Market Research & airdrop December 23 - 2022
Of course, the jobless claims were released, proving that the US economy is having a hard time. The labor market is still weak based on the stagnant data we have seen over the last few months.
The situation between equity prices and bond yields has been under pressure since the start of the year as investors have grown highly wary of the economy's health - not that it should be much of a surprise. However, the correlation between equities and rates has stabilized or seems to have bottomed in recent weeks.
When stock prices and bond yields moved in the opposite direction to one, this happened because of the actions of the Federal Reserve, which has been raising interest rates and reducing its balance sheet.
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Reduced Attractiveness of Tech Stocks
The performance of big tech stocks has been lacking this year, and there are signs that the sector will not likely see a big turnaround in 2023. Fed rate hikes, which have reduced the attractiveness of high-value tech stocks, as well as higher inflation and rising bond yields which means that a global recession is on the horizon
Nasdaq 100's earnings yield and 10-year treasury yield have dropped in recent months, while tech earnings no longer command the premium they used to have. The Nasdaq 100's 12-month P/E is in line with the 10-year average yet still substantially higher than before the dot-com bust in 2022.
Tech stocks aren't as attractive as they once were, and the possibility of more market participants needs to be shaken out of the market.
The 12-month forward price-to-earnings (P/E) ratio measures the P/E ratio using estimated earnings for the next 12 months. The P/E ratio is a financial ratio used to evaluate the relative value of a company's stock price compared to its earnings per share (EPS). It is calculated by dividing the current market price of a company's stock by its EPS.
The forward price-to-earnings ratio (P/E) is a valuation metric that uses a forward-looking earnings forecast for the next 12 months to divide the current stock price by. If a firm is anticipated to generate high profits soon, this might be a helpful method of evaluating the stock's relative value. A stock's "true" value may differ from what the 12-month ahead P/E ratio suggests since the P/E ratio is based on estimations.
For anyone who missed the blog post in august: https://romanornr.ghost.io/market-insight-august-11-2022/
Updated chart
Electric vehicles as a whole
Adam Jones from Morgan Stanley released a note a few hours before Tesla dropped 10%. In the note, Jonas discussed how rising rates can affect electric vehicles as a whole, how Tesla's discounting prices are important for mass adoption, how Ford's divisional reorganization is an important example of capital allocation, and how companies like Volkswagen spend a large number of their resources in capex, research, and development (R&D).
He concludes that legacy automakers like GM and Ford have an opportunity to reconsider the quantum and timing of their investment plans due to changes in the economic and interest rate environment.
VIX term structure
The VIX term structure is an important market volatility measure that has shifted significantly higher. This can be seen by the short end of the curve.
The VIX term structure chart shows the implied volatility of the S&P500 over different periods, from near-term (1 month) to long-term (1 year). The term structure refers to the slope of the char, which often reflects the sentiment of investors: if the slope is steep, it means investors are expecting a lot of volatility in the near term; if the slope is more flat, it means investors are expecting more calmness in the market.
In this context, "shifting higher" means that the slope of the VIX term structure has gone from being more flat to being very steep, i.e., investors are now expecting a lot of volatility in the near term compared to the previous expectations. That could have important implications for financial markets as investors may the overly pessimistic in their outlook and put pressure on stock prices.
Record CBOE Equity Put/Call ratio
The CBOE Equity Put/Call ratio charts the buying and selling of put options relative to call options for an equity market index, in this case, the CBOE Equity Index. Traders often track this ratio as a signal for market sentiment, with higher ratios indicating greater fear.
However, in this case, the put activity is driven by an operational trade rather than fear-based demand.
Do you want to learn more about options? Read the series of articles I wrote: https://romanornr.medium.com/list/options-trading-fce6d05f0412
In this case, the operational trade may refer to an investor entering an option agreement to buy or sell an asset at a future price. The high Put/Call ratio does not signal that the market is bracing for a world-ending event.
Which reminds me....
However, the market is not looking good heading into the holidays, with liquidity not inspiring. Additionally, there is a lot of put options activity and associated hedging, which puts downward pressure on the market.
In addition, a large customer "short call" position is in place. A rising Implied volatility (IV) environment will push dealers to sell off stock/futures to hedge the associated rise in the positive delta.
Short positions in the indexes also push dealers to sell in a rising Implied volatility environment, contributing to the sharp market declines.
Barring some exogenous events, the market’s precarious position will likely continue through the year's end, which could prompt relief after the large January monthly options expirations.
The current unstable state of the market seems likely to persist until the end of the year, especially as the massive January monthly options expirations approach. However, this tendency might be disrupted by an unexpected external event.
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Bank Of Japan
The Bank Of Japan (BOJ) is the central bank of Japan, and it has recently become known as the biggest money printer due to its large-scale bond-buying program.
This program, known as "Quantitative Monetary Easing" (QQE), has caused the BOJ's balance sheet to expand significantly since it was implemented.
The Bank of Japan announced its decision to adopt a "Yield Curve Control" (YCC) policy on September 20 and 21, 2016.
YCC is a form of quantitative easing (QE) that involves the BOJ targeting a specific level for long-term interest rates to stimulate economic growth and achieve its inflation target. The BOJ first introduced QQE (Quantitative and Qualitative Monetary Easing) in 2013, and the decision to adopt YCC was seen as a tweak to this policy.
Under YCC, the BOJ announced that it would aim to keep the 10-year Japanese Government Bond (JGB) yield at around 0% by purchasing a certain amount each month. The BOJ's decision to adopt YCC was part of its efforts to stimulate the economy and achieve its 2% inflation target, which it had been struggling to achieve through traditional QE measures.
However, the bank of Japan recently made an announcement, which I will try to summarize.
The Bank of Japan (BOJ) made a surprise decision on Tuesday that allows long-term interest rates to move 50 basis points on either side of its 0% target, wider than the previous 25 basis point band, but has kept its yield target unchanged.
They also increased their monthly purchases of Japanese government bonds (JGBs) to 9 trillion yen ($67.5 billion) per month from the previous 7.3 trillion yen. This will help sustain current monetary easing policies and not signal a withdrawal of stimulus.
More info can be found here: https://www.boj.or.jp/en/announcements/release_2022/k221220a.pdf
The effect of this policy decision is to make the Bank Of Japan still provide large amounts of stimulus, but the money printing machine is no longer running as voluminously. By increasing the band within which long-term interest rates may move and increasing their monthly bond purchases, the BOJ is attempting to sustain its current monetary easing policies. This policy decision may impact the JGB market and other related markets, potentially increasing demand or decreasing supply in the near term.
Tech vs. Energy
This chart shows a decade-long analysis of the Technology stock market performance and Energy sectors in the United States and European stock markets.
The graph indicates that after a decade of underperformance, Energy stocks outperformed Technology stocks in both markets. Overall, this graph is a useful visual representation of market trends and can be used to gain insight into the relative performance of the Technology and Energy sectors over the past decade.
Bybit 4th anniversary
Up to $1 million in prices
https://www.bybit.com/en-US/bybit-4th-anniversary/?ref=6776
tr3butor NFT mint
tr3butor is a platform aiming to build an interface for the Internet of Jobs to facilitate the transition from a traditional work landscape to a contributor economy.
It seeks to foster a vibrant talent community in collaboration with the most influential entities in Web3. This is because there are billions currently locked up in companies and DAOs that need to be funded and many aspiring Web3 contributors that need a clear path for them to take. tr3butor is the solution for this problem as it efficiently matches organizations and talent to help build and facilitate the contributor economy.
For the contributor economy to be successful, it needs fundamental changes to how we view work. Work should be challenging, fun, and free for people to contribute to what they feel passionate about.
Contributors should have multiple sources of income, funding, and rewards to monetize their skills, networks, experience, and clout in ways that are fairer. Additionally, a cohesive community is important for Web3 builders to have access to elite networks that can raise the level of the game.
Finally, the value should be distributed to users rather than extracted through a reward system, sense of play, ownership, and a seamless user experience.
Mint NFT: https://genesis.tr3butor.io/
ZKasino airdrop
ZKasino is a decentralized casino built on Layer 2 technology called ZK-Rollups, allowing the casino to scale infinitely while maintaining a high degree of decentralization from the Ethereum network.
ZKasino has confirmed they will launch their own token called “ZKAS”, which has the potential to be airdropped to early users who have tested the platform on the testnet. Anyone who has tested the platform before launch may be rewarded with an airdrop of the ZKAS token upon launch.
Airdrops are a popular way to get people to start using a new token, and ZKasino uses them to incentivize users to start utilizing their platform.
(blablala I want the airdrop)
First, Visit the ZKasino testnet page
Instead of "Metamask," I use "Blockwallet" throughout this airdrop guide.
Main reasons for Blockwallet
- It works better with my Trezor and Ledger hardware wallet
- BlockWallet's privacy proxies prevent IP leaks
- Easier to bridge between several networks inside the wallet itself for lower gas
- Built-in defense against front-running bots
- keep track of gas prices across several chains straight in your wallet
- I deleted Metamask
You can download Blockwallet here: https://blockwallet.io/
Check settings and switch to zkSync testnet
“Request and tweet” to get testnet tokens.
Then click on “Mint” to mint ZKUSD (ZKasino USD) to play the games.
Now click on “Explore games” and play some games.
ZKasino has confirmed to launch its own token called “ZKAS”
Users who have completed testnet actions on the platform may get an airdrop when they launch their token.
(There is no guarantee that they will do an airdrop. It’s only speculation)
Eykar airdrop
Eykar Testnet Quests is an activity offered on the StarkNet Goerli testnet. This activity is a strategy game wherein users can mint their character and complete quests that sometimes require transacting.
The benefit of engaging in this activity is that when the game goes to the mainnet, users may be able to mint something or get an airdrop. Additionally, users will likely be able to make a good return on their investment once StarkNet becomes more popular.
You need a starknet wallet which you can download on the site: https://eykar.org/
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