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The Macro Situation
With the economy apparently being taken to the brink of collapse, both the Fed and Britain’s central bank proceeded cautiously, with each raising interest rates by 25bps. The Fed further stated that its hiking schedule is winding down in view of its updated economic data. The expected terminal rate by the end of year is around 5.1%.
Markets immediately fell after the Fed’s announcement and Janet Yellen’s warning that future banking collapses have no guarantee of being covered. Choppiness continued into Friday, with markets rebounding by the close of the week. In short, any provisional good news for markets continues to be overshadowed by the risk exposure of small and mid-sized banks in the sector and the extent to which government agencies are willing to step in.
Also: escalation of conflict with Iran (1 US contractor killed and 5 US soldiers wounded). This will make oil rebound--especially if it turns into a war (which we hope it doesn't).
Stock Watch
Stock Tickers to follow:
Macro-Dependent:
- Long-term US Bonds (TLT, IEF)
- Gold (GLD), Silver (SLV)
- Oil: XOM, RIG, VLO
With the end of the interest rates cycle in view, the bond investment environment is stabilizing. A range of mid- to long-term bonds are now benefitting.
The USD index has dropped to as much as 102 but closed at 103. The dollar’s drop highlights precious metals as an inverse investment. This momentum should grow stronger with the expectation that the Fed’s hiking cycle is coming to a close in the near future.
Oil stocks have been suffering from mixed news most of the year. This week is dominated mostly by expectations of a drop due to a two-month oversupply and fallout from the SVB banking crisis. Pundits are expecting the upcoming summer and situation in China to boost prices.
Crypto Watch
Crypto Tickers to follow:
- “The Goliath Narrative”: ARB
- “Bank Safety” Narrative: BTC, ETH
- “Hedge” Narrative: PAXG
- “AI” Narrative: RLC, FIL, GPT (???)
If you follow the AOTB Quora space, you may recall the analysis of how larger platforms tend to win out over time. Arbitrum is the largest Layer 2 coin on the largest utility providing mainnet in Ethereum. News of ARB’s launch and airdrop incentivization hit a bump when Arbitrum’s website and scanner went down. ARB looks heavily discounted at the moment.
Crypto markets in general are faring well. BTC acts as a lead indicator, while ETH and other alt coins follow. BTC and ETH look to be benefitting still from worries about banking volatility (cue Janet Yellen), while PAXG continues to follow gold prices and a dropping USD index.
AI is still hot! It's also unpredictable. AI resource coins such as RLC or FIL make more sense.
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This newsletter was created by The Art of the Bubble/1.2 Labs and is provided for educational and entertainment purposes only. You should expect no financial returns one way or another based on the statements contained herein.Robin Technologies and Analytics LLC is the firm that distributes The Art of The Bubble products. The firm does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments; nor is Robin Technologies and Analytics LLC registered as an investment adviser or broker-dealer in any jurisdiction.
