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Prediction Markets Don't Believe The Fed
Today’s letter is brought to you by Consensus 2024!Consensus 2024 is happening May 29-31 in Austin, Texas. This year marks the tenth annual Consensus, making it the largest and longest-running event dedicated to all sides of crypto, blockchain and Web3. Don’t miss Bitcoin: We Are So Back, where Anthony Pompliano will discuss what the next bull market will look like, how it will differ from previous run-ups and the broad macro investment thesis for bitcoin and crypto more broadly. Consensus has tailored programming for Bitcoin maxis and multi-chain mavericks alike, covering everything from post-halving strategies to mining and more. Plus, you absolutely won’t want to miss the epic BTC (Nic Carter) vs ETH (David Hoffman) battle at Karate Combat. That’s just a taste of what's to come at crypto’s only big-tent event. Join Consensus in Austin alongside 15,000+ investors, founders, brands and more to take in all that blockchain has to offer. Get your pass today and use code POMP to save 20%. To investors, The market continues to work overtime trying to figure out the Federal Reserve’s plan to cut interest rates. Optimism ruled the day as we entered 2024, including a belief that we would have majority of the Fed’s interest rate decisions lead to rate cuts before the year ended. Today the sentiment is very different. Rather than opine on the qualitative feelings of the market, we can look to the Kalshi prediction market for a quantitative read on how people are thinking about what should unfold related to interest rates. According to these prediction markets, we were set for 5 interest rate cuts in January, but that number has now fallen to under 2. Quite a fall in expectations in just 5 months. You can see that the most popular prediction now is a single rate cut in 2024. At the start of the year, the market predicted an interest rate cut by July was more than 90% likely. Today that percentage has fallen to 27%. These same markets think there is a 92% chance of no change to interest rates in the next meeting, but an 8% chance to cut at least 25 basis points and a 2% chance of a cut larger than 25 basis points. What about the crowd that thinks there is going to be another increase in the interest rate, rather than cuts on the horizon? Those people are in the minority according to prediction markets. If you wager $100,000 on an interest rate hike happening before the end of 2024, you stand to make ~$566,000 if you are correct. Finally, the prediction markets believe there is a 37% chance that we will see an interest rate below 5.25% this year, while there is a 33% chance below 5% interest rate and an 11% chance we see lower than 4.75%. Most people don’t think in terms of probabilities. However, it can be one of the best ways to navigate complex, unknown scenarios. These prediction markets are not crystal balls, but rather can show you a quantifiable measurement on how sentiment and market expectations is changing in real-time. I will keep seeking information on my journey to learn. Hopefully you find this valuable. Have a great weekend and I’ll talk to everyone on Monday. -Anthony Pompliano Hannah Maruyama is the Founder of Degree Free. In this conversation, we talk about the data as to why college may not be as lucrative as people think, examples that include an 18-year-old bitcoin developer, why proof-of-work is so important, role of the parents, and a brand new launch program working one-on-one with teenagers. Listen on iTunes: Click here Listen on Spotify: Click here How The Idea of Proof-of-Work Is Changing CollegePodcast SponsorsCore Scientific is one of the largest public Bitcoin miners and hosting solutions providers for Bitcoin mining in North America. iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Supra- Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains. Propy - Now, anyone can start their on-chain journey by minting home addresses via PropyKeys and staking them for profit until they are ready to sell their home. BetOnline - Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100. Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere. ResiClub - Your data-driven gateway to the US housing market. Bay Area Times - A visual newsletter explaining the latest tech & business news. You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research. Invite your friends and earn rewardsIf you enjoy The Pomp Letter, share it with your friends and earn rewards when they subscribe.
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