Welcome back to Weekend Reading.
For those of you in Sydney currently enduring “The Melbourne Experience” (which possibly would be paired well with the Jimi Hendrix Experience), we hope you are staying safe and vigilant.
It has certainly been a week of ups and downs for markets – volatility persists and it appears the market can never retain a period of relative certainty for long, such is the nature of irrational short-term dynamics. At least there are some interesting bits of news from around the world to share today.
Let’s look back on the week.
Earlier this week, a disagreement between Saudi Arabia and the UAE derailed the latest OPEC+ meeting without coming to a deal. The most immediate outcome of these two uneasy neighbours willing to come to terms will be no production increase for August, something previously flagged to the market as part of this meeting.
For those who haven’t filled up their cars recently, this unfortunately means further supply restrictions to global oil consumers and the possibility of rising prices.
Given the reactive nature of oil and those countries who drill for it, this could change at any moment – WTI prices are up almost 50% this year and importers may put on the pressure to increase production of black gold.
Shine on You Crazy Diamond
You thought we’d get through a weekend reading without a mention of crypto?
Today in Hong Kong, Sotheby’s is auctioning off a 101.38 carat diamond, and accepting payment in either Bitcoin or Etherum – another milestone for the adoption of cryptos within auction houses. So not exactly El Salvador, but still interesting.
The diamond is expected to price up to $15 million USD, the most expensive physical object (don’t panic Beeple we remember) ever offered for purchase through crypto. Fewer than ten diamonds weighing more than 100 carats have ever come to auction, so this is not an insignificant little moment of history for the shiny rock market.
Shooting for 2%
The ECB has raised its inflation target up to 2%, leaving themselves room to ‘overshoot the target’ for a period of time, which leaves officials more leg room to stimulate the European economy after years of sub-par growth.
The ECB particularly noted that when interest rates are close to their lower limit (as they currently are), the economy needs “especially forceful” monetary stimulus that could “imply a transitory period in which inflation is moderately above its target”.
Translation: we have run out of traditional tools to kick this into gear, so we’re going to have to create some inflation to get things going, but it will go away.
Naturally this indicates an expansionary bias for the ECB and is the latest in a long line of central banks telegraphing to the market their future intentions around inflation, in the face of rising concerns.
Give Me a Pizza That
This is not a fluff story off Vice, this is genuine news out of Bloomberg: New York no longer has America’s best pizza – life changing information.
According to a new book, ‘Modernist Pizza’, Portland, Oregon has the best pizza in America.
The book is partly written by Nathan Myhrvold, former Chief Technology Officer at Microsoft; a man who ate 400 pizzas across the country to come to that conclusion, a difficult life to be sure.
Unlike that one listed deli in New Jersey, the ‘artisanal’ pizza makers in Portland that Myhrvold handed the crown to are not currently available to capital markets – sorry, no trade idea here.
*All numbers in USD from BofA Securities
Equities: $8.6 billion into equities
Bonds: $18.4 billion into bonds
Precious Metals: $0.1 billion out of gold
Cash: $10.5 billion into cash
Flows to Know
- Largest inflows into bonds in five months
- Third week of outflows from US value ($2.8bn)
- Second week of inflows into US tech ($0.5bn)
Regional Tech Divergence
US real GDP expectations have stopped rising
S&P 500 trailing PE highest ever
Jesse touched on this story months ago, but we will re-touch on it since it’s back in the news.
Nancy Pelosi’s husband Paul saw a large gain on newly purchased Alphabet, Amazon and Apple stocks/options, which they bought in the immediate leadup to the House Judiciary Committee on antitrust legislation earlier this year.
I’ll re-insert a chart Jesse found from the site “Unusual Whales” related to this story – it’s the Pelosi portfolio which is a prolific one even before this particular trade.
Source: Unusual Whales
$100 Billion Club
A ninth member has entered the hallowed circle of centibillionaires this week, with former Microsoft CEO Steve Ballmer now having a net worth of just over $100 billion USD.
Oracle Corp. founder Larry Ellison fell just short, with a mere $98.6 billion to his name – donate now to help this unfortunate soul to the number 10 spot where he belongs.
A rallying equity market has seen the largest surge in wealth within the $100 billion club, with seven of the nine members driving their original fortunes by running or starting technology companies in their own right.
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.
As a reminder, we have changed the call schedule to be Tuesday and Thursday mornings, same time as usual, starting 1 July.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team.
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