Bitcoin Holds $86K While The Dollar Hits An 18-Month High | Michael Howell

Scott Melker (0:01)

Bitcoin continues to hold strong around 86,000, while the dollar hits an 18-month high. Also, we're obviously going to talk about the PCE numbers and the job numbers that came in last week, unexpectedly soft, giving the Fed a bit of cover to maybe cut and stop the hiking cycle. What a coincidence. Magic, honestly. We've got a very special guest with Mike Dave, and I'd say we've got Michael Howell. We're going to dive into all of it right here on Macro Monday. Let's go.

Good morning, everybody. Happy Macro Monday. I'm going to go ahead and bring on the crew today. We've got Mike, Michael Howell, and Dave Michael. Welcome for your first time here on the show. Glad to have you.

Michael Howell (0:54)

Well, a great pleasure to be here. Looking forward to it.

Scott Melker (0:58)

OK. So, Mike, we're going to start with the Bloomberg Morning Meeting but from New York offices instead of Miami offices today.

Ran Neuner (1:06)

Yes. We have the Greenwich Economic Forum starting tonight, so I'm here for that. Honored to be part of that. I'm moderating a crypto panel. That'll be interesting.

Last year was a commodity panel. I forgot to get a chuck out of Dave on that one.

But so for the morning meeting, Andrew Sasher, a senior economist, pointed out the big repricing started last week with Fed President Williamson, probably needs some patience, downward revisions in PCE deflation and soft payrolls. This week's about the FOMC minutes, which come out Wednesday. And the key question is, were they leaning for further tightening before some of the data kind of came back a little bit? Obviously, we've taken the tightening out of the October meeting.

Right now, they expect one more hike from the committee this year, which is not going to be in October before the election. And it's going to be good to see how much they might have had a higher rate view before the day that came out and really took a lot of the hiking out of Martin. Will Hoffman on rates, I kind of pointed out, he's kind of perplexed by the abrupt reversal in US rates. Last week, still rising, but it's global. US on an FX hedge basis is near amongst the lowest yielding among the G10 or G7 countries. Decent supply this week, but last week is a little bit messy, although 10 and 30 year durations are doing well. And he does expect the Fed and the Treasury potentially do some more long end buybacks and actually maybe cut supply in the longer end. Audrey Chill Freeman, our FX strategy, pointed out the year olds in the limelight, mostly because partly French bond pressure expects that to continue, expect the year old maybe to head towards that one key 110 level, psychological level. But her point was the headlines in the direction of what's happening in like with France, it may be best to be defensive in FX means short the year old. Chris Gain pointed out his key, he's our equity strategy. He pointed out the weird stuff that's happening in equities, a record amount of negative beta stocks. Now Chris is very much technical and factor oriented, about 29 percent now it's the highest in years. Record low pairwise correlations and things like that. He said 99 percent of our performance in market cap versus EQUATE in the past few months, like to see whining out of the rally. He says he doesn't really know how much bearish this is, but a lot of weird stuff kicking in. And I, in my outlook pointed, I think we're nearing peak energy crisis. I just pointed out a few facts like he did. We've had the greatest rally in the Bloomberg, diesel total return index on a 12-month basis in history, not only goes back 30 years, goes 170%, typically that kicks in low price cures. And I just pointed out how metals and cryptos in the same kind of space are completely stock puppets. And then the key theme there is don't fight the Fed. Back to you.

Scott Melker (3:56)

Let's talk about don't fight the Fed. It's a great, great, great segue to what we should discuss next, because I mean, I can show you Cal-She, I just happened to bring it up. But we had a Fed decision in October, obviously until a week ago, everybody thought they were going to hike again. You can see here. And now it's, I believe, an 82 percent chance that the Fed maintains rates according to prediction markets. Of course, that is because the Fed's favorite inflation gauge, PCE, came in magically. I'm using the term magically because I'm literally at the point where I've never been a conspiracy theorist in my life. I just don't believe any of the numbers. But PCE came in soft after they recalculated how they do PCE. And job numbers came in extremely soft. And they revised back, as usual, the previous few months to make the job market, obviously, looks extremely weak. So now the Fed apparently is unlikely to continue hiking.