Making Room Higher

Transforming Logistics and Navigating Market Liquidity: Insights from Tuttle Ventures

While at Goldman, I had the privilege of working closely with Lu Weilang Felix, a true inspiration and hardworking individual. His positive attitude and humor consistently motivated me to be better.

Felix is now the co-founder of FR8Labs, an innovative company developing a cutting-edge operating system for Freight Forwarders in Asia.

Their recent recognition in Techcrunch for securing $1.5M in seed funding underscores their potential to transform Asia's logistics sector.

Anyone who is a longtime reader knows I don't highlight venture companies lightly.

Of the hundreds of companies out there — we spotlight those at the cross-section of innovation, market opportunity, and results.

I believe this company has all three.

As a network-based business, the benefit of having a larger network is nonlinear, which means that the economic value of the network increases at a faster rate than its absolute size.

For those in the global logistics industry with Southeast Asian network connections, please reach out and I will make an introduction to Felix and his groundbreaking venture.

You can read more here.

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The Bullish Liquidity Case

Shifting to public markets- we continue to be bullish and believe there is room to run higher for equities based on supportive liquidity.

Without a clear directional signal, we believe daily liquidity becomes the most important factor driving markets.

Our latest model suggests that the market will grind higher toward the 490 range for SPY 0.00%↑

This is based on the continued drawdown in Reverse Repo which is scheduled to deplete in April.

The major objective of the repo market is to provide consistent liquidity to primary dealers on a daily basis.

After the banking crisis in March, market participants have converted overnight funding released by the Federal Reserve into leveraged long duration stock purchases.

The ample supply of treasury bills has allowed this to continue on schedule.

As you can see in the chart below, the RRP drawdown (blue line) continues to be a liquidity magnet...pulling SPY level (black line) higher.

If you combine a cross section of weekly net liquidity and adjusted national financial conditions, we are safely in the bottom lower blue range.

Financial conditions continue to be easy. (95 are looser than average).

We are far from the upper left danger zone highlighted in yellow.

The danger zone is reserved for times of stress where decreasing net liquidity is combined with tightening financial conditions.

We are far from that at the moment.

Factors that might shift our optimistic (bullish) assumptions to pessimistic (bearish) include:

• Larger than expected buildup in the Treasury General Account

• Sharp drop in available treasury issuance

• Forced deleveraging by a major market speculator

• Restrictive shift in policy from the Bank of Japan to combat inflation

We believe the likelihood of one of these happening over the next few months is low.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here. 

Important Disclosures Here

Best,

Darin Tuttle, CFA

NOTE - This is not investment advice. Do your own due diligence. I make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in this report. Any assumptions, opinions and estimates expressed in this report constitute my judgment as of the date thereof and is subject to change without notice. Any projections contained in the report are based on a number of assumptions as to market conditions. There is no guarantee that projected outcomes will be achieved. Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.