SVET Reports
Friday's Markets Update
On Friday, Powell's remarks at Jackson Hole were well-received by traders, who responded by pushing the Nasdaq higher. Powell said that the Fed is prepared to raise rates, but suggested that it would remain unchanged in September. BTC continued to hover just above 26K. Other news: Consumer sentiment diminished; the Treasury proposed a new tax form for Bitcoin miners and required cryptocurrency brokers to report user information to the IRS.
Details
Consumer sentiment fell to 69.5 in August 2023, from 71.2 in July. Expectations and current conditions both fell, while inflation expectations rose. Consumers are tentative about the outlook ahead.
Comment
The decline in consumer sentiment is a sign that consumers are becoming more pessimistic about the economy. This is likely due to a number of factors, including rising inflation, the ongoing war in Ukraine, and concerns about a potential recession.
Despite the declining sentiment, consumers are still spending money. This is likely because they have built up savings during the pandemic and are feeling confident in their jobs. However, it is possible that this spending will start to decline if the economy continues to deteriorate.
If the economy does enter a recession, it is likely that unemployment will surge. This will put a strain on household budgets and could lead to even more pessimism among consumers.
Crypto
The U.S. Treasury Department has proposed a new tax form for Bitcoin miners, which will help to clarify their tax reporting and data collection obligations. This will provide miners with some much-needed clarity and may help to insulate them from future regulatory changes.
A previously unknown Bitcoin address has become the third-largest holder of BTC, accumulating 118,000 BTC over the past three months. The address has been attributed to Robinhood, but the company has not confirmed or denied this. Some on-chain analysts believe that the stash actually belongs to MicroStrategy, the U.S. business intelligence and analytics software firm, which holds 152,800 BTC. The identity of the owner of the address remains a mystery, but its rapid accumulation of BTC has sparked speculation about growing influence of retail traders on BTC trading.
The US Treasury Department has proposed a rule that would require cryptocurrency brokers to report user information to the IRS. This is part of an effort to crack down on tax evasion in the crypto space. The rule would simplify tax reporting for cryptocurrency users and subject digital asset brokers to the same information reporting requirements as brokers in traditional financial markets.
Comment
Across the government, there seems to be an entrenched assumption that an individual’s desire to keep the details of their life private means they’re engaging in wrongdoing. This overly simplistic assumption is not supported by the law or the reality of exactly why privacy is so important to countless law-abiding citizens in their everyday lives. Nor does it adequately balance the 21st century citizen’s right to privacy with the need to ensure the government can effectively enforce the law.
Across the government, there is an assumption that an individual's urge to keep the details of their life private means they are engaging in wrongdoing. This assumption is not supported by the law or the reality of why privacy is so important to countless law-abiding citizens in their everyday lives.
For example, a recent study by the Pew Research Center found that 72% of Americans believe that the government should not be able to collect their phone records without a warrant. Additionally, 63% of Americans believe that the government should not be able to track their movements without a warrant. These numbers suggest that the vast majority of Americans believe that they have a right to privacy, even if they are not engaging in any wrongdoing.
The government's assumption that privacy is only important for people who are doing something wrong is not only inaccurate, but it is also dangerous. When the government assumes that everyone is a potential criminal, it creates a climate of fear and distrust. This can make it difficult for people to speak out against injustice or to participate in their democracy.
The government needs to strike a balance between its need to enforce the law and its citizens' right to privacy. This balance can be achieved by ensuring that the government only collects personal information when it is necessary and that it uses that information in a responsible manner.
Macroeconomic
The dollar index rose to its highest level in eleven weeks on Friday after Powell's speech.
Comment
Forex traders are betting that the Fed will continue its hawkish monetary policy for the time being. This is despite some signs of economic weakness, which could lead more dovish members of the FOMC to vote against further rate hikes.
The continuation of the Fed's hawkish policy will depend on whether or not the current inflationary environment is similar to the 1970s. During that period, inflation came roaring back after the Fed stopped raising interest rates. However, there are some key differences between the current economy and the 1970s, such as the strong labor market and low unemployment rate. I believe that we are not in a repeat of the 1970s. The economic fundamentals are very different today.