SignalPlus Macro Analysis (20240307): The macro economy is good, and BTC suddenly crashed to $59,000

The cash income of Japanese workers announced this morning exceeded expectations year-on-year. Wage growth has been one of the focuses of recent market attention. This is because local media pointed out that an official of the Bank of Japan suggested that the negative interest rate policy should be ended as early as March instead of waiting until April. Japans largest labor union will announce the results of its annual wage negotiations on the 15th of this month, which will undoubtedly affect the Bank of Japans interest rate decision a few days later.

In China, the National Peoples Congress is convening, and the focus on the first day is on the government work report. Although the report announced a growth target of about 5%, the stimulus package failed to meet market expectations. Although the 5% GDP target is the same as last year, the lack of base effect means that the 2-year compound annual growth rate will reach more than 4%. Without additional policy stimulus, this target seems unlikely to be achieved. Policymakers announced a fiscal budget of 3% of GDP (4 trillion yuan) and will issue an additional 1 trillion yuan of ultra-long-term special government bonds as an additional measure, bringing the government deficit expenditure to 8.2% of GDP.

Funds obtained through bond issuance will continue to be used for investment projects rather than any form of consumer subsidies, which is somewhat disappointing for market participants who are looking forward to taking stronger measures to support economic recovery.

In the United States, economic data shows that although the job market has softened slightly, the overall situation is still quite strong. ADP employment increased by +140,000 in February (higher than +111,000 in January), and private sector employment has increased every month since 2023. The average increase is still more than 200,000, compared with an average increase of only 50,000 per month before the epidemic. After falling by 42,000 in December, the number of JOLTS job vacancies fell by 26,000 again in January and has now fallen below 9 million, indicating that the tightness of the job market has eased. However, the layoff rate is still at a very low 1%. The job vacancy-to-unemployment ratio remains at around 1.4, suggesting that Fridays non-farm payrolls data should still be quite good, but may not be too strong.

Chairman Powell testified to the U.S. House of Representatives yesterday, but his speech was basically in line with market expectations and did not cause much reaction. He reiterated the Feds comments at the January meeting that policy rates may have peaked, but before cutting interest rates, the Fed is still seeking more evidence to confirm that inflation continues to fall toward 2%. His strongest comments actually related to capital requirements for U.S. commercial banks, suggesting the Fed could make broad and significant modifications, including withdrawing current government programs entirely. Federal funds futures pricing still reflects that interest rate cuts will begin in June (the probability is about 60%), with slightly more than three rate cuts expected before the end of the year.

In the stock market, the troubled NYCB received much-needed assistance yesterday, receiving a total of US$1 billion in equity investment from several investment companies, including an investment institution led by former US Treasury Secretary Steven Mnuchin. This news limited the panic. spread, helping to prevent a repeat of last springs situation.

Speaking of market optimism, convertible bond yields for AI companies such as Super Micro Computer have fallen into negative territory, with investors willing to pay yields to companies in exchange for the opportunity to purchase very out-of-the-money call options on their stocks. SMCI shares have soared 1,000% in the past year and will be included in the SPX in March. The yield on the companys March 2029 convertible bonds fell to -3%, and the stock conversion price represents a 41% premium to the current spot price. It can be said to be in full swing!

Finally, on the cryptocurrency front, BTC fell from an all-time high of $69,000 to $59,000 in a matter of minutes, with rumors suggesting that this was because a long-dormant wallet began moving its holdings to Coinbase, trading at $0.28 Mining costs take profits. Large price fluctuations also led to the liquidation of large-scale futures longs, but heavy buying from ETFs helped support prices, and BTC eventually stabilized around $66,000, while ETH remained stable around $3,800.

As can be seen from the rapid recovery of BTC prices yesterday, the market is still in buy-on-the-dip mode. However, given the outperformance of BTC relative to ETH and other altcoins, there is a chance that BTC will underperform from now on. If BTC is compared to 3x Compared with the leveraged Nasdaq index, BTC also looks relatively excessive. In the short term, BTC has the opportunity to enter a shock consolidation mode and perform relatively poorly.

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