Dispatch #118: Has Inflation Turned а Corner?

Dec 17, 2022 3 min read

Dispatch

In this patch of your weekly Dispatch:

Inflation beats estimates to the downside
SBF arrested
Nexo Wallet beta goes live 💥

The Big Idea

The Second Month of Declining Inflation

As the crypto industry was distracted by the FTX show, some might have missed the US Bureau of Labor Statistics reports on recent inflation numbers. In October, inflation came down to 7.7% (from the 8.2% the previous month). In November that number decreased to 7.1% which is not only the lowest inflation has been since January, but also beat estimates.

Importantly, a deeper dive into the numbers showed that the decrease was attributable to a broad range of categories coming down, as opposed to being concentrated in a single area.

Markets responded well to the news. When the FOMC delivered the anticipated 50bps interest rate hike on Wednesday, those same markets were paying more attention to Powell’s words than the specifics of the hike, which was by and large priced in. After Powell indicated that Fed officials believed that rates would go up at least another half percent next year, stocks went down slightly.

Still, it’s clear that we are entering a different phase of this hiking cycle. There is a growing debate between hawks and doves within the ranks of the Fed, and Wall St. seems to be as concerned about growth as it is about inflation. Whether we’ve finally passed peak inflation remains to be seen, but we’re not going to lie – it’s nice to have a little bit of optimism again.

The Latest In…

The FTX Fallout

Last week we told you that it appeared that the noose was tightening around Sam Bankman-Fried. Little did we know how tight! On Monday, Sam was taken into custody in the Bahamas at the request of the US Department of Justice. On Tuesday, the unsealed indictment showed that he was being accused of eight counts of fraud and conspiracy to commit fraud. The SEC and CFTC also filed civil complaints. The claims paint the picture of someone who didn’t just make a few errors in judgment, but who from the very beginning treated customer deposits like their own piggy bank. After being denied bail, he was reprimanded to prison where he’ll await either extradition or another hearing in February, 2023.

The Latest In…

DeFi Mainstreaming

You can’t DeFi the gravity of the Nexo Wallet which just launched in beta for all of our wait listers! Our non-custodial product went guns blazing with a full suite of features, including the first-of-ts-kind opportunity to create a Web3 Identity – your on-chain identity that proves you own all those cryptos and NFTs, transaction “batching” to save on gas fees, and a bunch more “coming soon” products like Earn and DeFi Cards. To mark the launch, one of the people behind the product, our very own Elitsa Taskova wrote a piece to explain why we still need both centralized and decentralized financial tools, as well as why DeFi capabilities will be the next big thing.

The Week’s Most Interesting Data Story

That’s Just About Enough Lost, Thanks

This bear market has felt absolutely brutal. With institutional failures and the simple fact of numbers going down, it’s been rough. Interestingly, however, the ratio of the losses in 2023 compared to the gains in 2020-2021 looks quite similar to what happened in the last bear market. In that previous period, $117B in gains was followed by $56B in losses – a relative loss of just under 48%. 2020-2021 meanwhile saw $455B in profits, followed this year by $213B in losses – just under 47%. The only possible conclusion? We’ve had enough losses thank you very much!