Summing Up The Week
Despite inflation concerns and ongoing uncertainty about the Russia-Ukraine conflict, the markets continued their upward climb started a few weeks ago. Despite reporters pointing to Q1-2022 being the first losing quarter in two years, the market’s amazing recovery from the selloff has been… baffling, to say the least.
Let’s take a look at the news that moved the markets this week…
Market News
Biden’s 2023 budget hikes taxes on corporations & ultra-rich
On Monday, President Joe Biden presented his 2023 federal budge which includes tax hikes on corporations and ultra-wealthy citizens as well as billions of dollars in new spending for the Defense and Justice departments, reported CNBC.
While not a market-moving event, per se, it’s worth noting that corporations have been enjoying tax benefits first implemented under the Trump administration, which cut corporate taxes to levels not seen since the 1980s. Without those tax cuts, profitability for these corporations will likely be impacted.
Key changes to tax revenue include:
- Raise the corporate tax rate from its current rate of 21% to 28%.
- Raise the top individual tax bracket to 39.6%.
- Impose a 20% minimum tax on the top 0.01% of earners and households worth more than $100 million, the so-called the Billionaire Minimum Tax.
- Repeal several tax breaks for oil and gas producers and processors.
- Tax carried interest as regular income, closing the so-called carried interest loophole.
- End tax deferrals on the gains from like-kind exchanges.
Markets optimistic over ongoing Russia-Ukraine talks
On Tuesday, the markets headed higher as face-to-face talks between Russia and Ukraine were scheduled to continue this week in Turkey, reported CNBC.
Markets ascended further on Tuesday afternoon after Turkish Foreign Minister Mevlut Cavusoglu said the discussions had yielded the most significant progress to date. The European markets started rallying on the potential of peace talks with the American markets following after their opening Tuesday morning.
Inflation rose 5.4% in March, highest since ’83
On Thursday, the Commerce Department’s Personal Consumption Expenditures (PCE) price index showed inflation increasing 5.4% year-over-year, the biggest increase since April 1983, reported CNBC.
When adding in gasoline and groceries, the headline figure jumped 6.4%, another record at the highest pace since January 1982. Believe it or not, the actual figure was slightly less than Dow Jones estimates, who expected a 5.5% increase.
With continuing inflation causing weakening consumer demand and higher prices, it remains likely that the Fed will hike interest rates again when they meet next in May (if not an “emergency hike” made earlier than that date).
Economy added 431K jobs in March
On Friday, the U.S. Labor Department showed the economy added 431,000 nonfarm payroll jobs in March, below the 490,000 estimated by Dow Jones economists, reported CNBC.
Despite missing estimates, many pundits still believed the report demonstrates the strength of the U.S. economy in the face of rising inflation and the impending doom of a potential recession. “All in all, nothing shocking about this report. There was nothing that was really surprising,” said Simona Mocuta, chief economist at State Street Global Advisors. “Even if this report came in at zero, I would still say this is a very healthy labor market.”
Next Week’s Gameplan
For the most part, my positions remain in limbo – too low to take profits, too high to add to. Many pundits believe that the S&P 500 will sell off again and test its lows, at least, with some more bearish analysts believing the market is due for a greater decline or even an all-out crash.
As always, I never pull out of the markets – particularly on fear-mongering. However, I also take no action unless there’s a specific one to take. With the environment feeling confused and cloudy, the course of action remains sitting on my hands, waiting to see which big move the markets make next.
Have a great week, everyone!
This Week in Play
Stay tuned for this week’s episodes of my two portfolios Investments in Play and Speculation in Play coming online later this weekend!
Crytpo Corner
Important Disclaimer
Get Irked contributors are not professional advisers. Discussions of positions should not be taken as recommendations to buy or sell. All investments carry risk and all readers must accept their own risks. Get Irked recommends anyone interested in investing or trading any asset class consult with a professional investment adviser to determine if an investment idea is suitable to them and their investment goals.
Bitcoin Price (in USD)
%
Weekly Change
Bitcoin Price Action
Bitcoin breakout!
Bitcoin continued higher this week, breaking through the $45,855.00 monthly high to create a new point of resistance at $48,240.00 on Monday before the rally weakened as the week continued. I’ve adjusted the Downtrend? line to create a potential bearish trendline, however, at this point, there’s no longer as much strength behind the trend as there was several weeks ago.
From here, the next big movement in the crypto space will occur after a break of the new weekly high or a test of the new current weekly low formed Friday at $44,232.86 (followed by the $40K mark and below).
The Bullish Case
Bulls claim institutional buying is what caused the spike in crypto prices over the past few weeks, lending optimism to the space and believing that significant lows, particularly those below $30K, are no longer in the cards for Bitcoin.
The Bearish Case
Bears warn that without a significant breakout above key resistance around the $50K-52K mark, not only is Bitcoin in for a selloff, some bearish pundits believe $20,000 is still very much in the crypto’s future.
Bitcoin Trade Update
Current Allocation: 3.746% (-0.800% from last update)
Current Per-Coin Price: $40,495.46 (-2.480% from last update)
Current Profit/Loss Status: +13.364% (+5.117% from last update)
Bitcoin’s rally over the past week resulted in my decision to take even more profits when it appeared the crypto was about to pull back on Monday with a stop-limit order which filled at $47,714.20. The sale lowered my per-coin cost -2.480% from $41,525.45 to $40,495.46 and reduced my allocation -0.800% from 4.546% to 3.746%.
Bitcoin Buying Targets
Using Moving Averages and supporting trend-lines as guides, here is my plan for my next ten (10) buying quantities and prices:
0.060% @ $38.971
0.060% @ $38,164
0.090% @ $36,487
0.090% @ $34,521
0.904% @ $32,037
1.589% @ $30,029
2.232% @ $28,028
3.098% @ $24,578
4.257% @ $22,418
11.44% @ $20,155
No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.
While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (sometimes a drop of near -90% or a gain of up to +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything. Here are some of Bitcoin’s price movements over the past couple of years:- In 2017, Bitcoin rose +2,707% from its January low of $734.64 to make an all-time high of $19,891.99 in December.
- Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89. In the first half of 2019, Bitcoin rallied +343% to $13,868.44.
- From June 2019, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
- From December 2019’s low, Bitcoin rallied +64% to $10,522.51 in February 2020.
- In March 2020, Bitcoin crashed nearly -63% to a low of $3858.00, mostly in 24 hours.
- Then, Bitcoin rallied +988% to a new all-time high of $41,986.37 in January 2021.
- Later in January, Bitcoin dropped -32% to a low of $28,732.00.
- In February 2021, Bitcoin rallied +103% to a new all-time high of $58,367.00.
- Later in February, Bitcoin dropped -26% to a low of $43,016.00.
- In April 2021, Bitcoin rallied +51% to a new all-time high of $64,896.75.
- In June 2021, Bitcoin crashed -56% to a low of $28,800.00.
- In November 2021, Bitcoin rallied +140% to a new all-time high of $69,000.00.
- In January 2022, Bitcoin crashed -52% to a low of $32,933.33.
What if Bitcoin’s headed to zero?
The only reason I speculate in the cryptocurrency space is I truly believe Bitcoin isn’t headed to zero. I am prepared for that possibility, however, by knowing I could potentially lose all of the capital I’ve allocated to this speculative investment. Professional advisers recommend speculating with no more than 5% of an investor’s overall assets. Personally, I’ve allocated less than that to speculating in crypto. I feel that anyone who doesn’t fully believe in the long-term viability of cryptocurrency would be better served not speculating in the space. On a good day, this asset class isn’t suitable for those with weak stomachs. On volatile days, the sector can induce nausea in the most iron-willed speculator. If a speculator isn’t confident in the space, the moves will cause mistakes to be made.
