A sliver of light peeking through the headlines of the macroeconomy every now and then. Case in point, there was an increase in jobless claims last week, which suggests a more moderate approach to interest rate hikes. Until more events develop, the macroeconomic situation and its impact on markets is in a wait-and-see mode.

Stock Tickers to follow:

Oil

• XOM
• SLB
• USO
• APA
• RIG
• VAL

China’s slackening of COVID policy has backfired, with infection rates increasing due to a number of factors—e.g. hospitals being unprepared for the sudden change in policy; and the Chinese vaccine not being effective against the current COVID variants. Oil has been on a slumping trend with the prospect of lockdown returning, though at the close of this week it has seen a bump. For Q1/Q2 of 2023, the industry is pricing in a mild recession. Should the demand for oil increase, medium risk oil stocks (XOM-APA) stand to gain. Risky offshore oil ventures (RIG, VAL) are the most price sensitive.

Real Estate

• SPG
• VNO
• BXP

While the housing market is experiencing its second greatest correction since WWII, the commercial REIT market will be sensitive to interest rate increases. Should the Fed maintain its current course, then we’re at the end of the tightening cycle. Commercial real estate should benefit, even with a mild recession. The housing market would be a different story, depending on how severely a recession affects wages and jobs.

Bonds

• TLT
• IEF

Like real estate, the bond market is also sensitive to interest rates. The end of the tightening cycle means that long-term bonds remain good prospects, though a bit of caution is still warranted over liquidity issues which have affected other bond markets in the UK and China in the recent past.

Crypto Tickers to follow:

• GNS
• GMX
• ETH
• MATIC
• BTC

Overall, the collapse of FTX is still dominating the space. The current focus is on how the debt owed by Genesis plays out. $900M is owed to Gemini customers; key updates on how this is going to be paid are reportedly in the offing. Until substantial news arrives, it’s a holding pattern on investment.

We reported a few weeks ago that the Gains Network (GNS) presents the best DeFi trading ecosystem at this time. It has experienced a slight dip but looks to continue its strong performance.

ETH and MATIC have benefited from the demise of Solana. NFT projects DeGods and y00ts have migrated respectively to the two platforms. BTC retains its dominant position despite a drop on Dec 20 with the announcement that Core Scientific, one of the largest BTC mining companies, filed for bankruptcy.

-- Todd Mei, PhD

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