Summertime - Valkyrie


Week of May 30th, 2022

Macro Commentary

Memorial Day marks the beginning of summer, and along with it, the usual adage of “sell in May, and go away” is told again to keep investors wary of lower liquidity and slower than normal trading activity. This year could be different with the Fed expected to start the second part of its inflation fighting strategy on June 1st by progressively reducing the current balance sheet amount of $9 trillion. Quantitative tightening could be more impactful on markets due to the level of sensitivity related to the current inflationary environment, which could lead to a recession in the near term. President Biden and Fed Chairman Jerome Powell met today at the White House to discuss what’s next after the initial round of rate hikes and asset reductions.
Equities finally shook off a negative losing streak by ending higher for the week with the S&P 500 index up about 230 points to settle close to 4150. The rally improved the year to date performance to about -13%. Technology stocks were lifted off yearly lows as well with a nice bounce over the 12,000 level, down about 22% for the year. 10 year treasury yield was range bound between 2.7% and 2.9%. Crude oil futures were up last week on expected higher demand due to a possible European oil embargo and China’s easing of recent covid-related lockdowns.
Economic indicators released this week include Thursday’s weekly initial jobless claims expected to be about unchanged at the current historical lower levels of 210k. Friday’s monthly unemployment rate is currently surveyed to dip down slightly to 3.5% from 3.6% last month.

The Portfolio Management Team

Steven McClurg, CIO
Bill Cannon, Portfolio Manager
Wes Cowan, Portfolio Manager, Head of Defi
Josh Olszewicz, Head of Research
Sean Rooney, VP Research and Trading
Will McDonough, Vice Chairman, Investment Committee
Leah Wald, CEO, Investment Committee
Shannon Smith, Head of Investor Relations