🗞 Weekly Market Newsletter | Edition No. 11
News Update + A Full Analysis of Major Indices Including Stocks, Crypto, Commodities, Bonds & Forex
Saturday, September 17th, 5:38 pm
*cue war scene*
Gather Up Troops,
This week I type here in front of you like an Army Sargent standing atop an ammo crate as I gather my soldiers for one last ‘hurrah’ before the big invasion.
FED Chair Jerome Powell is closing in, and it’s T-72 hours until we expect his attack.
Be on guard for mortars of unexpected interest rate hikes, bombshells of liquidations and selling pressure, unlike anything we’ve seen on the battlefield this year.
Our intelligence has informed us of an inverted yield curve expansion on the horizon and treasury notes pushing near 4%; it’s not looking good troops.
If we stand any chance of surviving this week, we will need all efforts to defend the HODL at all costs.
Dollar-cost averaging into the dip is our primary strategy, and we’ve prepared for this all year.
Keep your heads up and your cash positions locked and loaded.
It is time.
- Bramwell
BramwellFox MetaCapital’s Weekly News Recap
Major News Headlines
🗞 Inflation is still burning 🔥 ; U.S CPI Data Release 8.3% (actual) vs. 8.1% (expected)
Market Reaction: $1.6 Trillion Wiped from the Stock Market, marking the worst day for equities over the past decade
September 21st Interest Rate Hike Prediction: Analysts estimate a 75 basis points hike at 80%, meanwhile 100 basis points creeping into the picture with a 20% probability (ultimate doom)
💭 Bramwell’s Thoughts…
During every three-point turn, there is a singular point in time to which you’re neither here nor there.
☝🏽 This is how I feel about the macroeconomic picture as we speak.
Inflation has been raging hot over the past year as global economies reopened and attempted to satisfy soaring demand.
On the flip side, supply chains have struggled to keep up with the pace from a production standpoint converting highly priced commodities into finished goods.
When demand > supply = prices 🚀.
To combat this relatively scorching hot growth, the FED has only one monetary policy tool, interest rate hikes.
How does this work? Here’s the equation from Professor Emoji;
👨🏽🏫 When interest rates go 🆙, debt becomes more expensive to carry 💰 which lowers operating cash flow both corporate and consumer 📉 thus reducing demand and re-establishing a better economic equilibrium ⚖️, which will lower prices and demolish Inflation (in theory)
Interest rate hikes can be a nightmare for investors if your portfolio is balanced heavily with risky assets such as stocks & crypto.
Why? Again, we look to Professor Emoji;
👨🏽🏫 Asset valuations are essentially a math equation where;
Fraction = Numerator / Denominator.
In most cases, assets are priced such as;
Value = (Stock or Crypto) / (Currency)
or $20,000 = Bitcoin ($BTC) / U.S Dollar ($)
When interest rates increase, the Dollar (denominator) gains strength as investors chase higher yielding and safer investment instruments.
Consider this like a U.S Dollar bull run.
As the lower half of the fraction increases in size (ex. U.S Dollar), the top part of our fraction get's smaller (ex. Bitcoin).
Hence, interest rate hikes are risk-asset kryptonite.
All of this is to say that we find ourselves in the middle of a three-point turn in the global economy, where the Federal Reserve still needs to hike higher rates to combat Inflation.
This week is significant as most risk assets (stocks/crypto) sit on-demand support in the charts.
Suppose unexpected events occur, including higher-than-expected rate hikes. In that case, it may crush the short-term hope that we are on the downslope of quantitative tightening monetary policy and unleashing armageddon onto the markets.
That was a novel in and of itself, continuing on.
🗞 A 99% Greener Blockchain 🌱 ; Ethereum 2.0 Merge ✅
The merge transition Ethereum’s Proof of Work (PoW) Consensus to a Proof of Stake (PoS), effectively cutting its energy consumption by ~99%
The World Economic Forum highlighted the merge and its implications for cryptocurrency mining.
Ethereum is the 2nd largest cryptocurrency by market cap. It is dubbed the Mother of crypto due to its smart contract capabilities (‘D’apps’) that have given birth to DeFi, NFT’s & DAO’s.
💭 Bramwell’s Thoughts…
I’m not an ETH investor, and I don’t particularly love the leadership team or technology behind the project; however, I’m grateful for what Ethereum has and will continue to contribute to the blockchain industry as the Mother of all altcoins.
This was a significant technological upgrade by merging from a Proof of Work consensus algorithm to a Proof of Stake - no easy feat.
It was a near $200B upgrade that could have gone wrong.
Instead, it went off without a hitch. So now, ETH has claimed its stake (😆) as a global leader in distributed ledger technology for the long run by reducing its energy consumption by nearly ~95-99%.
Many believed this would be some sort of bullish market catalyst for crypto prices; however, ETH’s price slumped by -10% post-merge, which simply tells me that the market is still in the hands of the broader macroeconomic picture for now.
But Kudos to ETH for doing the right thing and protecting the turtles.
🗞 White House Releases First-Ever Comprehensive Framework for Responsible Development of Digital Assets
The report focuses on multiple pillars, including;
Protecting Consumers, Investors, and Businesses
Promoting Access to Safe, Affordable Financial Services
Fostering Financial Stability
Advancing Responsible Innovation
Exploring a U.S. Central Bank Digital Currency (CBDC)
💭 Bramwell’s Thoughts…
This was one of my favourite news events of the week despite much of the social backlash on Twitter claiming that it was a nothing-burger and simply more bureaucratic jargon by the Government as they sandbag taking action on creating clarity for blockchain actors to abide by for legal compliance.
In my opinion, this framework perfectly articulated the delegated responsibilities of each government regulator and department to ensure that blockchain is an innovation that is here to stay.
The part that fascinates me the most is speculating on who will win the title of regulator-du-jour of the crypto space; the innovation-friendly CFTC or the ‘everythings-a-security’ bad-guy regulators led by Gary Gensler, the SEC.
Fight.
🗞 A Prime Opportunity; European Central Bank selects Amazon as one of five companies to help build the Digital Euro.
Amazon will be amongst other distributed ledger technology behemoths working together on the project.
Ripple Swell, an annual conference organized by Ripple, features two prominent speakers; it’s probably nothing tho’.
A Chief Executive of Mastercard
Amazon’s Global Head of Innovation
💭 Bramwell’s Thoughts…
Imagine this.
Ripple wins the lawsuit vs. the SEC setting the stage for a new digital asset securities framework adopted as precedent.
Ripple IPOs as one of the highest valued FinTech unicorns.
Amazon purchases a significant stake in Ripple.
Amazon integrates XRP technology into their ECB CBDC project and uses XRP for their private payment rails.
It’s not that far-fetched given that Amazon’s Global Head of Innovation is speaking at Ripple Swell in November.
All eyes are on Q4 for more information on this news event.
🗞 T-This Week; FOMC Meeting, Canadian Economic Data + Wen Flare?
The Federal Reserve will announce its monetary policy decisions on September 21st; brace for impact as it’s not looking good.
The Canadian Dollar closed at its lowest since 2020 as the Toronto Stock Exchange ($TSX) closed 2.95% lower on the week, losing just under 600 points.
The Flare Network is inching closer to its token distribution event as validators slowly decentralize the network.
💭 Bramwell’s Thoughts…
It’s the most crucial week of the year for our portfolios and the event we’ve all been waiting for over the past two months.
The headwinds are rough, and the majority of the market is bracing for hurricane Jerome to cause billions if not trillions of dollars of collateral damage to the markets in the interest (pardon the pun) of saving the U.S economy from
Joe Bidensoaring Inflation.Buckle up.
Seriously, buckle up.
BramwellFox MetaCapital’s Weekly Market Review & Technical Analysis
📈 The Week Ahead in Charts
DXY (U.S. Dollar)
✅ Last Weeks DXY Prediction:
The Dollar followed the path I had drawn perfectly, starting the week with selling pressure, followed by solid strength to the upside as CPI data was released, just as expected going into the FOMC meeting this week.
💬 📉Bramwell’s Commentary & Analysis:
🙏🏼 Scenario One (20%):
The market has already priced in the 75 basis point rate hike into assets, or we may be pleasantly surprised with a dovish 50 basis point hike.
The meeting is a short-term-volatile-nothing-burger and investors turn bullish on the discounted risk assets (stocks & crypto)
The Dollar plunges along its green path towards my bullish targets of 100-103.
A bull run commences starting the final leg up of the risk-asset cycle before the actual bear market like we have not experienced since the great depression hits in 2024.
🔥 Apocalypse (80%):
The FED confirms its hawkish tone raising interest rates by 75-100 basis points, and the markets completely capitulate their risk assets.
Foreign debt holders prepare for potential sovereign defaults, and a cascade of over-leveraged liquidations ensue.
Real Estate Markets show signs of armageddon.
The Dollar soars up to a channel high ~115-117 (red circle), creating nostalgia of the 2001 dot-com boom crash.
🧘🏽 Bramwell’s Prediction for the Week Ahead:
I’m fully expecting the FED to hike interest rates; in my opinion, the likely outcome is 75 basis points.
The most blah outcome likely outcome is that crypto and stocks continue their downslide into October before the release of new CPI data, to which the FED may pivot their tone and end the year with consistent rate hikes before ending Q.T. in 2023.
This outcome may succeed by simply being a nuisance to over-speculated retail investors who are low on cash, further weeding out over-leveraged funds.
This hammer on the capital markets would create an aura of a strong U.S. central bank that isn’t backing down in the face of chaotic geopolitical tensions.
Featured Chart DXY Daily Timeframe
💡 The DXY is currently printing a bullish bias on the daily RSI marking a series of higher lows. However, it’s worth hoping noting that the RSI is now under its moving average (highlighted by a yellow circle), which gives hope for further correction to the downside (green path) before the mid-week FOMC meeting, likely touching the daily trendline.
Featured Chart DXY 6HR Timeframe
💡 We’re trading in a 6HR range between the lows of 107.5 and the highs of just under 111. The DXY is printing a bullish bias within the range heading into Sunday’s open.
S&P500 (U.S. Equities)
❌ Last Week's S&P 500 Prediction:
The S&P fell slightly short of my upside targets after posting its worst day in over a decade following the August CPI data release. While I anticipated a bull-trap heading into FOMC week, it appears the markets are too nervous about being over-leveraged & naive heading into this week.
💬 🔪 Bramwell’s Commentary & Analysis:
The S&P 500 isn’t looking pretty.
As consumer net worth continues to plummet as Q4 arrives, I doubt the possibility of growth returning to the economy to finish the year.
Suppose revenue targets miss for any reason (lower consumer spending, supply chain disruptions, the mutated flu returns). In that case, I believe investors will likely fold their positions and save any spare change they can get for bills and covering current debt obligations.
This would catalyze the selling pressure to commence a 10-20% drop in the S&P into October.
🧸 Bramwell’s Prediction for the Week Ahead:
I’m breaking out my inner bear to align my predictions on this week being risk-asset bearish.
I’m expecting an early week scam pump for hedgies to lock in shorts on the market and for the S&P to follow the red path, likely closing in the vicinity of 3800-3825.
Featured Chart S&P 500 12HR Timeframe
Bitcoin (Crypto)
✅ Last Week's Bitcoin Prediction:
I nailed last week’s Bitcoin prediction as the CPI data release utterly destroyed risk markets on Tuesday. Bitcoin plummeted to the 19.5-20K region to end the week.
💬 🔪 Bramwell’s Commentary & Analysis:
Bitcoin maxis must have been trembling at the thought of what the ETH merge could have done for Bitcoin’s market dominance; however, it was a nothing burger except for XRP/BTC mooning - more on this shortly.
With PoW now seeming like outdated technology destroying the earth as we know it, will institutions capitulate to more energy-efficient networks such as XRP or ETH?
Time will tell.
🧸 Bramwell’s Prediction for the Week Ahead:
I’m expecting an upside push to fill the inefficiency of the downside move before the FOMC meeting on Wednesday. However, should the interest rate hikes spook the market, a further downside continuation may occur with bitcoin heading back into the low 19K region.
Featured Chart BTC 12HR
Featured Chart BTC Dominance 12HR Timeframe
💡This chart depicts Bitcoin's market cap dominance in the crypto-sphere as a percentage. When BTC.D increases, it typically means relative investor preference (potentially buying) of Bitcoin or weakness (potentially selling) in the total altcoins market cap.
XRP (Crypto)
💬 📈 Bramwell’s Commentary & Analysis:
On Friday a whale alert was sent out that a mega volume poured into XRP with a $500M accumulation of XRP.
This sent the XRP/BTC chart into breakout mode of a multi-month ranging channel and headed towards a multi-year diagonal resistance vs. Bitcoin.
On-Chain fundamentals are peaking with 4.3 million active addresses and soaring onboarding the blockchain that is rumoured to potentially be powering Amazon’s European Bank CBDC project.
September 19th is also a critical date in the Ripple vs. SEC lawsuit as both parties file important public motions for summary judgement as the litigation dubbed ‘The Trial of the Century’ reaches it’s climax.
🔮 Bramwell’s Prediction for the Week Ahead:
I’ve charted two potential scenarios below:
Bullish; XRP/USD breaks to the upside of it’s multi-month channel headed towards the 200MA ~.50 cents / coin.
Bearish; XRP/USD breaks to the downside and deviates a half channel before bouncing off the midline at .25 cents.
It’s important to note the XRP/BTC strength going into this week that may either a) bounce off the resistance line, or b) breakout to the 🌝
Featured Chart XRP/USD Daily Timeframe
Featured Chart XRP / BTC Daily Timeframe
Oil
✅ Last Weeks Oil Prediction:
We nailed Oil’s impulse to the upside last week however failed to expect the weakness to end the week upon Brandon’s announcement to potentially purchase Oil from the strategic reserve under $65 / barrel.
💬 📉 Bramwell’s Commentary & Analysis:
Russia is simultaneously experiencing weakness on the front lines of the invasion vs. Ukraine. As a result, Joe Biden’s administration is draining its strategic oil reserves to maintain its promise to keep gas prices low.
How long can this energy madness prolong?
Will it be a cold winter for Europe if the War heats up?
With Russia and other BRIC nations on the verge of skirting U.S. Dollar sanctions with a new payment rail, what will this mean for the Dollar's strength?
These questions remain unanswered, but the charts may give us a clue.
🧸 Bramwell’s Prediction for the Week Ahead:
I’m bearish on Oil after updating my wave count on the downside action within two standard deviations from its multi-month trading range.
I’ve charted an ABC correction with five waves to the downside, potentially ending with oil trading in the $70-$75 range in Q4.
Featured Chart Oil Daily Timeframe
GOLD
✅ Last Weeks Oil Prediction:
We nailed the mark on the weekly 200MA touch for Gold.
💬 📈 Bramwell’s Commentary & Analysis:
Gold isn’t looking too shiny heading into FOMC week.
As the world’s most lucrative inflation hedged asset, should the FED hurricane rain down on the inflation parade, it could mean fools gold is what investors are left holding.
🐂 Bramwell’s Prediction for the Week Ahead:
While I’m bearish on risk, something about this chart doesn’t feel right to me to expect Gold to go lower.
As the weekly candle poked below my support range and flirted with the 200MA, this could mean a whipsaw is in order, and an impulse to the upside is approaching.
Could the BRIC nations back a currency to Gold to fend off the Dollar?
Could hedge funds pull a contrarian play and expect the FED to pivot to growth early in the year?
These questions, too, remain unanswered; time will tell.
Nevertheless, I’m bullish on Gold.
Featured Chart Gold 1W
2YR & 10-YR U.S Bond + Yield Inversion Curve
✅ Last Weeks Bond Prediction:
Bonds soared last week, and we scored a B+ on our prediction as the 10YR and 2YR experienced strong moves to the upside.
💬 📉 Bramwell’s Commentary & Analysis:
Yields are as close to topping out as I can imagine as the 10YR exploded this week, re-testing the 3.5% ceiling and possibly forming a double top formation depicted below.
Meanwhile, the short-term looks ultra-bearish for a recession as the 2YR reached 4%.
This would mean that real estate investors may begin selling off their properties for a guaranteed 4% with T-bills than bear the headache of nuisance renters calling for a burst pipe - for the same ROI.
This is NOT looking good for real estate. I’m interested to know if this is a capital trap that could precede an unprecedented turn of events for risk assets.
🧸 Bramwell’s Prediction for the Week Ahead:
To be bearish on yields technically means to call bluff on the FED.
But looking at these charts, I can’t help but see how overextended both require a correction.
I am calling for a correction down to each range’s mid-line in Q4.
Featured Chart US10YR Daily Timeframe
Featured Chart US2YR Daily Timeframe
👋🏼 Hey!
Thanks for reading this week's edition of the Weekly Recap + Looking Ahead.
If you have any comments, feedback or questions on any material written in this edition please share as I'd love to continue a dialogue below.
If you enjoyed the read, share it with your network of friends, family & fellow investors.