Jun. 14 Markets Report: Bad News Bears

Jun. 14 Markets Report: Bad News Bears

The yield curve has inverted (again), total crypto market value is a shadow if its former self, and gas prices can't seem to go anywhere but up, up, up.

Jun. 14 Markets Report: Bad News Bears
Darry Port

Published Jun 14, 2022Updated Jun 24, 2022

In This Article

Past Year

Macro Overview

Running out of Ammo

  • Ukraine is now losing 100-200 soldiers per day and is almost out of artillery ammunition, with senior officials pleading for the West to send more weapons. 
  • The central bank of Russia announced that it’s lowering interest rates back to prewar levels, saying that the effects of economic sanctions are less severe than initially feared.

So Much for Peak Inflation

  • Despite inflation slowing down a bit in April, the Labor Department’s latest CPI reading came in at 8.6% – the largest yearly increase since December 1981.
  • On Tuesday, the World Bank cut its global growth forecast down to 2.9% for 2022, down from 5.7% in 2021. The bank also warned that the world economy could slip into a period of stagflation similar to the 1970s, and that recession will be hard to avoid for many countries.

Stocks & Bonds

All I See is Flaming Dollar Signs

  • With inflation coming in hotter than expected, stocks have swung back in bear market territory. The S&P 500, in particular, hit its lowest level since December 2020.
  • All major S&P 500 sectors are red, with financials and consumer discretionary dipping more than 7%.
  • Investors are now bracing for the Fed to raise rates later in this week.

Oh, How the Yields Have Curved

  • Bond rates jumped all around, with the 2-year Treasury rising to 3.29% — its highest level since 2007.
  • The 2-year rate is currently higher than its 10-year counterpart, reaching the yield curve inversion that is seen as an indicator of a recession.

Real Estate 

Moving Back into Mom’s Basement

  • The 30-year fixed mortgage rate bounced back to 6.13% after trending lower for 3 weeks.
  • In good news for buyers: Homebuyer budgets haven’t grown much (0.3%) since last year, which is a leading indicator that home prices have peaked and will slow down in the coming months. 
  • According to Redfin, the median monthly asking rent in the U.S. rose 15% YoY and surpassed $2,000 in May.
  • The top 3 Metro areas with the fastest rising rents are: 
    • Austin, TX (48%)
    • Nashville, TN (32%)
    • Seattle, WA (32%)
  • The top 3 Metro areas with the fastest declining rents are: 
    • Milwaukee, WI (-10%)
    • Kansas City, MO (-3%)
    • Minneapolis, MN (-3%)

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Source: Redfin

Crypto

More De-Pegging Panic

  • Bitcoin (BTC) opened the week with its lowest weekly close ($20,853) since December 2020. 
  • If you had any doubts that we’ve now entered a crypto winter, the total cryptocurrency market cap has plummeted to $944 billion from an all-time high of $3 trillion last November.
  • The value of ETH has dropped as low as $1,083, due to Merge-related delays and fears surrounding the depegging of stETH – an Ethereum liquid staking derivative. It’s worth mentioning, though, that stETH is a fully collateralized derivative and nothing like the algorithmic stablecoin UST. 
  • While this market downturn had a lot to do with rising inflation and crypto’s correlation with stocks, Celsius’ liquidity issues played no small part. 

In Desperate Need of Liquidity

  • On Monday, crypto lending platform Celsius paused all customer withdrawals due to “extreme market conditions”. 
  • Many speculate that Celsius has become insolvent (and might have been so for a while), either because they don’t have enough funds at all or because a lot of funds are in illiquid investments like their mining business. 
  • Competing platform Nexo soon came forward with a bid to acquire some of Celsius’ “remaining qualifying assets”.

Forget Web3, Welcome to Web5

  • Jack Dorsey, founder of Block (previously known as Square), is working on an alternative to Web3 that only runs on Bitcoin technology called Web5. So, uhm, what happened to Web4?
  • The SEC has opened a new investigation into Do Kwon’s Terraform Labs, looking into how UST’s marketing might have violated federal investor protection rules.
  • Last Friday, cross-border transfer service MoneyGram started rolling out USDC payments in key markets like Canada, the US, Kenya and the Philippines. 

NFTs & Metaverse

Bear Market Memes

  • The total NFT Market Cap is currently hovering around $21.9B, -16.11% for the week. 
  • According to DappRadar’s May 2022 Industry Report, NFT sales volumes came in at $3.7 billion, which is respectable considering that crypto is in a bear market.
  • Over the past few weeks, the NFT space has become dominated by dark themes in a bizarre attempt to cope with the bear market. Case in point: this week’s top collection is We Are All Going to Die with 9.22 million in volume.
  • This week’s top sale goes to Otherdeed for Otherside #8088 at 200 ETH ($243,046).

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Otherdeed for Otherside #8088, Source: Opensea.io

Actors on Actors in the NFT Space

  • This week we’re seeing a lot of actors share their enthusiasm for NFTs. 
  • Robot Chicken co-creator Seth Green was able to buy his Ape #8398 back after it was stolen in a phishing scam.
  • Comedic legend Jim Carrey released an NFT collection dubbed Sunshower via SuperRare, with all proceeds going to the Feeding America non-profit.
  • Oscar-winning actor Anthony Hopkins recently shared his ENS domain on Twitter and asked Jimmy Fallon, Snoop Dogg and Reese Witherspoon for NFTs recommendations.

Commodities

Top Commodities ETFs by Assets

Can We Kick Russian Oil to the Curb?

  • As of Monday, the national average price for a gallon of gasoline rose to $5.014 — up from $4.865 a week ago.
  • But residents of some states are feeling way more pain at the pump. In Washington, the average price of gas is $5.54. In Nevada, it’s $5.65. And in California, it’s — wait for it — $6.43 per gallon. Sheesh.
  • President Vladimir Putin recently said that the West will not be able to remove its Russian oil dependence for at least a few years. 

Trading Cards

Olé, Olé, Olé

Startups

Funding Rounds Take a Nosedive

  • Biotech startups have been attracting most investor interest amid this fundraising downturn, taking 4 of the top 10 rounds this week. 
  • The 3 highest-funded startups in the past 7 days are:
    • National Resilience, $625M: An end-to-end biopharmaceutical manufacturing and development firm.
    • Knock, $220M: A home-buying app that lets existing homeowners access the cash they need before they even sell their current home.
    • Branch, $147M: Branch makes buying insurance easier by allowing companies to bundle home and auto insurance in a single transaction.

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