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The Macro Situation
Markets began the week pricing in what looks to be the last rate increase for a while. The European Central Bank was in line with a similar 25bps increase.
Is the economy slowing? Probably, despite strong jobs numbers boosting markets at the end of the week.
Things will remain tight as the larger picture involves more liquidity exiting the financial system and potential mid-sized banking woes. Higher interest rates continue to exert pressure on balance sheets. PacWest, Western Alliance, and Zions are currently considering “a range of strategic options”.
The Fed’s attention will be maxed out this month, trying to steer a path between inflation, recession, and stagflation . . . all at a time when a potential US default nears its June deadline.
In the meanwhile, gold and silver were down earlier in the week but are gaining steam as they become more of a safe haven in view of a potential US default, or at least the backlash ensuing from a near-default.
Bond yields are down, thus bond EFT prices are up.
Macro-Dependent Tickers
- Long-term US Bonds (TLT, IEF, IEI)
- Gold (GLD), Silver (SLV)
Stock Watch
Given the changing macro landscape, counter-cyclical commodities are replacing stock investments. However, AI remains strong given on-going development and research.
Recession and the weakening US dollar mean mining firms will play the role of leveraged bets, where firms use debt to invest and increase mining production (see the lesson above–the last become first). Mining ETFs and Mutual Funds are in the spotlight.
Stock Tickers to follow:
Mining
- Gold - VenEck Gold Miners ETF (GDX)
- Gold - Gold Fields Limited (GFI)
- Silver - Sprott Physical Silver Trust (PSLV)
- Uranium - Cameco Corp (CCJ)
AI:
- Microsoft (MSFT)
- Alphabet (GOOG)
- Meta (META)
- Amazon (AMZN)
Crypto Watch
As the macroeconomy heads into the slower growth phase, liquidity should move in favor of BTC and ETH. Let us not forget PAX Gold, the gold-backed cryptocurrency, which will track the counter-cyclical market.
The XRP summary judgment is expected on May 6, 2023.
It’s hard to understand why the price of MATIC is not higher. It’s developing the right kinds of tech (e.g. zk-rollups) and is consistent with upgrades of its ecosystem (e.g. dApp integration). MATIC is a good candidate for being undervalued.
Crypto Narratives:
- Bank Safety: BTC, ETH, PAXG
- SEC v. XRP
- “AI” Narrative: FET, RLC, GAI
- Undervalued Giant: MATIC
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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.
