Conflicting US Economic Signals - FedWatch 126

Episode • Jan 9, 2023 • 57m

Hosts: Ansel Lindner and Christian Keroles

Fed Watch is a macro podcast like no other, with a clear contrarian thesis of a deflationary financial system’s breakdown leading to bitcoin adoption. We question narratives and schools of thought, trying to form our own understanding. Each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies.

In this episode, CK and I break down the current price chart of bitcoin along with some fascinating points about bitcoin volatility. We have open and honest discussion about the price that you can trust, because this show isn’t about shilling bitcoin, it is about understanding the macro environment which bitcoin finds itself in and how bitcoin is reacting to that environment.

Next, we cover the US manufacturing ISM data. For the second straight month in a row, US manufacturing has contracted. This was also the ninth straight month of falling numbers. They happened to stay positive until November, but now we have those two months of negative prints.

We also tackle one of the jobs reports this week, the ADP. ADP measures payrolls not employees, which is an important nuance to consider. It increased in December by 223,000 jobs! This is a mixed signal, we have falling manufacturing but rising payrolls.

Another conflicting signal we cover this week is the crashing US trade deficit. At first glance, if the trade deficit crashes, one would think that is a positive and means increased activity in the US. However, the reason for the crash is that imports crashed more than exports. Both were negative moves, but the net sum is a crashing deficit, which is a horribly bearish indicator that doesn’t match with the jobs reports.

The last thing we discuss on the day is ECB’s latest blog post by Panetta where he trashes “crypto” and lumps bitcoin in with all the garbage. The interesting part of the blog post is when he calls for “a risk-free and dependable digital settlement asset”, which is what bitcoin exactly is. Of course, he finishes that sentence by calling for a Central Bank Digital Currency (CBDC). What a joke.

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