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The Wolf Den #611 - Wen Pivot Sir?

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November 1 · Issue #611 · View online
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In This Issue:
  1. Wen Pivot Sir?
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Argo Blockchain Is In Trouble
  5. CZ On Why He Financed Twitter
  6. Changes Are Already Coming To Twitter
  7. Elections, Rate Hikes & Inflation - Can The Economy Survive The Pain? | Macro Monday w/Mike McGlone
  8. My Recommended Platforms And Tools
Wen Pivot Sir?
There’s one question on everyone’s mind - when will the Fed pivot?
Unfortunately, I am not writing this newsletter from the future and I can’t provide any insight as to the exact date. It is nearly impossible to predict the exact timing without the Fed explicitly telling us their plans.
They probably won’t do that.
The decision to raise rates is the easy part for the Fed, but knowing when to stop is a game of inches. They need to perfectly thread the needle.
Why is it so difficult? For one, our leaders refuse to even acknowledge we are in a recession. Thanks, Janet Yellen. Janet even refused to admit that there is a likelihood of a recession, even as banks rate the possibility as literally 100%.
For those that don’t know, the NBER (National Bureau of Economic Research) is the entity responsible for announcing a recession and their rules are vague and malleable.
Just how the government likes it.
The members of the NBER are not particularly good at their job. When recessions are short-lived, the committee is known to announce their existence when they are already technically over. Even during the Great Recession just over a decade ago, the NBER declared the official downturn over a year after it was actually finished. They have a difficult job and it makes life for the rest of us far less manageable.
If we currently had consensus on the mere existence of a recession, then the Fed would likely have pivoted already.
Another reason that the Fed is struggling is the lagging effects of monetary policy. Not even policymakers can easily measure the outcomes of their decisions, because the effects take a long time to kick in. They are always behind the data and the market, making decisions on what happened before and not the current reality. This is why inflation has remained near the highs, even with continuous rate hikes.
Perhaps the best tell for an upcoming pivot is when a major market simply breaks. We have seen currencies drop to record lows against the dollar, U.S Treasury bonds have gone haywire, and tech stocks are falling into the abyss. But unemployment is still extremely low and has not budged, so in the eyes of the Fed, the economy is still strong.
Sadly, we live in a world where the Fed wants to see WAY more people lose their jobs before changing policy.
They haven’t inflicted enough pain.
The market is pricing in another 75 bps rate hike tomorrow, 50bps at the next meeting, and then two 25 bps hikes to start the year. Then we will likely see the pivot. But it is very important to remember that the days of easy money are likely behind us. The pivot that everyone is expecting may not be to more printing and easing, but rather to simply not tightening.
Buckle up, there’s still a lot of nonsense to come, starting tomorrow.
Bitcoin Thoughts And Analysis
Nothing to see here! Price is the same as yesterday.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Nov. 1 - Bloomberg
Key events this week:
  • EIA crude oil inventory report, Wednesday
  • Federal Reserve rate decision, Wednesday
  • US MBA mortgage applications, ADP employment, Wednesday
  • Bank of England rate decision, Thursday
  • US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
  • ECB President Christine Lagarde speaks, Thursday
  • US nonfarm payrolls, unemployment, Friday
Some of the main moves in markets:
Stocks
  • Futures on the S&P 500 rose 1.1% as of 8:56 a.m. New York time
  • Futures on the Nasdaq 100 rose 1.4%
  • Futures on the Dow Jones Industrial Average rose 0.7%
  • The Stoxx Europe 600 rose 1.3%
  • The MSCI World index rose 0.7%
Currencies
  • The Bloomberg Dollar Spot Index fell 0.7%
  • The euro rose 0.5% to $0.9936
  • The British pound rose 0.7% to $1.1546
  • The Japanese yen rose 1.1% to 147.05 per dollar
Cryptocurrencies
  • Bitcoin rose 0.7% to $20,538.32
  • Ether rose 1.9% to $1,595.19
Bonds
  • The yield on 10-year Treasuries declined 12 basis points to 3.93%
  • Germany’s 10-year yield declined nine basis points to 2.05%
  • Britain’s 10-year yield declined five basis points to 3.47%
Commodities
  • West Texas Intermediate crude rose 2.5% to $88.69 a barrel
  • Gold futures rose 1% to $1,656.40 an ounce
Argo Blockchain Is In Trouble
Bitcoin Miner Argo Blockchain Shares Plunge 40% as $27M Raise Called Off - Decrypt
Yesterday morning, Argo blockchain released a “public strategy/company/ops update” regarding the financing of their operations.
Things are not looking good.
Argo had plans to raise £24 million via a subscription for ordinary shares, but that deal is no longer happening. As a result, Argo has begun to sell off some of its miners, lowering their total hash rate. Like Core Scientific, this is the beginning of the end if things don’t change. I copied Argo’s official statement below,
Shares of Argo dropped over 50% on the news.
While Argo is exploring other financing opportunities, there can be no assurance that any definitive agreements will be signed or that any transactions will be consummated. Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations. The Company is endeavoring to complete such financing transactions to provide the Company with working capital sufficient for its present requirements, that is for at least the next twelve months from the date of this announcement.
You can read the full statement HERE.
CZ On Why He Financed Twitter
Squawk Box
"We want to make sure that #crypto has a seat at the table when it comes to free speech," says @cz_binance on @binance investing $500M into @elonmusk's purchase of @twitter. "We want to help bring @twitter into Web3 when they're ready." https://t.co/BmbWJqXvul
CZ was asked why he decided to invest with Elon. I transcribed his answer below. Spoiler - it’s all about having influence.
“The deal was put together a few months back and there are many reasons for supporting the deal. Twitter is a free speech platform, which is global and extremely important… Also, we want to make sure crypto has a seat at the table when it comes to free speech. Also, there are more tactical things like we want to help bring Twitter into web3 when they are ready. And we want to help solve the immediate problems, like charging for memberships, which can be done easily using cryptocurrencies as a means of payment.”
Changes Are Already Coming To Twitter
Twitter to start charging $20 per month for verification - The Verge
Verified Twitter users will soon have to pay $20 a month to maintain their verification status.
According to the press release, Twitter employees have until November 7th to launch the new feature or they are fired. Clearly, Elon is not playing around. And once launched, verified users (like myself) will have 90 days to pay the subscription or lose the verification.
They are also including an option for anyone to get verified, which seemingly defeats the purpose.
This is likely for the sake of Twitter’s bottom line. There’s no doubt that Elon wants this decision to be a profitable one.
Elections, Rate Hikes & Inflation - Can The Economy Survive The Pain? | Macro Monday w/Mike McGlone
Podcast - The Wolf of All Streets
Elections, Rate Hikes & Inflation - Can The Economy Survive The Pain? | Macro Monday w/Mike McGlone
Bloomberg IntelligenceSenior Commodity Strategist Mike McGlone is here to discuss the latest macro news and to provide his opinion on what’s going on in the world of crypto and finance.
In this episode with Mike, we discussed:
  • Another rates hike
  • Too many people have jobs
  • Janet Yellen does not see signs of a recession in the near term
  • The classic bear market
  • Stocks
  • Fighting the Fed
  • Commodities vs Crypto
  • Debt to GDP
  • Dollar
  • US debt Interest payments approach $1T annually
  • China’s Economy Weakens
  • Meta chart
  • Ligma Johnson
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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