Cryptos and Stocks Rise on US Slowdown – Trustnodes

US stocks saw a 1% gain on Thursday with Nasdaq rising another 1.2% on opening today.

Bitcoin crossed $24,000 and eth almost touched $1,800 even while US GDP data showed a second slowdown quarter over quarter.

The economy still grew 1.6% year on year, and remains far off a recession which is defined as a contraction in two quarters, but year on year, rather than quarter on quarter.

No president can change facts, but clearly they can confuse with the help of their own statistics bureau which buries the data that actually matters, year on year, deep into dense text and tables.

So the economy is growing, not contracting, but the growth is slowing down from China levels, back to sclerotic growth thanks to Jerome Powell and his hurried hikes.

Fearing more hikes, any indication that Powell will stop is taken as good news by markets, especially if it is actually bad news.

A slowdown therefore is a reason to buy, apparently, and an actual contraction, by this logic, is a reason to throw a party.

That’s presuming inflation will cool and therefore Powell will stop hiking, which is followed by the second presumption that once he stops, we can have good growth again.

Yet the question is whether he has killed growth, and for good. Proper growth that is, with it anyone’s guess what the medium to longer term effects will be of going from 0.5% to 2.5% in four months.

That’s a 5x increase in just 12 weeks with another hike of 0.75% expected by the commentariat.

The fear that something might break, which is probably what caused the crash earlier this year, can be a good explanation and a good reason for some to be joyful at a slowdown, cheery at back to stagnation.

Plenty of this generation, however, might feel anger instead that some have been a bit careless at a rare opportunity to shake the economy into good growth.

That will raise the profile of bitcoin even further, for we will have a present example of the harm that can be caused by such a centralized control over money.

So traders are not happy, they just have to play the cards they’re dealt. They would have been a lot happier if Powell had gone a lot slower.

They don’t care about inflation, and as long as there is good growth, no one does. We know how to deal with inflation. If necessary, you can just hike 20% and be done with it.

But, as the past two decades have shown, the grandpas don’t quite know how to deal with kickstarting proper growth.

It would have thus been more reasonable to be extra cautious in favor of growth, in which case we would have not had a crash with trillions wiped out, and interest rates could have still gone to 2%, though a lot more slowly, and we may have kept on a good rate of growth.

What’s done is done though. We have the ECB in an A/B test as they’ve gone at a reasonable pace so far. Europe is continuing to see proper growth, while US slows down and while, quite tellingly, both nonetheless have the roughly same inflation rate of 9%.

As both have been booming and Europe still is, we go back to our theory that gas prices are at these levels primarily due to economic activity than Putin games.

But gas is not a fixed asset. Supply can be increased as demand increases, and for gas specifically, there have been many movements that should lead to the expectation of such increases.

Crashing gas therefore, if it isn’t primarily due to Putin games, is less reasonable than otherwise.

If the aim is not to crash gas, then crashing the economy is just self harm, and so we’re probably at the stage where any further rate hikes by fed will edge towards it being politically unbearable, with Biden of course to take the blame because he did hold a private meeting with Powell prior to Powell changing course from his strategy, which we found reasonable, to go slow to kickstart proper long term growth.

The answer to the current donkiness so being in politics, it may well be that only Britain, once again, can lead Europe and US in the proper direction.

The conservative party members there are choosing between Rishi Sunak and Liz Truss. The latter is the frontrunner, and she plans some reforms, including on fiscal policy, that prioritize proper growth and getting out of stagnation for good.

That energy and focus, if she does become the next Prime Minister, may well be precisely what is needed currently to grab this rare opportunity and set the economy in the right direction.

With that bearing fruit, the rest will follow. And so, it will of course in the end be the electorate that decides what is the right course, what is the right tradeoff.

So far, they have not yet been given the opportunity to have a say. But once they do, you’d expect them to choose anything, anything, other than stagnation.

Because no one will vote to be fired from their job as Powell plans, and we suspect under Biden’s direction. A Biden that has completely failed in that energy diplomacy.

So bad news is good, but there is an alternative where bad news wouldn’t be desired. That makes this mess a choice by very few men, and they have to change course if they want to keep their jobs.

Because the first casualty of any slowdown and the first to increase the unemployment line to loosen the job market, may well be those men themself who dare tell this generation you can’t have good growth.

Well, the only response to that is you can’t have the office as the public may see less harm and more good that way.