A Red Sweep
Cash is king, or at least it used to be. Jamie Dimon, the legendary JP Morgan CEO, explained in an interview that “hoarding cash” is a good strategy. If the Federal Reserve increases interest rates, the market will bring new investment opportunities. Preparing for that moment and having available liquidities may seem the right choice. But, is stockpiling cash a good idea?
Place a bet or wait for the next hand? It is the eternal dilemma of every rookie gambler. Seemingly, a senior investment banker is no different from a rookie gambler who is learning how casinos work. Investment banking lost its glory. The democratisation of investment services accelerated by the digitisation resultant from the coronavirus crisis hampered Wall-Street’s power. When facing an unprecedented market configuration, a seasoned investment banker is as green as an averagely informed person.
How does a casino work? Casinos engineer the mindset of gamblers to bring all their liquidities in the house of the rising sun. Anyway, money should never sleep. Isn't it? The gambler believes foolishly that he/she can bring the house down. Through this process, money changes hands from individuals to casinos.
The current situation across all markets is no different. Most individual investors are going through an investing frenzy, believing that if they do not buy assets, inflation will erode the value of their money. Thus, the price of equities, crypto and real estate followed an unforeseen explosion amid structural economic decline. All monies stockpiled throughout the 2010s are now injected in all kinds of assets.
In the long run the bubble will burst. No investors in their right mind
would need over-inflated assets that have low or zero productivity.
We have a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory. Jamie Dimon, JP Morgan CEO
The stock market entered into negative territory, the S&P 500 losing almost 80 points since last week. Bitcoin prices tested successfully the 40,000 mark but crashed below 36,000 amid market turbulence. The gold ounce plunged below 1,800 USD, despite rampant inflation.
The only thing that gained momentum is volatility, the VIX climbing above 20%. The fast spreading Delta coronavirus variant is a real reason to worry. The new mutant will test the efficiency of vaccines. If the result is negative and a new lockdown is required, the market reaction could be violent and volatility could spike significantly.
“Agua” means water in a free translation from Portuguese. One simple harmless word can damage a global brand dominating the market of non-alcoholic beverages. During a press conference, following a Euro 2021 match, Cristian Ronaldo removed two Coca-Cola bottles from view. The market reacted and Coca-Cola’s share plunged by cca. 2% in one trading session. The dip was not transitory and the world’s leading beverage supplier continued to lose value.
Coca-Cola is the key sponsor of the European Championship and there are many legal binding rules prohibiting teams and officials from hampering the brand’s reputation. Needless to say that such policies do not apply for CR7. Ronaldo is reputed for promoting a healthy lifestyle who avoids carbonated drinks and alcohol, thereby explaining his unusual longevity in professional sport.
The pandemic underlined how poor the state of population’s health is in
western countries. The massive consumption of unhealthy foods is one of the
causes. “Agua” is a word that could generate a revolution against the
mainstream food and beverage firms.
The pandemic brought to our attention an underrated investment vehicle called SPAC. SPACs are good for you especially if you are an investment banker. The real problem with SPACs is that you invest in an empty shell. The assets behind a SPAC can be opaque and sometimes doggy. It is the case of DraftKings, according to Hindenburg Research a world class shorter, DraftKings is a leading American daily fantasy sports contest and sports betting operator. The company got listed on NASDAQ following a merger between DraftKings, its SPAC sponsor, and a Bulgaria-based gaming technology company called SBTech. The problem is that the profit comes mainly from the Bulgarian firm. SBTech accounted for 25% of total revenue at the SPAC consolidated level and was the only firm bringing money into the deal. SBTech’s turnover seem to come from black market, as the Bulgarian betting company is active in multiple countries where gambling is banned.
The Dow Jones lost cca. 1000 points ending the week below the 33,300 support level. We could be at the beginning of a significant summer correction and a period of market turmoil.
The world’s leading cryptocurrency is still in murky waters and the different announcements could lead to substantial market dislocations. This is not the end of the bearish cycle, and for the moment, there are no signs of an exit from the turbulent zone.
The Gold ounce ended another week in negative territory going through a massive contraction below 1,800 USD. Gold prices behave unusually for an inflationary period. Paper may not be the right hedge and the inside inventors may opt for physical ounces.
General Disclaimer
The information and data published in this research were prepared by the market research department of Darqube Ltd. Publications and reports of our research department are provided for information purposes only. Market data and figures are indicative and Darqube Ltd does not trade any financial instrument or offer investment recommendations and decision of any type. The information and analysis contained in this report has been prepared from sources that our research department believes to be objective, transparent and robust.
Nope
Sort of
Good
A Red Sweep
Spooky Sell Signal
Gold Shines at New Highs
The ECB Cuts Again
Slowing Disinflation
Golden-Week Rush
China’s Massive Package
The Fed’s Big Rate Cut
The ECB Cuts Again
Banks Turn Bearish On China
Million-Dollar Gold Bar
Bonds Are Back
Black Monday
Diverging Rate Decisions
Still Strong
Smaller Is Better
The Name Is Bond, Green Bond
Landslide Victory
AI-Frenzy Takes a Break
Bye Apple, Hello Nvidia
The Fed Stays Put
An Indian Rollercoaster
The Name’s Bond, Convertible Bond
Nvidia Does It Again
A Small Relief
From Boom To Bust
Higher For Longer
Still Magnificent
Halve And Havoc
Stubborn Inflation
Choc Shock
An End Of An Era
Britain Bounces Back
China's Goal
Bye iCar, Hello iAI
Nvidia Beats Expectations
Germany Overtakes Japan
Riding The Dragon
China’s Falling Behind
India Outshines Hong Kong
Aging Dragon
US Inflation’s Accelerating
Tesla Lost Its Crown
2023 Market Wrap-Up
The Last Samurai
Fed Teases 2024 Rate Cuts
Bond Market's License to Thrill
Cyber Week Bonanza
OpenAI's Leadership Shuffle Drama
Inflation’s Cooling In The US And UK
Back Into Deflation
Triple Hold On Rate Hikes
The US Economy Is Still Flexing Its Muscles
Inflation’s Refusing To Come Down
Investors Are Bracing For A Dip
An End In Sight
Rate Hike Recess
End Of An Era
China's #1 Ambitions Are Fading
Americans’ Piggy Banks Are Running Low
Trying To Break The (Wage-Price) Spiral
China: A Nation In Deflation
Uncle Sam Gets Downgraded
Twin Hikes
Stagnating Dragon
A Tale Of Three Inflation Stories
Silver Is Shining Bright
UK Inflation: Defying Gravity
The Fed Calls A Timeout
A One-Two Punch
Shrinking Dragon
Keep Calm And Carry On
The AI-ffect Of The AI Mania
SLOOS: Crunch Time Looms
Last Republic
LVMH Pops The Bubbly
India Takes The Population Throne
The End Is Nigh
OPEC Drops the Pump
Why Gold Is Glittering
Can't Stop Won't Stop
To Hike Or Not To Hike
China’s An Underachiever
Cash Is King
What Energy Crisis?
The Name’s Bond, Japanese Bond
The AI War Has Begun
Hikes Everywhere
What Recession?
Shrinking Population
Grab Your Box And Leave
A Gloomy Prediction
It's Darkest Before The Dawn
Elon Fires Himself…
Triple Whammy
No More Zero-Covid?
Eight Billion And Counting
Another One Bites The Dust
No Santa Pause
Big Tech, Big Disappointment
Cart