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Bitcoin price must break $31K to avoid 2023 ‘bearish fractal’

BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.
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BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.

Bitcoin (BTC) held above $30,000 at the Oct. 23 Wall Street open as analysis said BTC price strength could cancel its “bearish fractal.”

BTC/USD 1-hour chart. Source: TradingView

BTC price preserves majority of early upside

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it hovered near $30,700, still up 2.5% on the day.

The largest cryptocurrency had made snap gains after the Oct. 22 weekly close, stopping just shy of $31,000 in what became its highest levels since July.

Now, popular trader and analyst Rekt Capital was keen to see the $31,000 level break.

“Bitcoin has Weekly Closed above the Lower High resistance to confirm the breakout,” he commented alongside the weekly chart.

BTC/USD annotated chart. Source: Rekt Capital/X

Rekt Capital argued that BTC/USD could disregard the bearish chart fractal in play throughout 2023 next. This had involved the two year-to-date highs near $32,000 forming a double top formation, with downside due as a result.

Specifically, Bitcoin required a “breach” of $31,000 in order to do so.

More encouraging cues came from the True Market Deviation indicator from on-chain analytics firm Glassnode.

As noted by its lead analyst Checkmate on the day, the metric, also known as the Average Active Investor (AVIV) profit ratio, has crossed a key level.

Bitcoin’s True Mean Market price (TMM) — the level that BTC/USD spends exactly 50% above or below — is now below spot price, at $29,780.

“Have we now paid our bear market dues?” Checkmate queried, describing TMM as Bitcoin’s “most accurate cost basis model.”

Bitcoin True Market Deviation (AVIV) chart. Source: Checkmate/X

Institutions awaken in "Uptober"

Analyzing the potential drivers of the rally, meanwhile, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, flagged the potential approval of the United States’ first Bitcoin spot-price based exchange-traded fund (ETF).

Related: BTC price nears 2023 highs — 5 things to know in Bitcoin this week

While not yet awarded the green light, a U.S. spot ETF is being treated as an inevitability after legal battles resulted in regulators losing sway.

“The potential approval of a spot ETF for Bitcoin has spurred a significant increase in bullish inflows in the crypto market,” Van Straten wrote in an update published on the day.

He noted Glassnode data showing inflows via over-the-counter (OTC) trading desks spiking since late September.

“In addition, the Purpose Bitcoin ETF, with its holdings of approximately 25,000 Bitcoin, has observed consistent inflow throughout the past month. Even though these inflows might not be termed as ‘large,’ they denote a positive market sentiment,” he continued.

“This uptick in inflows across various platforms indicates an optimistic market response to the potential approval of a Bitcoin ETF, bolstering the overall landscape of digital assets.”
Bitcoin transfers to OTC desk wallets (screenshot). Source: CryptoSlate/Glassnode

The largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC), continues to reduce its discount to the Bitcoin spot price, having already seen its smallest negative margin since December 2021.

This stood at -13.12% as of Oct. 23, per data from monitoring resource CoinGlass.

GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Walmart Hits Record High After Earnings Beat, Despite Soft Guidance, Warning About “Choiceful” Consumers Spending Less

Walmart Hits Record High After Earnings Beat, Despite Soft Guidance, Warning About "Choiceful" Consumers Spending Less

Walmart shares hit…

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Walmart Hits Record High After Earnings Beat, Despite Soft Guidance, Warning About "Choiceful" Consumers Spending Less

Walmart shares hit a new all-time high after the largest bricks and mortar retailer reported earnings that beat expectations despite providing guidance that was marginally softer, as choosy shoppers nevertheless kept buying in its stores.

Here is what the company report for the final quarter of 2023:

  • Adjusted EPS $1.80 (excluding impact, net of tax, from a net gain of $0.23 on equity and other investments) vs. $1.71 y/y, beating estimate of $1.65
  • Revenue $173.39 billion, +5.7% y/y, beating estimate $170.66 billion
    • Total US comparable sales ex-gas +3.9%, estimate +3.2%
    • Walmart-only US stores comparable sales ex-gas +4%, estimate +3.12%
    • Sam's Club US comparable sales ex-gas +3.1%, estimate +2.99%
  • Change in US E-Commerce sales +17%, beating estimate +15.5%
  • Adjusted operating income $7.25 billion, beating estimate $6.79 billion

Of the metrics reported, however, the most important one is that Walmart’s same-store sales (ex fuel), rose 4% YoY for US stores (of which net sales was 3.% and eCommerce added 17%). Wall Street was expecting 3.1% so the number was clearly a beat and was driven by "strength in grocery, health and wellness, offset by softness in general merchandise", and was the result of higher transactions (+4.3%) offsetting average ticket prices, which dropped 0.3% YoY. Still, the number is a far cry from the 8.3% comp sales a year ago.

In keeping with the noted softness in general merchandise, the world’s largest retailer delivered softer guidance for the current fiscal year, as it expects consumers to be selective in their spending:

  • For full-year 2025, WMT sees
    • Net sales +3% to +4%, slower than growth from the prior year, and adjusted EPS $6.70 to $7.12, slightly disappointing vs the median consensus estimate of $7.09
    • Capital expenditures approximately 3.0% to 3.5% of net sales
  • For Q1, 2025, WMT sees sees adjusted EPS $1.48 to $1.56.

Discussing the quarter, CEO Doug McMillan said that "we crossed $100 billion in eCommerce sales and drove share gains as our customer experience metrics improved, evenduring our highest volume days leading up to the holidays"

Commenting on customer "selectivity", CFO John Rainey said that “they are being choiceful" as consumers continue to spend less per trip but have been shopping frequently, adding that the company expects some resilience to continue for the rest of the year.

There was more good news: Walmart is gaining share in nearly every category, according to Rainey, with e-commerce among the factors driving growth as the company trims losses associated with handling online orders. Furthermore, while deflation is still a possibility, the company expects it to be less likely based on what it observed during the latest quarter.

That said, while grabbing more spending with low-priced groceries and other basics, Walmart has been cautious in recent months about the health of the consumer amid persistent inflation and higher interest rates. As noted above, US consumers have been buying cheaper products and seeking value, as they pull back from discretionary products like general merchandise. That has resulted in softer sales for some retailers, including Target Corp. and Home Depot Inc. Other big-box retailers are set to report their quarterly earnings in the coming weeks.

As Bloomberg notes, the recent moderation in inflation is another challenge for Walmart and other retail operators that have passed down price increases to consumers over the past few years. This has contributed to higher dollar sales for companies, followed by an uptick in revenue during the pandemic when people bought more groceries and home goods. Such increases are slowing overall, though inflation remains stubborn in some areas like groceries and shelter.

Similar to all of its major competitors, Walmart has been beefing up automation in warehouses and stores in recent years, while remodeling locations to make them more modern. Pickup and delivery businesses continue to expand, driving share gains among upper-income households and fueling growth of the Walmart+ membership program.

Separately, Walmart said it agreed to buy smart-TV maker Vizio Holding Corp. for about $2.3 billion. The deal would accelerate the retailer’s advertising business, called Walmart Connect, and help Walmart and its advertisers engage more with customers. Walmart has been expanding Walmart Connect and other nonretail businesses that have faster growth and better margins. The deal announcement confirmed a Wall Street Journal report from last week. Vizio shares soared 15% in Tuesday premarket trading.

As for WMT, the Bentonville, after the stock gained 16% over the past year, it jumped another 5.7% on Tuesday rising to a new all time high as investors were clearly satisfied with what they saw.

Full investor presentation below (pdf link)

Tyler Durden Tue, 02/20/2024 - 10:17

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Estimating US Recession Risk Using Economic Data For States

What are the choices for monitoring and estimating recession risk? Slightly lower than the number of stars in the universe. Ok, I’m exaggerating, but…

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What are the choices for monitoring and estimating recession risk? Slightly lower than the number of stars in the universe. Ok, I’m exaggerating, but not much. The good news: the search for robust, relatively reliable indicators narrows the field dramatically. But there’s always more to learn, in part because the supply of data sets is vast, increasingly so. Which brings me to another indicator that looks promising: state coincident indexes.

Every state’s economy is, in some degree, unique, although the gravitational pull of the national economy casts a long shadow. Tracking each state economy separately, and then aggregating the results, provides a different spin on the US business cycle compared with national indicators. Think of it as a bottom-up model vs. the standard top-down approach via US retail sales, industrial production, etc.

Conveniently, the Philly Fed publishes monthly coincident indicators for each state. Aggregating the 50 signals into a composite index provides a somewhat different view of the US business cycle vs. traditional top-down metrics. There are several ways to process the numbers – my preference, shown in the chart below, is a 3-month-change model. If a state’s 3-month change is negative (positive), the signal is negative (positive). Summing the negatives and positives provides a national profile. The current reading is 0.48 — in other words, 48% of the states are posting negative 3-month changes for their respective coincident indicator. As shown below, the composite reading maps fairly closely with NBER-defined downturns, and so the current signal is issuing a warning, albeit a warning that has yet to provide what might be thought of as passing the point of no return. But it’s close.

The readings vary from 0 (no negative 3-month changes) to 1.0 (all 50 states are reporting negative 3-month changes). A quick review of the historical record suggests that the US is on the verge of slipping into recession.

But before we ring the alarm bell, there are some caveats to consider. First, a similarly high reading 20-plus years ago turned out to be a false signal. The next couple of months will likely determine if a repeat performance is brewing, or not.

Second, no one indicator is flawless, as we’ve learned over the last couple of years – especially in recent history, when pandemic-related events have created no shortage of macro surprises.

Another reason to reserve judgment, at least for now: a range of other business cycle indicators tracked in The US Business Cycle Risk Report (a sister publication of CapitalSpectator.com) continue to show a clear growth bias. But as reported in this week’s issue, there are some nascent signs of softer economic activity and so it’s possible that the coincident state indicators are an early warning that the tide is shifting.

The most reliable methodology for estimating recession risk in real time is building an ensemble model that combines various modeling applications that are complimentary. Although any one model will excel at a given point in time, quite often the best-performing indicator changes through time. To minimize the risk that’s inherent in any one signal, The US Business Cycle Risk Report crunches the numbers on multiple indicators, which has proven to be close to optimal for balancing the need for timely signals that minimize false signaling.

Despite the caveats, the coincident state model adds another dimension to the mix and provides some complimentary input to The US Business Cycle Risk Report’s existing suite of indicators. Accordingly, I’ll be adding the composite state coincident data to the newsletter’s weekly updates.

The next batch of coincident state updates for January is scheduled for later this month. Meantime, I’ll be carefully reviewing the incoming data for fresh clues that support or reject the suggestion that trouble’s brewing via the state coincident indicators.


How is recession risk evolving? Monitor the outlook with a subscription to:
The US Business Cycle Risk Report


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Air Canada Says Freight Demand Beginning To Improve

Air Canada Says Freight Demand Beginning To Improve

By Eric Kulisch of FreightWaves

Air Canada expects the slow recovery in cargo volume…

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Air Canada Says Freight Demand Beginning To Improve

By Eric Kulisch of FreightWaves

Air Canada expects the slow recovery in cargo volume that began in the fourth quarter to quicken in 2024, aided by the addition of two more freighter aircraft, but doesn’t anticipate gains in pricing power, Mark Galardo, executive vice president for network planning and revenue management, said Friday.

The cargo division within Air Canada (TSX: AC) currently operates five converted and two factory-built Boeing 767-300 freighters. It is scheduled this year to receive two cargo jets converted from passenger configuration, but delivery of a third plane has been delayed until 2025 because of lingering supply chain and labor challenges faced by aerospace manufacturing companies, said Galardo on the company’s fourth-quarter earnings call.

The company nonetheless expects cargo capacity to increase 6% to 8% this year with the addition of the two freighters and more passenger aircraft that also carry cargo. The converted freighters are retired Air Canada passenger jets that are being retrofitted by aftermarket aerospace firms for carrying large containers in the main cabin area.

Cargo revenue fell 15% year over year in the fourth quarter to US$181 million on soft demand and lower yields, Air Canada reported. The three-month period represented an improvement from prior months as the downturn in freight transportation that gripped the air logistics industry for nearly 18 months began to ease. Full-year cargo revenue fell 27% to $253.7 million.

At the end of 2023, Canada’s flag carrier operated four more 767 freighters than at the end of 2022. Freighters were reintroduced at the company two years ago. Increased freighter operations to Central and South America and to Europe partially offset the year-over-year decline. Air Canada also enhanced its interline cooperation with Emirates SkyCargo, which allows customers to book interline cargo shipments through the Emirates SkyCargo flights, including between the Americas and Southeast Asia and India, through key European hubs. 

“We had a bit of a slower start in January, but as we look into February and beyond we’re starting to see volumes pick up and yields also pick up. And our 2024 assumption on cargo is more volume-driven than yield-driven. So we’re starting to see some positive indicators,” Galardo told analysts. “We’ve taken all the necessary measures to position ourselves to take advantage of the recovery. This includes strategically adjusting our freighter plan so that we can keep focusing on proven overall results for the long term and on maximizing cargo network value for our entire fleet.”

Air Canada in late September canceled an order with Boeing for two 777-200 production freighters because of the reversal in airfreight demand following the pandemic-fueled boom for air transport that lasted until early 2022. It then ordered 18 787-10 Dreamliners, including two that were swapped for the 777 freighters. Management, at the time, reiterated its commitment to operating freighters, saying that it needed to take a more measured approach to fleet expenditures and keep more cash available for other purposes.

Air Canada expects another leap in cargo business when the 787-10s begin entering the fleet in late 2025. But ongoing safety and manufacturing problems at Boeing could upset the delivery schedule. Production flaws have previously prevented customers from receiving Dreamliners on time.

“As we eventually receive the larger 787-10s, taking advantage of global cargo flows through our hubs will become an important lever for further diversifying revenue streams,” said Galardo. 

Air Canada performed well on cargo against its peers during the fourth quarter. Delta Air Lines and American Airlines saw cargo revenue slide 24% during the period, and Korean Air said its cargo sales fell nearly 29%. The percentage change in revenue at Air Canada was on par with the 14.8% decline at United Airlines. On a total dollar basis, Air Canada cargo revenue was less than that of the other carriers. The three major U.S. airlines are much larger than Air Canada but also do not have a dedicated cargo fleet. Delta was the closest to Air Canada at $188 million in revenue.

Overall, Air Canada generated $3.9 billion in revenue, up 11% from the prior year, during the final three months of 2023. But earnings before interest, taxes, depreciation and amortization of $386.4 million came in below expectations. On an adjusted basis, the company lost $32.6 million versus a loss of $162 million the year before. Higher wages, maintenance costs and flying volumes pushed expenses up 8%. Inflation is expected to increase costs another 4.5% to 5% in 2024, offset in part by productivity gains.

Tyler Durden Tue, 02/20/2024 - 06:30

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