SVET Markets Weekly Update (November 7, 2022)

08 Nov 2022 by rate3

That is how the preceding week has been played on the markets:

Bureau of Labor Statistics made Powel’s day at early Tuesday, Nov 1 by announcing that the number of job vacancies (JOLTs) went up to 10.72 million (by 437,000) in September (experts’ expectations put it on 10.0 million; in August JOLTs stood at 10.3 mil).

FED’s hawks get their anti-markets follies reinforced as a result. Players, engulfed by the rising short-term bullish momentum, reacted immediately and brought NASDAQ under 11th (10890) with BTC following it (20484) in a few minutes.

Next we saw as Institute for Supply Management (ISM) reported PMI (purchasing managers index) lowering to 50.2 in October from 50.9 in September.

After it spiked to 63.7 in March 2021 PMI has been gradually getting closer and closer to its 10 years low of 41.7 reached in March 2020 pointing to the slowest growth in factory activity since their contraction in mid-2020. Figures came slightly higher than market forecasts of 50 which, obviously, played on Powell’s hand during the next-day FOMC meeting.

Wednesday, Feb 2 mid-day trading session disappointed many unexperienced players who continue to fight the FED, as prognosticated.

Although the rate hike fall in line with analytics expectations of 75 points, Powell’s subsequent comments demonstrated that him and his elderly cronies, heading FED’s regional banks, are still firmly set to crash Millennials dream of the better economic future.

Side Note:

In 2020th we have seen the generational war going on several battle fronts simultaneously.

One — in Ukraine where aging Soviet-era ideologues attempt to boost their fading libidos by throwing stones into the modern world’s glimmering vitrines. Another is raging under carpets of Capital Hills around the world, where young bulldogs attack older ones from two sides — progressive and ultra-conservative. The third — is in on money markets where 70+ old hypocrites attempt to save Zoomers from too early retirement.

Bureau of Economic Analysis reported at Thursday, Nov 3 that the US trade deficit beats market forecasts of USD 72 bln growing to USD 73.3 bln (a three-month high; it stood at $65.7 billion in August). On import side, it reflects an increase in telecommunications equipment and semiconductors shipments from Mexico added by EU travels and financial services. On export side, the deficit narrowed with China

US manufacturers have read geopolitical signals loud and clear. Now they start to move oversea productions closer to home. Exports went down 1.1 percent (to USD 258 billion) as US producers cut their shipments faced by the falling oil prices (it has already slumped to ~88 USD per barrel — for almost 20 percent, from its ~120 highs reached in Jan).

The Institute for Supply Management Services PMI settled on 54.4 in October (downsizing from 56.7 in September). We haven’t seen such low level since March 2020, when Non-Manufacturing PMI was on its way up to several decades high of ~69.

At Friday, Nov 3 Bureau of Labor Statistics provided markets with a little bit more of additional fuel to support its short-term bullish momentum by reporting the unemployment rate increasing by 0.2 percentage point to 3.7 percent in October 2022 (up from 29-month low of 3.5 percent showed in September). It also has bitten market expectations of 3.6 percent.

This week we will see one newsworthy macroeconomic indicator hitting the markets: yearly Inflation Rate updates published by Bureau of Labor Statistics on Thursday. Also many players will be watching for Michigan Consumer Sentiment index preliminary estimates published on Friday.

FOMC uses its heaviest artillery to bomb tech markets into the pre-Bitcoin ages. Despite that, the annual inflation, which picked up in June to 9.1 percent, has been slowed down only marginally reducing with a decelerating rat (dropping to 8.5, 8.3 and 8.2 percentage during past three months till October).

Highest increases were in fuel oil (58.1 percent) and electricity (15.5 percent, after reaching 15.8 in a previous month — the highest since 1981). At the same time, a small slowdown was seen in food (11.2%, previously — 11.4, the highest since 1979) as well as in used cars (7.2%). With that rent prices accelerated from 6.2 to 6.6 percent.

FOMC futile attempts to chase inflation back into the 2–4 percentage range underlines economic system’s inadequacy. It is highly centralized, regionally bias, brutally policed and socially unjust. It can not properly function in the new tech-hyped world.

The University of Michigan consumer sentiment, which now lingers around its lowest level previously seen during 2007–08 debt crisis and 1980th Paul Adolph Volcker’s markets massacre, was revised slightly higher in October (to 59.9 from 59.8, with 59.3 prognosticated for November).

Also, University’s survey reported notable divergence in overall sentiment between consumers with considerable stock market / housing wealth and lower-income consumers. While the later stay upbeat about economic prospects — the former exhibit a significant declines in sentiment. I wonder why :)

Overall, BTC prices dynamics this week (first few days down — then up) uncovers a slow-motion battle between two unequal armies — whales/ institutions on one side and shrimps — on other.

Big capital holders / traders have to execute two contradictory strategies now.

On the one hand, they expect the next big leg down and continue to sit on stacks of cash waiting for the crash to jump back into leading coins. They use every opportunity to short small fishes. As a result, BTC hits each and every resistance lines on its way to 23–24k range.

On the other, a big group of large corporate players are stuck in BTC and can not allow its prices to slide below corporate majority portfolios’ zero-line. As a result, they keep swallowing waves after waves of small sell orders, preventing BTC going under water on 19–18k.

This type of play is likely to continue this week too, if no more negative news-hit markets during it.