QCP: The market perception is at odds with the fundamentals, as the market awaits a repricing

Deep Tide TechFlow message — on July 16, QCP Capital released a report noting that the most prominent feature of the market this week is “divergence”: across crude oil, the peace agreement, China’s economy, and crypto liquidity, the surface narrative and underlying fundamentals are showing a clear mismatch.

In crude oil, despite the peace agreement getting pulled into a crisis and transport volumes through the Strait of Hormuz falling to the lowest level since late May, Saudi Arabia has reset its pricing. Meanwhile, OPEC and its allies have raised quotas again, indicating that conditions on the supply side are recovering.

On interest rates, Waller’s stance has turned clearly hawkish, but consumer demand is weakening. After cycle credit growth exceeded 10% in April, it has started to contract. On China’s economy, factory prices are nearing a four-year high, yet retail sales have declined.

In crypto, Strategy adjusted its funding route by strengthening its dollar reserves through equity financing, without using its Bitcoin holdings.

QCP believes that when such a broad divergence emerges between market appearances and the underlying structure, the next thing worth watching is which side will be repriced first.