The Macro Environment: From 2020 to Today and Beyond
Part 2: Navigating the Tides of Economic Change
Wondering where we are in the business cycle right now? 🤔
Let’s talk about where markets are going next.
Sticky inflation? Hyperinflation? Recession? Bank Crisis? 😱
WTF is going on?!
In Part 1 of this macro masterclass, we laid the groundwork for macro investing and gave you a glimpse of the business cycle. We shared why the business cycle is important to understand the trends of technological adoption and the flow of capital into crypto and web3.
Now, it's time ⏰ to take a deeper dive into the macro environment, exploring how it has transformed since the COVID-19 pandemic struck in 2020 and what we might expect in the future.
But first, let's discuss an essential lesson in macro that we didn't touch on in Part 1. 📚
Peering Into the Future: A Macro Investor's Crystal Ball 🔮
One critical aspect of understanding macro is the ability to gaze into the future – not with supernatural powers, but through keen analysis and a forward-looking mindset. 🧠🔍
When looking at macro, it's essential to project 6-9 months ahead.
Relying solely on current numbers is a surefire way to lose, as most economic indicators are lagging, and markets are forward-looking.
To thrive in macro, we must forecast where the world 🌐 will be in 6-9 months and make investment and business decisions accordingly.
When I say markets are forward-looking, you can understand that by looking at markets since the beginning of 2023.
The real economy has only gotten worse over the last few months, with companies laying off employees, banks collapsing and interest rates moving higher, yet financial markets like equities and crypto have done exceptionally well. 💸🚀
Why? It’s because markets are looking at where inflation, interest rates and liquidity will be in the future (as a result of the current situation), not where things are right now.
To help you grasp this concept as well as understand where things may go in the coming year, I’m going to walk us through the macro environment and the related crypto/web3 adoption since 2020. 🤝
This will help provide foundational knowledge to speculate on where things are going.
With that in mind, let's journey back to the beginning of the COVID-19 pandemic and see how it shaped the macro environment. 🦠📊