Overview

Markets continue to be uncertain, with crypto, equity and bonds reflecting different expectations. A mishmash of signals have arrived, and depending on where one looks, they can find something to support either an optimistic or pessimistic narrative. It is important to focus on the bigger picture and not get led astray by day-to-day headlines. Zooming out, equity, crypto and bond markets have been trending largely sideways, showing an uncertain market waiting for direction.

Equity

With earning season starting in earnest, market watchers are most interested in finding out how earnings have been impacted in an environment with a potential recession looming, banking uncertainty, high interest rates and sticky inflation. Bellwether earnings so far include JP Morgan and Wells Fargo, strong beats that have injected significant confidence following the preceding month’s banking collapses and rescues. It remains to be seen if the more concerning regional banks have done as well and how firms outside the banking sector have done. For those trying to divine how seriously to take recession fears from coming earnings, it is worth remembering that earnings are backward-looking.

Crypto

BTC broke 30k last week, but in the grand scheme of things, that is not a big move and prices have since fallen below the mark. The real news was in ETH. With Shanghai-Capella having arrived, ETH has seen significant strength after an initial bout of weakness right before the upgrade itself. The initial sell pressure represented traders attempting to front-run the market before an event with apparent downside potential. In reality, this resulted in crowded short positions in ETH, many of which were liquidated. Sell pressure was overstated as the unlocks are gradual and most have cost basis above current market prices. Meanwhile, Shanghai-Capella’s successful execution shows that things are going according to plan and is long-term bullish. The strength is most apparent in the ETH/BTC pair, but it remains to be seen if ETH holders will be tempted to take profit and cap the current rally.

Upcoming Calendar Events

• Earnings season
  • Finance: Bank of America (18 April), Morgan Stanley (19 April)
  • Consumer Goods: Johnson and Johnson (18 April)
  • Semiconductors: ASML (19 April), TSMC (20 April)
• US PMI data (21 April)

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