This idea is based on nothing, but it needs no regulation

23 maj 2022

INVESTMENT CONTEXT

• Joe Biden said Finland and Sweden would enjoy the “full, total, complete backing of the U.S.” as they apply to join NATO
  
• Ukraine ruled out ever conceding territory to Russia as part of a ceasefire deal. Andrzej Duda, Poland's President, commented that only Ukraine's parliament should decide the nation's future
  
• U.S. stock market indexes recorded their seventh straight week of losses, while earnings from the country's largest retailers disappointed on consumer taste rotation squeezing margins
  
• Christine Lagarde said the European Central Bank was on on track to lift its main policy rate back to zero by the end of September. During the weekend Lagarde remarked that cryptocurrencies are "based on nothing" and should be regulated
  

PROFZERO'S TAKE

• ProfZero welcomes the positive stance that permeated the blockchain space during the weekend, bringing BTC above USD 30.5k at the time of writing, and lifting all Layer-1 coins (with the exception of XRP) even after May 20 trades into deep positive territory. ProfZero already praised the possibly divergent trade that could be opening between the blockchain space and Wall Street - yet it would be reckless to rule out the risks inherently linked to taking positions in the same box-shaped formation already seen in weeks 2-3 of April. The bottom may not be there yet - and ProfZero definitely won't like to be the one finding out
  
• Goldman Sachs strategist David J. Kostin joined JPMorgan Chase quant Marko Kolanovic asserting that asset prices now have fully priced a recession - but a downturn is still far from concretely materializing. ProfZero agrees that the selloff has indeed wiped value even where fundamentals were solid (think of high-quality tech like Apple, AAPL and Microsoft, MSFT, or the very same Amazon, AMZN); yet the absence of near-term catalysts to rev up markets is the biggest missing element for a rebound in the weeks and months to come
  
• The ECB indicating a quicker-than-expected exit from negative interest rates territory (Q3 instead of Q4) is in fact one of those catalysts ProfZero thinks have not been fully priced by markets as of yet - without evening mentioning the continent's ailing growth
  
• As world leaders meet in Davos after a two-year pandemic break, key on the agenda is de-globalization and new "fault lines" in geopolitcs. Speaking of which - whose fault, actually?