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Macro update 4.7.22

Global markets have shifted their attention from inflation- to recession-risks, so this week’s economic data could prove useful in this assessment. The US labour market is in focus and key datapoints include May job openings (Wednesday) and on Friday we get June non-farm payrolls, unemployment and average hourly earnings.

Source: Federal Reserve Bank of Atlanta

A background risk remains Q2 earnings, especially given the disconnect between market pricing and analyst expectations (see charts below).

As we stated last week though, any risk-asset rally on expected easing is likely to be self limiting until inflation data shows clear signs of slowing amid a vicious cycle for the Fed.

All bets are off

The list of “unprecedented” occurrences continues in the digital assets space. Concerns around further liquidations and who has been irresponsible are likely to limit gains for now. Indeed, any rally is likely to encounter selling pressure as risk aversion remains dominant.

Nevertheless, we believe that the current environment is an opportune time to invest since the froth has been taken out of the market and numerous fundamentally-sound projects are now attractively valued. We expect those with strong fundamentals, use cases and teams to perform well over the medium term.

Indeed, last week I travelled to Dublin and witnessed a special cohort of such projects. These BUIDLers give a pitch of their projects in the video below from 48 mins in. Enjoy!

I also came across an apt coffee house for the current times. As the sign says: “Love your daily grind!”

Kind regards

Lyndon Barreto, CFA

Chief Economist and Project Specialist

Disclaimer: The content above does not constitute investment or financial advice. All statements are opinion and not statements of fact.



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