Keep in mind how markets work. Whether it's stocks, or crypto.

Markets speculate on future value. Hence the famous phrase "buy the rumor, sell the news".

So even if we're in a recession, the market only cares about what's next, not what's happening now.

Also, keep in mind the difference between Wall Street vs Main Street.

Crypto and stocks are based a little more on speculation, and can seem more irrational, and out of synch with main street.

GDP:

We are officially in a recession in the US. At least if you go by the simplified definition of 2 consecutive negative GDP.

So markets should go down right?

GDP is actually a lagging metric. It looks back at the last 3 months.

The latest GDP numbers may have shown further evidence of a bottom, and possibly the worst already happening in the past months. Last quarter, GDP was -1.6%. And this quarter that drop has slowed to -0.9%.

If you look at the monthly GDP, we were briefly flirting with -2% GDP (coinciding with peak oil prices), and slowed back to -0.9%.

A negative GDP was pretty much expected already. We already had data for that. So that part should have been priced in. What the market was waiting for, was the extend of the damage, and evidence of the worst being behind us.

Inflation:

This one keeps getting worse. So why is the market not taking further?

That last figure for CPI wast at 9.1%. A pretty scary figure.

Yet markets went up.

There's many elements to this. But the biggest one is energy.

Energy was by far the biggest culprit of the increased CPI. In fact, energy alone, accounted for the entire increase in CPI, compared to the previous quarter.

That came from having oil prices hitting $122 a barrel in June for that quarter. But OPEC has started a series of increases of output, and oil prices have since dropped below $100. Recently bouncing between $98-$94.

So the main culprit of the much higher CPI, is now going down. Not having the Fed printing stimulus money, does also help.

Earnings:

Remember last week all the posts saying we would drop, because earnings would miss this week?

Earnings did miss, but stocks and crypto still went up.

A part of it was because everyone was already expecting a miss. If for a couple weeks all you hear is everyone saying earnings will be bad, and it's gonna be a tough week, then chances are, the market already expects this.

But the other thing is, GOOG and MSFT weren't quiet as bad as maybe some people were expecting. Especially putting things into context. They still performed well under strained conditions, and still had some hefty revenue.

Supply and demand:

This is really the biggest factor. If you run out of enough sellers (maybe because all the people who wanted to panic sell have already panic sold), prices become too oversold or too cheap, demand returns, shorts become too easily squeezed, there's not enough stop losses low enough to dive down, etc…Then the laws of supply and demand will kick in. There's only so far a bearish phase…or an entire bear market can go before it runs out of fuel and selling pressure.

This could be just a bearish phase running out of fuel. Or the entire bear market.

Crypto outlook:

Crypto could form a bottom and begin to recover before stocks.

Mainly because it's a much faster moving market, more volatile, than stocks. It goes through its bear and bull cycles much faster than the stocks market.

It's more vulnerable to speculation.

We even often see Bitcoin crash, or pump, before stocks. Even when the Fed rate hike was released, Bitcoin reacted half an hour before stocks.

The entire bear market started about 2 months ahead of stocks.

While it has been correlated to stocks this year, that may not last very long. It moves at a different speed, and different volatility. We can already see the statistical correlation beginning to drop.

Is crypto beginning to decouple and return to follow its own cycles?