#1124 Darius Dale | Should We Expect The Fed To Pivot?

— Inflation remains elevated despite year-over-year base effects; core and sticky inflation measures likely to retrace higher sequentially into late 2022 and 2023.

— The Federal Reserve faces two potential pivots: first, a deceleration in the pace of rate hikes (already priced in); second, a full pivot to looser policy, which may be over a year away.

— U.S. household balance sheets are historically strong with $7.6 trillion in liquid cash reserves, low debt-to-income ratios, and minimal debt service burdens, delaying recession pressure.

— Recession probability rises in the 12–18 month forward interval (October 2023–April 2024); near-term economy likely to remain resilient due to consumer spending and labor market strength.

— Bitcoin proved resilient through the FTX collapse; the asset's fundamentals remain intact despite the second-largest crypto exchange failing, distinguishing it from legacy financial system bailout dependency.

— Net liquidity contraction from peak expansion (November 2021) has driven crypto and risk asset selloff; further declines likely through year-end, with potential recovery window in H1 2023.

— Monitor Fed balance sheet and Treasury cash/borrowing schedules as primary drivers of asset price direction; wait for credible Fed pivot signal before significantly increasing risk asset exposure or Bitcoin dollar-cost averaging acceleration.

— Build dry powder now for H1 2023 deployment: multiple growth surprises likely as market reprices recession timing from near-term to late 2023–early 2024; this creates a window for long positions before credit cycle deteriorates.

— Recognize Bitcoin's structural resilience differs from legacy finance; it requires no Fed backstop and survived FTX systemic stress with protocols intact, validating its design as censorship-resistant alternative to government-dependent financial infrastructure.