Equities give back gains - ProfZero not falling for bull trap 🐻
INVESTMENT CONTEXT
PROFZERO'S TAKE
- Equity markets took a breather on May 23, as operators reacted positively to U.S. President Biden commitment to review Trump-era tariffs imposed on China
- Accumulated gains are now being quickly given back, as futures on May 24 point to red territory for both S&P 500 and Nasdaq (dropping 1.21% and 1.88%, respectively). Snapchat (SNAP) in particular cratered 30% in the after-market on anticipated top- and bottom-line miss, dragging Pinterest (PINS) and Meta Companies (FB) 12% and 7%, respectively. Zoom (ZM) instead popped 16% over-the-counter on sales forecast beat
- An initial remark by President Biden that that U.S. military will intervene to defend Taiwan should the island be attacked was later walked away by White House officials
- International Monetary Fund (IMF) Kristalina Georgieva hinted at further cuts for this year's global economic growth
PROFZERO'S TAKE
- The ongoing market jitters must be nerve-wrecking for the cohort of retail traders that entered the market during pandemic times. A sustained period of tech-fueled growth has quickly reversed, with Nasdaq plunging into bear market (year-to-date performance down 27%) and S&P 500 teetering on the brink of one (negative 17% since the peak in November 2021). Pandemic-era dears Pinterest (PINS), Snapchat (SNAP), Twitter (TWTR) are now down at least 50% from their peaks; blockchain assets trade even deeper in the red. Is this the end of Growth? To ProfZero, that amounts to as much as asking - are we really building the next decade on coal, legacy banking and neo-protectionism? Clocks tick on, not back
- Speaking of innovation, Samsung (ticker: 005930) is investing USD 356bn over the next 5 years in semiconductors, biopharmaceuticals and next-generation technologies to drive "long-term growth". Curiously enough, neither coal nor plastics appear on the plan
- IMF Managing Director Kristalina Georgieva's admission that a global recession is not in the cards, but shouldn't be ruled out altogether, resonates with JPMorgan's CEO Jamie Dimon seeing "big storm clouds" on the horizon, just but darkening a currently strong economy. ProfZero already underscored the resilience of Main Street in Q1; however, trading is all about the future, and
- ProfZero still fails to see a sufficiently credible deterrent to avert a recession. A ceasefire in Ukraine, and normalization in energy markets would be a fair start
- "Frailty, thy name is... BTC". ProfZero keeps it cool on blockchain - not paying the bears' lunch