But I still think it always has something useful to tell us. It’s just sometimes hard to decipher the message.
At the moment, I think the bounce in the S&P is telling you that Russia’s invasion will stay contained within the borders of Ukraine, which wasn’t necessarily the case just a week or so ago. That’s good for risk assets, but, of course, no consolation to the people of Ukraine.
That’s the short-term message from the large-cap indexes. I think there’s a different, medium-term message coming from rate-sensitive sectors.
Look, for example, at housing stocks: US house prices are booming and with inventories at all-time lows after a decade of under building, you’d normally expect there to be a long runway of growth for home builders.
And yet, builders like PHM and LEN trade on 6x earnings.
The message in that particular bottle is that Powell is going to raise rates and sell mortgage bonds until he squashes the housing market.
Which will take some doing: Mortgage rates are up a full percentage point this year, and there’s still 20 buyers lined up for every new house that comes up for sale.
Housing stocks are telling you Powell is going to get more aggressive, and that’s not a great message for risk assets.
Q: What’s it mean for crypto?
Crypto is still first and foremost a risk asset, so you have to think it will be a slog for the next couple of quarters.
Q: That’s it? Just a couple of quarters?
I’m still in the transitory camp (where it’s getting a little lonely now), so I’m always on the lookout for signs of disinflation, and I spotted a good one this week.
Xiaomi, the big handset maker, noted that semiconductor supply issues are starting to ease — so much so that they expect demand to be the problem by the end of the year.
That is admittedly a single, cherry-picked data point. But from my time trading tech stocks, I can tell you that Asian consumer tech suppliers were always ahead of the curve on macro trends.
If that’s still the case, Powell will need to hurry up and get his rate hikes in while he can. The window may not be open very long.
Q: What's the most innovative thing happening in crypto at the moment?
I’d say stablecoins and bridges.
In bridges, recent launches of THORChain and Stargate both allow you to swap native tokens between blockchains without having to deal with an intermediary “wrapped” token (like the $320 million of wrapped ETH recently stolen from a Solana bridge.)
Think of THORChain and Stargate as multichain versions of Uniswap.
The tokens for both are up sharply this month and price always leads narrative, so you can expect “cross-chain interoperability” to be a thing now.
And, as discussed the other day, stablecoins are reinventing money.
The currently most interesting stables may be SPA (interest-bearing money) and FPI (CPI-pegged money).
Q: How will the FPI peg work?
I don’t know, but I’m super curious to find out.
CPI is only released once a month and FPI will presumably trade all the time, so that seems like an issue.
Their Medium post says it will be pegged to “official US Government CPI.” But also that they will work with Chainlink to “decentralize the CPI metric.”
CPI is a famously imprecise measure of inflation, so it seems to me there is scope for not only improving money by pegging it to inflation, but improving on inflation metrics by sourcing better data.
Q: Stablecoins and bridges are boring. What about ApeCoin?
I agree, ApeCoin is not boring. But neither is, like, stubbing your toe or getting a root canal.
APE has achieved its distinctly not-boring market cap of $13 billion primarily by employing the oldest trick in the TradFi book: listing with just 15% of issuance in free float.
That tight float is creating a lot of exit liquidity for insiders, possibly at the expense of the community — which I believe is the opposite of what crypto is meant to be about.
But I guess I shouldn’t single them out, as there’s plenty of that going around: Buying newly listed tokens has been a terrible strategy as of late.
And ApeCoin at least provides a way to be long of NFTs without being long of NFTs, which does have some value — although only about as much as getting long bitcoin by buying Microstrategy (i.e., not a lot).
There is one saving grace to the whole thing, however: 10,000 ApeCoin were donated to the Jane Goodall Institute.
So, yeah, if you want to provide exit liquidity for Jane Goodall, sure, buy some ApeCoin.
BlackRock CEO: Ukraine War Could Speed Digital Currency Adoption — Blockworks
Avalanche Summit: How Will NFTs Evolve? — Blockworks
One in Three NFTs End Up With Little to No Trading Activity, Reports Says — Blockworks
ANZ Becomes First Bank to Mint Australian Digital Dollar — Blockworks
Phi Labs Secures $21M Seed, Led by CoinFund and Hashed — Blockworks
Teller Finance Introduces DeFi-Native Lending Market in Singapore — Blockworks
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