Trends We’re Tracking: Tech shakeout, Terra LUNA and UST Collapse, Rising Food Protectionism

Envestnet | PMC provides independent advisors, broker-dealers, and institutional investors with comprehensive manager research, portfolio consulting, and portfolio management to help improve client outcomes. Every month our Global Macro Team offers insights into the themes currently shaping the markets to help you quickly take note of recent trends that your clients may be inquiring about.

Technology shakeout
After a long run-up in the technology sector, companies faced a rude awakening as sky-high valuations tumbled and access to cheap capital dried up. Tech firms rapidly changed their tune and pivoted from rapid growth plans to cash preservation. Many startup employees who were hoping for more richly valued IPOs were instead faced with cost-cutting and layoffs. Yet, startups were not alone. Most of the big-league companies faced similar fates as Meta,, Apple, Microsoft, Alphabet, Netflix also witnessed tumbling share prices. During the month of May alone, it was estimated that more than 15,000 tech workers were laid off, and pundits believe there is more to come.1

Terra LUNA and UST collapse
Recent events within the digital asset ecosystem highlight the extreme risks of investing within this new space. The Terra blockchain protocol’s native digital assets LUNA, and its stable coin, UST, experienced a remarkable collapse over a short period of time. UST is a stable coin, which is algorithmically designed to maintain a 1 to 1 peg to the U.S. dollar. The peg experienced significant pressure, and initially decoupled when hundreds of millions of UST was sold, forcing the price of UST to drop to $0.91. With the peg broken UST holders moved quickly to sell their positions, forcing the UST market cap to drop from $18 billion to just over $200 million at the end of May.2 Simultaneously, the market cap of LUNA fell from nearly $28 billion to just under $800 million over the course of the month.3 In addition to the immediate financial impact of this collapse, many wonder what longer-term effects this will have for the digital asset space as regulators closely examine this evolving ecosystem.

Changing consumer habits
The habits of consumers have begun to change. There has been a reversion from the pandemic-driven uptick in spending on goods. As lockdowns have eased and vaccination rates have increased, consumers have shifted their spending on services, specifically spending on travel and leisure. Data from the Bureau of Economic Analysis shows that spending in May from the previous year is about nine percent above pre pandemic levels, down from 16 percent above.4

Active managers are outperforming
According to Goldman Sachs, 56 percent of active large-cap mutual funds have outperformed their respective benchmarks so far this year (year to date as of mid-May). If the 56 percent number holds at the end of year, 2022 will be the year that the largest percentage of active large-cap mutual funds outperform their benchmarks on record (the record began in 2009). Breaking down by style, 47 percent of active large growth mutual funds have outperformed the Russell 1000 Growth Index, 62 percent of active large value mutual funds have outperformed the Russell 1000 Value Index, and 59 percent of active large core mutual funds outperformed the S&P 500 Index. This is much-needed good news for active managers as they have been struggling to keep up with their benchmarks over the past decade. Except for 2009, less than half of active large-cap mutual funds were able to beat their benchmarks in every single calendar year from 2010 to 2021. Poor equity market performance, cash holdings and rising performance dispersion among stocks all helped active managers outperform their benchmarks so far in 2022.5

Rising ‘food protectionism’ fuels inflation and hunger
As the ongoing war in Ukraine continues to disrupt the supply of staple grains, a rising trend of ‘food protectionism’ among major producing countries threatens to fuel stubbornly higher global food inflation numbers. While this impacts consumer spending adversely in both developed and developing world, it also plunges millions living in economically weaker countries, who are dependent on food security and subsidy programs, into extreme hunger. 

Earlier this year, countries like Hungary and Serbia imposed bans on grain exports and Indonesia curtailed palm oil shipments. Argentina, Turkey, and Egypt also imposed similar restrictions and controls on local produce. The trend continued in May as Malaysia imposed a ban on poultry exports and India put curbs on wheat and sugar exports.6 Speculation is rife that India may add rice to this list. However, unlike wheat and corn, rice prices so far have remained subdued, thanks to ample production and stockpiles. As India is the largest exporter of rice and accounts for around 40 percent of the global trade, any curbs from that country can put upward pressure on grain prices.7,8 As war lingers on, we expect additional curbs on agricultural exports could exacerbate the existing global food crisis and inflation situation.9

Global central banks accelerate rate hikes to fight inflation
In response to persistent global price increases that have reached their highest levels in decades, central banks from Latin America to Central Asia are attempting to curb inflation with one of the most coordinated tightening cycles in recent memory. According to a Financial Times analysis published at the end of May, central bankers had hiked their countries’ policy rates more than 60 times in the preceding three months. Central banks in the United States, United Kingdom, Canada, New Zealand, South Korea, and Australia have all ratcheted short-term interest rates up at least one level in recent weeks. Among major developed economies, the United States Federal Reserve, the Bank of Canada, the Reserve Bank of New Zealand, and the Reserve Bank of Australia each went further, raising their policy rates 50 basis points in their most recent meetings.10,11,12 Notable outliers include the People’s Bank of China, which has cut an accommodative stance to deal with economic fallout from the government’s harsh COVID lockdowns, and the Bank of Japan, which has continued to pursue stimulus in the face of relatively low, but rising, inflation. With eurozone inflation hitting 8.1 percent in May, the European Central Bank has turned hawkish recently, and quarter-point increases at its July and September meetings are now viewed as the baseline.13 Whether these moves will quell inflation without precipitating a broader economic downturn – the proverbial “soft landing” – remains uncertain.


1. Natasha Mascarenhas, Amanda Silberling, “Tech layoffs top 15K in a brutal May,”, May 27, 2022,

2. Muyao Shen and Philip Lagerkranser, “TerraUSD Stablecoin Plunges as Crypto Market Awaits Rescue,” Bloomberg, May 11, 2022,

3. Daniel Van Boom, “Luna Crypto Crash: How UST Broke and What's Next for Terra,”, May 25, 2022,

4. “The Changing American Consumer,” The Economist, May 29, 2022,

5. “Mutual Fundamentals: Big Tech underweight continues to drive mutual fund performance,” Goldman Sachs Portfolio Strategy Research, Dated May 24, 2022

6. Nicholas Larkin, “Food Protectionism Threatens to Further Disrupt Global Crop Trading,” Bloomberg, May 22, 2022,

7. Pratik Parija, Vrishti Beniwal, and Shruti Srivastava, “India’s Protectionist Moves Spark Concern Rice May Be Next,” Bloomberg, May 26, 2022,

8. Rajendra Jadhav, “Exclusive: Panicked traders step up forward Indian rice purchases after wheat export ban,” Reuters, June 6, 2022,

9. Low De Wei, “Rising Global Food Protectionism Risks Worsening Inflation Woes,” Bloomberg, May 24, 2022,

10. Valentina Romei, “Central banks launch most widespread rate rises for other two decades,” Financial Times, May 29,2022,

11. Nic Fildes, “Australia raises rates by most in 22 years to battle surging inflation,” Financial Times, June 7, 2022, 

12. Lucy Craymer, “New Zealand raises cash rate 50 bps, signals a lot more to come,” Reuters, May 25, 2022, 

13. Alexander Weber, “Euro-Zone Inflation Hits Record as ECB Mulls How Quickly to Hike,” Bloomberg, May 31, 2022,

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this brochure is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. An investor may experience loss of principal. The asset classes and/or investment strategies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment strategy. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon and risk tolerance. Past performance is not indicative of future results. This material is not meant as a recommendation or endorsement of any specific security or strategy. Information has been obtained from sources believed to be reliable, however, Envestnet | PMC cannot guarantee the accuracy of the information provided. The information, analysis and opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. An individual’s situation may vary; therefore, the information provided above should be relied upon only when coordinated with individual professional advice. Reliance upon any information is at the individual’s sole discretion. Diversification does not guarantee profit or protect against loss in declining markets.

FOR INVESTMENT PROFESSIONAL USE ONLY ©2022 Envestnet. All rights reserved.