US Freeway Friday Update — 14 October 2022

Sadie Hutton

Published in

Freeway

10 min readOct 14, 2022

See what is happening in the non-US Freeway ecosystem with the video update below from the global platform.

Click to hear from Sadie and get all the latest from Freeway world.

In this week’s edition of the Freeway Weekly Update, you get news of former billion-dollar fund manager and long-time Freeway advisor Joel Krueger’s new senior management role.

Hey #FreewayFam,

A new era for Freeway with Earn & Protect

As our official launch of Freeway Earn & Protect draws closer, I’ve got some exciting news to share.

Joel Krueger, the former $75 billion fund manager and long time senior advisor to the project, has accepted the role of Managing Director of AuBit Reserves and will join the senior leadership team here at Freeway HQ. Here’s a few words from the man himself about his new role.

“The new Earn & Protect product is a really exciting development for Freeway. The product marries the best of traditional finance as well as the best of the crypto world. And putting those two together in a new format and new structure really is an exciting new direction for the Freeway family. In addition to the work that I’ll be doing, overseeing the corporate investments of Freeway and ensuring the integrity and robustness of those investments, I’ve been asked to look at other ideas to further provide protections for Freeway, and one of those ideas is to create a reserve structure. Those are the kinds of ideas that I’m going to be focused on and I’m looking forward to an exciting new future for Freeway”.*

And we’ve deployed the big guns elsewhere too as two of Freeway’s co-founders, Graham Doggart and Peter Neilson popped over to Amsterdam to spread the word about Freeway at Bitcoin Amsterdam. They assured me they had some very productive meetings, as well as a fun night out with a few VIPs from the FreewayFam, below.

*When you lend crypto to Freeway, we become the owners of your assets. Any reference to “protection(s)” refers only to protections of Freeway’s own assets. Protections are not absolute and could result in a loss of Freeway’s assets. Available in select countries only. Review the Freeway Earn & Protect Terms and Conditions for complete details.

Graham has been spreading the word on Twitter too, in a series of live Spaces AMAs with the likes of The Moonwalker, Freeway OG and Coach K. Check out Twitter to catch up on those and keep an eye on our socials for details of more AMAs with Graham scheduled in the coming weeks, as we prepare for the platform launch of Freeway Earn & Protect.

It’s going to be HUGE!!!

Freeway’s Latest Growth Stats

After our successful finish to Q3 last week, where we bucked the trend in a challenging crypto market to finish the worst quarter in 4 years with net positive growth, I’m delighted to announce another net positive week for Supercharger simulation growth.

Here are the latest growth stats for the US platform in full:

US Freeway users = 6,316
US total Supercharger simulations = $33,708,620
US closed-loop FWT staked = 712,429,891

Guerrilla of the Week: James

Telegram: @James_RSA

This week, we recognise a member of the FreewayFam who has been engaging with the community for well over a year now.

A year in this industry is a long time and since James has been active throughout, we are sure he can attest to the amazing journey Freeway and the FreewayFam are on together!

Thank you for being a regular contributor to the community discussions. We are genuinely thankful for people like you who engage in a level manner, who contribute when things are great and when things are hectic!

You’re always kind to new people who join the community and that really is a testament to the great culture of the FreewayFam!

Congratulations on this week’s GOTW!

Agent Alpha on: These are fascinating times!

Agent Alpha’s statements are solely his own opinions and market commentary, are for entertainment, and are neither endorsed by, nor represent the views of Freeway. You should always do your own research and seek independent expert financial advice.

Yesterday was one of the biggest turnaround days in history for risk markets — only on 4 times in its history has the S&P ever managed to flip from a -2%+ move to > +2% on the same day. Now the media and most of the market commentariats are saying this turnaround was down to a combination of reasons; dovish ECB minutes? A UK fiscal U-turn which would calm things down in the UK Gilt (debt) market? And a general short squeeze. That’s media and commentariats scratching around for a rationale — usual form.

A short squeeze? Yes, as positioning is clearly so bearishly extreme. So at what point would this move higher, should it continue of course and not be a short squeeze, but materialise into something more fundamental? Answer being 4080+ on the S&P E-mini, which is the exponential 200 MAV area, with some closes above.

My latest chart below for your reference; as we are currently (as I write) now through the first short-term MAV resistance of the 10 day.

Obvious point there is c. 10% of upside potential in play on a squeeze dynamic so plenty to play for in the meantime.

A factor that is very interesting and relevant for crypto investors

We didn’t see the relative rotation explosion yesterday as risk kicked off the lows as aggressively as it did. The US growth vs value pairing actually went lower. So what I would say here is that investors have an opportunity, because if the squeeze is going to kick on there is no way that the growthier elements of the market (crypto included) won’t start to outperform. What we want to see is this pairing to move > 119.39 aka the 200 MAV (I will keep Alpha readers updated on this in the coming posts), because should this punch over that longer running resistance area, we could be on the cusp of the mother-of-all pain trades combo.

A general risk squeeze led by the growth areas.

So why did we bounce so hard yesterday following the latest US CPI print (Consumer Price Index), which actually came in HOTTER on both the headline and core readings than expected?

Well, the CPI print from the States on both the headline and the core was higher, but by 10bps. 10bps folks only 10bps. But what did this 10bps mean as the market then tried to extrapolate what it meant for the FED? Well the market whipped up the forthcoming HARD LANDING economic outlook for the US economy. So how the hell is that good then?!?!

Aha!

Pricing kicked in with a vengeance in the fixed income markets (once the hard landing probability started to sink in) and in the FED FUND Futures markets. In other words more POLICY ERROR probability stepped up from the FED’s no choice kamikaze path they’re currently on. Which means (critical here) RATE CUT PRICING in ’23 stepping up.

The US curve 2/10 spread legged lower to > -50bps; screams recession (depression!?)

And so therefore we need to pay attention to the rate CUT pricing from the FED in ’23. Yesterday as the hard landing pricing kicked in, the rate cut pricing lurched from -120bps of cuts to -140bps of cuts.

So, you see this is the point, that the FED will try and get to their terminal rate, which yesterday priced at 4.83% vs 4.67% pre-CPI release (as the chart above shows). But the nonsense that is constantly spouted by FED speakers and the vast majority of market strategists out there, that the FED will then HOLD those rates for a good while through ’23 into ’24, is just that complete NONSENSE.

The ‘Grand ol Duke of York’ analogy

We’re looking at a FED that is being forced into greater policy error calamity — which is fine in the sense of where markets now currently are (having already been so battered and priced in so much already) and the extremis bearish positioning out there (no one is LONG!) — because we’re then looking at a FED that within a very short space of time of reaching the ‘top of the hill’ on their rate hiking path and will be slashing those very rates back down again.

We have in other words an increasing probability of a FED Chair impersonating ‘The Grand ole Duke of York’ who marched his men to the top of the hill to only march them back down again.

And to close out this week let us look at CHINA vs USA once again as the CHINESE inflation data out overnight for September showed increasing evidence of PLUNGING dynamics, which has material global ramifications as ’23 beckons.

Just look at the chasm now between the Chinese PPI and the US CPI prints.

Chinese PPI is plunging and is almost outright deflationary now. How long is it realistic for the US CPI to not turn lower and play significant catch-up? The relation is quite clear and whilst yes China has unique circumstances currently on it vs history aka no covid and destructive associated policy from the Chinese authorities accordingly. Nonetheless it is only a matter of time before some mean reversion is going to materialise on the US lag here.

US inflation (and Western) is going to turn HARD and FAST in a matter of months — of that I am convinced. It will coincide with a FED that has marched to the top of that hill realising how much of a policy error calamity that march has been to then pull the levers desperately to unwind accordingly.

In terms of timing, we’re getting so close now. The US midterm elections in November are going to probably time almost perfectly with this dawning realisation of policy error. The democrats are going to get hit hard at those elections and I would not be surprised that the backlash from the White House could then see heads roll and not least Fed Chair Powell himself.

Conclusion

Why did we rip off the intraday lows yesterday? Positioning extremis coupled with policy error ramp up in pricing.

Markets look forward c. 6–9 months and if this rally (squeeze) continues, it will be because the rate cut pricing stays as is or even picks up pace. The 2/10 curve now > -50bps is the tell and if this moves > -60bps, aka the recent lows, I would stand back and light the proverbial touch paper because that FED pivoters forlorn hope brigade will start singing louder and louder. And a FED pivot once it is signalled is the factor that will determine how risk performs in the months ahead.

Until next time!

Alpha

Tuesday’s AMA on Twitter Spaces

Once a week on a Tuesday at 6pm UTC, Freeway holds a live AMA in the Freeway Telegram channel that gives the community a chance to ask direct questions to Freeway’s co-CEO Graham Doggart.

This week, we held our community AMA live on Twitter Spaces. If you didn’t make it, you can read our full transcript.

If you’d like to participate in the next AMA on Tuesday at 6pm UTC, where you can ask Graham anything, join the Freeway Official Telegram group here.

As always, we love hearing from you, so please join us on Telegram, follow us on socials, and if you want to hear from us and you want to hear it first, sign up for the newsletter.

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Until next week,

Sadie Hutton

Co-Founder and CEO

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