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markets

We Need To See the Dot Plot

That’s the fuel for the market’s next move.

It would be almost impossible for Jerome Powell to top what Bank of Japan Governor Kazuo Ueda did on Tuesday.

Nor is it the Federal Reserve Chair’s style to roll that way.

So there will be no surprise rate cut – or a surprise rate hike! – today.

The best we can hope for is an interesting dot plot.

The Fed Guy, Joseph Wang, shared his forecast on X on Tuesday: “Best guess tomorrow - not much different from December.”

The Fed Guy noted that inflation has been a bit higher than expected but said “the path was always expected to be bumpy.” He observed as well that the market has priced out a lot of cuts and currently reflects the December dot plot.

That is, three cuts. So perhaps even that won’t be so interesting…

a chart showing the US Federal Reserve's dot plot projections for december 2023

“Oh, and market rallies,” of course.

That’s the question on which price action will turn today: how many rate cuts will the Fed include in its updated dot plot.

As of Tuesday the CME FedWatch Tool was pricing in a 99 percent chance of no change today. The odds of a rate cut on May 1 are less than 4 percent. The market does expect a cut in June.

There are folks out there who are warning of other kinds of surprises.

Kathleen Hays, editor in chief of Central Bank Central, spoke with former Atlanta Fed President Dennis Lockhart on Tuesday.

Lockhart told Hays the dot plot could show just two rate cuts in 2024, as Jerome Powell and company await further confirmation of disinflation.

Under this scenario, we could be looking at rate cuts after the election following November and December FOMC meetings.

The market might not rally on that kind of news.

How many dots will the central bankers plot?

Not a lot, it’s thought…

deep dive

That’s a Powerful Set of Chips

Nvidia keeps making big leaps.

Maybe it’s hyper-reductive as heck to say that the post-October 2022 spike on Nvidia’s $NVDA chart is all about the Blackwell B200 GPU.

Maybe it isn’t.

If the H100 is the chip that brung NVDA to the multi-trillion-dollar-market-cap dance, the new new new thing is meant to extend its AI dominance and carry it beyond Microsoft $MSFT to top billing.

a chart showing nvidia's 3-year price history

NVDA was back leading the market on Tuesday after CEO Jensen Huang introduced the company’s next chip, adding more than 1 percent and extending its year-to-date gain to more than 80 percent.

According to NVDA, the B200 offers up to 20 petaflops of FP4 horsepower from its 208 billion transistors.

As Sean Hollister of The Verge explained, a GB200 combines two of those GPUs with a single Grace CPU to offer 30 times the performance for LLM inference workloads while also potentially being substantially more efficient.

NVDA said the setup “reduces cost and energy consumption by up to 25x” over an H100.

Huang said each new GPU would be priced between $30,000 and $40,000.

deep dive |
March 20, 2024

That’s a Powerful Set of Chips

crypto

$MSTR Is Basically $BTC

There are many ways to participate in crypto markets.

MicroStrategy $MSTR Executive Chairman Michael Saylor announced it on X a little after 8:00 a.m. ET on Tuesday:

MicroStrategy has acquired an additional 9,245 BTC for ~$623.0M using proceeds from convertible notes & excess cash for ~$67,382 per #bitcoin. As of 3/18/24, $MSTR hodls 214,246 $BTC acquired for ~$7.53B at average price of $35,160 per bitcoin.

There’s no question MSTR has done well since it confirmed its first Bitcoin $BTC purchase on August 11, 2020.

When the world’s No. 1 cryptocurrency surged toward $74,000 a little more than a week ago MSTR’s price return from that date went beyond 1,000 percent.

“With this latest purchase, the company now holds over 1% of the total bitcoin supply, comprising 21 million coins,” according to The Block’s Yogita Khatri.

a chart showing MSTR's bitcoin holding over a four-year period

What’s hard to decipher on the far-right edge of the chart is the 5.67% haircut MSTR had at Tuesday’s close after sliding as much as 18.14 percent intraday from Monday’s close.

BTC, for its part, was down a little more than 5 percent in the 24 hours up to about 4:30 p.m. ET.

MSTR will clearly revert to its mean, which is basically BTC at this point, and track it as it has for quickly coming up on four years.

BTC – the underlying asset, as it were – has met what technical analysts would describe as major resistance around its previous all-time high.

On-chain data, as Louis Sykes of All Star Charts Crypto noted earlier this week, show a lot of profit-taking. Louis described it as “a healthy digestion of gains” after “an incredible move higher.”

And it has been incredible.

Say what you will about Bitcoin and cryptocurrency; my question remains, what problem does it solve?

I’m also fascinated by the price action. There is no clouding debate about utility right now. This is pure flow of funds.

But consider the fact that, according to Grant Englebart of The Carson Group, “a handful” of the firm’s advisors are allocating an average of 3.5 percent of client portfolios to BTC spot ETFs.

That suggests a lot of room for growth.

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