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GM.

Despite handily beating earnings estimates and guiding higher for next quarter, NVDA is down 9% since reporting on Wednesday, dragging the Nasdaq down 3% with it.

This morning’s in-line inflation data has given markets some level of relief, but bounces have been muted in the wider scope of recent performance.

Crypto assets have largely been battered.

Earlier this week we wrote that a bitcoin close under $92k and a SOL close under $160 would force us to shift from our full risk-on bias for the first time in years, and that has come into fruition.

While we expect this morning’s bounce to continue in the near term, we think it’s more likely BTC revisits the $74K-$75K area than it is to convincingly recapture its range above $94K in its next move.

$73-$75K would be an outstanding area to buy should we get it - here’s how we think it could play out:

This setup would be invalidated should BTC convincingly close over $92k in the near-term, where we’d turn full bullish again.

Inflation and Monetary Policy Outlook

Synopsis:
January’s core PCE inflation aligned with expectations (0.3% month-over-month, 2.6% year-over-year), providing limited relief to the Federal Reserve. Despite moderated inflation readings, the Fed remains cautious, with markets not pricing in rate cuts before mid-year due to lingering inflation concerns and policy uncertainties.

The Details:

• PCE Data: Core inflation rose by 0.3% MoM and 2.6% YoY, matching analyst expectations and suggesting stable yet still elevated price pressures.

• Fed Response: Rates expected to hold steady at the March 18-19 meeting. Markets foresee potential rate cuts starting June but contingent on clearer inflation moderation.

• Economic Risks: Tariff threats and ongoing economic uncertainties, highlighted by declining consumer spending (-0.2% in January) and increased imports driven by preemptive actions against tariffs, risk economic contraction.

WHY IT MATTERS: Persistent inflation above the Fed’s 2% target combined with consumer caution and tariff-induced uncertainties create a challenging macro environment. Investors should remain vigilant about prolonged higher rates affecting growth prospects and consumer sectors.

• Fed skepticism: Potential policy errors amid elevated inflation, questioning effectiveness of continued tight monetary policy.

• Opportunities: Defensive sectors, interest rate-sensitive financial instruments.

• Risks: Consumer spending pullback, tariff-induced economic drag, protracted rate environment.

Geopolitical and Commodities Developments

Synopsis:
President Trump announced a strategic minerals deal with Ukraine aimed at securing rare earths essential for AI and military technology, suggesting a possible near-term resolution to the Ukraine conflict. However, Trump’s simultaneous threats of expansive tariffs against major trading partners present a conflicting economic picture, potentially undermining market stability.

The Details:

• Ukraine Deal: Trump administration confirms rare earth minerals agreement with Ukraine, focusing on applications in AI and military technology, potentially altering geopolitical dynamics.

• Tariff Threats: Persistent threats of tariffs against Canada, Mexico, and China introduce substantial uncertainties, potentially elevating consumer and import prices and hampering economic growth.

• Market Reaction: Businesses preemptively increasing imports ahead of tariff impositions, reflecting heightened uncertainty.

WHY IT MATTERS: While securing critical minerals strengthens strategic capabilities in tech and defense, broad tariff applications threaten economic stability. Investors should monitor sector-specific impacts closely, particularly tech, defense, and import-heavy industries.

• Opportunities: Strategic positioning in defense, AI sectors.

• Risks: Increased input costs, inflationary pressures, broader economic slowdown risks due to tariff-related uncertainties.

Crypto Market Sentiment

Synopsis:
Cryptocurrency markets continue to face downward pressure, particularly among altcoins, driven by skepticism toward meme coins and valuation adjustments in bitcoin-related equities. The sector's instability may weigh on market segments heavily linked to crypto investments, signaling broader caution.

The Details:

• Bitcoin Pressure: Market questioning appropriate valuations of bitcoin-centric equities, notably MicroStrategy, affecting bitcoin stability.

• Altcoin Declines: Extensive declines among meme and alternative coins due to heightened skepticism and regulatory scrutiny.

• Wealth Effect: Continued crypto market downturn reduces broader market liquidity and investor sentiment.

WHY IT MATTERS: Persistent crypto market weaknesses could pressure interconnected equity segments and exacerbate investor caution, offering selective opportunities in undervalued assets for strategic long-term investors.

• Opportunities: Selective long-term crypto assets, hedged equity positions.

• Risks: Regulatory risks, continued valuation volatility, spillover effects on correlated equity sectors.

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