Notes to the Reader

I wrote a document concerning the markets and the future in November of 2022 discussing the future of the Macroeconomic Environment. I have returned to say that I was somewhat accurate. FOLLOW ME ON LENS IF YOU DON’T ALREADY.

I am just trying to make these reports better and I’ll comment about the conditions of the market. Scroll through to what you care about the most.

Consumer Price Index (US)

The US Bureau of Labor & Statistics released their report on Inflation on the morning of April 12, 2023. The report was clear that CPI was 5.0%, well below what was expected and had a moderately cooling one month change on inflation.

How does this affect you?

The Federal Reserve may be tempted to halt rate hikes. If the Federal Reserve does halt rates, this protects bank balance sheets from bond losses in the future, as I believed rates would reach 5.75%.

If Rates are held at or below 5.25% - the current rate is 4.75% - 5.00% - it prevents further bond losses. The market may very well rise following a rate halt, benefiting banks by growing their balance sheets.

What do I think will happen?

I think the Federal Reserve will raise rates in May and halt in June. This would give the Federal Reserve time to receive the Consumer Price Index in April before changing course.

It also allows them to raise rates over inflation rather than matching it as they currently are. This would put the Federal Reserve into their magical zone entitled Sufficiently Restrictive.

Global Trends

Currently the United States Dollar is being threatened by different payment rails, sponsored by the Chinese Communist Party, Russian Federation and the Saudi Royal Family.

These acts, threatening the very basis of the global economy, will be very inflationary for the USD in the long run. This is one of the reasons I do not believe the US will ever return to a 2% inflation target.

Cost will rise as currency favorites are adjusted.

How does this effect you?

China has recently threatened to go into Taiwan, by action not by word, and I think the US is foolish enough to put boots on the ground. It is no secret that this would be a world changing event. War is not profitable.

The price of oil is subject to rise with the latest ruling of the Oil & Petroleum Exporting Countries (OPEC) directly effects the costs of Proof of Work Miners. It also directly effects inflation.

The war in Ukraine rages onward with Beijing attempting to manage peace talks.

What do I think will happen?

I believe the United States will attempt to stymie any attempt from Beijing to organize peace in Ukraine, but I think that it will not be effective. However, New Delhi may play an important role here as China by proxy.

I believe the war will end, or escalate by Q2 2024. If it ends, China will be apart of the solution and if it escalates China will be apart of the escalation.

If the war ends smoothly, the Taiwan incident will be less likely.

Peace is the most profitable for us all.

Banking Crisis

Traditional Finance is nothing like Cryptocurrency Markets. I can’t just get on Etherscan and look up what the J P Morgan Contracts have and tell you the future.

What I can say is that the world has been buying US bonds for a long time with them providing modest profits and minimal losses. Last year was the first time they were not profitable.

Being the basis of any traditional balance sheet, banks are feeling the pressure. I don’t expect to see any other bank failures, but I do believe many are insolvent currently. They have all tapped into the Bank Term Funding Program and this will shore their balances through theses times.

Another noticeable event is that the Federal Reserve Meeting Minutes, released shortly after inflation on April 12, 2023, suggested that the group believed that the Banking Crisis would lead to a recession.

“Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.”

Federal Reserve Meeting Minutes, March 21 - 22, 2023 Page 6/11

I think they failed to state that Banking Crisis, brought on by their speedy rate hikes, would lead to the Recession. The Recession is becoming less and less necessary to lower rates as CPI comes to 5.0%

An article I released earlier, concerned with the threat of deflation, is becoming a more realistic view of the US Economy. It is a real possibility. A deflating dollar would be devastating for the overall economy.

Final Projections

Federal Reserve Pivot: Q4 2023 - Q1 2024

I have moved this report up because I do not think the Federal Reserve wants to hurt the global banking sector more than it already has. A pivot sooner, with inflation coming below 5% is likely. A pivot would be further secured if a Recession arrives and unemployment rises quickly.

CPI by Quarter

Q2 2023: 5% (April) - 4.2% (June)

Q3 2023: 4% (July) - 3.6% (September)

Q4 2023: 3.6% (October) - 2.7% (December)

Q1 2024: 2.8% (January) - 3.0% (March)

These are very conservative numbers. My hesitations are as follows:

• Energy Prices will rise into June 2023, as they have every summer I’ve been alive.

• Unemployment is very unpredictable right now.

  • There is sufficient evidence to believe it won’t have to exceed 4.0% in the US during these times. The majority of the economy is consumer based and consumption isn’t slowing.

  • If the job market had more manufacturing, I’d be more inclined to think it’d rise.

• The US Debt Ceiling has to be risen in the month of June.

• Fall & Winter Seasons will be the most critical. In that climate I would like to see the more moves toward peace in Ukraine.

• I am convinced that inflation will not go below 2.5% just because of the feeble nature of the US Federal Reserve and the Fiscal Policy of Capitol Hill

Ending Notes on Regulation

The United States Government has reasonably taken a hostile position toward cryptocurrencies. They threaten the very nation of the dollar monopoly that has kept the oligopoly happy for the past few decades.

Below is a podcast that I recorded about this at Ethereum Denver…

Nonetheless, the politicians have realized that this is a very effective way to get votes and the battle for crypto voters has begun. I say this to say, like most issues in the United States, that most of this will be all talk with no walk.

However, someone must reign in the Securities Exchange Commission and I do believe that is coming near as Republicans have gained control of the house and the interest of the decentralized communities.

This is the most unpredictable thing in the whole world. How humans will behave, that is.