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Posted April 04, 2022

Sean Ring

By Sean Ring

Monthly Asset Class Report

  • Large caps rally hard for the suckers.

  • Real estate was up as well, but bonds took a bath.

  • Monero and Ether lead the way for cryptos

Greetings from the Eternal City!

I write you with sore feet under the desk, as we covered over 7 miles yesterday, according to my Apple Watch.

Ill tell you all about it this week, including a fascinating pub conversation with a professor from Oklahoma.

But first things first.

This past month, Ive been moaning about the bear market rally in stocks. I think its finally going to turn back down.

The SPX and Nasdaq both did well, but I genuinely think thats because the US government, media, and perhaps even business, havent grasped the enormity of the Russian situation.

Cryptos were up as I suspected, but not with the mustard Id expect when governments confiscate assets left, right, and center.

Monero, though, which is the only coin thats genuinely anonymous, was up over 22% this month.

I think thats telling.

The 10-year yield rose to 2.38%, putting the kibosh on bonds. I dont like bonds right now and cant see why youd own them unless the government forced you to (like asset managers).

But equally, Im not sure how hard Powell can tighten without the markets crying uncle.

This isnt just a Paul Volcker situation; its a fundamental shift in how we price things.

As the USD rallied over the last month, its not like investors are rushing for the exits.

With that said, lets get to the charts

S&P 500

From last months report:

But I will say that as a death cross is imminent (50-day moving average moving below the 200-day MA), this market may have already put in its top.

I shouldve realized that in Clown World, a death cross would be a buy signal instead of a screaming sell.

So the SPX rallied about 400 points in the last two weeks of the month for a big suckers rally, which caught out many.

But if last week represented the local high point, were in for an ugly April.

Nasdaq Composite

As they say in Asia, Same, same, but different.

We had an enormous bear market rally last month, but like the SPX, I think Nazzies party is over for now.

Russell 2000 (Small caps)

The Russell has held steady to its great credit, but I stick to my $160 call.

Small businesses cant withstand Bidens regulatory onslaught or poor policies for much longer.

The US 10-Year Yield

From last months report:

I zoomed out a bit on this one for context. That little blue box shows a repudiation of the uptrend, but its only a little one. I expect the trend to resume in line with how hard the Fed goes into the hiking cycle.

And there we went. We finished the month at 2.38%. Im not sure how much farther Powell can go with tightening when the USGs fiscal edifice starts to fall apart.

Remember, for every 1% increase in rates, you add $300 million to the USGs interest costs.

Dollar Index

From two months ago, but it nearly holds word-for-word:

Ok, Ive updated JC Parets chart on the USD here. Early in the month, we bounced off that 38% level of 94.80ish and rallied over the 50% line. I thought wed be off to the races, but we traded back down immediately to 96.54.

My best guess is that well dilly dally around this level before rates go up and we take off from here. Next stop: 98.20, with an eye on the all-important psychological level of 100.

We actually got up to 99.40 or so.

Our problem now is wondering what the dollar can buy going forward and from whom.

USG Bonds

I said wed hit 132, and so we have.

We got all the way down to 128, but then another bear market rally happened.

Fair enough. Now Im looking at the 127 level, then 117 after that.

Investment Grade Bonds

From last months report:

Though we had a rally in investment-grade bonds, I expect this to be short-lived. Im looking at the 120 level from here.

We got down to 118 before another bear market rally.

Theres not much holding this up between here and 100.

High Yield Bonds

We got down below 80, but bounced off there. Im still looking at that 77 level first.

Theres nothing I like about junk right now.

Real Estate

I like this real estate rally, if only for the insane inflation argument.

But since weve already had one false breakout recently, theres nothing to guarantee this time is for real.

Base Metals: Copper

A false breakout early in the month gave hope, but hey, this isnt nickel!

Were still in that red zone and just watching the price action until some definitive happens.

Precious Metals: Gold

Did Russia break the gold market wide open?

I dont know, but I think not owning gold right now is lunacy.

The chart isnt that exciting yet. Im still looking for that $150 rally before I get my gold bug on again.

Precious Metals: Silver

Watching this chart, Im reminded of Bud Fox in Wall Street: Having sex with her was like reading the Wall St Journal. Yup, thats silver for you.

Cryptos: Bitcoin

BTC is up, but not as much as I suspected. It couldnt break its 200-day moving average, and thats not a good sign.

Cryptos: Ether

ETH may be a real rally rather than a suckers one.

It just retook its 200-day moving average, but the jurys still out until it makes a new all-time high.

Trad Asset Class Summary

That commodities are up is no surprise, but we had one heck of a suckers rally in equities in March.

Crypto Class Summary

The descent was not only steadied last month but reversed. ETH had a great month, up 16%, while Monero, the most secretive coin, was up a stunning 22%.

Thats not surprising, considering the Wests new policy of arbitrary confiscation.

Wrap Up

Thanks again for reading. Its always a pleasure to see you here.

I hate bonds, think stocks are still overcooked and wish gold would poop and get off the pot.

But most of all, we will see how the Russian rubles-for-gas trade pans out. Much depends on how Europe reacts to Russias demand.

Here, have some gallows humor:

Until tomorrow.

All the best,

Sean

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