SignalPlus Macro Research Report (20231030): M2 currency growth is bottoming out, is the BTC market about to usher in a new turning point?

Markets on Friday maintained their pace for the week, with stocks sliding on weaker corporate forward guidance, interest rates steepening around mid- to long-dated dates on strong U.S. economic data, credit spreads widening on U.S. bond term premiums and consumer spending Weakness moved higher, while USD/Gold/BTC was able to hold on to gains throughout the week as investors turned to safety.

Last Friday, U.S. economic data were generally in line with expectations. Personal income and PCE price index were basically in line with expectations. The UM consumer confidence index rose slightly, but the one-year inflation expectation rose sharply to 4.2%, much higher than the expected 3.8%. Long-term inflation expectations also edged up to 3.0% after briefly falling to 2.8% last month.

This week the interest rate market will pay attention to multiple economic data and events, including the release of ADP, JOLTS, ISM and non-farm payrolls data, as well as the FOMC interest rate resolution. Although the Federal Reserve will almost certainly keep interest rates unchanged at this meeting, if the next The employment data is as strong as expected, and the December meeting may return to market focus. The market currently expects that the possibility of raising interest rates in December is less than 20%; it is worth noting that the United Auto Workers union strike may have an impact on the United States. Data from the Bureau of Labor Statistics has a huge impact, with the agency saying that 30,000 auto workers will have their paychecks suspended this month.

The much-anticipated November refinancing statement will also be released on Wednesday. The market expects that the bond auction supply will increase significantly in the fourth quarter, and the bond supply in the first half of 2024 may even be higher than market expectations. In addition, this weeks Bank of Japan meeting may have a profound impact on Japanese investors, depending on the extent of YCC policy adjustments, and higher domestic yield benchmarks may stimulate asset repatriation and limit U.S. Treasury investment in 2024.

In terms of the stock market, according to Goldman Sachs data, 49% of SPX companies have announced third-quarter financial reports, including 4 technology giants; although the revenue and EPS of most companies are better than market expectations as in previous quarters, due to interest rates Rising demand, weaker consumption trends, and uncertainty about the macro and political environment in 2024 have led corporate management to lower their future profit guidance; in addition, compared with the past few quarters, investor expectations have also risen accordingly, with only earnings/operating A higher-than-expected closing is no longer enough to guarantee a strong share price performance that day.

From a technical point of view, bank stocks have broken the trend line in the past 14 years after the Lehman incident. The impact of rising interest rates on capital costs, loan demand, and portfolio market value losses seems to have entered a new stage. Although overall investment in the short term Sentiment is potentially overly pessimistic, but from a long-term technical perspective, the outlook is quite negative and we remain negative on risk assets in the short term.

On the cryptocurrency side, prices have held on to gains and we still believe there is a supply-demand imbalance in the near term. A chart from GMI Raoul Pal shows an interesting correlation between year-on-year BTC price changes and global M2 money supply. With policy rates appearing to be approaching terminal rates, monetary growth may be in the process of bottoming out. Is this another sign that cryptocurrencies have reached a turning point? let us wait and see!

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