SignalPlus Macro Analysis (20240319): Japan ends the era of negative interest rates
Yesterday was relatively calm as markets are still awaiting todays Bank of Japan announcement and the RBA/Fed/BoE decision later this week. The Bank of Japan continues to manage market expectations by publishing Nikkei articles and other means. A Bloomberg headline stated that The Bank of Japan will end yield curve control and ETF purchases on Tuesday. The advance guidance seems to have worked, and the Nikkei Composite Index is still at a record high Hovering around 150 points, USD/JPY returned to the familiar 150 level ahead of the possible end of Japans long-term negative interest rate policy.
The re-released Chinese economic data is still not ideal, with the official unemployment rate significantly higher than expected (5.3% vs 5.1%). Having said that, Chinese risk assets have stabilized since the New Year, market sentiment has almost bottomed out, and risk assets appear to have A long-term bottom is forming, and as officials take more supportive steps, investors are hoping the worst is behind them.
After last Fridays decline, the stock market rebounded again on Monday. With SMCI being included in the SP 500 index and Nvidias highly anticipated GTC 2024 event beginning, the AI craze is heating up again, but both have an inauspicious start, due to the bullish Cashing in, SMCI is down 3.5% on the day, and despite Nvidia announcing another new chip (Blackwell), the stock has experienced a 6% drop from its highs.
In the cryptocurrency space, prices continue to retreat from recent highs, especially in the mainstream coins, but the alternative EVM narrative is still feverish, with Solana and Avalanche still outperforming most other major coins.
Looking back at the 2017 ICO craze, it was ETH that benefited the most at that time, because traders (and degens) needed to buy and lock ETH to lock in the distribution of discounted tokens. The locking and waiting part created a one-way demand for ETH, This led to a huge surge in ETH, outperforming most other major coins during the ICO craze. However, in the current cycle, the baton has been passed to Solana, where most meme-coins, pre-sales, and other “degen activity” take place. Additionally, the current lock-up and waiting periods are also much shorter, leading to faster cycle changes and more intense speculative hype, which has allowed Solana to outperform other major coins in the current meme-coin mania.
Finally, nothing serves as a more fitting interlude to the meme-mania era than rug-pull, in which the developers of a popular token project “accidentally” burned 10 million (USD equivalent) investor lock-ins due to a code glitch before the token was launched. Assets, as we mentioned last week, things do look a little too rosy and it might be wise to take a more defensive stance for the time being. Stay safe everyone and protect your valuable assets!
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