In today’s briefing:
- OIL MACROS: Snowballing Supply Worries May Keep Prices Elevated
- Crypto Weekly – Web 3 and Selfie Monetization
- Dow Jones – Spooky Chart Update I
- NDX Low Due This Week – 15,500 the Level to Mend the Damage
- Alpha Bites: Performance Summary of Trade Recommendations in FX and Rates – January 2022
- Going through withdrawals
- CLFD: Dropping Coverage, 32% Return in 4 Days
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- Liquidity Risk Short Candidates: HashiCorp, Fluence Energy, Rivian Auto, Domo Inc.
- Could SPACs Be a Contrarian Bet in 2022?
OIL MACROS: Snowballing Supply Worries May Keep Prices Elevated
- Demand cheer and supply fear have become the major drivers behind crude’s spike to 7-year highs.
- Escalating tensions between the US and Russia over Ukraine are a major trigger for a fear premium. But a military conflict and supply disruption is not our base case.
- Constant OPEC+ output shortfall and a thinning cushion of OECD stocks makes the market ultra-sensitive to any actual or feared supply disruptions.
Crypto Weekly – Web 3 and Selfie Monetization
- Crypto continues to drawdown due to tightening, however, the industry continues to grow with several large VC fund raises underway such as a16z’s $4.5 billion dollar fund
- Web 3 is a hot topic and we explore how several entrepreneurial individuals have monetized their selfies for millions
- We also explore LooksRare’s potential to disrupt Opensea and their potential 2022 public listing
Dow Jones – Spooky Chart Update I
- This chart draws a fascinating historical comparison between the behaviour of the stock market today with that seen 100 years ago around the Spanish Influenza
- It clearly shows that what we are seeing today has some sort of reflection of the past
- We have fresh developments that indicate further weakness for Equities [relative to Gold]
NDX Low Due This Week – 15,500 the Level to Mend the Damage
- NDX break below trendline and price support at 15,300 did open Pandora’s box and was touted as a key risk driver for a global sell off into late January.
- NDX 14,300/100 low zone to kick off a recovery rise in February. We prefer the DJI near 34k and SPX near 4,350. Late January cycle low timeline in focus.
- NDX underside of broken trendline at 15,500 is the level to re take to mend the technical damage – a tall order at this stage.
Alpha Bites: Performance Summary of Trade Recommendations in FX and Rates – January 2022
- In my monthly recap note, I provide a performance update of my weekly trade recommendations in emerging markets FX and rates.
- Of the total of 31 trade recommendations made so far, I have recommended closing 21 of which 17 were in the money.
- I also go over my open trade recommendations as well as those that I have closed recently.
Going through withdrawals
- There have been 9 SPAC registrations withdrawn in 2022 to date
Don’t worry about the fallen SPACs, though. SPACs are like The Immortals… when one falls there is another to take its place. There have been 11 new SPAC registrations in 2022.
- Cohn Robbins Holdings Corp. (CRHC: warrants +8.9%) & Allwyn Entertainment
CLFD: Dropping Coverage, 32% Return in 4 Days
- We are electing to close out our Sell Rating on Clearfield (CLFD) after an unprecedented market response to our initiation.
- In less than 4 trading days, CLFD’s stock has declined by approximately 32.3 percent
- We see less of a reason to maintain coverage when the market has priced in for the business risks we had originally highlighted.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets dropped yet another day on Friday, with the S&P and Nasdaq down 1.9% and 2.7% as the risk-off sentiment continued to weigh on markets. Most sectors were in the red with Communication Services and Consumer Discretionary down 3.1% and 3.9%. US 10Y Treasury yields were flat at 1.77% after easing 8bp on Thursday. European markets closed mostly higher with the DAX and CAC down 1.9%, 1.8% and 1.2%. Brazil’s Bovespa closed 0.2% lower. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI was down 1.1%. Asian markets have broadly opened in the red – HSI, STI and Nikkei were down 1%, 0.1%, 0.6% while Shanghai was up 0.2%. US IG CDS spreads were 1.1bp wider and HY CDS spreads were 5.7bp wider, EU Main CDS spreads were 1.7bp wider and Crossover CDS spreads were 7.9bp wider. Asia ex-Japan CDS spreads were 1.5bp wider.
Liquidity Risk Short Candidates: HashiCorp, Fluence Energy, Rivian Auto, Domo Inc.
- Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
- Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
- HashiCorp Inc (HCP), Fluence Energy (FLNC), Rivian Auto (RIVN), Domo Inc (DOMO)
Could SPACs Be a Contrarian Bet in 2022?
- After a Boom that lasted nearly 18-month, SPACs are now finding themselves under fire.
- Increasing amounts of Scrutiny from regulators, A Mismatch in Incentives towards Sponsors, and Burnout in new deals by Investors have all contributed to the recent slump.
- A majority of the high-growth De-SPACs have already seen a sharp selloff, leading to a drop of between 40-60%.
Before it’s here, it’s on Smartkarma