Weekly Market Memo 21/3-27/3 BTC, US stocks, HSI

Market Observation

The labor market of the US is strong. The rise of wages increases people's purchase power and demand. It turns out adding fuel to the inflation. The Fed is now trying to lower the inflation rate to 2% with the well-equipped tools. These tools are expected to be effective to both the supply and demand sides. However, the uncertainties are the war between Russia and Ukraine and the supply chain issues. These two evolving incidents may raise inflation quickly and high. The Fed is in a very passive position in dealing with the highly uncertain incidents. If necessary, the Fed can raise more than one percentage point of interest rate at a time.

The prices of commodities may rise significantly because of Russia's invasion.

News

Crypto

Both the BTC and ETH balance in major exchanges hit the lowest in 2 years.

Finance and politics

The relationship between China and western countries are going to be worse because of the Ukraine and Russia war. The stance of Chinese authorities does not align with western countries in many international arenas.

War (Ukraine and Russia)

The war has disrupted the supply of neon gas which is the main material for making chips. Two Ukrainian companies, Ingas and Cryoin, have been supplying 45% to 54% of the world's semiconductor-grade neon gas.

Russia and Ukraine are seeking to end the war by negotiation.

The Fed's Announcement

Jerome Powell announced the raise of interest rate by a one-quarter percentage point in 16/3 (UTC). The household balance sheet, business balance sheet, payroll, and job growth are performing well. The reduction of the Fed's balance sheet can be started as soon as May. The current strong US economy can bear the tightened monetary policy.

The objectives of the Fed include the achievement of stabilizing the price and sustaining the labor market. The stat shows 1.7 job openings for one unemployed person in the labor market. The shortage of labor raises the upward pressure on wages. The raised wages are going to the hands of labor and the laborers are going to spend the money in the market. The price of the products will be raised further.

Jerome Powell admits that the war between Russia and Ukraine is highly uncertain and raises the price of oil and commodity. The prices also are going to weigh on the GDP growth to some extent. The projection of GDP growth may have a lag.

Jerome believes that the supply chain problem worsens as businesses are avoiding touching Russian goods.

Overall, the Fed predicts that the inflation rate (e.g. PCE inflation) remains the highest through the middle of the year. Then coming down and coming down sharply next year.

As one of the actors in the market, the Fed does not want to be one of the uncertainties in the market. The details of shrinking the balance sheet will be disclosed after the finalization of the policy.

Market Trend

BTC
41641 (3/20 20:47 UTC+8)
Review of analysis: excellent
This week's analysis: BTC has gone through a very good recovery week. It is pretty sure that the level of 37555 - 40000 is a very strong support. If the current recovery trend continues, a pump will come. Let's monitor the live trend to see when the time is likely to come. ;)
Overall Ranking: 3.25/7

DJI
34754 (3/20 21:25 UTC+8)
Review of analysis: I stated that I have confirmed a DJI downtrend unless DJI could bounce back and stand above 34200.
This week's analysis: DJI really re-bounces above 34200. I need to adhere to my analysis. The downtrend has come and gone like the wind. This re-bounce is very strong. If the momentum can sustain, a bull market comes along with the re-bounce. 34000 and 34800 are two critical prices.
Overall Ranking: 4/7

Crude Oil
103.2 (3/20 21:27 UTC+8)
This week's analysis: Oil price has reached 126.48 which is the highest in 7 years. 96 - 100 is the current support level. If the war between Russia and Ukraine can settle via negotiation (hopefully), the supply problem of oil will be relieved and the price will go down.
Overall Ranking: 4/7