Farewell to Growth? Not so soon! ☝🏻
INVESTMENT CONTEXT
PROFZERO'S TAKE
- The evacuation of Ukrainian troops from the Azovstal plant in port-city Mariupol suggests that Russia may be taking the final steps to seize control of the area
- McDonald's (MCD) and Renault (RNO) announced the full exit from Russia. MCD will sell its operations in the country for USD 1.2-1.4bn write-down, whilst RNO assets in Russia were nationalized
- Negotiations are stalling to persuade Turkey not to veto the entry of Sweden and Finland to NATO. Turkey resents both for refusing to extradite Kurdish dissidents
- Shanghai's lockdown measures may ease, as the city has reported no new COVID cases for the third consecutive day
- Sri Lanka’s new prime minister, Ranil Wickremesinghe, said the country has reached its last day of fuel supply, as default on international debt looms
- Berkshire Hathaway (BRK) scooped USD 3bn Citigroup (CITI) stock
PROFZERO'S TAKE
- Analysts are seeing a remarkably dovish tone in the words of President Vladimir Putin, who said the proposed NATO enlargement posed “no direct threat for Russia”, and that he had “no problems” with either Finland or Sweden joining. ProfZero's eyes are now looking above, chasing further reconciliation signs from the other half of the heavens
- After ploughing more than USD 51.1bn in U.S. stocks in Q1 2022, particularly in energy (Occidental Petroleum, OXY) and Value-style technology (IBM, Activision Blizzard, ATVI) Berkshire Hathaway (BRK) binge on Value continued with a USD 3bn bet on Citigroup (CITI). All this, while Saudi Aramco overtakes Apple as the world's most valuable company, feasting on +82% net income on Q1 2022 vs. one year before. ProfZero sees the capital flow as possibly marking the end of an era for at least the frothier fringes of the Growth segment. Still, it's challenging to imagine the post-pandemic, post-war world without innovation in the driving seat on all fronts - energy (smart grids), finance (digital currencies, decentralized exchanges), healthcare (applications of genome mapping), transportation (smart cities, sustainable movement). As hard as it is to call for an opportunity now - is it really by chance that inflows to Cathie Wood flagship ARK fund are up USD 1.5bn since the beginning of the year, right while it was snapping 860,000 more Coinbase shares (COIN)?
- After TerraUSD project collapse, nervousness remains high in the stablecoin space. Ever since Tether briefly lost its peg to USD on May 12, over USD 7bn positions were pulled from USDT, sending the market capitalization of the project down by 9%. ProfZero remains convinced of the importance of stablecoins as mediums to bridge and create confidence between the legacy transactional world and fully embracing cryptocurrencies as means to exchange value - one of the rare wedges where Regulators could meaningfully step in and act concretely to establish investors' trust
- BTC is trading range-bound around USD 30k gravity. Albeit it successfully shrug off the risk of further meltdown below USD 25k in the wake of LUNA collapse, it is not supported by sufficient buy-side pressure to call the bottom. ProfZero still believes the eventual point (C) of a bear Elliott wave sits just below USD 30k, which could function as platform for a ramp to reclaiming USD 40k in the near term, before a final capitulation in the low USD 20ks. To ProfZero discouraged readers - BTC has seen multiple 80% peak-to-trough plunges, the last one no later than in Q1 2020. Another disruption of that magnitude would locate the next min at ca. USD 13k. Would that undermine the wealth of blockchain as the technology for the next era? Iron Maiden used to sing "Fear of the Dark"; not "Fear of the Future"
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