gm
**MACRO** - Alright well a lot has happened over the weekend! First, it was a pretty tough day for risk assets on Friday with stocks closing 1.5-1.7% lower while rates continued to blow out with 10Y out to 4.56%. Perhaps some of this move was due to geopolitical tensions rising but tbh it kind of feels like we would have had that move lower anyway regardless. I am certainly not geopolitical expert here but market prices tell me tensions have been relieved; oil prices are actually lower and stock futures are up, 0.5-0.6% actually...so here's hoping all of this blows over. Naturally I don't think things just "blow over" but I'm always a believer in that things never really go to full blown war because people understand the prisoner's dilemma and the net result is it's better EV for everyone to cooperate and eventually come to an agreement. Let's see how markets progress this week but last week was a tough one and it's interesting to see stocks actually higher to start the week despite everything that has just happened.
**CRYPTO** - We had almost $1bn of liquidations over the weekend which saw BTC drop to as low as 60k with some pretty brutal wicks down on other coins. With trad markets closed over the weekend it feels like people used crypto to speculate on the headlines but tbh, once again, I do believe this was just a leveraged wipeout. Funding has been very low recently but that doesn't necessitate leverage is low. There's been a tonne of tradfi firms putting on basis trades; going long ETFs and shorting perps to capture the big differential in funding rates. What this means actually is that gross risk has been very high across the board and I think people got lulled into a false sense of security taking on large amounts of leverage because funding was low. Consequently, that flush out we saw over the weekend I think is going to prove to be a very healthy one provided broader markets hold up...and that certainly is a big proviso. ETF data continues to be a bit meh at the moment with volumes appearing to be rather low, we saw a $55m net outflow on Friday and numbers like these aren't really going to move the needle in either direction.
GL this week