INVESTMENT CONTEXT
PROFZERO'S TAKE
- U.S. stocks dropped sharply on growing fears of recession. S&P 500 dropped 3.27% on June 16, recording its steepest weekly decline (more than 6%) since March 2020
- To calm the fears of a new debt crisis in EU, the ECB is reportedly structuring a specific bond-buying program specifically aimed at supporting its most indebted economies
- Turkey maintains its opposition to Finland and Sweden joining NATO
- For the first time since 2007 the Swiss National Bank raised its policy rate by 50bps
- Russia increased the cut of natural gas supply to Italy to 35%, sending TTF up 25%
- U.S. mortgage rates at 5.78% hit the maximum since 2008, causing new home constructions to fall by 14.4% in May
- Blockchain assets are dragged by investors shunning risk assets across the board. BTC is repeatedly testing USD 20k strong resistance, seen by some analysts as "critical" before a raft of leveraged trades get margin-called, potentially causing position defaults
PROFZERO'S TAKE
- On June 16, ahead of the market open, ProfZero called the feeble rebound of June 15 a "dead cat's bounce" - nothing different from what happened on May 6, two days after the Fed announced a 50bps interest rate increase: after an initial relief trade, market engaged a steep sell-off, one that brought Nasdaq from 12.9 to 11.4k within a week. Until markets will have embraced the deep rooting of the current disruption; will have stopped looking at Regulators for cheap and quick fixes, and will have started to work on structural solutions on energy and food - ProfZero argues we are bound to trade in a nervous, sharktooth, lose-lose type of environment
- It is not "are we holding 20k on BTC?" that should be asked. Rather: "what for is it worth paying 20k?"