The Heretic Speculator June Month-End Newsletter
June was a tremendously fun month in the markets... if you're short! In this month's update, we'll put some numbers on the carnage and try to make sense of what could be coming in July.
What I would like you guys to do for the June Month-end newsletter is go back and reread the May Month-end newsletter. It’s basically the same story. Risk assets getting pulverized. Inflation still high. Nowhere to run, nowhere to hide. I’m slightly kidding, I’ll actually write something new this month. But it ain’t pretty, guys. We’ll get to all that momentarily. First, blog production-wise I dropped 13 Heretic Speculator posts in June – 3 of which were for paid members only. One trade idea, perfectly to script for 2022, it’s getting smoked. I gotta do better for my paid peeps in July. I will do better.
From a cryptocurrency perspective it was an eventful month to say the least. The contagion that was triggered by the Terra LUNA meltdown has been incredible. Celsius Network blew up. BlockFi blew up. 3AC was a straight up Ponzi scheme. Voyager Digital almost collapsed. Grayscale is suing the SEC. Coinbase, Gemini, and numerous other crypto businesses are laying off staff. Saylor is seemingly the only one buying Bitcoin and the price dumps each time he completes another purchase round. And that’s just what I can remember.
To be fair though it isn’t just crypto that is getting totally “rekt.” Nothing is working. STONKS can’t hold a gain. Gold almost broke $1,800 today. The Michigan consumer sentiment index is 50. It was 85.5 a year ago. And King Jerome admitted none of them have any idea what is gong on. It’s a GD bloodbath out there. BUT…. Remember, it’s all one trade and the debt market is the one that sets the tone. Observe this chart:
This is the weekly chart of the yield on the 10 year. That’s not a great candle so far this week so we’ll have to see where that closes tomorrow, but if it gives up 3, I think that would be very interesting and could potentially indicate the market is starting to entertain a pull back in inflation or a Fed pivot from interest rate hikes; or both. If you recall, back in May I hypothesized where the top in the funds rate might be:
If that trend holds, it’s projecting a peak of 1.8 in the funds rate. That gives us maybe two more 50 bps hikes in this cycle, tops.
Needless to say, we’re almost there…
The next hike does us in. The effective rate is currently 1.58. I see one more 50 bps hike at the end of July and then probably a rate hike pause. Otherwise, this time it really is different and we’re going to have to just accept all of the insolvencies. To be clear, I want more of a free market in interest rates I just don’t think we’re likely to get it because of the system damage that would happen as a result. Maybe that’s the whole plan. I don’t know. But it seems like there’s an easier way to move to a different monetary standard. In any case, as always, the market believes the Fed more than I do.
Otpyrc Red Rum
What’s that? Murder crypto? Sure, I’d love to keep buying lower… ugh… monthly performances:
Strangely enough, Solana actually had the best month out of the five coins that I typically share updates for. True story, that June that we just had was one of the worst month to month performances in Bitcoin’s entire history. I don’t have much else to say, guys. It’s crypto winter. If you still believe, dollar cost average your positions and you’ll probably do fine over time. If you think this is the cycle that finally kills crypto, you’re probably not in it anyway.
STONKS and ETFs
In last month’s update, I talked about buying Costco back in the low $400’s after selling above $590 I bought everything back after the selloff. Well, I just sold it again at $480 a couple days ago. I have that name pegged it seems but I don’t want to press my luck in the winners since I’m getting dragged just about everywhere else. This is not how the greats invest BTW. I’m very aware.
That’s two straight months with a Borat GIF. Can he make it three? We’ll just have to find out. Switching gears, we’re now halfway through the 12 month period that I planned to hold the 5 ETFs that I highlighted in January. I have to say, if you’ve been using me as a counter indicator I applaud it and I want to buy you a beer. Wait, no. I want you to buy me a beer. Kidding. Like all things public markets, the ETFs have been awful.
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