Where Are We Headed?
This weekly is on the early side and I am wary of what Friday brings, especially as the debt ceiling saga gives rise to further bond market volatility.
It has been a torrid week in the world of Cryptocurrencies. Over the past seven days, we have seen prices fall between -17% (Cardano) to -53% (ICP). So, what was the catalyst?
One thought is China announcing it is banning financial and payment institutions from providing cryptocurrency services and warning investors against speculative trading*. However, this is not something new with China forewarning about this some time ago.
It doesn’t stop there either. The Biden Administration announced proposals for transfers of at least $10,000 of digital FX to be reported to the IRS**. The Treasury also wants crypto activity to be monitored.
Prior to this, we saw how Elon Musk is muddying the waters, and after saying he would accept Bitcoin as payment for Tesla, he then did a U-turn suddenly citing the environmental toll of Bitcoin mining as a reason. Technical factors have also been given for Bitcoin’s recent volatility, particularly around its 200d moving average.
Overall, we have seen strong economic data this week on the manufacturing and activity fronts. Two points are worth noting: (1) activity did not fall as much as analysts had expected over the last couple of months despite lockdowns and (2) services is picking up very strongly boosted by really strong demand. So, perhaps unsurprisingly inflation pressures are mounting.
In the latest round of international tax talks, the Biden team proposed a global minimum corporate tax rate of at least 15%***, much lower than the 21% first mentioned and much closer to the 12.5% discussed at the OECD
*** Source 3
Industrial production growth in China slowed to 9.8% y/y (March: 14.1%); whilst Fixed Asset Investment growth slowed to 19.9% YTD y/y (March: 25.6%); and Retail Sales growth slowed to 17.7% y/y (March: 34.2%). Of course, March was a strong month given China went into lockdown ahead of others. April suggests things are still on track.
From the 1st June, foreigners in the UAE will no longer need an Emirati shareholder or agent and can therefore be 100% foreign-owned.
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