August 23, 2024 | Read Online

_{Brought to you by:}

"Life starts all over again when it gets crisp in the fall."

― F. Scott Fitzgerald, The Great Gatsby

Friday autumnal charts

The northern hemisphere's autumn equinox occurs on September 22 this year — but that astrological event (when day and night are of equal length) is no longer the official start of Fall.

It's not Labor Day, the unofficial last day of summer vacation in the US, either.

Nor is it when you start raking leaves, which is still many weeks off.

Instead, Fall is already here — it started yesterday, August 22, when Pumpkin Spice Lattes made their earliest-ever re-appearance.

Because Starbucks is the new arbiter of seasons.

Don't believe me?

Why, then, will I be watching "week zero" college football tomorrow afternoon, a full week earlier than normal?

And why was it a crisp 50-odd degrees when I got up early to walk my dogs in sun-belt North Carolina this morning?

Most conclusively, what is this sudden economic chill I feel in the air?

I'm not the only one — Chair Powell was certainly feeling it in Jackson Hole, Wyoming, where it was 35 degrees just hours before his big speech this morning.

The labor market "has cooled considerably from its formerly overheated state," he told us — and that can only mean that rate cuts are now as appropriate to the cooling economy as pumpkin spice is to the cooling weather.

If that sounds like a torturously stretched analogy to you, you clearly did not catch the rest of Powell's remarks.

"The time has come for policy to adjust / The direction of travel is clear / The good ship Transitory was a crowded one / I see some former shipmates out there today."

Where Chair Greenspan spoke in riddles, Chair Powell speaks in verse.

But unlike the 1990s when you needed a team of economists to decode Greenspan's inscrutable riddles, you do not now need a team of Shakespearean scholars to decode Powell's verse.

This morning's message was as clear as a harvest moon: The market's beloved "Fed put" is back.

What Powell said: "We will do everything we can to support a strong labor market."

What the market heard: "We will do everything to make sure your risk assets go up."

Like Starbucks firing the starting gun on cooler weather, college football, and hot coffee, Powell has fired the starting gun on risk taking.

How long might the season last?

Let's check the charts to find out.

The long-term forecast:

Fed funds futures expect two full points of rate cuts between now and the dog days of next July.

The FX barometer:

The US dollar is near a two-year low — usually a sign that it's time to take more risk.

A 10-year inflation forecast:

The TIPs market in inflation-adjusted bonds is signaling that US inflation will be well below the Fed's 2% target over the next 10-years.

The best kind of rate cuts:

When the Fed is cutting rates, it's usually because they're scrambling to revive a faltering economy or save us from some financial crisis. This time they're cutting just because inflation is down. Falling inflation expectations at a time of rising corporate earnings could create a rare sweet spot for risk assets.

Gas prices:

In large swaths of the country (the purple parts above), the price of gasoline (most people's primary inflation metric) now has a 2-handle (trader speak for 'below $3').

What price gouging?

Groceries are getting cheaper, too. Measured by how long you have to work to earn them, the cost of groceries is back to pre-pandemic levels (and far below historic norms).

"Work" from the beach?

The ADP's employee motivation and commitment index has nose dived this summer — but Starbucks says summer's over, so get back to work!

Not everyone is breaking out the sweaters:

If you live in sweltering Texas, it must seem way, way too early for Pumpkin Spice Lattes.

But, as far as the market is concerned, it's never too early for rate cuts.

Have a great weekend, autumnal readers.

— Byron Gilliam

Brought to you by:

The Uniswap Extension is designed to make your onchain experience feel effortless. This extension lives in your browser's sidebar, letting you swap, sign transactions, and send or receive crypto without ever losing your place. Plus, with human-readable transaction messages, you'll always know exactly what you're signing.

Navigate a multi-chain world effortlessly with support for 11 chains like ETH Mainnet, Base, Arbitrum, and Optimism. No more chain switching or token importing – all your assets are right where you need them.

Download it on Chrome today.

Download now

Crypto Incentive Models Are Broken

Jack and Mert discuss how betting rebranded to prediction markets, and potential SocialFi and prediction market crossovers! They also dove into the EigenLayer airdrop controversy, and the conflicts of interest associated with it. Also, do we need fewer tokens?

Watch or listen to Lightspeed on YouTube, Spotify or Apple.

Brought to you by:

Simplify integration processes and supercharge your project with one unified crypto data API providing unparalleled depth and complete coverage for analysts, developers, and DeFi projects.

With CoinGecko API, you'll be able to access extensive crypto data for 3.1M+ cryptocurrencies across 1,200+ DEXes and 160+ networks from one consolidated API:

Aggregated crypto price & market data
Exchange data and trading volume
Onchain DEX and liquidity pool data
Metadata (logos, website & social links)
Crypto categories and global market data
Historical coin and exchange data (price, volume, OHLCV)
NFT collection data

Help your end-users discover the market momentum easily and get a panoramic view of the cryptocurrency market today.

Take 15% off with code 'BLOCKWORKS15'

Quinn Thompson @qthomp

I thought similar. Or at least if not 50 in September, at least 75 by year end. The biggest takeaway for me was that it was certainly not a "one and done" type of speech. That was a strong confidence in rate cutS with an S.

tw profile: Anna Wong Anna Wong @AnnaEconomist

Listening closely to Powell, my take is that he is already on board the 50 bps boat given the current data. It is now a matter of: can he convince the other FOMC members?

3:15 PM • Aug 23, 2024

50 Likes 1 Retweet

1 Reply

jonathan(love)wu @jonwu_

Capital formation is broken in crypto.

What started as collective, earned ownership has broken down into insider games that feel somehow worse and more gatekept than private markets outside of crypto.

What we were promised--democracy, open access, permissionlessness--has become… x.com/i/web/status/1…

10:12 PM • Aug 22, 2024

220 Likes 24 Retweets

15 Replies