The market closed lower this week, but optimism remains. Retail trading reached a high (since 2021), accounting for 23% of the market’s total volume in January. Goldman Sachs has downgraded the likelihood of a recession from 35% to 25%.
Certainly, there’s room for caution. Recent trading volume has been bolstered by the end of shorting activity. We know more rate increases are on the horizon, but the terminal rate is now predicted to be closer to 6%
Next week’s CPI is the point of focus. It is possible to extrapolate the relevant numbers from that report for the core PCE numbers the Fed watches. If they are too hot, then markets will reposition to that 6% range–and a likely recession. If not, then a slow and steady recovery may still be in the works.
Remember to ask any follow up questions on Discord
Stock Watch
Stock Tickers to follow:
- Macro-Dependent: GLD, US Treasuries (IEI, IEF, TLT)
- Green Energy: TSLA
- Tech: GOOG, MSFT
What terminal rate is in view? A higher end rate will see GLD and Bonds suffer for the short term. The US Dollar index sits just above 102, with GLD lumbering upwards as it recovers from last week’s news and tries to make the most of a weak US dollar. Mid- to long-term bonds are still on the watch list but will suffer until more certainty emerges with the Fed’s intentions.
TSLA remains strong, yet pundits believe it currently faces resistance around the $200 mark, which it dropped below at the close of the week. AI-related stock is doing well.
Google would appear to be undervalued on an historical basis, but its stock price dropped after its chatbot, “Bard,” answered a question incorrectly. We think it is far too early to hail the death of Google.
Crypto Watch
Crypto Tickers to follow:
- The Benchmark: BTC, ETH
- ALT Coins: MATIC, RLC, RSR
- Network Coins: BNB
- DeFi Exchanges: GMX, GNS, GLP, MLP
Cryptos are experiencing a bit of a hangover after the recent rally. BTC’s peak of $23k was stemmed by fears of regulatory actions taken by the SEC against Kraken and its staking services.
MATIC remains an outlier with a “sell the news” situation. Reddit has released a new set of Super Bowl LVII NFT avatars which are available on the Polygon network.
AI-related protocols are hot, though there has been a bit of a dip for most projects. One to keep an eye on is RLC (iExec RLC) which allows users to buy compute resources to complete everyday use-cases.
Reserve Rights) will be offering an interesting liquidity pool service by providing graded baskets of yield farming tokens. Their overall project aim is to provide a decentralized, tamper-proof stablecoin that is backed by a changing basket of assets, which speaks to one of their strengths. For more on information, see the recent 1.2 Labs post of RSR
- Todd Mei, PhD
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