Darius sat down with Paul Barron on the Paul Barron Network last week to discuss the “soft” vs. “hard” vs. “no” landing debate, Bitcoin ETF, earnings, and more.
If you missed the interview, here are three takeaways from the conversation that have significant implications for your portfolio:
1. Near Textbook Disinflation in The Super Core PCE Deflator Suggests That The Fed May Safely Land The Inflation Plane At 2% In The Coming Quarters
The likelihood of a soft landing for the economy has increased, as highlighted by last week’s PCE report.
Notably, the 3-month annualized rate of inflation change stands at 2.1%, and the 6-month rate is at 1.9% – figures that align closely with the Federal Reserve’s target inflation rate of 2%.
These readings suggest that year-over-year inflation is set to decline towards 2% in the upcoming quarters.
This downward trend in inflation is reinforcing the soft landing scenario currently being priced into asset markets.
2. We Believe Upcoming Earnings Reports Will Outperform Recent Quarters
Signs of enhancement in corporate profitability are already evident.
Our Corporate Profitability model, which tracks the spread between Gross Domestic Income growth minus the spread between Unit Labor Cost and Productivity, shows that Corporate Profits bottomed a few quarters ago and have improved since.
According to the model, earnings are expected to continue improving.
Should this trend persist, it will act as a tailwind for asset markets.
3. The Impact of The Bitcoin ETF Will Take Time to Materialize
The approval of a Bitcoin ETF is likely to have a long-term positive impact on BTC, as it will introduce structural inflows into the asset class.
However, it is important to note that these benefits will not be fully captured immediately upon the ETF’s approval.
We believe that much of the anticipated impact is already factored into current prices, due to market participants front running the event.
That said, the ETF is not the sole influencer of Bitcoin’s price. Factors such as inflation, economic growth, policy changes, and liquidity also play crucial roles in determining Bitcoin price trends.
Investors aiming to stay informed about Bitcoin’s future trajectory should monitor these metrics closely.
That’s a wrap!
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