Welcome back to Weekend Reading.
You would be forgiven for thinking that some of the stories out this week are spoofs, parodies or hyperbole. Sadly not – it seems the market is occasionally intent on becoming a caricature of itself, what that says about sentiment we postulate on for longer than this note.
What is worth considering is that when everybody’s gone mental, even something absurd can seem normal. Maybe if the market tanks we can call it the “intervention trade”.
Let’s look back on the week.
Baby Shark, Baby Brains
Do you remember way back when in one of these notes where we recounted the story that a prison in Mexico was done for psychological torture, after keeping its inmates awake by playing the song “Baby Shark”?
No? Neither do punters apparently.
Samsung Publishing Co, a shareholder in the producer of “Baby Shark”, rallied earlier this week after everyone’s favourite Technoking tweeted about the song. That’s right, a tweet about a song that came out for children in 2016 drove a major listed corporation.
The stock has more than quadrupled since the end of 2018, with this being the latest kicker in the years-long rally.
I hope one day when we’re all enslaved in Elon’s off-world Dogecoin mines, we can look back and see that his influence over the market was a sign that he was one bad day away from becoming a James Bond villain.
Regulatory Credits, Bitcoin, now Burgers
Yes just re-name this note the “Elon Musk Variety Hour”.
Tesla has filed applications with the US Patent and Trademark Office to use its logo for use in the food industry.
A tweet from <not saying his name again> confirmed that this would be more than just a simple café but a full production to accompany a new Tesla Supercharger location.
At the moment it appears the location will be in Santa Monica, featuring a 50s diner and movie theatre – if they do not sell “Big Kahuna Burgers”, I will personally buy put options on TSLA out of spite.
This is perhaps another means to diversify Tesla’s income streams away from selling credits to other automakers and profits from crypto trading – perhaps noting Porsche’s success in 2008 acting like “a hedge fund that makes a car”.
Title Fight: Ether vs Bitcoin
If crypto markets were a pay-per-view boxing channel, these two coins are the ol’ reliables who fill the stadium; Bitcoin and Ether.
Ether’s relatively small drop in May compared to the plummet in Bitcoin has edged it closer to taking out the title of being the largest coin by market value. Currently BTC is still almost 100% larger than ETH, but after May’s slump brought closed that gap by around $350 billion USD, the race seems to be back on in a big way.
Even Cathie Wood has come out in support of Ether, highlighting its broader capabilities than Bitcoin and its increased potential to be used as part of the global monetary system.
*All numbers in USD from BofA Securities
- Equities: $14.7bn into equities
- Bonds: $11.8bn into bonds
- Precious Metals: $0.1bn into gold
- Cash: $16.3bn into cash
Flows to Know
Largest tech outflow ($1.6bn) since December 2018
Largest inflow to banks ($2.8bn) and materials ($1.8bn) in 3 months
Large inflow into European stocks ($2.3bn)
A U.S “Inflationary Boom” leads to commodities > bonds
Small Cap and Value recovering popularity
2H rotation from goods to services
Jeff’s Off This Planet
Amazon have advocated for a new way for people to feel out of this world, without the use of multi-billion dollar rockets.
Amazon said it will actively support proposed U.S. federal legislation that would legalize marijuana
at the federal level, which is focused on decriminalization of the drug and support of communities impacted by substance abuse.
“We hope that other employers will join us, and that policymakers will act swiftly to pass this law,” Amazon said in a message to U.S. operations employees from Dave Clark.
This kind of large corporate support for the initiative is another positive movement for policymakers looking to reverse legislation that has existed against marijuana usage since the Nixon Administration – as part of their support, Amazon will remove marijuana in its drug screening program, which may see productivity in any warehouses where edible goods are stored take a dramatic plunge.
Nyet Dollar in Oil Fund
Russia has made the decision to remove the USD from its oil fund, reducing its exposure to Western sanctions – this is only a fortnight after Putin held his first summit with Biden.
The National Wellbeing Fund will divest from USD holdings into euros, yuan and gold – the new split is shown below:
The central bank reserves dedicated to these assets measures around $119 billion USD, with around 30% of this currently being in USD denominated assets.
Russia is looking to make this change within the next month, a symbolic shift but one that is designed to send a geopolitical message. One can only hope that whoever receives the message can read Cyrillic.
Our morning calls continue, please do tune in for a daily dose of market insights and access to some leading experts in the funds management field.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team
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The views expressed in this article are the views of the stated author as at the date published and are subject to change based on markets and other conditions. Past performance is not a reliable indicator of future performance. Mason Stevens is only providing general advice in providing this information. You should consider this information, along with all your other investments and strategies when assessing the appropriateness of the information to your individual circumstances. Mason Stevens and its associates and their respective directors and other staff each declare that they may hold interests in securities and/or earn fees or other benefits from transactions arising as a result of information contained in this article.