SignalPlus Macro Analysis Special Edition: Is Work Resuming Soon?

Macroeconomic assets had a tough week last week, with the Nasdaq Index experiencing its worst weekly drop since the “Liberation Day” in April, mainly dragged down by concerns over an artificial intelligence bubble bursting and disappointing economic data.

Although considered “non-core” data, last Wednesday’s Challenger layoff report still shocked market participants—October layoffs surged by 15.3 million (a month-on-month increase of 9.9 million), marking the largest increase for the same period since 2003, with layoffs mainly concentrated in the private sector. Detailed data showed that layoffs in the warehousing industry accounted for over 30%, with the tech sector following closely at 22%.

In addition, undoubtedly related to the duration of the government shutdown, the University of Michigan Consumer Sentiment Index fell to its lowest level since June 2022 (50.3, consensus expectation was 53), while short-term inflation expectations remained sticky at around 3.9%. However, as positive progress is expected this week toward resolving the shutdown, the market will look forward to a rebound in sentiment next month, indicating that this may be just a temporary lull.

This morning’s headlines indicate that Senate Democrats have joined Republicans in voting (60 to 40) to overcome a filibuster and advance a proposed plan aimed at ultimately restarting the federal government. The bill still needs to pass a House vote, which may not be completed until Wednesday or Thursday, meaning it may not be in time for the release of key inflation data.

This apparent agreement comes as President Trump and the Republicans have recently suffered a series of setbacks, starting with the “blue wave” in the midterm elections and followed by the Supreme Court ruling the president’s tariff policy unconstitutional. If the final ruling is unfavorable, it may require refunds of tariffs related to the International Emergency Economic Powers Act, which would offset a significant portion of this year’s fiscal deficit improvement and introduce new uncertainties for fiscal and debt issuance paths starting in 2026.

Perhaps in response to these recent setbacks, President Trump has proposed a new stimulus plan in the form of a direct $2,000 “tariff dividend” to the American public, as well as a new 50-year mortgage to improve housing affordability.

The “tariff dividend” is reminiscent of the stimulus checks during the COVID-19 pandemic, which were a direct and effective money-printing stimulus, while the ultra-long-term mortgage would add additional leverage to the system. Both should be seen as new forms of liquidity easing.

Although traditional financial assets were closed for the weekend when the news broke, bitcoin rose by about 2–3% on the news, as the government is fully committed to its “easy money” path. The Nasdaq Index also managed to hold its 50-day moving average during last week’s sell-off, just as bitcoin has so far successfully held the $100,000 support level.

Seasonal factors for equity fund flows are also entering December, the most positive month, so perhaps it’s time to start preparing for the Christmas rally, as it appears that most known risk factors may have already passed.

Cryptocurrency assets spent most of the week on the defensive, with bitcoin doing its utmost to hold the $100,000 line after a series of perpetual contract liquidations, ETF outflows, and original “whale” sell-offs.

In addition, as more victims of the October 10th crash continue to surface, following the unfortunate incident at Stream Finance, we have seen increasing outflows of total value locked and stablecoin depegging in many DeFi yield protocols.

Meanwhile, while mainstream coins and major altcoins have been under pressure, established privacy coins such as Zcash have soared, with the sector rising by about 100% over the past month. Given the increasing control of traditional finance, the narrative around privacy needs has seen a revival, though it is unclear whether this is a sustainable theme, especially under the current legislative environment.

In any case, it is reassuring to see at least some sectors performing well amid the current downturn, and we cautiously believe that bitcoin has so far held its lows. With market positions having been cleaned out for a long period, as we head into the end of the year, we tend to be optimistic, especially considering the improving macro catalysts mentioned above.

Good luck and happy trading.