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Market Lab Report - BRICS; banking woes; shorting opportunities

Market Lab Report

by Dr. Chris Kacher

The Web3 Evolution Will Not Be Centralized™


BRICS

BRICS now has six new members: Iran, Saudi Arabia, Egypt, Ethiopia, Argentina, and the United Arab Emirates. Their share of global GDP now surpasses that of the G7 nations (32.1% vs 29.9%).



The world indeed looks somewhat equally divided between G7 and BRICS countries in terms of oil production (46% vs 54%) and population (54% vs 46%).


BRICS is actively reducing reliance on the dollar by promoting global trade as they dominate key trade routes including the Artic Sea Route, Persian Gulf, Red Sea, Suez Canal, and others. 

While this goal may eventually be reached, the dollar's global dominance will take significantly longer to topple than mainstream media would have you believe. Each BRICS country has its own geopolitical priorities. The majority of respondents in India, Brazil, and Argentina think China would barely take their own country’s interests into account when making international policy decisions. Further, the US dollar accounted for around 90% of global forex transactions in 2022 and 59% of foreign exchange reserves in Q1 2023, surpassing the renminbi's scant 2.5% share. So until BRICS countries can form a true synergistic alignment, the dollar will likely remain top dog for at least another decade or two. That said, a mega black swan where fiat currencies begin hyperinflating away would increase the odds of Bitcoin becoming the world's sovereign currency. 

Banking woes

XLF tracks the financial sector of the S&P 500. This includes companies involved in financial services, insurance, banks, mortgage real estate investment trusts (“REITs”), and consumer finance. Because rates shot higher in record time since 2022, these companies lost big sums resulting in the largest banking collapses in history. You can see the other shoe has yet to drop based on how weak the XLF is compared to other indices such as the S&P 500 and even the lagging NYSE Composite, the broadest measure of US stock market performance. Indeed, the XLF has yet to hit higher highs. It closed below its 50-dma on Tuesday.




Even worse off is the IAT ETF which tracks the performance of the smaller US regional banks. Such were hit hardest compared to larger banks which have more headroom and reserve. The daily chart (not shown) shows resistance at its 50-dma.


Other sectors are also showing topping activity. In consequence, we have recently sent members a number of short selling opportunities in specific stocks.
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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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