Wen | Liu Shuo

Sina Financial News on May 23, US Eastern time, Sina Finance interviewed Matt Weller, the global research director of Jiasheng Group (Gain Capital), in view of the recent financial results of the consumer sector and the sharp fluctuations in digital currency. Weller believes that U. S. stocks reported stronger-than-expected results during the consumer quarter, and that there is limited room for Bitcoin to fall based on historical data.

In an interview, Matt Weller believes that the signs of inflation reflected in the recent CPI figures are due to extreme conditions in the same period last year and cannot be compared with each other. The results of several major retail companies in the US stock consumption season are stronger than expected. With the further opening up of the US economy, he is optimistic about the consumption outlook for the rest of this year. The volatility of Bitcoin has been compressed, and recent volatility is not uncommon in terms of historical data, nor does it mean the end of the bull market.

The following is a transcript of the interview:

Sina Finance: yesterday was a very interesting day. Both the US stock market and the cryptocurrency continued to fall in volatile trading on Wednesday. The Fed signalled an abandonment of loose monetary policy, with the Dow down 587 points in morning trading and, as investors feared, inflation might be faster than expected. What signs do you think you will see in the future?

Weller: We saw a pretty shocking number in the recent CPI report, and I think if you just look at it on the surface, you would think that inflation is happening, maybe moving towards hyperinflation. But I think we need to put this figure in a larger context, and as many analysts have pointed out, this inflation is largely due to the used car crisis. We think this is more like a temporary development. Basically during the outbreak, car rental companies sold a large number of used cars, believing that people would not rent cars or travel often. We have seen a much faster recovery in the economy and travel holidays than expected, and at the same time we are seeing a continuing shortage of chips needed to build new cars, which I think higher chip prices will remedy and allow manufacturers to start making more cars later this year, especially in the second half of this year, which should ease the bottleneck.

The other thing I want to say about the CPI report is that we have to consider the comparison with last year, this is the April consumer inflation report, I don't know what you think, but personally, there was uncertainty and conservatism around the epidemic in April last year, when people were still panicking to buy sterilized wipes to wipe food, because no one knows what happened. So it's not surprising that no one spent money and there was no inflation at this time last year. But now, as the economy starts to open up, and as we have a better understanding of the virus and its cost, it's like taking an apple.It's the same as an orange. So to some extent, this makes the inflation figures look higher than expected, some of which are also due to the prices of used cars I mentioned.

Sina Finance: when it comes to consumer spending, several of the largest retailers in the United States have reported results this week. What is the overall performance?

Weller: generally speaking, I would say, very strong. So the four companies we focus on this week are Home Depot.Lowe's, they are both retailers and omni-channel retailers. Like Target.Such large retailers each of these companies are in their earnings expectations and their shares have performed well in the relatively negative overall market so far this week. Some of the other details in the report showed a 20% year-on-year increase in passenger traffic in several of the stores. I think this highlights a big theme that we have seen. I hope to play for the rest of the year and they want to get back to normal. There is a lot of pent-up demand at present. I just looked at the figures before the interview, and the personal savings rate averaged 18% in the past 13 months, which we have never seen in American history, especially in the past 40 or 50 years. So people spent a year saving money, and they were ready to shake the economy and live the kind of pre-epidemic life they couldn't live before. I think this will be reflected in the rest of the year. Brick-and-mortar retailers and consumers with strong performance have the opportunity to compensate for expenses that have not been made in the coming year.

Sina Finance: we have seen stronger-than-expected earnings reports and higher savings rates. As you mentioned, as Target, Home Depot and other retail giants are retreating from last week's 50-day moving average, bullish traders will be watching stronger reports to join the uptrend. So did the early reports released so far give you more confidence in your theory?

Weller: Yes, I think these figures are very impressive, if you agree with me, this is one of my ideas. In terms of reopening, the revival of brick-and-mortar stores will continue for months or quarters, and then I think these companies are doing a particularly good job of taking advantage of that. This is what I think will continue.

Sina Finance: now let's talk about Bitcoin. Almost all current currencies are falling sharply. Recently, I think such a big event has happened due to various circumstances, which is nearly 40% worse than this year's peak. We already know that currencies are highly volatile because bitcoins are traded 24 hours a day, seven days a week. So you also mentioned your report that it is normal to fall sharply in a bull market. So what should we see next? Will it be like what happened in 2017?

Weller: evidence suggests that if you look at Bitcoin, the father of all cryptocurrencies, it tends to go through years of bull and bear market cycles. It is so volatile that it is essentially just a more extreme version of the bull and bear market trends we see in the broader stock market, which could take place for a decade or at least a few years. With Bitcoin, many of these cycles have been compressed, and a lot of volatility has been compressed, so Bitcoin is likely to rise in the past cycle. In a bull market, it rises by an average of 2% to 5000%, then falls by 80% to 90%, and many of these games are over. So I don't think it's uncommon for those who have been involved in the cryptographic asset market for a long time to look back a few years ago, especially in that big bull market, the type of decline we saw yesterday from 2015 to 2017.

So in fact, as I said to you, both Bitcoin and Ethernet coin are rebounding from their lows, and we have seen seven separate 30% declines in the Bitcoin bull market from 2015 to 2017. but the price of Bitcoin has still risen from a few hundred dollars to $20,000, which I think is only the third 30% decline so far in this bull market cycle. I don't think this necessarily marks the end of the bull market, and some of the other evidence I've talked about in some reports suggests that we haven't reached that extreme yet. that's why I think there may be more room for rise in Bitcoin and the broader space for encrypted assets as a whole.