May 17 Markets Report: I’m Not Loving It!

May 17 Markets Report: I’m Not Loving It!

Sustained high energy prices are re-ordering the market cap giants, stablecoins are turning out to be anything but, and blockchain is still the hottest buzzword around (even as NFT trading volumes plummet).

May 17 Markets Report: I’m Not Loving It!
Darry Port

Updated Jun 22, 2022

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Macro Overview

Oh, Just Give Up Already

  • It appears that Russia’s invasion of Ukraine has hit another stalemate, with Russian forces increasingly losing momentum. 
  • At least 500 members of Ukraine’s National Guard have been killed since the war started. Russia, on the other hand, has lost more than a third of its troops.
  • Ukrainian President Volodymyr Zelenskyy is set to discuss post-war reconstruction at the World Economic Forum in Davos next Monday.

Retaliation is a Must for Moscow

  • In an effort to maximize their security, the historically neutral Finland is in talks to join the NATO military alliance. 
  • Moscow’s Foreign Ministry warned that it would take retaliatory steps in response to NATO’s expansion. 

Ba Da Ba Ba Bah, I'm Not Lovin' It!

  • Following the invasion of Russia, Mcdonald's temporarily shut down hundreds of restaurants.
  • As of today, Mcdonald's has decided to sell its Russian business and leave the country altogether.

Has Inflation Peaked?

  • According to the latest CPI figures, April’s rate of inflation slowed down to 8.3% — a 0.2% drop from March.
  • One of the biggest contributors to this slowdown is energy prices falling by 2.7%. 
  • China’s own consumer price index spiked by 2.1% in April, mainly due to increased food prices and transportation costs that follow tight Covid restrictions. 
  • On the positive side, Shanghai recently announced that they aim to get back to business as usual by June

Stocks 

Stocks Can’t Get No Relief

  • While stocks are still mostly bleeding, markets briefly rebounded on Friday before continuing downward.
  • This week, the Dow Jones Industrial Average shed -0.18%, while the S&P 500 and Nasdaq inched up +0.36% and +0.32% respectively.
  • Some notable stocks outperforming the market include: 
    • Agricultural fertilizer manufacturer, CF Industries at 18.20%.
    • Petrochemical manufacturer, Occidental Petro at 18.05%
    • Hydrocarbon explorer, Marathon Oil at 16.24%
  • Investors are looking to retail earnings this week, with big names like Walmart, Target and Home Depot set to report results. 

Battle of the Trillion Dollar Giants

  • Apple Inc, once the most valuable company in the world at over $3 trillion in market cap, was recently dethroned by oil giant Saudi Aramco.
  • Aramco currently has a market cap of $2.492 trillion, with its recent jump in value thanks to rising energy prices.
  • In Q1, Saudi Aramco’s net profit grew by a staggering 82% to $39.5 billion.

Bonds

Come on Home to Bonds

  • Not much new to report here. The yield on the U.S. 10-year Treasury note fell to 2.877% while the 30-year dipped to 3.08% as investors start moving their money back into bonds.

Crypto

7 Straight Weeks of Losses

  • Last week was one of the craziest ones in recent memory for crypto investors. 
  • The market lost over $200 billion in just 2 days, with Bitcoin (BTC) and Ethereum (ETH)  cratering as low as $24K and $1.7K respectively (though they quickly bounced back). 
  • Even whales like Michael Saylor are now in the red, but many still believe we haven’t reached the bottom. Rich Dad Poor Dad author, Robert Kiyosaki, thinks that Bitcoin might bottom out at $17k or $11k.
  • The week’s biggest losers include: 
    • Terra (LUNA) at over -99.99%
    • TerraUSD (UST) at -88%
    • Waves (WAVES) at -52.12%
    • Convex Finance (CVX) at -43.45%
  • The best-performing crypto bar none was Maker (MKR) at 44.64%

The Moon Comes Crashing Down

  • News of LUNA’s collapse dominated headlines this week, with the project’s native stablecoin UST losing its peg to the U.S. dollar and entering a death spiral. As of writing this, 1 UST is worth $0.11.
  • LUNA, once a top-ten cryptocurrency that reached a high of $120 in April, plummeted to essentially zero ($0.0002).
  • Terraform Labs, headed by Do Kwon,  attempted to restore UST’s peg by selling over $3 billion worth of BTC and other cryptocurrencies to no avail. In a last-ditch effort, the company hyperinflated LUNA’s supply into the trillions and even halted the blockchain network. But alas it was too late.
  • This highly publicized crash has caught the attention of regulators like Treasury Secretary Janet Yellen, who used this opportunity to express the need for stablecoin regulation.

HODLers, Central Banks & Ponzi Schemes

  • Germany’s BMF announced that cryptocurrencies held for more than one year become tax-free
  • On May 17, 44 nations will be coming together in El Salvador to discuss Bitcoin, financial inclusion and digital payments. 
  • Jeremy Spence, also known as “Coin Signals”, has been sentenced to 42 months in prison for running a $5.37 million crypto Ponzi scheme.

NFTs & Metaverse

Paying $700K for Some Ink Blots

  • The total NFT market is currently valued at $19.25 billion, down a mere 0.76% for the week. 7-day volume, on the other hand, has plummeted -46.73% to $755 million.
  • Azuki has bled more than most NFT collections, with its floor price dropping -30% on news that the founder Zagabond was previously involved with some rug pull projects.
  • Otherdeeds, the Bored Apes Yacht Club (BAYC) metaverse collection, also saw its market cap decline -76.92%. Its floor price, however, rose 3.19% for the week. 
  • The biggest sale this week belongs to an NFT simply called “beyond”. The JPEG, which simply depicts a few ink blots on a white background (like a Rorschach Test), switched hands for 297.2 ETH ($700.99k) 

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Source: DappRadar

Birthing More NFT Adopters

  • In their Q1 earnings report, gaming company Square Enix revealed that they’re looking to incorporate NFTs into their games starting this year.
  • Famous musical duo The Chainsmokers is releasing their new album with an NFT giveaway that will reward 5000 fans with a 1% cut of the royalties. 
  • NFT card game Sorare is launching a baseball fantasy game in association with Major League Baseball. 
  • The Royal Museum of Fine Arts Antwerp became the first European museum to tokenize fine art, starting with Belgian painter James Ensor's (1860–1949) painting "Carnaval de Binche." 
  • Meta Platforms is bringing NFT profile pictures to Instagram
  • Two icons, musician Madonna and the digital artist Beeple have partnered up to release a surreal and provocative NFT collection called “Mother of Creation”. 

Commodities

Double the Crops? No Prob

  • Double cropping is when farmers plant a second crop on the same land in the same year, which doesn’t always work out.
  • In order to make up for reduced food exports caused by the Ukrainian invasion, The Biden administration is increasing the number of counties eligible for double cropping insurance.
  • The White House is also investing an additional $250 million in domestic fertilizer production. 

Wheat Ban Drives Up Prices

  • India, the world’s second-biggest wheat producer after China, has decided to ban wheat exports to manage the country’s food security.
  • Wheat prices rallied over 8% following the ban.

Blocking Oil Flow Without an Embargo

  • The EU has put its Russian oil embargo on hold following pushback from member states like Hungary, whose economies are largely dependent on Russian energy.
  • Ukraine’s state-owned grid operator Gas TSO suspended Russian flows through its Sokhranivka entry point, which delivers Russian gas to Europe

Max Pain at Cali Pumps

  • According to AAA, the national average gas price is now $4.483 per gallon, the highest ever recorded. 
  • Some states have it even worse. In California, for instance, the state average is $5.84.

Collectibles

Half a Mil on My Wrist

  • Timepeaks’ Luxury Watch Index, which measures the average price of myriad luxury watches, is currently sitting at $573,824. 
  • Timepeaks also pegs the average price of a used Rolex at 1.78 million. 

This Car’s Worth 1 Tenth of a Billion Dollars

  • Classic car valuation company Hagerty has heard from multiple sources that a Silver Arrow Mercedes-Benz has recently sold for 135 million euros ($142 million).

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Source: Hagerty

Sports Cards

Ronaldo Cards Got a Leg Up on the Market

Art

Two of the Most Expensive Artworks Ever Sold

  • “Shot Sage Blue Marilyn”, a 1964 portrait of Marilyn Monroe by Andy Warhol, recently sold for $195 million at Christie’s — making it the most expensive piece of American art ever sold. 
  • Man Ray’s Le Violon d’Ingres (1924), also sold for $12.4 million last week — becoming the most expensive photograph ever sold at auction.
  • These purchases indicate that the value of high-end art is holding up pretty well in these inflationary times.

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Source: The Art Newspaper, CNN

Startups

Climate Change for the Win

  • According to Crunchbase, the most funded startup categories this past week were climate change and biotech.
  • The biggest funding rounds, on the other hand, belong to:
    • Faire, $416 million: Allows retailers to buy wholesale from smaller independent brands.
    • Summit Carbon Solutions, $300 million: Captured and stores carbon in the U.S. Midwest.  
    • Rippling, $250 million: Automates the management of employee systems all from one place. 

Startups Tighten Their Coffers

  • As investors start to focus more on businesses with strong cash flows and profitability, companies are starting to shrink their hiring budgets and even lay off large parts of their workforces.
  • Some recent layoffs and hiring freezes include: 
    • Robinhood cutting 9% of its staff.
    • Netflix laying off dozens of employees after a brutal quarter.
    • Carvana firing 2,500 employees. 

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