With the May numbers in the books, let's jump right into the charts.

It was an eventful month in financial markets! Let's start by looking at crypto. On May 9th, the two tokens from the Terra ecosystem, LUNA and UST started to collapse. At it's peak, LUNA had a market capitalization of $40 billion, which made it one of the 10 largest cryptocurrencies. However, more controversial is the collapse of UST, which had a market capitalization of $20 billion. The algorythmic stablecoin was supposed to be pegged to the value of 1 US Dollar and its collapse caught many investors by surprise. In the aftermath of these events, calls for regulation for stablecoins are getting louder. Japan  already passed such a law and the UK is following suit. The rest of the crypto market has not been spared from the carnage. Since their peak on November 9th, both BTC and ETH have lost 60% of their value.

Next, let's take a look at real estate. The Case-Shiller Home Price Index has been making new highs over the past months. Adjusted for inflation, US home prices are more expensive than ever. Currently, the price for an average house in the US is almost 8 times the median annual income. In the UK the ratio stands at 8.9. However, since the start of 2022, rates for mortgages have been rising to over 5 percent, which finally put some pressure on real estate prices.

Let's take a look at interest rates. The copper/gold ratio has not acted as a leading indicator recently. While the yield for a 10-year Treasury bond rose to 2.9%, the ratio stayed stable over the last few months. Yields have been following rising inflation, which currently stands at 8.26% and is higher than the M2 growth rate for the first time since 2010. Real yields rose and decoupled from Gold, which stands currently at $1855 per ounce. As noted by Lyn Alden, different yield curves currently have a rather wide gap. While the spreads for the 30y-5y and the 10y-2y turned negative in recent weeks, the spreads for the 10y-1y and the 2y-1y are far from doing so.

Rising yields have been negative for stocks and bonds. With their earnings lying further in the future and getting discounted more heavily, growth stocks got hit harder than value stocks. Accordingly, the Nasdaq underperformed the S&P500. In contrast to these two ratios, large-cap/small-cap has been relatively unaffected.

From a valuation perspective US stocks remain expensive. The dividend yield for the S&P500 stands at 1.51%, the PE Ratio at 20.73, the Shiller PE at 32.07, and the Wilshire5000/GDP at 167.24%.

Finally, looking at equities internationally, US stocks have been outperforming the (aggregate) rest of the world since 2008, while Emerging Markets have been underperforming.

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