“Fed Watch” is a macro podcast, true to bitcoin’s rebellious nature. In each episode, we challenge the mainstream and Bitcoin narratives by examining current macro events around the world, with an emphasis on central banks and currencies.
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In this episode, CK and I had the privilege of sitting down Andreas Steno, who is the publisher of Real Vision, co-host of the “Macro Trading Floor” podcast, and author of the “Steno Signals” blog on Substack. Our discussion focuses on the energy situation in Europe, but we start by talking about the rate hike by the Federal Open Market Committee (FOMC). Steno has extensive knowledge of Bitcoin and his “Macro Trading Floor” podcast is hosted by Blockworks, which means we also got to pick his brain about his thoughts on the Bitcoin market.
The Federal Reserve raises Fed funds by 75 basis points
Our timing for this interview was fortuitous, because we were able to speak with Steno immediately after the Fed released its policy decision, even before he gave his own “Real Vision” briefing.
Let’s start by getting Steno’s broad reaction to the Fed’s policy decision. He claims that Chairman Jerome Powell was very clear that they do not want the market to bet on a pivot. The dot plot showed that the average of FOMC members expects the Fed to hike to 4.5% in early 2023. The intent was also very clear: They want to lower asset prices, to crush demand.
Interpretation of the consumer price index
The Fed is trying to be very clear about its goals and its methods, and also very clear about the cause of its policy trajectory, which is above the CPI target. I asked Steno about his thoughts on the US CPI numbers.
His thinking is in line with mine, that the CPI appears to have peaked, with the largest contributor to the August CPI being protection, which is known as the most lagging part of the basket. Therefore, if the lagging part of the basket is the only component that continues to rise, it must mean that the price momentum is reversing.
Steno also says he expects the CPI drop to surprise most people, offering plenty of reasons, which you’ll have to see or hear.
European energy crisis exaggerated?
The topic he was most eager to talk about was the European energy crisis. Steno lives in Europe and has extensively researched energy flow. In the interview, he gives the figures for natural gas storage and flows around the world. It was also amazing to learn that perhaps the biggest contributing factor to the crazy price increase was the fact that European leaders ordered countries to rush to fill their reserves. This caused everyone to buy additional natural gas at the same time. Now that reserves are nearly full, and it’s before peak natural gas usage season, there could be a reverse effect where prices fall.
Overall, listening to Steno, I got the impression that the situation is less dire than the mainstream financial press would have us believe. There will be pain this winter, the economy has already experienced some fallout in the chemical industry and so on, but it is not a civilization-ending event as many think.
In this episode, of course, we talk about bitcoin and the possibility of a breakup of the euro currency. Steno has some strong views on the structure of the euro and the likelihood of bitcoin stepping in and making a difference in a breakout, but you’ll have to watch and listen to hear it.
This is a guest post by Ansel Lindner. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
