Diversitas

1/6

Morning update:

This week is extremely important as the FOMC meeting will likely set the direction for the stocks as well as crypto for weeks if not months to come. Apart from the rate hike, it will be interesting to see the reasoning behind it. Furthermore, comments about future hikes are something to watch for👀

This week we will also get:

-Consumer Confidence

-Manufacturing PMI

-CB Monetary Policy / Unemployment

-Services PMI

Big week ahead of us😉

2/6

Secondly, it will also be interesting to observe the market prior to the meeting. Will the market rally or will we see the derisking?🤔One interesting observation so far is that on Friday there were huge inflows into the bear market ETFs👀

3/6

That being said, the market expects a 25bps hike and it is likely that we will see one although we think a 50bps hike would be more appropriate considering the spikes in inflation data and easing of financial conditions. No matter the rate hike, the important thing is what Powell will tell the market in his speech👀 The bulls want to see a pause and rate cuts in the second half of the year while the bears want to see more tightening and rate hikes🤔

We have plans for both scenarios and will decide on our next move after the FOMC meeting. Right now, it's all just pure speculation so we are waiting on the sidelines✅ $BTC

4/6

Lastly, we still believe that the FED is at a crossroads where there are two paths that lead to the same outcome. Recession is gonna happen either way, the only question that remains is how we get there?🤔 We will likely get the answer on Wednesday👀

Have a great start of the week!🙌

5/6

Here are the two scenarios we think could play out. We already shared this, but it seems like a good reminder before the FOMC meeting.

Scenario #1👇

6/6

Scenario #2👇

As you can see, it leads to the first one🤔

1/4

Morning update:

Not much happened over the past 24 hours. We are getting closer to the FOMC meeting so the markets are mostly trading sideways. The PCE for December that we got yesterday was in line with expectations and did not impact the market.

That being said, the numbers of most commodities started to explode in January so the FED will make a big mistake if they go with a 25bps hike as inflation will rebound big time🚀 Next week, we will see if Powell will really stay the course or back of sand make the same mistake Wolcker made in the 70s🤔 This will also be something we will base our next move on👀

2/4

Meanwhile, there are more and more signs of a weak economy. Yesterday, Bloomberg reported that more Americans are falling behind on their car payments than during the financial crisis. In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, vs the crisis peak of 5.04% in January 2009👀😱

https://www.bloomberg.com/news/articles/2023-01-27/car-repossessions-grow-as-inflation-slams-consumers?utm_source=website&utm_medium=share&utm_campaign=twitter

3/4

On the flip side, the stock market as well as crypto indicators are close to extreme greed. Not sure why, but we have a feeling that this won’t end well..😅

4/4

Last but not least, as already mentioned, we will wait for the FOMC meeting and decide whether we want to join this euphoria with part of our holdings or wait for the dominos to fall after we see what Powell decides to do🤔

P.S. Tomorrow is our day off so have a great weekend and we will be back with our updates on Monday🙌