SignalPlus Macro Analysis: The macro economy is good, but BTC suddenly plummeted to $59,000
Japan's labor cash income announced this morning exceeded expectations year-on-year, with wage growth being one of the recent market focuses. In terms of cryptocurrency, BTC dropped from its historical high of 69,000 to 59,000 in a matter of minutes, with rumors suggesting this was due to a long-dormant wallet starting to transfer its held assets to Coinbase, cashing out at a mining cost of $0.28.
The cash income of Japanese labor announced this morning exceeded expectations year-on-year, with wage growth being one of the recent market focuses. This is due to local media pointing out that an official from the Bank of Japan suggested ending the negative interest rate policy as early as March, rather than waiting until April. Additionally, Japan's largest labor union will announce the results of the annual wage negotiations on the 15th of this month, which will undoubtedly influence the Bank of Japan's interest rate decision a few days later.
In China, the National People's Congress is currently in session, with the focus on the government work report on the first day. Although the report announced a growth target of around 5%, the stimulus plan failed to meet market expectations. While the 5% GDP target is the same as last year, the lack of a base effect means that a two-year compound annual growth rate must exceed 4%. Without additional policy stimulus, this target seems unlikely to be achieved. Policymakers announced a fiscal budget accounting for 3% of GDP (4 trillion RMB) and will issue an additional 1 trillion RMB of ultra-long special government bonds as an extra measure, bringing government deficit spending to 8.2% of GDP.
The funds raised through bond issuance will continue to be used for investment projects rather than any form of consumption subsidies, which is somewhat disappointing for market participants expecting stronger measures to support economic recovery.
In the United States, economic data shows that while the job market has softened slightly, the overall situation remains quite strong. In February, ADP employment increased by 140,000 (higher than January's 111,000), and private sector employment has averaged over 200,000 new jobs per month since 2023, compared to an average of only 50,000 per month before the pandemic. The number of JOLTS job openings fell by 42,000 in December and again by 26,000 in January, now dropping below 9 million, indicating some easing in the tightness of the job market. However, the layoff rate remains very low at 1%, and the ratio of job openings to unemployed persons remains around 1.4, suggesting that Friday's non-farm payroll data should still be quite good, but may not be overly strong.
Chairman Powell testified before the U.S. House of Representatives yesterday, but his remarks largely aligned with market expectations and did not provoke much reaction. He reiterated the Fed's comments from the January meeting that "policy rates may have peaked," but before any rate cuts, the Fed is still seeking "more evidence" to confirm that inflation is consistently falling back to 2%. His strongest comments were actually related to the capital requirements for U.S. commercial banks, suggesting that the Fed may make "broad and significant modifications," including a complete withdrawal of the current government plan. Federal funds futures pricing still reflects a 60% probability that rate cuts will begin in June, with expectations for slightly more than three cuts by the end of the year.
In the stock market, struggling NYCB received much-needed assistance yesterday, securing a total of $1 billion in equity investments from several investment firms, including one led by former U.S. Treasury Secretary Steven Mnuchin. This news helped contain the spread of panic and prevented a repeat of last spring's situation.
Speaking of market optimism, the convertible bond yields of AI companies like Super Micro Computer have fallen into negative territory, with investors willing to pay yields to the company in exchange for the opportunity to purchase very out-of-the-money stock call options. SMCI's stock price has soared 1000% over the past year and will be included in the SPX in March, with the yield on the company's March 2029 convertible bonds dropping to -3%, and the stock conversion price at a 41% premium to the current spot price, indicating a hot market!
Finally, in the cryptocurrency space, BTC dropped from a historic high of $69,000 to $59,000 within minutes, with rumors suggesting this was due to a long-dormant wallet starting to transfer its holdings to Coinbase, realizing profits at a mining cost of $0.28. The significant price volatility also led to mass liquidations of futures longs, but substantial buying in ETFs helped support the price, ultimately stabilizing BTC around $66,000, while ETH remained stable around $3,800.
The rapid recovery of BTC prices yesterday indicates that the market is still in a buy-the-dip mode. However, considering BTC's relative performance against ETH and other altcoins, BTC may have the opportunity to underperform from now on. When compared to the 3x leveraged Nasdaq index, BTC also appears relatively overextended, and there is a chance for BTC to enter a consolidation phase and perform relatively poorly in the short term.
