Wednesday's Scoop: Discouraged🌥️

Hey friend - here’s what you need to know today to inform your work, spending, and investments…

1. Policymakers say the economy is doing better than at the start of the year.

2. The US dollar is very strong relative to other currencies right now.

3. Crypto markets have been highly volatile this week ahead of a major Bitcoin event.

Unemployment Rate: 3.8%
^{Still near the lowest rate in 50+ years}

Policymakers think the economy is doing a little better than at the start of the year. The Federal Reserve's Beige Book survey indicated that consumer spending, investment, and hiring picked up a little in February and March. There was also good news about inflation. Despite insurance costs continuing to climb, prices for broad goods and services didn’t increase much faster than average. Companies also mentioned having more difficulty passing higher costs onto their customers, which is a good sign for consumers but a bad one for corporate profits.

Inflation Rate: +3.8% (YoY), +0.4% (MoM)
^{Policymakers aim for 2% YoY inflation. (CPI)}

The US dollar keeps getting stronger versus other currencies. It’s a good time to import stuff or spend money abroad. The dollar rose to its highest level against the Japanese yen in 34 years this week, and it can buy more in Europe than it has in over five months. Free-floating currencies like the dollar are driven by supply and demand. Demand for dollars has increased in recent months because the US economy is doing better than most other major nations, and the dollar looks like a better investment. While other global policymakers plan to cut interest rates soon to support their economies, the Federal Reserve keeps signaling plans to keep interest rates high. Higher potential interest from US cash accounts increases the demand for dollars.

The Market: ⬇️ -0.6%
S&P 500: 5,022.21
1Mo: -2% | 1Yr: +21% | 5Yr: +71%

The market continued lower on Wednesday as corporate financial updates failed to shift the narrative. Investors still think inflation isn't going away and policymakers won't lower borrowing costs anytime soon.

Cryptocurrency markets have been highly volatile this past week ahead of a major Bitcoin event called the halving. The Bitcoin halving is a technical event written into the cryptocurrency’s foundational code in which the rewards earned by Bitcoin miners are cut in half. Miners are the supercomputers that process complex code to verify transactions on the blockchain. They earn Bitcoin in return for maintaining the system. There will only ever be 21 million Bitcoins to maintain scarcity, and every four years, the mining rewards shrink by half. Bitcoin has enjoyed a substantial price rally after past halving events, but there’s no proven direct correlation. The uncertainty has spurred excitement and volatility in the market as the halving event approaches imminently.