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“Fed Watch” is a macro podcast, true to the rebellious nature of bitcoin. Each episode, we question the mainstream and bitcoin narrative by examining current events in macro from around the world, with an emphasis on central banks and currencies.
In this episode of “Fed Watch,” Christian Carrolls and I go through several charts, using them to springboard a variety of themes. We cover Bitcoin charts, US Dollar, Hong Kong Dollar, US Treasury Yield and energy charts such as Oil, Gasoline and Natural Gas.
bitcoin and other currencies
We begin our discussion with a very simple chart of the price of bitcoin. The indicator on the right is volume-by-price, and it shows the trading volume at each price level. This volume attracts bids and asks like a scalping point. I expect the price to move up into the mid-$20,000 low volume gap.
Next is the US dollar, and that’s where the “Fed Watch” podcast has been ahead of the curve. We are saying that the dollar will strengthen during 2021, while bitcoin and most others in the macro were raving about the dollar crash.
As you can see on the chart, the dollar has broken out of its recent parabolic trend, indicating that its growth will slow down in a period of consolidation.
Below is a monthly long-term chart of the Dollar Index (DXY). I have added shaded boxes to indicate a ladder-step upward move in the dollar after the global financial crisis (GFC). I expect the dollar to hit the next high in the coming years.
I have included a chart of the Hong Kong Dollar (HKD) to represent currency pressure in China. As you can see, it is at the top of the range, meaning that HKD is looking to depreciate against the dollar, but the Hong Kong Monetary Authority is using its US dollar reserves to buy HKD equipment to keep the peg. .
The last currency chart we have is the Japanese Yen (JPY). It is currently down 6% from its recent low against the dollar (on this chart, the yen’s fall is depicted as the dollar strengthening).
One fascinating thing I point out on the podcast is that the top of the chart matches the Japanese polls they just did. These recent elections also saw the very unusual assassination of Shinzo Abe. It is two very unusual incidents surrounding the election: the accidental yen and the assassination of a popular leader.
The result of the election was that the Conservative Party marginally increased its number of seats in government. On the podcast, I speculate about the conservative versus global view of these unusual events surrounding the election.
US Treasury Yield
We quickly take a look at the two charts below and discuss yield curves and what they can tell us right now.
Everyone is so enamored of the Federal Reserve, completely believing in its mythical powers. However, you’d better understand the macro economy if you forgot that the Fed exists at all and looked at the charts to see what they’re trying to tell you.
The returns and the inverse are telling us that the world’s largest, most sophisticated market is hedging faster and faster against near-term risk. As the curve approaches zero (see second chart above) and eventually turns negative, the likelihood of a rapid credit event is becoming more and more likely.
energy chart
A large part of the increase in the Consumer Price Index (CPI) is due to energy prices and supply shocks. On the podcast, we break down American oil and gasoline, then European natural gas.
The chart above is West Texas Intermediate (WTI) oil. As you can see, it’s right on the support. If it breaks below here, we could see a decline to very low levels.
Next, taking a look at the longer term WTI price chart (below), you see that the recent spike does not match the spike from GFC. Historical support sits below the current price around $75-80 per barrel.
However, US petrol futures hit a new high this time in comparison to GFC. Despite this, it too has retreated and is threatening to fall down.
The moral of this energy story in the US is that global demand is waning while global supply remains relatively stagnant. Despite efforts by the current administration to humble the energy industry, U.S. production is also stagnant and growing.
The next two charts we covered briefly on the podcast. They are both European natural gas futures; Dutch contract to be specific.
I pointed out during the episode that the July 2023 contract is now up where the current price was a few months ago. Things could clearly change before the middle of 2023, but this chart is telling us that if nothing changes soon, energy prices will continue to hold up for Europe only. The ball is in the court of the cosmopolitans.
easing of Russian sanctions
The globalists who approve of Europe are getting heated. In the podcast, I read through a recent article in the Financial Times, which explains how the recent sanctions package from July effectively removes a number of restrictions. Once again, objective reality has prevailed and the fake reality sold to us by globalists is crumbling.
,European governments have eased efforts to curb trade in Russian oil, delaying plans to shut Moscow off the crucial Lloyd’s of London marine insurance market amid fears of rising crude prices and tighter global energy supplies. Some international shipments allowed. […]
“However, the EU has amended part of its own sanctions to allow European companies to deal with certain Russian state-owned entities, such as Rosneft, for the purpose of transporting oil to countries outside the bloc.
“European companies will no longer be prevented from making payments to the likes of Rosneft, ‘if those transactions are strictly necessary,’ for the purchase of crude or petroleum products or for transportation to third countries,” a European Commission spokesperson told the FT.
“The EU said in a statement that the measures were taken ‘to avoid any potential negative consequences for worldwide food and energy security’.
Nancy Pelosi’s Taiwan Trip and China’s Bluff
“Fed Watch” is not a fan of the current global administration in the US, however, as Representative Pelosi’s visit to Taiwan brings up some important nuances to the current geopolitical chessboard.
China is the biggest beneficiary of globalization today. If you are on the side of the people against globalists and statisticians, you have to be against the Chinese Communist Party (CCP). Also, in this specific event, the US is playing the role of an anti-world power because it is a populist move to support Taiwan, through the world’s current distorted geopolitical incentive structure.
The lasting effect of Pelosi’s visit would be an insult to the CCP. Before he left, I had said on several occasions that China’s harsh rhetoric showed that they were really unable to do anything about it. “The Art of War” says to be strong where you are weak. Therefore, the CCP intensified its aggressive rhetoric to appear stronger. America called it a hoax.
Other effects of the move include the support of Japan’s arch-rival of China, America’s biggest ally in the region.
It does for this week. Thank you readers and listeners. If you enjoy this content please subscribe, review and share! don’t forget to check out fed watch clips channel on Youtube.
This is a guest post by Ansel Lindner. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.