May 24 Markets Report: Planning for the Worst
Terra is still an active train wreck, startup funding is drying up (for almost everyone), and the energy market is going to remain a horror show for a bit. Truly, what a time to be alive.
Updated May 24, 2022
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No More Pumpkin Spice Latte for Putin
- As of May 21, the city of Mariupol and a large portion of the Luhansk Oblast have been captured by Russia.
- Starbucks announced that it will be shuttering the 130 cafes it had in Russia.
- On May 16, U.S. President Joe Biden vowed to defend Taiwan should it be attacked, with China expressing sharp opposition to these remarks.
Europe in 2022. Source: CNBC. This map shows that Russia is becoming increasingly isolated from the rest of Europe.
A 2023 Recession is Becoming More Likely
- A recent Bloomberg survey of 37 economists has pegged the odds of a U.S. recession next year at 30%.
- The UK’s April 2022 inflation rate jumped to a staggering 9%, the highest level since 1989. The ECB indicated that they will be hiking interest rates soon, likely in July.
Monkey… WHAT NOW?
- Monkeypox, a rare viral disease typically found in Africa, is beginning to spread worldwide.
- The World Health Organization (WHO) has already confirmed 92 cases of the disease in 12 countries, including the U.S., Australia and most member states of the EU have all reported their first cases of the virus.
- Belgium is the first to introduce a mandatory 21-day quarantine for monkeypox patients.
Stocks & Bonds
Stocks & Bonds
No Bottom in Sight
- Just when investors started thinking that the stocks had bottomed, earnings misses from big-box retailers like Walmart and Target pushed the market down further.
- The Dow Jones Industrial Average has declined for eight straight weeks, its longest losing streak since 1923.
- Meanwhile, The S&P 500 briefly fell 20% into bear market territory on May 20.
- Nasdaq stocks, on the other hand, have officially seen their worst sell-off since the dot-com bubble burst.
Bonds Yields Dip
- Yields on the 10-year and 30-year Treasury notes fell to 2.821% and 3.022% respectively.
- In the coming week, investors will have their eye on three key pieces of data:
- Retail earnings from the likes of Costco, Macy’s and Best Buy
- The Federal Reserve’s meeting minutes
- The PCE Index, the Fed’s preferred inflation indicator
A Fresh Start in Southside Metros
- The 30-year fixed-rate mortgage has cooled down to 5.36% after being as high as 5.64% in the opening week of May.
- With 32% of U.S. home buyers looking to move to a different metro area in April, these are the top destinations with home prices under the national median of $424,400.
- San Antonio ($330,000)
- Houston ($340,000)
- Jacksonville, FL ($357,000)
- Bakersfield, CA ($365,000)
$300 Million Papa John’s
- May 22 was Bitcoin Pizza Day, which commemorates the world’s first real-world Bitcoin transaction. So if you’re feeling beat up about your portfolio lately, just remember that the 10,000 BTC that Laszlo Hanyecz paid for two Papa John’s pizzas are worth over $300 million at today’s prices.
- That being said, the total cryptocurrency market cap shed a few billion dollars in the last week and is currently sitting at $1.26 trillion. Bitcoin (BTC), with a market dominance of 44% is down 2.33% for the week while Ethereum (ETH) trimmed 1.86%.
The Merge is on the Horizon
- In the first half of June, Ethereum’s Ropsten testnet will simulate the Ethereum proof-of-work (PoW) mainnet and Ethereum proof-of-stake (PoS) Beacon Chain merge.
- Ethereum co-founder Vitalik Buterin stated that there’s a big chance The Merge will take place in August, though he also cautioned that delays might surface.
Can Terra 2.0 Make Investors Whole?
- Terra’s implosion is still the talk of the town, with Terra co-founder Do Kwon now facing legal repercussions from South Korea’s government and independent law firms.
- The Luna Foundation Guard (LFG) reported that they sold 80,000 BTC ($2.4B) as well as millions in USDT and USDC in a bid to defend UST’s peg. As of May 16, the LFG claims to hold less than 400 BTC ($12M).
- The Brazilian Crypto Exchange Nox Bitcoin has announced that it will refund all UST Holders’ losses with USDT.
- Do Kwon has drafted a proposal to fork the old Terra chain and build everything from scratch on Terra 2.0, which includes reimbursing UST and LUNA holders. Thus far, the proposal gathered the support of 66% of the community with 2 days left to vote.
- Stablecoin issuers Circle (USDC) and Tether (USDT) have both committed to regular reserve reports in the wake of the LUNA collapse.
Source: Terra Station
Hidden Gems in the Magic Eden
- This week, NFT volume is down -44.17% to $414.6 billion.
- The biggest sale this week belongs to Otherside #90209 at 235 ETH ($462.13k).
- Solana-based NFT marketplace Magic Eden has topped OpenSea in terms of daily transaction volume, with Okay Bears emerging as a potential competitor to the blue-chip Bored Ape Yacht Club (BAYC).
Sorry, NFT Tickets Only
- On May 20th, serial entrepreneur Gary Vaynerchuk kicked off VeeCon, a four-day conference in Minneapolis where entrepreneurs and Web3 evangelists discuss digital transformation.
- What’s particularly unique about this event is that the holders of Vaynerchuk’s “VeeFriends” NFT collection were given exclusive access to the annual event for three years after their NFT purchase.
Who Let the Alpha Doggz Out?
- Peer-to-peer filesharing site LimeWire has partnered with Universal Music Group (UMG) to launch NFT projects for artists.
- NFT pioneers Snoop Dogg and Steve Aoki have teamed up to launch an exclusive NFT album, Alpha Doggz Da Da. Collectors who hold a Snoop Stashbox token or an Aokiverse Passport NFT will get a song airdrop for free.
- A struggling artist called jmw327 became a Twitter sensation overnight, with their first NFT release bagging them 20.90 ETH ($43,248.46) — 4x more money than they would normally make in a year.
- Seth Green, creator of the adult animation series Robot Chicken, was the victim of a phishing attack that saw him lose $330k worth of NFTs.
Gazprom Cuts off Gasum
- Gasum, Finland’s state-owned gas importer, announced that imports from Russia will be halted starting Saturday.
- No official reason was given, but it’s likely due to Finland refusing to pay for Russian gas in rubles and applying to join NATO.
- Gasum also stated that the company will continue to supply natural gas to its customers from other sources.
The EU’s Clean Energy Transition Is Going to Take Some Dirty Work
- The European Commission published REPowerEU on Wednesday, highlighting their 45% renewable energy target for 2030 that will require 210 billion euros in extra investments from 2022 to 2027.
- As the EU slowly weans itself off Russian energy, the Commission acknowledges that existing coal facilities — a huge environmental pollutant — may have to be used for longer than initially expected.
$6 Gas Incoming?
- With fuel stockpiles continuing to drop, JPMorgan analysts are forecasting a national average gas price of $6.20 per gallon this summer driving season.
- According to AAA, the national average for gasoline is currently sitting at a high of $4.596 per gallon.
Time Is Money? Not for These Pieces
- Over the past week, Timepeaks’ Luxury Watch Index has dropped from $573,824 to $564,382.
- A few of the biggest losers in the index include:
- Grand Seiko
- United Citizen
- Used Chanel
Forget Pikachu, This is Where the Pokemon Money’s At
- Pokemon (1.04%) and Basketball cards (0.35%) bumped up in value this week, with Baseball and Hockey cards shedding -0.86 and -0.06 respectively.
- According to Alts, the two best value cards this week include:
- 2003 Pokemon Skyridge Holo Charizard #146 PSA 10
- Last sold for: $14,400.00
- Potential value: $23,352.07
- 2019 National Treasures Emerald Luka Doncic #23 PSA 10
- Last sold for: $1,363.88
- Potential value: $3,069.13
- 2003 Pokemon Skyridge Holo Charizard #146 PSA 10
Rainmakers in the Funding Drought
- Even as funding dries up for startups, these three U.S. companies still managed to raise over a quarter-billion dollars:
- HR tech provided Velocity Global: $400M.
- Payments solution SpotOn: $300M.
- Biotech company Kriya Therapeutics: $270M.
Planning for the Worst
- Crunchbase reported that the overall number of $100 million-plus deals peaked in November. May is currently on track to be the smallest month, both in terms of deals and total dollar amount.
- Startup accelerator Y Combinator recently penned a letter to its portfolio companies cautioning them to “plan for the worst” amid this global economic downturn.
- Still, demand for SpaceX equity will likely outstrip supply, with the company looking to raise a whopping $1.725 billion in funding at a current $127 billion valuation.