Forgetting the Past

March 21, 2023

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Banks Run, Digital USDs Race Offshore

March 20, 2023

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Breaking the Ice

March 15, 2023

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DeFi’s Dynamism

March 14, 2023

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digital daily: Let’s Dance

Markets are more art than science. They cannot be tamed by mathematics or behavioral expertise. Complex economic, financial, political, and regulatory systems are churned by the market to produce a singular outcome – the price where buyer meets seller. To dance with the market, you must accept its lead. And the market is leading us to new themes, telling from reactions around recent events. Cyclical commodities have raced higher since the hawkish FOMC meeting. But the Fed was hawkish? We know, it isn’t ordinary. The US dollar was also broadly lower, a reminder that FX cannot be trivialized by a rate differential. Technology stocks are languishing. And digital asset markets, forever the chameleon, blended with its closest relatives to rise smartly with cyclical commodities. What is the market telling us? An industrial cycle is approaching, where structural resource constraints matter. The dollar goes up in recession, the Fed is targeting recession, commodity markets lag the cycle, and digital assets suffer the longest winters – these historic analogs do not look anything like present-day markets. Commodity markets found discipline after the 2016 global recession. Investment has lagged. ESG sentiment reinforced it. Oil markets are bottoming at unusually high levels, especially considering the strength of the US dollar. So, the Fed is hawkish. So what? The world is slow-walking into recession and the market is leaping to the next cycle’s themes – resource constraints. The Fed burst the duration bubble, including excessive capital that piled into intellectual property investment. It’s time for tangible investments to shine. But at what market price does industrial policy dominate again? Recent events hint that we’re going to find out sooner than usual – and it could be unprecedented given supply constraints. Digital asset markets are hitching a ride to the commodity cycle.