So, here’s what’s happening in the crypto and financial world today, based on the data:
Morning Moves (8:00 AM – 3:00 PM UTC+6):
The market’s looking green (positive) early on because Japan’s economic data hasn’t improved, which is weakening the Yen. Meanwhile, China’s central bank (PBOC) is still pumping money into the system without withdrawing any, and the U.S. Reverse Repo Program (RRP) rates are still climbing. So, liquidity is flowing, and that’s helping the market.
Midday Dip (4:00 PM – 6:00 PM UTC+6):
Things might turn red (negative) for a bit here. No major data is driving the market, so it’s likely just some profit-taking or minor corrections.
Evening Recovery (7:00 PM – 10:00 PM UTC+6):
The market could go green again during this time since there’s no significant data expected. It’s a quiet period, so the market might just drift upward.
Late Night Drop (10:00 PM – 12:00 AM UTC+6):
Another red phase is expected here. Again, no major data, so it’s likely just market noise or minor adjustments.
Early Morning Surge (1:00 AM – 8:00 AM UTC+6):
The market might turn green again as the U.S. RRP rates could rise further, signaling more liquidity in the system.
Housing Market Insights:
Existing home sales are up, which aligns with the recent rise in housing starts. This is a good sign for the housing market overall, even though some forecasts had predicted a drop. It shows that the housing sector is firming up, and other related metrics like new home sales, building permits, and NAHB (National Association of Home Builders) data are also improving. The only weak spot is pending home sales, which are still lagging.
The lesson here? Trust the data, not just the forecasts. Sometimes, the market surprises you, and that’s okay. Mistakes happen, but they help you learn and get better.
Liquidity and Inflation:
Liquidity in the market seems to have hit its bottom, and keeping it there for too long could risk a recession. That’s why Trump was upset when the Fed paused rate hikes. But by April 2025, liquidity is expected to improve as the Fed slows down its Quantitative Tightening (QT), reduces RRP, and increases the M2 money supply. Plus, the debt ceiling will likely be raised, which will inject more money into the system.
Trump’s complaints are mostly political drama, but the reality is that rising liquidity will likely push inflation higher by March. We’re already seeing signs of this in the housing market data. Soon, Trump might announce housing stimulus to keep the economy afloat. If he doesn’t, the U.S. could face a recession, especially if the March jobs report (NFP) disappoints.
Japan’s Inflation and the Yen:
Japan’s inflation is down for now, which is strengthening the Yen. But this is temporary because by April, minimum wages (UMR) will rise, boosting consumption slightly. However, foreign investors are pulling out of Japan—about 1.8 trillion has left. This isn’t unique to Japan; many countries are experiencing the same thing, partly due to Trump’s policies encouraging investment in the U.S.
The problem is, many American-made goods are too expensive for Asian consumers, which only strengthens China’s position since their products are more affordable. Trump’s policies might backfire because the U.S. doesn’t have enough cheap labor to sustain low production costs. If illegal immigrants are deported, who’s going to work for low wages? Even orange farms are struggling to find workers. I wouldn’t be surprised if Trump reverses some of these tariffs by April.
Oil Prices and Inflation:
Oil prices are climbing because the U.S. sanctioned a Chinese refinery for buying Iranian crude. WTI crude is nearing 69 a barrel, its biggest weekly gain since mid-January. However, trade war concerns and potential OPEC+ supply increases are capping the gains.
Higher oil prices mean the U.S. Dollar Index (DXY) will rise, which puts pressure on local currencies and keeps inflation high. Countries with strong economies can absorb higher oil prices to keep their industries stable, but weaker countries pass the costs onto consumers, driving inflation even higher. This creates a vicious cycle: higher oil prices → weaker local currencies → higher inflation → lower purchasing power for U.S. goods.
Goldman Sachs outlined two scenarios for rate cuts:
Normalization Cuts: If tariffs fall short of expectations and inflation drops, the Fed could cut rates back to a neutral level of around 2.75%.
Insurance Cuts: If tariffs or other policies create significant economic risks, the Fed might make emergency rate cuts outside of their usual schedule.
Trump seems to be pushing for the second scenario—cutting rates quickly to avoid economic downturns. It’s an unconventional move, but that’s Trump for you—always thinking outside the box.
Inflation is the big theme, and it’s likely to stay high for a while. Keep an eye on the Fed’s moves and Trump’s policies—they’ll have a big impact on where things go from here. And hey, if the U.S. stumbles, that money might just flow back to Asia. So, stay sharp and keep learning from the data!
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