์๋ฌธ ๋ณด๊ธฐ
Jamie Damon throws a bucket of cold water on things. The FEC will cut costs in October as the entire market expects, or it won't happen. Hello, cryptolover. In this new editorial we will understand why that mixed message of faith in the first cut of the year and Jamie Damon's "don't celebrate yet" is so important.
We continue with the warning of bearish sector correlations , the famous Animal Spirit, which usually precede declines. But the important question is, can the FEC really continue cutting rates if inflation remains stuck at 3%? As Jamie Damon warns, stay here if you want that answer that can help you anticipate market movements.
We're going there. Let's start with what matters most: the price of absolutely everything, the interest rates. The FE cut 25 basis points and the market is still pricing in the possibility of two additional cuts for the remainder of the year. But Jamie Damon, the CEO of JP Morgan, poured a bucket of cold water on the situation.
He says that if inflation stays around 3%, the cuts are not guaranteed. And frankly, knowing Powell's character , we must give due importance to that possibility that Jamie Damon speaks of. As I mentioned in the previous video, there's something that makes me not want to celebrate this cut, and even less so those two supposed additional cuts this year.
In fact, the market isn't convinced either. It took off, didn't it? In fact, it has regressed. It is also true that liquidity is there, it is watching us, it is observing us, but it has not yet reached the market. There's not enough time. I don't think it's far off, but it's still a ways off. Meanwhile, in the short term, that 3% to which inflation is currently tied matters a great deal, for two reasons.
The first is the thermal sensation of those prices that are hot. Energy and food have provided some relief, but inflation in services, rents, insurance, and health remains quite persistent, and with tariffs still up in the air, one must be quite cautious. For this reason, the fear of a resurgence in the infection remains.
The second reason is the bond curve. Cutting the shorts doesn't guarantee relief from the longs. If the market fears that the FEC will loosen while the underlying one beats strongly, long-term yields will demand more payments, and that makes mortgages and financing more expensive. So the long part of that curve is the silent brake that the market currently has.
Now, Nelson, what can happen to counteract all of that? My theory is, and I could be completely wrong, so everyone should draw their own conclusions, that they're going to normalize that 3% inflation as the new comfort zone of the first mandate of the Federal Reserve and that they're going to activate the third hidden mandate of the Federal Reserve with the objective of lowering interest rates by decree to levels that we 've only seen during major black swan events, the global financial crisis and the recent pandemic, and watch out, watch out, as I already said, the tariffs are here to achieve that.
We must pay close attention to events. Well, Diamond talked about stablecoins. He said they are not a threat to the banks. It's a simple phrase with a profound meaning. If they are not a threat, then they are a channel for liquidity to enter the banks. In other words, more is coming to on-chain payments, remittances, and the tokenization of the economy for the crypto cycle; that means legitimate infrastructure.
For me, the price means time. Bank adoption helps, but it doesn't replace the immediate impact we expected from the cuts. We also have that Animal Spirit that I mentioned in the title. But what exactly is Animal Spirit? Well, he's the man who gave Keynes the emotional impetus that drives people to take risks or hide out of fear, regardless of what the data, models, and even graphs say.
It is pure confidence, euphoria, or even collective fear that drives these economic decisions. It's like buying a house or opening a factory, increasing exposure to the stock market or simply doing the opposite, not increasing exposure. In short, so you understand, Animal Spirit is the same as market sentiment.
When they are high, prices usually rise in advance. When they turn off, we get a hangover. Your job is not to confuse spirit with courage and to adjust the risk accordingly. With that understood, let's continue. Currently we can see that a few LSP500 sectors are soaring, while other sectors are quite far behind the top.
There is no healthy correlation between the different sectors. Historically, when the herd goes crazy over a single narrative, nowadays artificial intelligence and megatech make the index look good, but the reality is that that ground is quite slippery. The last few times we saw such a disparate correlation, the SP500 fell between 5 and 18% in a few weeks.
And guess the month with a reputation for creating those drops: October isn't magic, it's the end of the quarter, it's restructuring, and the real test is in the macroeconomics. The consequence for crypto in all of this is direct. When the dollar rises and real bond yields also increase, high-beta assets, which are most sensitive to that sentiment, suffer first.
When the dollar weakens and those yields fall, liquidity returns to seek risk. That's why the market today looks like a fan. Two days seek risk, two days seek fear. That's how they have us looking this way and that. But hey Cryptolover, if you like this type of video where I share my analysis, don't forget to follow me, like this video, share it with others, and turn on notifications. Let's help the economy and the community grow too. M.
Comments 0