Good News: Tech Stocks & Ether Leap on PPI Report

GM and BRRR.

Today’s less-hyped inflation data point served as a reason to rally today. The Producer’s Price Index (PPI) was actually negative 0.5% month on month and merely 2.7% higher year on year.

Markets liked to see the cost of production coming down.

Few assets gained as much in terms of percentage or total market cap as Ether ($ETH, +5.6%, $2010, $242B market cap), the token of the Ethereum network.

Ethereum developers successfully upgraded the network yesterday to allow staked Ether to be withdrawn for the first time. Since the staking contract was created nearly 2 years ago, about 15% of all ETH in existence had been deposited, or about $34B.

Some worried that the unlock would send price down, as stakers would look to cash in their ETH after ~30% gains and ~5% annual yield since depositing.

What happened was the opposite - because the upgrade went smoothly, there was a surge in deposits into the system, as the successful launch and complicated migration from Proof-Of-Work to Proof-Of-Stake had significantly de-risked the investment.

We love Ether right now and we love it long-term. It’s one of our core holdings in our public portfolio we share at the end of the newsletter.

Here’s what we brrr’d today:

• Wall Street gets high on Big Tech, Bullish for a few

• Deflation, followed by “mild recession”

• ETH Shanghai -is it a success?

Wall Street goes high-Tech, cold on corporate profits

• Wall Street rallies: The US stock market experienced a rally, with the S&P 500 and Dow Jones Industrial Average reaching their highest levels in almost two months.

• Inflation cools: This was due to a report showing that inflation at the wholesale level slowed more than expected last month, at 2.7% higher than a year earlier, the lowest level in more than two years.

• Tech stocks leap: High-growth stocks, particularly Big Tech stocks like Apple, Microsoft, and Amazon, rose, as traders hope that cooler inflation could lead to a less aggressive Federal Reserve and fewer interest rate hikes.

• Job market remains solid: A separate report showed that slightly more workers applied for unemployment benefits last week than expected, but the job market has remained remarkably resilient, which could ease inflation pressure.

• Corporate earnings forecasts low: The biggest US companies are starting to report their earnings for the first three months of the year, with forecasts calling for the sharpest drop in earnings since the pandemic.

  APNews

Deflation creeps in with ‘mild recession’

• Recession on horizon: The producer price index (PPI) increased by just 2.7% annually, below the Fed's target for consumer inflation of 2%, indicating deflation.

• Break for Businesses, not for consumers: Input costs for businesses have decreased, but this has not yet translated into savings for consumers as companies are increasing prices for customers to boost profit margins.

• Unemployment spike by ‘23: The Fed expects a potential recession later this year, causing a spike in the jobless rate to 4.6% by the end of 2023, which would disproportionately affect Black Americans.
  The Hill

ETH rolls out Shanghai upgrade

• ETH gets buff: Ethereum's highly-anticipated software upgrade, known as the "Shanghai" or "Shapella" upgrade, has gone live, allowing stakers to begin withdrawing their crypto. Previously, stakers were still earning financial rewards while locking up their tokens to secure the netowkr, but their investments were not liquid.

• Signficant stake: Over 15% of all ethereum is staked, an amount worth $33.73 billion. Investors can begin selling off some of these assets.

• Volatility expected: The upgrade may cause temporary volatility in the market; may be at least $300 million worth of selling pressure, and some validators who had legal and financial difficulties during the lockup period may now sell their tokens.

• For the better: The upgrade is largely positive for the network's future. It finalizes the switch from Ethereum's proof-of-work to proof-of-stake mechanism, which cuts the network's energy usage by 99.9%.

• Greater participation: Some experts see the upgrade as a bull case for more institutional investment in Ethereum's network. Now easier for institutions to stake ETH and access liquidity by being able to unstake their ETH. Paves the way for broader institutional participation in ETH staking, which is essential for the future security and stability of the network.
  Business Insider

AI ART OF THE DAY

Janet Yellen continues to insist she’s a geopolitical expert - encouraging Congress to continue authorizing billions for Ukraine.

She also moonlights as a professional hot dog eater.

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The BRRR is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.