Elon Musk suggested during Tesla’s 2022 Annual Meeting of Stockholders that inflation in the United States has already peaked. He also projected that the next recession will be “mild to moderate.”
Musk highlighted during a Q&A session at the annual meeting that Tesla’s six-month commodity price got lower.
Tesla is witnessing the creation of precisely the type of economic context in which risk assets thrive, after recently selling almost all of its $1.5 billion in BTC holdings.
Commodities, he asserts, are declining, indicating that inflation has already reached its peak.
“We sort of have some insight into where prices are headed over time, and the interesting thing that we’re seeing now is that most of our commodities, most of the things that go into a Tesla — not all, more than half the prices — are trending down in six months from now,” Elon Musk stated. “This could change, obviously, but the trend is down, which suggests that we are past peak inflation.”
Macroeconomic meetings were upbeat and included the possibility of a “relatively mild” U.S. recession lasting roughly 18 months. According to Musk, inflation will “drop rapidly.”
Is the U.S. really past inflation?
A comeback in risk assets, including cryptocurrencies, is possible due to the end of an inflationary phase and the decline in commodity prices. Theoretically, this results from less tightening by the U.S. Federal Reserve due to reduced inflation, which creates favorable conditions for riskier investments.
The trend will be amusing for Tesla, which rid itself of virtually all its BTC exposure last month at a profit of just $64 million, should strength return to markets and cryptocurrency to outperform.
At the time, Musk stressed that the move was not a criticism of Bitcoin in general and that BTC might return to the company’s balance sheet later.
Not so fast
The irony of Musk’s statements was not lost on crypto critics, and other voices are already betting on a stock market bounce that will last.
Fundstrat Global Advisors, for example, warned this week that markets have traditionally established a bottom half a year before the Fed ends tightening via important interest rate hikes.
The S&P 500 might reach 4,800 points in the second half of 2022, according to the firm, a benefit for crypto markets that are still closely associated with equities in general.
This week, the world’s top asset manager provided additional insight on Bitcoin’s prospective comeback. With over $9 trillion in assets, BlackRock has teamed with US exchange Coinbase to provide clients with crypto exposure.