Apr. 26 Markets Report: A False Victory

With the Battle of Donbas underway, Russia has started the second phase of their invasion and is aiming for control of the Donetsk, Luhansk and Kharkiv oblasts. So far, Kreminna is the first city to be captured by Russian forces. Let’s hope it’s also the last.

Because while Putin already thinks he’s winning, the head of the Central Bank of Russia (CBR) has recently revealed that economic sanctions are devastating their economy: inflation hit 17.3% in March while 2.4 trillion rubles have flowed out of banks. Satellite images also show that Russia is pumping nearly 10% less oil than before the invasion. And with Macron securing a second term as President of France, a Russian oil embargo is still in the cards.

Over in the US, President Joe Biden continues to crack down on Russian businesses and oligarchs while providing billions in military and government aid. On Thursday, he also announced an immigration program that will accept up to 100,000 Ukrainian refugees.

Check out the details and get updates on more of your favorite asset classes below.

Let’s get the big news out the way. Twitter’s board has officially accepted billionaire Elon Musk’s takeover bid to buy the company and take it private at $54.20 a share. Twitter stock (TWTR) surged 5.66% on the news and is up almost 10% for the week. 

Meanwhile, the rest of the market posted another week of losses. The Dow dropped more than 1.10%, the S&P 500 and the Nasdaq dropped 2.18%% and 2.46% respectively. Asian stock markets have it much worse, with China’s Shanghai Composite dropping more than 8.36% amid Covid case spikes. 

Over the coming week, nearly a third of the S&P 500 and half of the Dow Jones is set to report earnings. If major players like Amazon, Apple, Alphabet, Meta and Microsoft manage to beat expectations, then we’re in for a swift market recovery. But the converse is also true. If sales are down across the board, then expect your portfolio to bleed some more. 

In the meantime, here are the best and worst performing sectors this week: 

• Gainers
  • Real Estate: 1.52%
  • Consumer Staples: 1.21%
• Losers
  • Telecom: -7.60%
  • Energy: -5.98%
  • Materials: -3.80%

Yields, on the other hand, are spiking as investors sell out of bonds. The 5-year U.S. Treasury yield went so far as to climb above 3% on Thursday, after Fed Chairman Jerome Powell said that a 0.5% rate hike was “on the table” in May. Since then, the US5Y yield has dropped to 2.82%, with the US 10Y and US 30Y sitting at 2.80% and 2.89% respectively.

Home prices continue to rise as the supply of homes for sale is still low relative to demand. According to the National Association of Realtors, March sales of existing homes dropped 2.7% from February and 4.5% year-over-year (YoY). 

The median price of an existing home sold in March was $375,300, a 15% YoY increase. With the 30-year fixed rate rising to a 14-year high of 5.32%, economist George Ratiu warns that we might enter another housing bubble if prices continue to rise at the current pace.

Some recent housing data does suggest that the demand is cooling down though. This includes fewer people searching for “homes for sale” on Google, mortgage purchase applications decreasing, and new home listings on Realtor.com increasing. But it’s still too early to tell.

Crypto prices were a bit stagnant this week as BTC and ETH each kept under $43,000 and $3,200. As is to be expected, most cryptocurrencies followed Bitcoin losses, though a few large projects like Dogecoin (DOGE), Terra (LUNA) and Hex (HEX) still managed to make gains.

DOGE, in particular, owes some of its recent gains to Musk’s Twitter purchase.

The best performing crypto sector this week is Transport (believe it or not), with an average price change of 953.57%. This week’s worst-performing sector, on the other hand, is Video at -9.93%. In terms of individual projects, here are this week’s winners and losers:

• Gainers
  • ApeCoin (APE): 54.65%
  • Kava (KAVA): 27.17%
  • Curve (CRV): 22.63%.

• Losers
  • Moonbeam: -17.23%
  • Audius: -16.88%
  • Waves: -15.74%

Over in the Ethereum ecosystem, API provider Infura suffered an outage on Friday that affected multiple blockchain apps like MetaMask, Polygon and Filecoin. This incident highlights the fact that even relying on the common tools can threaten a project’s decentralization. Twitter co-founder and Block CEO Jack Dorsey said as much in a recent tweet (only, in a more condescending manner). 

Honorable mentions

• Blade Runner director Ridley Scott’s production company is set to adapt “The Infinite Machine”, which chronicles the founding of Ethereum, into a film. 
• German bank Commerzbank just became the first financial institution in the country to apply for a crypto license. 
• Australia’s first Bitcoin ETF, the Cosmos Asset Management Bitcoin ETF, is set to begin trading on April 27 and could see up to $1 billion of inflows. 

Coinbase’s NFT marketplace is currently in beta and only available to a select number of users. Aside from allowing users to exchange NFTs, the platform is also set to support social features like token-gated communities. Even though Coinbase is a bit late to the party, NFTs are still on the up and up.

NFT sales rose by 53.77% for the week, with projects like Moonbirds, CryptoPunks and Bored Apes Yacht Club (BAYC) topping the charts. You’re probably already familiar with the latter two, but what about first? 

Moonbirds is a collection of 10,000 Profile Picture (PFP) NFTs that feature owls with rarity-powered traits. Owning a Moonbird grants you access to a private community, IRL meetups, airdrops and a host of other benefits. Moonbirds’ floor price is currently $99.59k (ouch), with Moonbird #2642 selling for 350 ETH ($1.03M) on Saturday. 

BYAC owners are likely set to gain more utility for their NFTs as well, with Yuga Labs announcing that their Otherside metaverse project will launch on 4/30, 12pm ET. See you there.

Ever since Gold soared above $2,000 per ounce in March, it has been on something of a short-term downtrend and is currently trading at about $1,900. While Gold usually rallies higher during times like these by acting as an inflationary hedge, rising interest rates also tend to drive outflows from non-yielding assets. So, it appears that smart money is chasing yield at this moment. 

WTI Crude Oil, which peaked at nearly $130 per barrel back in March, fell over 8% back below $100 . With COVID-19 cases in Shanghai skyrocketing and lockdowns being prolonged, investors are expecting a decrease in oil demand. This bearish sentiment could soon reverse, however, since the European Union is preparing so-called “smart sanctions” against Russia that might further reduce supply and lead to another rally. 

Startups

• Even during these market conditions, VCs are still willing to bet on disruptive companies. This week’s biggest funding rounds include:
  • The Boring Company ($675M): Elon Musk-led company constructing tunnels for high-speed transportation. 
  • Upside Foods ($400M): ​​The first startup producing lab-grown meat from multiple species.
  • Beta Technologies ($375M): Developing electric vertical take-off and landing aircraft (eVTOL).
• Yesterday saw a slew of IPOs, including: 
  • HilleVax (HLVX): A Norovirus vaccine developer 
  • Tenon Medical (TNON): Creating medical devices for sacroiliac joint surgery.
  • Edible Gardens (EDBL): Controlled environment agriculture (“CEA”) farming. 
  • Austin Gold (AUST): Gold exploration company in Nevada.
  • Belite Bio (BLTE): Novel therapeutics for currently untreatable eye diseases.

Sports cards

• Soccer and hockey cards saw the biggest gains this week, led by cards like  2016 Panini Select Base #1 Cristiano Ronaldo and the 1981 Topps Base #16 Wayne Gretzky Center. 
• As far as basketball cards go, Jordan Poole cards have been trending even higher off the Warriors’ win against the Denver Nuggets on Saturday. Poole’s 2019 Prizm Silver, Base, Pink Ice and Green cards are among the biggest gainers, up anywhere from 51%-143% over the last 7 days. 

Wine

• According to Liv-ex’s Fine Wine Market Q1 2022 report, fine wine has outperformed all major markets aside from commodities this year. Burgundy and Champagne are among 2022’s best performers, while Bordeaux has been failing to keep up with the broader market.

Art

• The Venice Biennale Arte 2022 kicked off on Saturday, showcasing unique contemporary visual art that reflects our society. For the first time in this event’s 59-year history, both of the Biennale Arte’s Golden Lions went to black women — Simone Leigh for her Brick House sculpture and Sonia Boyce for her British Pavilion. 
• On May 12, Jackson Pollock’s Number 31 (1949) will hit the auction block in New York with an expected price tag of over $45 million.