Weekly Update #26: Apr. 21 2024

WHAT YOU NEED TO KNOW ABOUT MARKETS THIS WEEK

Macro:

As mentioned in the last update:

all short-term indicators are pointing bearish, so we went on cash yesterday as stated in the weekly update.
Till we get a clear breakout or a big positive news catalyst, it's best to go easy on risk-taking.

This week was quite intense with a mix of geopolitical and economic shocks.

Financial conditions tightened due to a stronger dollar and higher rates, draining liquidity from the system. There was concerning news about Israel attacking Iran, which caused the US dollar index to rise, typical in a risk-off environment. Additionally, John Williams, an influential voice at the Fed, mentioned a possible rate hike if data supports it, which wasn't what investors wanted to hear, sending interest rates higher.

As liquidity dried up in many markets, stocks and cryptocurrencies took a hit. Fortunately, the model kept us safe, avoiding getting caught up in that mess.

Equities:

Stocks went down all week as Tax Day selling piled onto more selling and that selling continued when Williams dropped the H word and Israel struck Isfahan.

The model continues to be bearish.

Digital Assets (aka crypto)

Bitcoin recently underwent its fourth halving, a milestone that's often said to be already 'priced in.' However, I believe this perspective might not fully capture the situation. While news is typically factored into market prices, the fundamental drivers of asset supply and demand are not. Consider the growth trajectory of Bitcoin. We can easily extrapolate its adoption reliably. Can we say it's already priced in? Probably not as growth requires actual capital investment. Speculators alone just don't possess the necessary capital to preemptively price in such developments.

Coming back to the weekly recap. We got scary market dips, but Bitcoin is holding up well for now. It doesn't mean we should get aggressive yet. Patience. It's time to plan your next moves so when you get the signal, you are ready to jump back in.

As we get many questions on why we are so focused on crypto, we wanted to drop the chart below from Coinbase Institutional... It's just about performance. Bitcoin has just been the top-performing asset in eight of the past 11 years. During the period from 2013 to 2023, it was also the top-performing asset, with annualized returns of 124%.

Asset class performance 2013-2023

Commodities

The model continues to be bullish on Gold, Silver and Oil.

PORTFOLIO UPDATE:

We've been stopped out in COIN and VRT. We are sitting in cash, waiting for the opportunity to get back in.

LINK OF THE WEEK:

This week, we'd like to end on a positive note ... so we bring you the last update from Raoul Pal with his crypto big picture.

That’s it from us this week, thanks for reading!

DISCLAIMER: The No Rainy-Day Portfolio is not registered with any financial regulatory agencies. Content is for research, education, and entertainment purposes and should NOT be considered personalized financial advice.