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Read by heads of trading at the world’s biggest hedge funds and investment banks, Connecting the Dots by London Crypto Club covers everything you need to know in macro and crypto.

The 2 authors have a combined 38 years of experience working in macro trading roles at the biggest central and investment banks and now work in institutional crypto trading.

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Key inflation gauge for the Fed rose 0.3% in March as expected (2 min read)

The personal consumption expenditures price index (PCE), a key inflation measure for the Fed, rose just 0.1% for the month and 4.2% annually, which was down sharply from the previous month. The core PCE, which excludes food and energy, rose 4.6% on an annual basis, slightly higher than expected, but the monthly increase was only 0.3%, about 0.1% lower than in February. Despite the figures are still well above the Fed’s 2% target, it continues to ease and is likely to support a pause in the central bank’s rate hike campaign after May.

Bank of Japan sticks to negative rates while announcing policy review (4 min read)
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The Bank of Japan has left its interest rates unchanged and maintained the tolerance range for its 10-year government bonds at 0.5% above and below its target of 0%. Japan’s negative rate policy has been a long-term measure to stimulate the country’s economic growth. Despite market expectations, the bank stood by its current policies and stated it would not hesitate to take additional easing measures if necessary. The bank also forecasts inflation to be around 2.5% for 2023 and between 1.5% and 2% for 2024 and 2025.

Google, Microsoft and Meta each said ‘AI’ nearly 50 times on earnings calls. Here’s why we should all care (5 min read)
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Tech giants like Alphabet, Microsoft, and Meta have all mentioned the word “AI” dozens of times in their recent earnings calls. That was also the keyword that sent all of their stocks higher in the same week. With the enormous influence over billions of users who rely on their platforms for various aspects of their lives, these companies can likely control the AI landscape and lead the industry to success. As investors clamor to invest in generative AI technology, the views of these big tech firms and their actions can have wide-ranging implications.

First Republic most likely headed for FDIC receivership, shares drop another 40% (2 min read)
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Shares of First Republic continued to fall, dropping another 40%, and were halted multiple times on Friday. The stock has already plunged more than 50% since reporting its Q1 financials earlier in the week that showed nearly half of its deposits were lost during the banking crisis in March. Sources revealed that the most likely outcome for the bank was for the Federal Deposit Insurance Corporation (FDIC) to take it into receivership. Year to date, the stock has fallen more than 90% as investors increasingly lose confidence in the bank.

The New VIX Isn’t Better Than the Old VIX (2 min read)
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The Cboe has launched a new “fear gauge” volatility index, the VIX1D, to measure the implied volatility of S&P 500 index options that expire in a day or less. The VIX1D is designed to be much more responsive to current events than the VIX, but some market participants argue that it may be too responsive to near-term events, rendering it less useful as a sentiment gauge. While the VIX has become a popular fear gauge, the usefulness of the new index remains to be seen. It is unlikely that an ETF tied to the VIX1D will be launched soon.

Why Defined Outcome ETFs Are So Popular (Podcast)
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Defined outcome ETFs, or buffer ETFs, have grown rapidly over the last several years due to their ability to significantly protect the downside of a portfolio. The total AUM for these ETFs was only $100,000 in 2018 and today it has over $21 billion. Innovator is the pioneer and current dominant provider of defined outcome ETFs. This podcast is with their CIO where he breaks down everything investors need to know about these ETFs and why they became so popular.

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Thanks,
Thomas

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