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Bitcoin's trading back near the lows. People are saying the bottom's in. Look, there's even a magazine cover!
That MUST mean the bottom's in, right? Well... maybe. But that doesn't mean we're going to see a massive crypto rally starting right away.
We took a look at the stats. As an indicator that the worst is probably behind us, it's pretty good.
If we're looking for the start of another crypto bull market, we'll need more fuel than a moderately bearish magazine cover 👇
There’s no inflation round ‘ere!
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China's Next Big Boom - Money-Minting Time
Yeah. China. Remember how they're reopening, the economy's going to boom, investors are piling back in and that's supposed to be uber-bullish commodities?
Wall Street really wants to believe in that story...
“Investors have to start thinking about what is going to be one of the big, global trades of 2023, which is going to be the China reopening trade... The direction of China’s Covid policy is clear, tail risks are lower, and this is not going to be lockdowns forever.”
David Loevinger, a sovereign analyst at TCW Group Inc. and former US Treasury Department senior coordinator for China affairs, said in a podcast last week.
Much like crypto, the worst is probably behind us. That doesn't mean everything gets immediately better though. The road to reopening is set to be bumpy, as we're seeing now in Beijing...
"The city is facing its most complex and severe prevention and control situation since the outbreak of the coronavirus,"
Liu Xiaofeng - Deputy director of Beijing's municipal Centre for Disease Control and Prevention
Things are starting to move in the right direction with stimulus measures and loans to developers... 👇
There's no guarantee the rally or the economic improvement will last.
JPMorgan private bank strategists Alex Wolf and Timothy Fung are preaching caution 👇
“We would not recommend fundamental investors to chase this rally,”
“Momentum traders should set tight stop-losses given the technical nature of this rebound. Tactical traders are likely to lock in profits, while short-sellers will start rebuilding positions.”
“Fundamental investors could question policy effectiveness and refocus on China’s economic slowdown”
Yep. We'd say that's the base case for China too.
While we're on the point of things that are promised but might not happen...
How about that recession that's going to kill inflation?
Goldman Sachs economists reckon it might not even happen in the U.S!
Global growth slowed sharply through 2022 on a diminishing reopening boost, fiscal and monetary tightening, China’s ongoing Covid restrictions and property slump, and the energy supply shock resulting from the Russia-Ukraine war.
We expect the world to continue growing at a below-trend pace of 1.8% in 2023, with a mild recession in Europe and a bumpy reopening in China but also important pockets of resilience in the US and some EM early hikers, such as Brazil.
Which begs the question... How quickly will inflation fall without a severe recession?
It looks like inflation has peaked, but that doesn't mean we're going straight back to 2% and the lowflation world of old...
Persistent inflation might mean (even) higher interest rates for (even) longer. Have a read of our take here 👇