Previous week recap
One of the most important events of the previous week was the US GDP q/q. The U.S. economy shrank in the first three months of the year, and faces threats from high inflation and rising interest rates, yet economists foresee a return to growth for the rest of 2022 based on the strength of the job market and consumer spending.
The first quarterly decline in gross domestic product since the pandemic hit in 2020 – a 1.4% drop on an annualized basis – is not likely a prelude to recession, economists say. That may bring little comfort to President Joe Biden and Democrats, who face mid-term elections this year in which rising prices for food, energy and other essentials will be a major theme of Republican opposition.
- Crypto Donations Halted By Wikimedia Foundation
Wikimedia Foundation, the parent organization which manages Wikipedia, has decided to halt the acceptance of crypto donations after a community vote on a poll revealed that 71.17% of respondents wanted to discontinue all cryptocurrency donations. The poll which had a total of 400 respondents, was the result of a three-month-long community discussion on the environmental implications of cryptocurrency mining.
- Warren Buffet Bashes Bitcoin, Again.
At the recent Berkshire Hathaway Annual Shareholder meeting on April 30, Legendary TradFi Investor Warren Buffett took the stage to remind listeners of his avid contempt for Bitcoin. Buffet who had earlier called Bitcoin “rat poison squared” stated that Bitcoin does not offer tangible value, unlike business or property.
Mr. Buffet was quoted saying,
“If you told me you own all of the bitcoin in the world and you offered it to me for $25 I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything.”
- Goldman Sachs Offers Its First Bitcoin-Backed Loan
This means that crypto investors can now borrow fiat money from Goldman using their bitcoin holdings as collateral. This is the first time in Goldman Sachs’ history, that such a product has been offered.
According to a spokesperson from Goldman, the most interesting part of the facility was its structure and round the clock 24-7-365-day risk management system.
Current Week News
A busy week ahead packs both manufacturing and services PMI data releases for April to provide an update on the health of the global economy alongside central bank policy meetings at both the US Federal Reserve and the Bank of England. Meanwhile April’s US labor market report will be released on Friday with a string of inflation figures also due from APAC economies.
The Fed convenes 3-4 May to update their monetary policy with the consensus currently pointing to a 50 basis points (bps) hike following the 25bps hike implemented in March.
According to the CME Fed Watch tool, the market has fully priced in the 50bps hike for May and expects a further five to six 25bps hikes before the end of year. While no updates to economic projections will be anticipated in the upcoming meeting, the post meeting statement and Fed chair Jerome Powell’s press conference will be closely watched for the Fed’s rhetoric with recent concerns about inflation, slowing global growth and the implications of policy tightening.
April’s labor market report will follow on Friday with the consensus suggesting a strong 400k addition to non-farm payrolls and unemployment rate to stay unchanged at 3.6%.
Europe: Bank of England, Norges Bank meetings
The Bank of England (BOE) convenes for the third time this year and is set to implement its fourth successive hike at 25bps according to consensus. April’s flash UK PMI survey pointed to rising inflationary pressures, backing the BOE’s tightening stance. That said, signs of cooling economic growth had also been signaled, which may be further pressured by rising interest rates
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Goldman Sachs Offers Its First Bitcoin-Backed Loan
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