FUND PERFORMANCE ANALYTICS FROM THE SENIOR ASSET MANAGER

Currently, our fund is focusing on several sub-strategies.

The primary component of our engaged assets consists of a long position in securities that are attractive from both a fundamental and technical analysis standpoint. We also capitalize on movement moments.

Asset rotation occurs quite frequently. We strive to secure positions in quality securities, gradually increasing our stake as they grow, thus managing our position effectively. Currently, the long share in securities under this sub-strategy (Global Value) exceeds 60%.

We are also actively engaged in event-driven trading. Currently, we have several targeted positions from which we expect to see a percentage gain in the near term, contributing to the overall quarterly result.

One of the successful trades related to event-driven trading took place the day before yesterday. We purchased AMC shares during another meme stock surge. We managed to secure a position strategically and have already partially locked in profits, contributing positively to the fund.

Speculative trading in futures and options is also quite active at present. A few weeks ago, we closed a large volatility position that we had been holding since the beginning of the quarter. It added 2% to our returns. We are continuously searching for new speculative patterns for reversals or trend continuations in futures on oil, gold, silver, currency pairs, and S&P futures. Currently, this is our main focus.

We anticipate a significant revitalization in the stock market and IPO market shortly. It’s possible that we will see much more activity in this sub-strategy than in the last quarter, which saw only two such trades.

We also have a Fixed Income sub-strategy, which is currently inactive as we do not see any dynamics in these assets at the moment. There are no indications of growth in the “bodies” of these instruments. Naturally, if we hear a clear stance from the Federal Reserve System that rates will be lowered soon, and see the market beginning to price this in—particularly in how bonds and bond funds start moving—we will also begin to actively rebuild this position and increase it as the market moves. However, we believe that this play is not for this quarter or the next, but by the end of the year, we will find good entry points.

Igor Yashaev
Igor Yashaev
Managing Director

Gold: Investment Insights and Market Trends

he fifteen-year history of gold trading provides valuable lessons about the dynamics of this asset. Analyzing its trajectory offers insights into its behavior and investment potential over time.

Historical Gold Prices

The gold market has witnessed fluctuations over the past decade, with prices ranging from $1600 to $1800 in 2010. Despite modest growth since then, early investors would have seen only marginal portfolio growth. Gold’s stability is evident in its ability to remain within a narrow range for extended periods, as observed between 2013 and 2016.

Gold and Bitcoin Growth

Both gold and Bitcoin have demonstrated significant growth due to increased investments. While gold attracted larger sums, comparing their volumes reveals their distinct market positions. Both commodities reached peak prices in 2024, driven solely by supply and demand, unlike equities with additional value propositions like stock buybacks.

Gold Expectations Curve

Investor expectations for gold prices reflect optimism, with projections nearing $2700 per ounce. However, realizing this scenario depends on inflation trends and central bank policies. Presently, cautious monetary policies globally temper immediate optimism, signaling mixed sentiments regarding gold’s future.

Gold Futures Turnover

Gold futures turnover competes with that of the S&P 500 index, underscoring its significance in trading circles. Its popularity among traders surpasses that of other commodities, including oil and gas, and even bonds. Understanding gold’s market weight is crucial for effective analysis and decision-making.

Central Bank Reserves and Geopolitical Factors

Recent years have seen a surge in gold purchases by central banks worldwide. Countries like China, Russia, and India have bolstered their gold reserves as part of efforts to diversify their portfolios and safeguard against currency devaluation.

India, with its burgeoning economy and cultural affinity for gold, represents a significant market for physical gold consumption. This trend indicates a growing demand for gold beyond speculative investments, contributing to its sustained market momentum.

Market Outlook and Conclusion

Gold’s prospects remain favorable, driven by sustained demand for physical metal and speculation against currency instability. While short-term corrections are possible, the long-term forecast for gold looks positive, supported by ongoing geopolitical and economic uncertainties.

In comparison to other investment options like bonds, stocks, or real estate, gold offers a unique proposition as a store of value and hedge against market volatility. While Bitcoin presents an alternative investment avenue, its volatility and lack of institutional support distinguish it from gold as a more speculative asset.

In conclusion, gold continues to attract investors seeking stability and long-term growth potential. As global economic dynamics evolve, it is important to monitor the performance of this metal and its role in diversified investment portfolios for investors worldwide.

Igor Yashaev
Igor Yashaev
Managing Director

David Svoboda about fed meeting

I would like to state that yesterday’s press conference was one of the calmer ones and delivered, more or less, exactly what the market was expecting. Luckily, fears of a hawkish shift in the Fed’s policy did not materialize. Powell maintained his status quo. The current state is: a resilient labor market and sideways-moving inflation. I believe that unless there is a shift in balance in either of these two, we will not see any change in the monetary policy. Therefore, every data reading in the upcoming periods is going to be crucial for evaluating and predicting any future bias. Namely, PCE and CPI data for inflation and JOLTS job openings and Initial Jobless Claims to monitor strength in the labor market. Now let’s say the Fed is going to get the desired confirmation towards 2% inflation. That leaves us, in my opinion, with two possible dates this year: the September and December meetings. If I had to personally pick, I think we could see it rather in December because the Fed will, in my opinion, try to avoid any monetary changes relatively close to the US Elections.

Scenario two is another round of inflation where a shift into a hawkish outlook would become a reality, and that would be a whole different story. But given the speed at which we shifted from almost 100% certainty of 4 rate cuts this year—and the market accepted this almost as a fact—to speculation about whether there will even be any rate cuts this year, I think this scenario does not seem as far-fetched as it might have a couple of months ago.

David Svoboda
David Svoboda
Trader

Making sense of a wrong-way bet on the yen

Among the largest developed-market peers, the Japanese currency has lost the most against the dollar this year.

Many analysts expected that 2024 would be a turning point for the yen after a three-year decline in the currency against the dollar.

According to Bloomberg forecasts, the yen was expected to strengthen from 141 yen against the US currency at the end of 2023 to 135 yen a year later.

However, instead, the yen continued to fall, approaching the level of about 152 yen. Among the largest currencies in developed countries, the yen has lost the most against the dollar this year, weakening by almost 7%.

Structural factors were expected to provide some support to the yen, including a significant current account surplus and attractive valuations (the yen is close to record lows against a basket of currencies weighted by trade prices).

However, the focus was on Japan’s monetary policy. In particular, the potential for Japan’s reflation to lead to higher interest rates for the first time since 2007 was seen as a key source of yen strength. The relative attractiveness of interest rates on currencies, as a rule, strongly affects currencies.

In March, in Japan, the bank canceled negative interest rates, purchases of exchange-traded funds and its program to limit government bond yields. What happens between the countries in the currency pair in question, as well as global conditions, may be of the same, and often more important. In the case of the yen, the biggest mistake was what happened not in Japan, but rather in the United States and around the world.

Most importantly, forecasters who were set on a rising yen assumed a repeat of the historical relationship between economic conditions in the United States and monetary policy, without sufficiently considering what might change this time.

At the end of last year, analysts expected that the most aggressive monetary tightening cycle in the last four decades would lead to a slowdown in economic growth in the United States and continued deflation, as it had been in previous economic cycles. This, in turn, will lead to a decrease in the base interest rate, which will make the dollar less attractive.

Five Innovative Ideas for Asset Tokenization

Asset tokenization transforms the value of physical and non-physical assets into digital tokens, potentially revolutionizing investment opportunities across various sectors. From sports to music, and even winemaking, the possibilities are endless. Here are five original concepts that could change the landscape of asset investment through tokenization:

1. Tokenizing Athletic Achievements

Imagine investing in the potential Olympic glory of athletes competing under a neutral flag. This form of tokenization isn’t just about financial support; it’s about becoming part of a community that backs underrepresented athletes. By purchasing tokens, investors gain a stake in athletes’ performances at international competitions, with payouts potentially tied to medal wins or other performance metrics.
The first NFT related to Barcelona’s sports scene sold for a whopping $693,000!

2. Crowdfunding Concert Tours with Tokens

For emerging artists, organizing a multi-city tour is a daunting financial and logistical challenge. Tokenization can simplify this by allowing fans and investors to purchase digital tickets as tokens, which can later increase in value, similar to stocks. This method not only secures upfront funding for the artists but also strengthens their engagement with fans.
DJ 3LAU made headlines as the first artist to tokenize an album, raising an impressive $11.6 million from the venture.

3. Financing Films and Music Albums through Token Sales

Crowdfunding through token sales presents a unique solution for filmmakers and musicians facing high production costs. By selling digital tokens, creators can raise funds while offering backers a stake in the project’s success, from box office earnings to streaming revenues.

4. Vintage Wine Production

Tokenization can offer a financial lifeline to winemakers, especially in regions prone to unpredictable weather which heavily impacts yield. Investors can buy tokens linked to wine barrels or vintages, potentially reaping rewards as the wines age and increase in value.
Johnnie Walker has ventured into NFTs, releasing digital tokens for exclusive “ghost whiskey” from its dormant distilleries.

5. Developing Concept Hotels

Imagine being able to invest in a boutique hotel before it’s even built. Through tokenization, investors can purchase digital squares meters of property, sharing in the economic benefits like reservation incomes and appreciation in property values. This democratizes real estate investment, making it accessible to those who might not have large capital to begin with.

Each of these ideas showcases the versatile and dynamic nature of asset tokenization. Whether it’s supporting aspiring Olympians or securing a stake in the next big indie film, tokenization opens up a world of opportunities for investors looking for innovative ways to diversify their portfolios.

What assets would you consider tokenizing, and why? Let’s explore the possibilities together!

Cocoa powder has risen in price to $ 10,000 due to a shortage, which leads to a steady increase in prices

Futures prices have more than doubled this year, reaching an all-time high, as crop failures among key West African producers have led to a supply shortage in the world for the third year in a row. The market is struggling with the effects of low profits paid to cocoa farmers, and fears are growing that they will be able to purchase enough beans. 

This is bad news for consumers if chocolate manufacturers continue to raise prices or sell smaller bars or bars with a lower chocolate content. Easter is the peak period for chocolate consumption, and the difference between the commodity and retail markets means that the main blow for buyers is still ahead.

The focus is currently on the upcoming average harvest in West Africa, the smaller of the two annual harvests. Ivory Coast’s regulatory body expects the harvest to decline this season, Bloomberg reports.  

“The cocoa supply situation in West Africa remains extremely tense as the average harvest begins next week, and this continues to support cocoa prices,” Hightower said in a report.