A Comment -- General Comments From an Expert (A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There has been a lot of selling recently and some stocks, especially small and mid caps, have been crushed. The Omicron variant has largely been discounted in the markets. Investors are also reconsidering the Fed’s comments on tapering. The economic backdrop is strong so the tapering is a normal event. Unlock Premium - Try 5i Free

Educational Segment. The covid shock that hit the world a year ago, caused a deflationary void.The Feds were trying to boost inflation to the 2% target. The policies put in place by the Feds are now accelerating inflation. They will now start to taper support. The bond market globally is down 4-5% while equities are up 13% ytd. The 60-40 portfolio is in the 6-8% range now. The bond part is of concern. If inflation is not transitory, there will be a need to do something. Inflation will be shocking to the market. There are alternatives to stocks, eg. private credit market. The yield in the private credit market is attractive at 5-6%.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The sell off is more of a shift than a panic. The shifts are related to inflation, interest rates and valuation adjustments. These market forces can drag on for longer than panic. There are high multiple stocks stilk, which can be vulnerable to further downside. Unlock Premium - Try 5i Free

CRYPTO UPDATE

On Saturday morning, sometime after midnight, the crypto-currency market experienced a severe correction, with the value of Bitcoin, having fallen by more than 20%, before immediately rebounding to the strong support zone at $42,000, testifying to the presence of many buyers. It is currently trading at $50,000, and could even resume an upward trend if the price manages to pass the $53,000 mark. Nevertheless, it is risky to make a statement too soon, as a 20% drop in less than 3 hours is not a trivial event, even for the Bitcoin market.

The altcoin futures index, available on FTX, also shows a drop in the altcoin market of about 20%.
However, it is interesting to note that the second most important crypto, Ethereum, reacted very well to the flash crash on Saturday morning with a very strong recovery by buyers, and even had the luxury of breaking a triangle and its 99 moving average to the upside, with a target at $4,600, and a disqualification in case of a bearish breakout at $4,200.