#1226 Darius Dale | Wall Street Is Calling The Fed's Bluff?!

— Consumer spending accelerated in June to 4.6% on a three-month annualized basis (highest in four months), with core retail sales at 6.1% and auto sales surging 23%.

— Manufacturing and industrial production are decelerating while capacity utilization has dropped to 78.9%, the lowest since October 2021, though retail inventory levels remain structurally depressed versus historical norms.

— Leading indicators suggest a potential bottoming in the manufacturing cycle; the ISM Manufacturing New Orders minus Inventories spread has rebounded from minus 8 to plus 2, signaling a likely rebound in the ISM Manufacturing PMI.

— Investor positioning across asset classes is near historic lows in equities (18th percentile) while money market fund exposure is at the 82nd percentile, indicating investors have fought the rally and raised cash.

— The S&P 500 is being driven by cyclical growth expectations, while Bitcoin is inversely correlated to structural growth expectations—meaning Bitcoin is positioned for a potential recession and central bank liquidity capitulation.

— The Federal Reserve will likely hike rates one more time but should then pause; a recession is expected to begin in Q4 2023 or Q1 2024 as long-term monetary policy lags catch up to the economy.

— S&P 500 accelerating on soft landing narrative and delayed recession expectations; equity positioning remains below October 2022 lows despite rally.

— Bitcoin positioned to benefit from recession scenario and Fed capitulation; Darius Dale predicts Bitcoin will close 2024 above $100,000 as central banks supply unencumbered liquidity.

— Year supply of retail inventories at 1.5 years, lower than 2009 Great Recession depths, suggesting a fresh inventory cycle may support growth in coming quarters.

— Fed funds rate likely moving to 5.25–5.50% range; no further hikes needed after next week as policy enters restrictive territory relative to nominal GDP and compensation.

— Institutional and retail investors remain underinvested in equities and overexposed to cash; this positioning leaves room for continued performance chasing and equity upside if the soft landing narrative holds through late 2023.

— A fresh inventory cycle combined with continued consumer strength could delay recession further than consensus Q4/Q1 expectations, supporting equity markets for another one to three quarters.

— Bitcoin holders should focus on central bank policy responses to late-2023 and early-2024 recession signals; the asset is priced for liquidity expansion and could rally significantly once Fed begins easing.