• Monday: PBoC
  MLF, US Markets closed for MLK Day, BoC Business Outlook Survey.
• Tuesday: UK
  Labour Market report, Canada CPI, Fed’s Waller.
• Wednesday: China
  Industrial Production and Retail Sales, UK CPI, US Retail Sales, US
  Industrial Production, US NAHB Housing Market Index.
• Thursday:
  Australian Labour Market report, ECB Minutes, US Building Permits and
  Housing Starts, US Jobless Claims, New Zealand Manufacturing PMI.
• Friday: Japan
  CPI, UK Retail Sales, Canada Retail Sales, US University of Michigan
  Consumer Sentiment.

Monday

The PBoC will conduct the MLF operation on
Monday and we will see if they decide to lower the rate or keep it unchanged at
2.50%. There are some
expectations for a 10 bps cut
tomorrow which would set the stage for a cut for the LPR rates as well.
The latest Chinese
inflation data continues to show
deflationary pressures which gives the PBoC ample room to ease their policy
further.

Tuesday

The UK Unemployment Rate is expected to
tick higher to 4.3% vs. 4.2% prior.
The average earnings excluding bonus are seen at 6.6% vs. 7.3% prior, while
those including bonus are seen at 6.8% vs. 7.2% prior. This report is unlikely
to change anything for the BoE as the central bank continues to support a “wait
and see” approach, but the market’s pricing will certainly be influenced by
the data with more to come the following day with the release of the UK CPI
report.

The Canadian CPI Y/Y is expected at 3.3%
vs. 3.1% while the M/M measure is seen at -0.3% vs. 0.1% prior. The BoC is
focused on the underlying inflation measures (common, median and trimmed-mean)
and although the rates are getting closer to the 1-3% target range, Governor
Macklem said that they want to see more progress both on inflation and wage
growth fronts. As a reminder, the last reports went in the opposite
direction with underlying inflation
measures ticking higher and wage
growth accelerating.

Given the recent aggressive easing in
financial conditions, it’s worth noting that Fed’s Waller will give a speech at
Brookings on the economy and monetary policy with a Q&A session to follow. Waller
is a key FOMC member because he’s been a “leading indicator” for changes in
Fed’s policy. He was the first one talking about QT in December 2021 and
the first one mentioning rate cuts in November 2023.

Wednesday

The UK CPI Y/Y is expected at 3.8% vs.
3.9% prior,
while the M/M measure is seen at 0.2% vs. -0.2% prior. The Core CPI Y/Y is
expected at 4.9% vs. 5.1% prior, with no consensus for the M/M figure although
the prior release showed a -0.3% fall. Again, this report will have no
bearing on the February BoE meeting but will certainly affect the market’s
pricing with the first cut expected in May and a total of 125 bps of cuts
seen by year-end.

The US Retail Sales M/M are expected at
0.4% vs. 0.3% prior,
while the ex-autos measure is seen at 0.2% vs. 0.2% prior. Also watch the
Control Group as it’s regarded as a better gauge of consumer spending, and it’s
been beating expectations consistently for several months.

Thursday

The Australian Unemployment Rate is
expected to remain unchanged at 3.9% with 18K jobs added in December compared
to 61.5K seen in November.
This report will have no bearing on the February RBA meeting, but it will
influence the market’s pricing, with a weak report likely increasing rate cuts
expectations after the recent miss in the Monthly
Australian CPI data.

The US Jobless Claims
continue to be one of the most important releases every week as it’s a timelier
indicator on the state of the labour market. Initial Claims keep on hovering
around cycle lows, while Continuing Claims after reaching a new cycle high
started to trend lower. This week the consensus sees Initial Claims at 207K
vs. 202K prior, while there’s no estimate at the
time of writing for Continuing Claims, although the last week’s number was 1834K
vs. 1868K prior.

Friday

The Japanese Core CPI Y/Y is expected at
2.3% vs. 2.5% prior.
The headline inflation measure has been easing steadily in Japan thanks to
energy deflation but the Core-Core measure, which excludes food and energy
prices, has been doing so at a slower pace. The Tokyo
CPI, which is seen as a leading indicator for
National CPI, decreased further recently and the Average
Cash Earnings showed a much slower
than expected growth rate. This has pushed expectations for a normalisation
of monetary policy further away as the conditions the BoJ is looking for are
not materialising.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The peak of the hype in the first half hour is exactly what you would have expected but in the two days that followed, it’s fallen 12%, raising some big questions about what comes next.

First off, there was no way the results were going to match the hype. US investors already have plenty of ways to access bitcoin, including via Coinbase and other exchanges, the BITO futures ETF and many other highly-correlated products. There’s something to be said about a pure spot ETF that owns the underlying asset but how big is the market for it really?

The results from the first two days are sobering.

I had conservatively estimated at least $4 billion in inflows into the 11 ETFs based on the experience in Canada, where the BTCC ETF attracted $421 million in inflows in the first two days of trading.

Consider:

• The US is 10x bigger than Canada by population
• The US is even larger when adjusting for GDP and FX
• International investors would be much more inclined to buy a US ETF than a Canadian one
• The fees around 0.2% are much lower than the 1.5% in Canada
• The hype was much larger for the US ETFs

Again, because of all that I thought inflows of $4 billion were very conservative.

So what are the results?

Just $1.4 billion is sitting in the 10 truly new ETFs — a drop in the bucket of the $840 billion market cap of bitcoin.

Even worse, the Grayscale GBTC ETF, which converted from a closed end fund, saw $579m in outflows and the pre-existing BITO futures ETF saw $151m in outflows so the net inflows were just $652 million. That’s scarcely 50% more than the Canadian one. In fact, after the first two days of trading, the Canadian ETF at $421 million would rank in third place, only scarcely behind the Fidelity FBTC at $422m and Blackrock’s IBIT at $498 million.

Now, some are trying to spin the individual ETF AUM numers as a success against the long history of 3000 ETFs but comparing these launches to the no-hype, no-demand launches of the myriad of ETFs out there is entirely disingenous. This was the event that spurred a 50% rally in bitcoin’s price; all for just 0.077% of its market cap and got wall-to-wall coverage on CNBC.

To see just how disappointing this is, you only have to go back to some pre-launch estimates.

For some more-credible estimtates:

• Standard Chartered predicted $100 billion of flows into bitcoin ETFs by end of this year.
• Bloomberg predicted $50 billion by year end and as much as $4 billion in day one

Even if you ignore the $30 billion which should flow out of the high-cost GBTC into the 10 low-fee ETFs, those numbers now look wildly optimistic.

A crypto ETF launch is like opening weekend at a box office — especially ETFs as well-advertized as these ones — your opening weekend is highly predictive of the total take-home.

Again, the Canadian ETF is instructive. It’s $421m two-day total only doubled at the end of two months, finished the year at $741m and didn’t sustainably rise above $1 billion until this year (it’s at $2b currently).

If the new ETFs follow that path, they would have just $2.4 billion by year end… and that’s excluding GBTC, BITO, Coinbase and BTCC.U outflows.

The BITO futures ETF brought in $1.1 billion in its first two days in 2021, almost double the to $652m net of these new ETFs. It didn’t get above $1.4 billion until October of 2023.

Looking at the 25 largest ETF launches ever, none of them have had meaningful flows beyond the first day since the stone ages of ETFs.

And here’s a reminder of how bitcoin did after BITO:

Now some are arguing that it will take longer for institutional money to show up and that the post-launch fall in bitcoin wasn’t exactly conductive to inflows. I agree there was also plenty of talk about sell-the-fact so maybe the tide turns if/when bitcoin prices start to rise but at this point, but I’m going to need to see it to believe it.

So far, I wouldn’t classify this launch as anything less than disastrous.

This article was written by Adam Button at www.forexlive.com.