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Markets Could Be A Trap Ahead Of Today’s Fed Decision

Markets Could Be A Trap Ahead Of Today’s Fed Decision

Submitted by QTR’s Fringe Finance

Make no doubt about it, all eyes are going to be…



Markets Could Be A Trap Ahead Of Today's Fed Decision

Submitted by QTR's Fringe Finance

Make no doubt about it, all eyes are going to be on the Federal Reserve’s decision about interest rates later today - and most strategists feel as though they have the market action pinned down. If, of course, by pinned down, you mean “could land anywhere within a 10% range”.

For example, J.P. Morgan recently offered up a ludicrously detailed and nuanced take on what the day’s action could hold, broken down into 6 different situational scenarios of different rate hikes and commentary choices, all of which basically boiled down to the grand conclusion that “markets could crash lower or rip higher 10% depending on what the Fed does.”

To quote Snatch, “You could land a jumbo f*cking jet” in that range.

My analysis looks past that brilliant work of sell-side art and makes the case for how, in my opinion, the Fed has already “booby trapped” markets ahead of their decision today. Let’s discuss what I think.

The nice thing about today’s decision is, in my opinion, it doesn’t matter.

I mean, sure, the Fed’s decision obviously will dictate trading for the day - maybe even for the rest of the week, maybe even for the month of November.

But I still continue to believe that a trapdoor could fall out from under this market at some point regardless of what the Fed says or does today.

My readers know that for the last few months, I have been making the argument that the 325 basis points already baked into the economic cake have still not been digested, and subsequently puked up, by the market yet.

Fed Officials Look at Higher Peak for Rates as Inflation Endures - Bloomberg

And the consumer is just now starting to run out of firepower. Have a look at an extremely frightening chart: personal savings rate overlapped with consumer loans.

As Americans are now tapped out on their savings, they are borrowing. When less borrowing becomes available and rates rise, it then becomes a story of delinquencies, charge off, bankruptcies and forced selling. When forced selling happens, prices are driven lower, making the cycle even worse for remaining participants. Thus begins a financial royal fuck deluxe that ends in capitulation and panic - the first semblance of true free market buy signals the market will have given off in years.

If I had to guess, we’re at the “Return to ‘Normal’” phase of things. After all, Goldman put out a note last week suggesting a soft landing could be incoming and people think they’re “buying the dip” with valuations nearly double the median S&P 500 bear market P/E ratio right now.

We blew past “Delusion” during Covid, when we didn’t even have an economy and were relying totally on the Fed’s money printer (which we are now paying for with 8% inflation) and we reached “New Paradigm” once Cathie Wood and Ross Gerber were being hailed as generational investing visionaries.

We spent the summer in “Denial”, as markets tried to recover, and now that things have settled down slightly, some people think we are back to normal. We’re not.

You can call me a pessimist if you’d like, but it is still extremely difficult for me to make the case that the market has bottomed – even if the Fed pivots today – with Market Cap/GDP about 40% above historical means and a Shiller PE in the mid 20’s.

Make no mistake about it, now matter how many times your portfolio has caused you to wet yourself over the last 9 months, this has been an orderly selloff: we have not seen panic yet, these are not trying times, there is no blood in the street and there definitely isn’t a buffet of value across markets yet.

That’s not to say that those moments won’t be forthcoming, but the road to get there, in my opinion, remains a rocky one. We’re going to need to see significant panic, fear, and capitulation before “old-school” value investors like myself see a reason to get screamingly bullish on equities.

This time and place varies significantly from the last time I was overall bullish on equities, which was in March 2020. Back then, I knew stocks were still expensive even thought they had crashed as a result of Covid. But I also thought that Covid fears in general were overblown (especially regarding financial stocks) and that QE infinity would eventually lead to market euphoria when coupled with the rosier reality of the coming pandemic.

This go-round, it’s a little different. Rising rates are a far more concrete and finite problem. In essence, no matter what the Fed does now, 325 bps are already making their way through the plumbing of the market - a time bomb just waiting for the right reason to explode, in my opinion.

This perspective is extremely important: these rates are going to rise again today no matter what. The only thing “analysts” are considering is whether it’ll be 50 bps or 75 bps - to which I say: who cares? The 325 bps time bomb is still making its way through market plumbing regardless of whether or not the Fed doesn’t even hike at all today.

When it blows, we’ll realize we’re not on a path that the Fed set with today’s rate hike decision, but rather that all along we have been on a path they started us on 9 months ago when stimulus checks stopped, inflation became real, and the fallacy of 0% rates forever ended violently. We just closed our eyes and continued on the ride, never once pulling up the window shade to catch a glimpse of the Fed napalming the economy in the background. As long as the plane has stayed somewhat level, with tolerable amounts of turbulence, we have just assumed that everything is going according to plan. My guess is when the market pulls the window shade up for us, we’re not going to like what we see.


Tyler Durden Wed, 11/02/2022 - 12:09

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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.



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 Oct. 23.

The largest cryptocurrency 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 is 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 doubletop formation, with downside due as a result.

Specifically, Bitcoin requires 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 Oct. 23, 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 its 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 Oct. 23.

He noted that Glassnode data shows 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. Source: CryptoSlate/Glassnode

The largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC), continues to see a lower 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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California bill aims to cap crypto ATM withdrawals at $1K per day to combat scams

A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000.



A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000. California legislators have proposed a new bill titled “Digital financial asset transaction kiosks,” calling for a cap on crypto ATM withdrawals of $1,000 per day in light of growing scams. Additionally, starting in 2025, the law would limit operators’ fees to $5 or 15% (whichever is higher). The bill, if approved, would come into effect on Jan. 1, 2024. The bill was introduced after legislative members visited a crypto ATM in Sacramento and found markups as high as 33% on some crypto assets compared with their prices on crypto exchanges. On average, a crypto ATM charges fees between 12% and 25%, according to a legislative analysis. Government officials also found ATMs with limits as high as $50,000, prompting them to take regulatory measures to curb such high premiums and withdrawal limits. There are more than 3,200 Bitcoin ATMs in California, according to Coin ATM Radar. Democratic State Senator Monique Limón, who co-authored the proposed legislation, said the “new bill is about ensuring that people who have been frauded in our communities don’t continue to watch our state step aside” when there are real issues happening. Another provision of the bill would require digital financial asset businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025 Crypto ATMs are a popular way for people to exchange cash for their choice of cryptocurrency but have become a hub for scams and exploits because of the nature of transactions (i.e., hard cash). Unlike bank and wire transfers, each transaction leaves less of a trail. Related: CoinSmart president says crypto taxes are a ‘little bit more favorable’ outside US Some residents have recently been caught up in such scams, where the scammer persuades the victim to go to a nearby crypto ATM and deposit cash for the crypto of their choice. Some of those affected by ATM scams have lauded the bill and said the low transaction limit would give victims time to realize if they are being duped, reported the LA Times. On the other hand, crypto ATM businesses said the new bill would harm the small operators who must pay rent on their ATMs. The operators noted that the bill fails to address the core issue of the fraud and instead takes a punitive path focused on a specific technology. They warned such a move would shudder the industry and hurt consumers while doing nothing to stop bad actors. Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

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An airline just launched one of the country’s longest domestic flights

The trip from New York’s JFK to Anchorage International Airport will take over seven hours.



While the title for longest commercial flight in the world will soon be taken over by the 20-hour and 10,576-mile journey between Sydney and London that Australia's Qantas Airways  (QUBSF) - Get Free Report is preparing to launch in 2025, the U.S. is a big country with a number of long-haul domestic flights on its own.

Without even looking at U.S. territories overseas such as Guam or American Samoa, one can spend more than 10 hours in the air and end up only in another state. Some of the longest domestic flights in the U.S. include routes from Boston to Honolulu in Hawaii and Chicago to Alaska's Anchorage.

Related: The World's Longest Flight Is a New Route: Here's Where It Goes

In a move to bring more service from mainland U.S. to Alaska, Alaska Airlines  (ALK) - Get Free Report is about to launch its longest flight yet that is subsequently also one of the longest in the country — the route from New York's JFK to Anchorage International Airport will take over seven hours and cross 3,386 miles.

An Alaska Airlines aircraft.

Image source: Shutterstock

New flight takes travelers to 'land of midnight sun'

The route will debut on June 13, 2024 and take place daily on a Boeing 737-8  (BA) - Get Free Report. The airline recently invested in the plane with the longest capacity in its fleet to be able to serve faraway destinations on the East Coast.

More Travel:

"We're eager to welcome guests to our great state from the city that never sleeps to the land of the midnight sun on Alaska's new nonstop flight," Jillian Simpson, president and CEO of the Alaska Travel Industry Association, said in a statement. "There's so much to do in Anchorage and in the smaller towns nearby, mapping out your itinerary might be the toughest thing you do before heading west."

The route is part of Alaska Airlines' wider efforts to expand its coverage between Alaska and the mainland U.S. On May 18, it will also launch a nonstop route between Anchorage and San Diego that will take just over six hours and span nearly 2,500 miles. While the airline serves many Californian cities, San Diego's smaller size meant that residents would have previously needed to transfer in Seattle or LA on their way to Alaska.

New routes meant to serve both burgeoning tourist interest and local demand

After adding the new flights, Alaska Airlines expects to have 63 flights a day leaving from Anchorage during the summer of 2024. This is designed to meet the burgeoning traveler interest in the state as well as serve Alaskans who are separated from large American cities by geography.

"Alaskans like to get out," the airline said in announcing the new routes. "Sometimes that might mean hitting all the must-sees in New York City or taking surf lessons in SoCal. We'll make it more convenient for our guests to get there from Anchorage, as well as lots of other places."

For those who are able to make travel plans this far in advance, both the New York and San Diego flights to Anchorage are already available for booking on Alaska Airlines' website. The former starts at $400 each way for mid-week departures, while flying into the state from San Diego will cost from $300.

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