Investors,
I’m going to keep this short & sweet…
Labor market data was the key theme of the week, which had an overall theme of — you guessed it — resilient & dynamic. Of course, certain aspects were soft and came in below expectations and/or prior month results; however, the overall theme is that job growth remains intact, wage growth exceeds inflation, and the unemployment rate actually cooled off on the back of declining initial unemployment claims.
Specifically, I want to highlight the following:
ADP private payrolls added 99,000 jobs, decelerating vs. the prior month
NFP payrolls added 142,000 jobs, decelerating vs. the prior month
Wage growth accelerated from +3.63% YoY to +3.83%.
The unemployment rate fell from 4.3% to 4.2%
The layoff rate remains historically low, currently at 1.01%
Multiple jobholders as a percentage of the employed was flat at 5.2%
Weekly initial unemployment claims decreased, reaching 122,000 claims
Overall, this is solid data. It isn’t perfect and many would struggle to call it strong.
But labor market conditions continue to evolve in the manner which I’ve expected:
Resilient & dynamic with some modest softening.
All of the data from the past week confirms that this theme is intact, primed to usher in at least 0.25% worth of rate cuts in the September FOMC meeting on September 18.
While I haven’t ruled out the possibility that the Fed will cut interest rates by 0.5% in September, my belief is that the Fed will only cut by 0.25%.
So why aren’t asset markets rising higher on the back of this resilient data with rate cuts around the corner?
I don’t know.
Most other analysts won’t have the ability to say that, but I could either lie to you and fabricate a justification with the benefit of hindsight or be transparent, as always, and explain that the market performance this past week caught me off guard.
In the holiday-shortened trading week, the S&P 500 fell -4.12% after having its second highest daily close of all-time last Friday, August 30th.
Bitcoin fell -4% alone on Friday, generating a weekly return of -8.8%.
The fact of the matter is that Bitcoin and equities are moving lower together, with the chart above comparing the performance of BTC vs. S&P 500 futures since late August.
In this environment, Bitcoin isn’t facing idiosyncratic risks — it’s simply behaving like a risk asset during a period where investors are taking risk off the table.
But this correlation & volatility is providing a lot of opportunity for traders, so kudos to the traders who were able to take advantage of shorts this past week. Regardless of what your bias is, long or short, the recent leveraged products from REX Shares are helping investors get directional exposure to spot Bitcoin ETFs with leverage.
For example, their inverse 2x spot Bitcoin ETF, BTCZ 0.00%↑, gained +19.7% this week! Of course, this means that the T-REX 2x Long Bitcoin ETF, BTCL, lost a similar amount with a weekly return of -17.6%.
These products carry significant risk due to their leverage, but can provide traders with significant opportunity if they are able to take advantage of short-term trends and market dynamics.
You can read more about REX Shares’ products here.
If you want to access my latest thoughts on Bitcoin and the current levels that I’m focused on, check out my comprehensive post on X, which has exceeded 50k views.
This X post about Bitcoin was arguably the most important piece of analysis that I shared throughout the week, so don’t miss it!
Best,
Caleb Franzen,
Founder of Cubic Analytics
Best,
Caleb Franzen,
Founder of Cubic Analytics
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DISCLAIMER:
This report expresses the views of the author as of the date it was published, and are subject to change without notice. The author believes that the information, data, and charts contained within this report are accurate, but cannot guarantee the accuracy of such information.
The investment thesis, security analysis, risk appetite, and time frames expressed above are strictly those of the author and are not intended to be interpreted as financial advice. As such, market views covered in this publication are not to be considered investment advice and should be regarded as information only. The mention, discussion, and/or analysis of individual securities is not a solicitation or recommendation to buy, sell, or hold said security.
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