It's official, higher for longer is back! For the first time this year, markets are now pricing-in just 4 interest rate cuts in 2024.
Just 6 weeks ago, markets were expecting 6 interest rate cuts in 2024. More importantly, the timing of the first rate cut has been pushed all the way back to June 2024. There is now only a 9% chance of rate cuts beginning in March 2024, down from 90% just 6 weeks ago. There is also a ~63% chance that interest rates are unchanged through May 2024. Rate cuts are all but guaranteed. Source: The Kobeissi Letter
There were winners today...
VIX 17 call expiring tomorrow (Wednesday) was basically worthless earlier today... Source: TME, Refinitiv
Bitcoin' Electrical Cost, the rock solid historical price floor for Bitcoin, is at $31.6K today.
It will double in 63 days. Source: Capriole, Charles Edwards
$LYFT is surging 63.73% (!) after hours after beating earnings (500bps EBITDA margins expansion) and providing a stellar outlook 👀
But under 1 hour later, the CFO said there was a typo in their earnings release... saying they meant to report a 50 basis point increase in EBITDA margin (instead of 500bps). In other words, EBITDA margin was reported to be 10 TIMES what it actually is... The stock ended up being 18% after hours... Source: Markets & Mayhem, The Kobeissi Letter
VIX panic kicking in.
VIX has not closed here since the melt up started in late October 2023. You do not compare volatility to trending assets over time, but the shorter term chart shows a clear picture. VIX panic is here. Source: TME, Refinitiv
Stock-to-Flow (S2F) simplified: ALL bitcoin upside is around halvings.
If you split BTC price in 2 parts, one around halvings (green) and one between halvings (red), then you see that ALL gain is around halvings. Ergo: halvings/S2F/scarcity is the root cause of BTC value. Source: PlanB @100trillionUSD
📉 UK Inflation Remains Stable, Easing Pressure on BoE!
UK inflation remained weaker than anticipated in January, holding steady at 4% year-on-year, defying forecasts of a rise to 4.1%. This unexpected outcome suggests reduced pressure on the Bank of England (BoE) from underlying price increases. Notably, services inflation reached 6.5%, slightly below the BoE's projections. Despite the stable headline rates, the BoE remains cautious amidst labor market tightness and signs of economic recovery. As a result, traders have adjusted their expectations for rate cuts, now anticipating two cuts for the year, with the first expected in September. However, amidst this cautious sentiment, the UK bond market could emerge as an attractive opportunity. Expected decreases in the Consumer Price Index (CPI) signal potential inflationary relief, supporting the case for Bank of England rate cuts by mid-2024. Furthermore, appealing yields following recent market pullbacks add to the attractiveness of the UK bond market as an investment avenue. It's worth noting that the market does not anticipate a rate cut until the first half of 2024, providing investors with ample time to position themselves strategically. #UKInflation #BankOfEngland #InvestmentOpportunity #BondMarket #EconomicOutlook
Has the market become too complacent?
Goldman Sachs Panic Index is near decade lows. Source: Win Smart
