🗞 Weekly Market Newsletter | Edition No. 40

News Update + A Full Analysis of Major Indices Including Stocks, Crypto, Commodities, Bonds & Forex

Matthew Fox

May 15, 2023

Sunday, May 14th, 2023

Hello Friends,

Let’s just jump in right away with some great news from last week;

U.S CPI (inflation report) came in below expectations 🥳;

Then immediately jump into some unsatisfying news;

U.S Unemployment Rate fell to 3.4%, the lowest since the 1960’s 😕

If you’re not reading between the lines, this means that despite a cooling U.S economy, the FED’s job isn’t quite done yet.

In fact, as of tonight market participants are not only pricing in an additional 25 basis point hike with an 85.6% probability during the June 14th FOMC, but also opening the door for a 50 basis point hike with a 14.4% probability.

That isn’t exactly what markets love to hear, especially risk assets.

Why? Well…

The combination of low inflation and low unemployment presents a conundrum for policymakers as continuing to the hike to higher interest rates can lead to increased borrowing costs for companies and individuals, which can dampen economic growth and impact corporate earnings.

This, in turn, can lead to decreased demand for risk assets, as investors seek safer havens for their capital.

But which safe haven is my question? I truly don’t think there is a safe haven anymore.

And to be completely honest, sometimes I feel like I’m in the cliche road trip scene with the young children in the back yelling “Are we there yet…?” each week when I do my best to cover the most impactful catalyst ongoing in the macroeconomic landscape.

However, these are the current cards being dealt to the table and we have to be patient and play them right.

But I have to wonder how much of this game is somewhat rigged, and I only say that because each of the major financial collapses were predicted down to the year back in 1875.

Don’t believe me, take a look.

We are currently resting at the trough of Point C, where “Years of Hard Times, Low Prices, and a good time to buy Stocks & Goods (and Crypto! 🥸) and hold till the ‘Boom’ reaches the years of the good times.”

And I have zero doubt that between now and 2026 there will have been an explosion of good times and abundance brought to all of us for our discipline and patience navigating these markets, especially the Cryptosphere as it’s maturing before our very eyes - just not without it’s fair share of drama 😂

Speaking of Crypto drama, my Canadian readers ought to be on high alert as this week a bombshell dropped on Friday that Binance will be exiting the Canadian Crypto Market due to unfavourable regulations.

And it’s not only the Canadian government that is driving away fin-tech innovation.

The U.S regulators have been getting an onslaught of backlash on their side of the turf as well.

This week Susan Friedman, the President of Ripple Inc., the company utilizing the XRP blockchain for cross-border payments and CBDC development publicly shared her frustrations on how the U.S Securities & Exchange Commission is forcing innovation overseas into foreign markets such as Dubai and Asia where regulatory clarity is a certainty and not a guessing game.

Shortly thereafter the lead counsel for Ripple, Stuart Alderoty tagged teamed the sentiment citing legal precedent that highlights how the SEC has yet to win a case in the Supreme Court when arguing the famous Howey Test applies to cryptocurrencies.

To make matters worse, even the U.S Government stepped in with a knock-out punch as the U.S Chamber of Commerce interjected themselves into the high profile on-going litigation of the SEC vs. Coinbase, the leading U.S Crypto Exchange calling out the SEC for acting unlawfully in the digital asset space.

Wait a second, this doesn't make any sense.

How can the U.S. Government, which makes the laws, call out branches of the U.S. Government for not following the laws?

Seems fishy to me.

It still seems like something is going on behind the scenes that has yet to come to the surface.

It still appears that a certain regulatory body is acting as a bodyguard for the major banking institutions of the U.S.A. until they successfully secure their positions and gobble up lucrative assets at the "Low Prices" that the famous Mr. back in 1875 predicted so gracefully.

It still seems like sleight of hand to me.

But who am I to speculate? It's not like we have seen any evidence that the major investment banks are buying and trading digital assets and crypto.

Nasdaq: "Hold my beer..."

So what exactly is going on here?

We have the Federal Reserve just stalling any potential growth and expansion of risk assets pending some magical empirical evidence that the economy has ‘slowed’ to perfection, when in reality how can we even trust that the data they’re releasing isn’t somewhat fudged in the first place.

Why is it every single CPI reading comes in just ‘fractions’ beneath expectations.

Market expects 5%, data comes out 4.995%, just enough to praise the FED that they’re doing a great job, but not good enough for the FED to relinquish control over the financial markets, yet.

It’s this all evasive yet that keeps me up at night.

What are they waiting on…

What event? A Black Swan, A War, A New President?

I need to know…

US Government: “Hold my beer…”

Oh, well, maybe this has something to do with it?

You're reading this correctly: the U.S. has only a few weeks left until it runs out of money.

Typically, it just prints more, but remember it can't do that right now because more money printing = more inflation.

Their next secret weapon is generally launching an unprovoked war in some foreign country to create a liquidity crisis and drive demand for the U.S. Dollar, but we all know that doesn’t appear to be in the cards, or at least we hope.

(👀 still watching Taiwan + Russian geopolitical tensions for this reason)

A possible solution would be to transition from fiat currencies into a digital asset-based system led by innovations such as Bitcoin, but as we know, they're completely lagging behind on that front.

So in essence, we're still in this sort of stalemate investment landscape from a narrative point of view, but luckily for us, we have technical analysis which often looks under the hood of the fundamental narrative and can predict the future without it ever reaching mainstream news.

This is why you must also read and study the charts I lay out this week to see where the price movements are forecasted, and then work backward and await the news to follow.

Here's the cheat sheet for understanding the charts: always form a bias on where the markets will go, starting from less risky to most risky, or from currencies (cash) to magical unicorn money, crypto.

Always form a bias on the markets by starting with the forecast of the U.S. Dollar. This is why I start every edition off with the DXY and FOREX currencies, as they are the denominator behind all risk assets.

This is also why events such as the CPI, Unemployment, and FOMC meetings are so important for the markets because when it all boils down to it, the strength of the dollar relies on the demand for the dollar.

If the FED is allowing investors to park money with a 100% guarantee for 5% annually at the current FED rate, why would you want to risk a guaranteed 5% when your favorite company in the stock market might report low earnings or financial troubles due to lower profits and their stock sink 5 or 10 or 20 or 50 or 80%? That's a huge spread risk.

Once a bias is formed on the dollar, you may migrate to Treasuries (bonds and debt instruments such as the U.S. 2-Year Bond) or Commodities such as Food (wheat, sugar, corn), Energy (oil), and Metals (gold, silver, etc.) and try to gather a bias on their direction, as generally, companies in each economy are buying commodities to turn into finished products.

High costs for them equal lower profit and operating margins.

For example, if Oil is trending higher, one can forecast that energy costs will soar, driving consumer spending down as well as corporate profits, as they rely heavily on manufacturing facilities and transportation.

Or if the U.S. Treasury Bond Yield is rising, we can assume the bond prices are falling, and investors are selling off bonds to rotate capital elsewhere.

Once your bias is formed on Currencies + Treasuries + Commodities, you transition into equity indexes such as the S&P 500, the Dow Jones, or the TSX to grasp how their technicals look and forecast a direction given your developing bias.

This is why we must pay attention to corporate earnings, layoffs, developments in regulations and laws, geopolitics, and so forth to see how these news catalysts will affect the companies that make up the economy, which in essence make up a large piece of institutional and retail investment portfolios.

Lastly, we triangulate all these biases into the riskiest assets of them all, Cryptocurrencies.

If the Dollar appears bullish, you must realize that from a fraction standpoint, the denominator of all cryptocurrencies is based on either BTC or USD. Thus, when the USD gains strength, the denominator gets larger, and the numerator on top becomes diluted, hence the value of digital assets falls.

I wanted to explain this to you in such detail so that you can understand the obvious market manipulation by the U.S. Government (who holds the title of owning the Global Reserve Currency) and why they would have an interest in throttling the back-and-forth strength of the U.S. Dollar over a period of time to shake investors out of their positions by consistently giving mixed narratives.

When I refer to "are we there yet…" I'm speaking metaphorically about this process and how tedious it becomes as a retail investor to stay emotionally steady given the endless streams of volatility.

Think about what you've heard over the past two years from the Government:

"A really dangerous flu spread across the world from bats that's going to kill you, so stay inside and put a mask on, and all businesses must shut down."
"A recession is coming, and it's going to be worse than the Great Depression."
"Hundreds of billions of dollars from taxpayers must be sent to Ukraine, or Russia will take over the world."
"Crypto is a big scam used by bank robbers, drug dealers, and criminals."
"The banking system is absolutely fine and safe to store your money." - Meanwhile, they actually have little to no money.

It's a big game of money, and it's our duty to see through the wordplay and find some form of truth, invest in that truth, and stay the course.

Because as the famous graphic from 1875 has foretold, the boom of the good times is just around the corner.

With that my friends, I’ll conclude my thoughts and words for this week.

Very quickly looking ahead, there isn't any ‘super’ important economic data to be released aside from corporate earnings and retail sales, which will give us a good sense of how .Inc's are performing.

But we must keep our eyes on the rally the U.S. Dollar is attempting to make, as if it gains strength, we will expect assets to fall sharply in price (buy more).

You'll be able to see what I'm thinking by opening the charts I've posted below and seeing the direction I'm anticipating across the board.

If you have any questions, please leave a comment as I’d love to create a dialogue below or you may e-mail me privately at bramwellfox@pm.me for any specific thoughts pertaining to the markets.

As always, may the best of vibes be with you and stay solvent!

- Matthew Fox