Ares Intel Report Issue #2

The "Everything Bubble" Crashes Further...

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Dear Investors -

Welcome to our Friday Market Recap Issue of our Ares Investing INTSUM. It’s been an eventful week, to say the least, with a further decline across multiple indices spanning multiple markets. Despite all the blood in the markets, just a sobering reminder for all of us:

1. Markets are often a casino in the short term.

2. A strategy game in the mid term.

3. A Wealth creator in the long term.

That being said, let’s jump straight into our assessment for the coming week, and what this week’s impact spells out for the Wall St. Warrior Team.

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BLUF (Bottom Line Upfront)

• Credit spreads between the Treasury and Junk Bonds expanded over the last 72-hours, indicating a further decline in sentiment analysis for “Risk-On” Assets. (i.e. high-multiple technology stocks or Crypto Altcoins)

• Institutional short-covering led to quick rallies in the equity markets as predicted in our last letter. With BlackRock (Trillions in AUM) rebalancing allegedly 75% of one of their funds out of tech, we can expect to see more quick rallies. Watch for these days; easy opportunities to capture quick returns with bullish momentum indicators. (e.g. Call Option Day Trades on TSLA)

• Elon Musk gets cold feet on the Twitter buyout deal; Twitter cannot / refuses / doesn’t know what actual percentage of their “customer base” is Bots and which aren’t.

• This week marks the second-highest seven-day increase of retail’s Bitcoin holdings ever. Retail is slowly understanding BTC as an asset class that can facilitate wealth preservation and ultimately growth in the long term.

• Melvin Capital, the hedge fund infamously destroyed by the Wall Street Bets “GameStonk” trade announced that it would be shutting down, liquidating assets, and returning cash to investors.

• Celsius Protocol is finally on the cusp of rolling out a non-accredited investor Yield Staking Product this summer. For those that don’t know, due to recent regulatory scrutiny, Celsius was forced to prevent US Customers from staking any further Crypto in their Earn Wallets unless they were certified as Accredited Investors.

• Qatar launches its first regulated Bitcoin Exchange.

• US Congress considering a bill to protect the right to allocate retirement savings to Bitcoin. Allegedly, bipartisan support for now. (How’s that “Bitcoin Ban” coming along?)

• NFT Market incurred a healthy stabilization of floor prices across collections. Still seeing insane seven-day floor changes up to +45%.

• The Fed and Powell sentiment is definitely hawkish:

  “We need to see growth moving down from very high levels, and we clearly have still a job to do on cooling down demand. If that involves moving past broadly understood measures of neutral rates (i.e. 2.00-2.50% on Fed Funds), we won’t hesitate to do that”.

  Jerome Powell, May 17th 2022