FOMC Meeting Next Week: Bank of America Expects 50bp Rate Hike The Federal Open Market Committee (FOMC) is set to meet next week, and investors are eagerly anticipating the outcome of the meeting. Bank of America Global Research has discussed its expectations for the meeting, saying that it expects the Fed to raise its target range for the federal funds rate by 50bp in December to 4.25-4.5%.
According to Bank of America, the Fed has telegraphed this move over the last few weeks through its communications. However, the more important question is where the Fed will go next. Bank of America expects the median forecast for 2023 to move up by 50bp to 5.125%, which is consistent with its terminal rate. The bank also expects the dot plot to show 100bp of cuts each in 2024 and 2025.
In addition, Bank of America expects the macro projections in the Statement of Economic Projections (SEP) to be revised to show lower GDP growth and inflation than in September, and higher unemployment.
At the press conference following the FOMC meeting, Bank of America expects Chair Powell to push back against easing in financial conditions and remind investors that a slower pace of hikes does not mean a lower terminal rate. The bank believes that Powell will stress that the Fed's job is far from done.
Overall, Bank of America expects the FOMC meeting next week to be consistent with the Fed's previous communications and for there to be no major surprises or shifts in policy.
Some Jargon Explained
The Dot Plot
The dot plot, also known as the Summary of Economic Projections (SEP), is a visual representation of Federal Reserve policymakers' individual forecasts for where they think key interest rates will be in the coming years. The dot plot shows the central tendency, or the middle of the range, of the individual forecasts for the federal funds rate.
Each participant in the FOMC meeting provides their own individual forecast for the federal funds rate at the end of each calendar year, as well as over the longer run. These forecasts are then plotted on a chart, with the dots representing the individual forecasts and the lines connecting the dots indicating the median of the group's forecasts.
The dot plot is released four times per year, along with the FOMC's policy statement, and provides insight into the collective thinking of FOMC members about the future path of interest rates. It is an important tool for investors to gauge the future direction of monetary policy.
The Terminal Rate
The terminal rate, also known as the long-run federal funds rate or the equilibrium real interest rate, is the interest rate that the Federal Reserve believes is consistent with the long-run health of the economy. It represents the level of the federal funds rate that is neither expansionary nor contractionary and is expected to prevail in the long run, once the economy has reached its full employment and price stability goals.
The terminal rate is not a fixed number, and can change over time depending on a variety of factors such as changes in the underlying productivity and demographic trends of the economy. The Federal Reserve uses the terminal rate as a reference point when setting its short-term interest rate targets.
In general, the terminal rate is expected to be lower than the current federal funds rate, as the Fed typically raises interest rates in the short run to prevent the economy from overheating and then lowers them in the long run to support economic growth. This means that the terminal rate can provide important information about the future direction of monetary policy.
Macro
Macro charts look bad but Crypto looks worseLots of people are expecting a dramatic crypto recovery soon, but crypto has shown so much overall weakness over the past year, with little signs of strength. Ethereum seems to be playing out a fractal of the previous trend. Assuming this plays out, Ethereum is close to final capitulation. How low it will go and how long the recovery will be - no one knows.
BTC cycle based Wave CountsThis is our macro view on BTC based on cycle based wave counts.
--> BTC is in the final leg down of a full macro corrective wave 4, nobody knows what the excact low would be.
Based on wavecounts, Fibonacci extension + retracement targets the most confluence is founded in the 13-11.5k zone (also the launchepad of the previous bullrun) with an potential overshoot towards 10k
We dont want to try buy the exact bottem, we always waiting to get conformation on a bottem formation or we buying at prices where we feel comfort with to hold for the next wave up.
--> BTC never was able to make new ATH's before the halving date. The next logical top should be in 2025
This is just one of the many scenario's we could think of, along the way with having more chart data our vieuw on this TA could change.
On wich prices are you feeling comfort to buy in without having any regret over the next years?
What is your trade plan?
Cheers,
Team Quantistic
The West Takes Aim at Russian Oil MarketsAs tensions continue to escalate between the West and Russia, a new development has emerged in the ongoing struggle over oil shipments. The West has been using shipping insurance as a tool to put pressure on Russia, but this strategy has had limited success so far. Insurance is only available for shipments valued at less than $60 a barrel, and as it happens, Russian oil already trades just below this cap. As a result, it's not yet clear how much of an impact this will have on oil prices.
But this raises an interesting question: why would the West set the cap at this level? The answer, it seems, is that they've calculated it in such a way that it provides just enough incentive for Putin to keep pumping oil. This is because the West is understandably concerned that Putin might choose to remove Russian oil from the international market, causing prices to rise significantly. And if global oil prices do rise much above where they currently are, the situation could become much more heated.
This is just one example of the complex dance that goes on between petronations and the West. On the one hand, the West has the ability to put pressure on petronations by limiting their access to the global market. But on the other hand, petronations have the power to put significant pressure on the West via energy prices. So it's a delicate balancing act, and it's not always clear who has the upper hand.
But what does this mean for the future? Well, it's difficult to say for certain, but it's clear that the West is trying to find a way to put pressure on Russia without causing a major disruption in the global oil market. And if they're successful, it could have significant implications for the ongoing struggle between the West and Russia.
Of course, there are many other factors at play here, and it's impossible to predict exactly how things will unfold. But one thing is clear: the discussion around this issue is only going to become more heated as global oil prices continue to fluctuate. So it's definitely a topic worth keeping an eye on in the coming months and years.
BTC - What December Holds HistoricallyHi Traders, Investors and Speculators 📈📉
Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫
In today's analysis, we take a look at Bitcoin over Decembers from the past. Which direction does the price usually go, bullish or bearish ? It's no surprise that it seems to be a near equal amount of months up vs. down. Over the 11 months observed, we notice 6 green Decembers and 5 red Decembers. This makes probability near equal. However, we could take a look at a few other interesting observations:
💭 Highest increase for Bitcoin was +58.92% when the lowest decline was only -33.15%
💭 More often than not, two months of the same color follow
💭 The biggest yearly increase was during December 2012 - December 2013 with a whopping yearly increase of 9,899.19%
💭 The second biggest increase after that was from Dec 2016 - Dec 2017 with +2,681.15%
💭 The biggest yearly decline was from December 2017 - December 2018 with BTCUSD losing -84%
The crypto winter that started in December 2018 was one of the worst yet... But with the industry under pressure, could this year be the new record? IF BTCUSDT were to drop to $11 000, that would be a -81% decline from last December.
From all the above... Which way do you think the price will go during December 2022 ?
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BTC Macro Bitcoins macro outlook is starting to turn bullish, monthly chart CCI indicator just passing through the -100 line along with Macd histogram changing color. BTC closing in on 1 year mark from its all time high november 10th 2021. Historically since bitcoins inception has shown one year bear followed by 3 year bull run.
Market 2022 Pullback - Consolidation & RecoveryWe are at the bottom of the market, Bitcoin has seen some major flush outs as institutions that ave poorly managed positions keep causing selling pressure. The market needs to be stimulated for the next leg up and until then we consolidate at the lows. Typically bitcoin does not break down below previous lows but we have been trading under $20,000. The market will be positioned in a bear trend until we break above the previous low $25,000 and then we can continue to consolidate and potentially start making our way back to the ATH and then higher. We anticipate that within the next 1-2 years we will see all time highs and bitcoin prices above $100,000.
This is a macro outlook on the market.
Long positions should be scaled in and leverage at the lows built up with short stops. Buying between 16K - 10K are great entries for a long but trades may take months to come to fruition.
Long-Term Macro Oil Price Development....Commodities Super CycleBrent Oil is in a Macro Selling Phase until it reaches mid - low 40's before we began a major Oil and Commodities Bullish Super Cycle which will see Brent hit at least 150$, maybe even up to 200$, depending on how intense the 'Trend ending price spike' will be.
Crypto/Gold AnalysisCurrent economic and political general dismay impacts the valuation of different fiat currencies, specifically the USD(DXY). This is due to:
Lower global trade activity (recession) = lower dollar supply = USD price increase
Demand for USD increases for the safe haven currency = USD price increase
Worldwide investors' stakes in equities and cryptocurrencies have been shortened. The price of Bitcoin is declining further with the US dollar substantially rallying. Nevertheless, its arguable intrinsic value may be better approximated through spread graphs, particularly - BTC/GOLD; as it omits the mentioned political and economic supply/demand effects for a more precise analysis. This may be recognised through technical analysis of past prices
The main graph presents GOLD/BTC breaking out its long-term resistance; which logically makes sense.
history reminds us:
The upcoming recession doesn't look promising for such volatile securities with (arguably) no intrinsic value
Inflation = Gold is Bullish
Potential Trade
Short BTC:
Entry Price:16,700
TP:15,515
SL:16,920
$VIX $PCC $DXY - All telling the same storyThe Macromarket is telling the same story overlapping on the same chart. More puts to calls, higher DXY, and Higher VIX. Likely a near-term top given the number of amateur investors seeing this same reality, but the trend will likely continue until something big breaks and the system bottoms and a new market cycle starts.
BTC HTF OUTLOOKBTC retesting downtrend resistance after an initial breakout.
Since the confirmation of a top in bitcoin and a confirmation of a lower high and therefor downtrend, almost exactly a year later BTC broke out of the downtrend and rallied to 21.5k before a macro news event causing fear and mass selling back down to local lows of 17k. which also coincides with a retest of the trendline.
If BTC can hold and rally off these lows it would be a strong place to start building for the next bull market. However if this area of support fails then a further drop down to 14k is possible.
Not financial advice
Ryder through 85 in timeWeekly chart here for Ryder, daily chart indicating buy through 83, with an add through 85. Would love to see the daily chart consolidate here under 85 for a couple of days finishing with a volume spike through 85 in time. 85 seems to be a huge macro level dating back to May 2021.
Watching EURUSD After a Historic CrashThe EURUSD is down 13 of the last 15 months. That is red after red after red. The bearish sentiment is about as extreme as I can remember, ever, for any currency.
I usually do not trade FX and I should be clear, I do not have a position in the Euro at this moment. But I do want to write about a few things that have caught my attention.
Foremost, I think it is pretty interesting that the EURUSD is not only at parity, but also slightly below parity. This makes capital flows rather easy, if not effortless for Americans to invest in Europe or want to get involved in Europe. It also makes exports more competitive for Europe to other countries. There is a point where these levels just do not make sense from a broad, macro standpoint.
The strength of the Dollar makes investment into Europe that much more attractive. If you have dollars, you can now afford more. I would add that there are 764 million people in Europe, with many of the greatest cities on Earth.
Actually, that is something that I do find interesting. I follow many smart investors/traders on social media. The majority of them are extremely bearish on Europe and the Euro. I have seen it all from them - social disparity! energy crisis! bad leadership! And the list goes on. HOWEVER, when I see that they are on vacation, with the family or taking time for themselves, where do they go? Pictures of Italy, Greece, and more. I find this to be a tad ironic, and also interesting. What I mean is, to be so bearish about a region, but then for that region to also be your number one vacation spot. I myself need to get back to Europe - I really love French organic wines!
One more important thing about a weak Euro: it makes European exports far more competitive. When they produce goods, relative to the Dollar, it now does not cost as much. In addition, that means they can sell their product for less. This means they can compete with more brands and services. It will lower prices, thus, make the product more attractive and easier to consume. Exports can be a great thing for a country! In this case, it's for many countries across Europe.
There are many more interesting developments that I am thinking about - for example home buying the region, but that is for another post, and let me not waste any more of your time.
Let's talk trade levels!
The levels in yellow that I marked are from 2001/2002. That happened after the tech crash. If this is another tech crash, well we have further to go.
In addition, that kind of pattern, and price behavior might be something to WAIT for. Hey, what's the rush.
Lastly, I did highlight the extent of this sell-off. Month after month of selling. Even as a mean reversion trade I would wager there is some potential to return to rather significant moving average. The 200 day moving average is at 1.24, for example! Could it ever return there? If you do your own research, check out where the 50-day and 100-day moving averages are. You may also find that interesting.
Okay that's all for now! Thanks for reading and good luck.
BTC, Is the Bear Market Over?BTC looks like it has completed a triangle for the final wave of a diametric pattern which began in mid 2021. We will likely see a rapid melt up from here. Targets are well above all time high if we can confirm the end of this bear market. Macro LARPers will get rekt trying to short into extremely high and sticky inflation. Alts will outperform BTC because of regulatory changes coming in the next year that will clarify securities laws and end SEC manipulation of crypto markets.
Macro Update DXY $106 INBOUND
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No frills, no bullshit! Just a quick update on the eth Chart!
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DYOR - Not financial advice, just for education!
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Pain is just starting for crypto - 3k area at play?! for Pain is just starting.
The US treasury bonds are decreasing as the debt to GDP ratio is going through quantitative cumulative tightening resulting in increased pressure on subscription prices and falling demand for butter cookies and other commodities. This will only worsen as the BOJ (Bank of Japan) is issuing rate hikes at a pace of 75 bipperinos per hike, eventually leading to a bottleneck in its economical orbit. This could lead to two scenarios : recessional (unilateral) crash or hyperdeflationary catalytic sme-GMA event as seen in 1945. As of now, any long is destined to be a losing trade. The probability of a bottom across US equities is low as they're indirectly correlated to the rate of growth in Brazilian government subsidized index KRVM4GA , which has been seeing major bearish divergences as the ambassador of Peru declared Brazil to be debt-solvent, meaning that its portfolio of foreign asset is absorbing damage at unsustainable pace, with no sign of improvement until FY2036. Furthermore, FAANG companies are set to launch a global campaign in support of Ukrainians, which puts pressure on Kremlin forces currently controlling the black sea canal ; all of this could lead to a shortage in wheat and forced selling on the BVT-PLU5 index , possibly impacting the life of millions of Europeans, thus directly decreasing their income and risk appetite when it comes to volatile assets like BTC.
Overall, this puts global macro conditions in a dangerous spot as they are set to worsen by EOY, possibly reaching a doomsday-level bankrun scenario.
For those reasons, I will be looking for shorts (and shorts only) until we hit the 3k area (possibly marking the bottom for this cycle).