SignalPlus Macro Analysis Special Edition: Is Resumption of Work Imminent?

Macro assets had a tough performance last week, with the Nasdaq index experiencing its worst weekly decline since the "liberation day" in April, primarily weighed down by concerns over an artificial intelligence bubble burst and disappointing economic data.

Although considered "non-core" data, the Challenger job-cut report released last Wednesday shocked market participants — the number of layoffs in October surged to 15.3 million (an increase of 9.9 million month-on-month), marking the largest increase for the same period since 2003, with layoffs primarily concentrated in the private sector. Breakdown data shows that warehouse industry layoffs accounted for over 30%, followed closely by the tech industry at 22%.

Additionally, undoubtedly related to the duration of the government shutdown, the University of Michigan Consumer Confidence Index fell to its lowest level since June 2022 (50.3, consensus expectation 53), while short-term inflation expectations remained sticky at around 3.9%. However, with positive progress expected this week regarding the shutdown issue, the market will look forward to a rebound in sentiment next month, indicating that this is just a temporary downturn.

This morning's headlines indicate that Senate Democrats have voted with Republicans (60 votes to 40) to overcome procedural hurdles and advance a proposed plan aimed at ultimately restarting the federal government. The bill still needs to pass a vote in the House of Representatives, which may not be completed until Wednesday or Thursday, meaning it could miss the timely release of key inflation data.

This apparent agreement comes at a time when President Trump and the Republicans have faced a series of setbacks, starting from the "blue wave" midterm elections to the Supreme Court ruling the president's tariff policy unconstitutional. If the final ruling is unfavorable, it may require refunds related to the International Emergency Economic Powers Act tariffs, which would offset a significant portion of this year's fiscal deficit improvement and introduce new uncertainties to the fiscal and debt issuance path starting in 2026.

Perhaps in response to these recent defeats, President Trump has proposed a new stimulus plan in the form of a direct payment of $2,000 in "tariff dividends" to the American public, along with a new 50-year mortgage to improve housing affordability.

The "tariff dividends" evoke memories of the stimulus checks during the COVID-19 pandemic, which were a direct and effective monetary stimulus measure, while the ultra-long-term mortgages would add extra leverage to the system. Both should be seen as new forms of liquidity easing.

Although traditional financial assets were closed for the weekend when the news broke, Bitcoin rose by about 2-3% due to the government's full commitment to its "loose monetary" path. The Nasdaq index also successfully held above the 50-day moving average during last week's sell-off, just as Bitcoin has so far successfully maintained the $100,000 support level.

Seasonal factors in stock fund flows are also entering December, the most positive month, so it may be time to start preparing for the Christmas rally, as it currently seems that most known risk factors may have passed.

Cryptocurrency assets have been on the defensive for most of the week, with Bitcoin doing its utmost to hold the $100,000 line after a series of perpetual contract liquidations, ETF fund outflows, and original "whale" sell-offs.

Additionally, as more victims of the October 10th crash continue to surface, following the unfortunate incident with Stream Finance, we are seeing increasing outflows in total locked value from many DeFi yield protocols and a decoupling of stablecoins.

Meanwhile, while mainstream coins and major altcoins are under pressure, established privacy coins (such as Zcash) have been on the rise, with this sector increasing by about 100% over the past month. Given the deepening control of traditional finance, the narrative around privacy demand has revived, but it remains unclear whether this is a sustainable theme, especially in the current legislative environment.

In any case, it is reassuring to see at least some sectors performing well amid the current downturn, and we cautiously believe that Bitcoin has so far held its lows. As market positions have been cleaned out for a long time, we tend to be optimistic as we approach the end of the year, especially considering the aforementioned improving macro catalysts.

Good luck and happy trading.