Aug. 29 Markets Report: Inflation Bug Infects Us All

Powell forecasts economic "pain" on the horizon, energy markets teeter and totter, and Y Combinator names a new President.

Updated May 4, 2023

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Stocks

Real Estate

Crypto

NFTs

Wine

Startups

Sports Cards

Gold

Farmland

Whiskey

Macro

Source: moneymade.io

US Economics

Interest Rates:

2.50%

Unemployment Rate:

3.50%

GDP YoY:

-1.7%

CPI YoY:

8.5%

The Obsession with "Recession"

  • In his speech at the Kansas City Fed on Friday, Chairman Jerome Powell said that "higher interest rates, slower [economic] growth, and softer labor markets conditions [will] bring some pain to households and businesses." Powell stated that this "pain" is necessary to stabilize prices and lower inflation. He also predicted that the interest rate will settle around 2.25% to 2.50% depending on economic data and outlook come the Fed's September 20 meeting.
    • A new study presented at the Kansas City Fed reported that central banks' monetary policy could fail to control inflation if governments don't adjust their fiscal policies accordingly; it asserts that government budgets are a decisive factor in curbing high inflation because raising interest rates isn't enough.
  • Germany's fears of a winter gas shortage dissipated after the country's Economy Minister stated that they're ahead of schedule in replenishing their stockpile. Russia accounted for 55% of Germany's gas supply before throttling gas exports in response to wartime sanctions.
  • Egypt is inching toward an economic crisis as it risks defaulting on its foreign debt. 
    • The exchange rate of the Egyptian pound plunged after $14.6 billion of investments left the country, largely due to concerns about the impact of the war in Ukraine. The North African country is rationing electricity to achieve a natural gas surplus, pump exports, and generate foreign cash flow to fill its forex reserves.

Stocks & Bonds

Bond yields

US3M:

2.8814%

US2Y: 

3.4272%

US10Y: 

3.099%

US30Y: 

3.243%

Recession Red Flags

Sector performance

Energy: 

4.53%

Materials: 

0.27%

Health Care: 

-2.98%

Infotech: 

-2.89%

Real Estate

Haunted Housing

Crypto

The Bear Keeps Growling

  • Bitcoin's price sank below $20,000 for the first time in over a month. Crypto analytics firm Glassnode reported that the current bear market will likely continue due to unfavorable macroeconomic conditions, low capital influx from investors, and low demand for BTC.
  • Coinbase just launched cbETH—a liquid staking token for ETH. This enables ether stakers on Coinbase to sell their ETH2 or deposit it into Ethereum DeFi protocols.
  • Israeli Blockchain Industry Forum founder and self-described "web7 investor" Maya Zehavi tweeted that Israeli regulators may have been playing inside baseball when it came to the solvency of Celsius, a now-bankrupt crypto lending firm.

NFTs & metaverse

Will the NFT Bubble Burst? 

Commodities

Why Toil When There's Oil?

The C-Suite Weighs in on Energy

Commodity Winners & Losers

Dutch Natural Gas:

23.69%

Japan/Korea LNG:

18.99%

Gasoline:

-7.45%

Coal:

-5.50%

Startups

The Startup Scoop

  • Famed startup accelerator Y Combinator named Garry Tan as its next CEO and president. Tan, who co-founded seed investment firm Initialized Capital, will replace Geoff Ralston by the end of 2022.
  • The VC world had its eyes on clean energy and healthcare last week, according to Crunchbase.
    • Lunar Energy raised $300 million in two funding rounds to develop hardware and software solutions for sustainable energy independence. Former Tesla executive Kunal Girotra is taking the lead on this venture.
    • Fervo Energy raised $138 million to build and operate geothermal power plants using state-of-the-art drilling techniques and sensing technology. The Berkely, California-based startup has raised $177 million since it was founded in 2017.
    • Alma raised $130 million in a Series D funding round to help independently practicing therapists deal with billing and other administrative tasks. The New York-based health insurance company has raised $220 million since it was founded in 2018.