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The Macro Situation

Market performance was largely reactive to earnings reports (see Stock Watch below) and a decrease in economic growth. The Commerce Department notes an annual growth rate of 1.1%, citing a slowing housing market and reduced business inventories. Jobless claims will probably be bumpy given the strange effects of the pandemic; claims last week fell by 16,000.

The Fed’s decision next week should not bring any surprises for the market. Economists have been long expecting a 25bps hike. The question is whether or not there will be a pause for the remainder of the year.

A June hike presently looks unlikely.

The new worry has moved from recession to stagflation, i.e., when high inflation persists along with little to no economic growth. Ray Dalio last year stated this was the most likely outcome and many economists are moving to agree with him.

Macro-Dependent Tickers

• Long-term US Bonds (TLT, IEF, IEI) – likely bounce when Fed Rate hikes stop or reverse
• Gold (GLD), Silver (SLV) – likely bounce when Fed Rate hikes stop or reverse
• Indices: SPY, QQQ

Stock Watch

​Good news for tech stocks (Meta, Microsoft, and Google) are fueling some optimism in the short-term. But selling pressure should arise in the near future with the expectation of negative to near-to-negative growth. A significant factor with respect to tech stocks is how labor cutbacks may be propping up inflated earnings for this past quarter.

AI research and production, coupled with labor cost savings means a short period of growth for the major tech players. We’re very much witnessing the AI Wars—not robot overlords controlling humans, but the battle to see which of the big three will gain the decisive advantage. Microsoft appears to have the upper hand with its OpenAI partnership. An indicator? Interesting to see that for the first time Bing has played a key role in the company’s earnings.

Amazon reported Q1 earnings but saw its price clawed back after the CFO Brian Oslavsky told investors that he expects customer spending to decrease.

Cannabis is back for the time being. Typically, cannabis stocks move when key pieces of legislation are on slate to pass. An earlier version of US legislation allowing cannabis companies access to banking and financial services is gaining support in the Senate. This good news has outrun concerns about oversupply in the sector.

Oil ended the week on a small rally but remains volatile due to fears of a recession.

The AI Narrative:

• Microsoft (MSFT)
• Alphabet (GOOG)
• Meta (META)
• Amazon (AMZN)

The Cannabis Narrative:

• Tilray (TLRY)
• Canopy (CGC)
• Roundhill Cannabis ETF (WEED)

Crypto Watch

Blue chips have recovered from the big BTC Binance sell off last week. Dropping as low as $27K, BTC is now just below the $30K resistance mark.

Whales have been active with XRP trading, at one point reaching $1B in trading volume. A decision is expected soon, perhaps next week. AOTB is estimated a 2x gain in price if XRP wins the suit. For more ideas on how to play the XRP scenario, see the related Quora post.

MultiverseX is the outgrowth of the now obsolete Elrond. Its focus on Metaverse utility has been snapping up attention, but there are still some questions as to whether or not it can execute on its several projects: xFabric, xPortal, and xWorld. It’s a protocol to keep on the long watchlist as the general tech front pushes through the slowing economy.

Crypto Narratives:

• Bank Safety: BTC, ETH
• SEC v. XRP
• “AI” Narrative: FET, RLC, GAI
• Metaverse Narrative: MultiverseX (EGLD)

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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.