What’s new
Administrative topics and an introduction
Well folks, I had a change of heart; I love writing these too much. So, I’m having a nice beverage and writing on a Friday evening.
Let’s get into some stories.
Did you miss the last edition? No worries! Get it right here and catch up on the madness.
Fundamentals
Where did the markets end last week?
U.S. Indices 5 Day Performance
Dow Jones: -1.46%
S&P 500: -1.55%
NASDAQ: -3.00%
Asia and Europe 5 Day Performance
Nikkei 225: -4.10%
Hang Seng: -2.78%
FTSE 100: +0.22%
DAX: +1.28%
Rates, Spot Prices, and ‘Good to Knows’
Market Madness Portfolio: -1.46%
CBOE Volatility Index (VIX): 24.66
US 10 YR: 1.568%
Crude OIL: $66.28
Spot Gold: $1,698.64
TEDRATE: 0.15
LIBOR (3 month): 0.17550%
U.S. Dollar Index: 91.988
EUR/USD: $1.191
Pound/USD: $1.384
USD/JPY: 108.245 JPY
USD/CNY: 6.496 CNY
Weekly update
An article by Christopher
Financial markets
You read the fundamentals; you know what kind of week it was. The same old dirty laundry from last week came back to haunt us this week. We’re still memeing in some corners of the market, with Rocket Companies (the largest mortgage lender in the U.S.) being the latest short squeeze target by the Redditors and the new BUZZ (Van Eck Vectors Social Sentiment) ETF, launched by Van Enck, appears to encourage the meme trading, despite remarks from the CEO.
“This is not a Reddit meme stock ETF,” said Jamie Wise, CEO of Buzz Holdings and the originator of the index. “This is about the broader conversation around stocks mentioned on social media platforms. We are using broad social media sources, principally Twitter and StockTwits.” Wise said it also uses Yahoo Finance, Benzinga and Reddit… This is essentially a momentum index, but instead of tracking stocks that are moving on price, BUZZ tracks stocks that are getting a lot of social media hype. (excerpted from CNBC article)
I’m not too sure what to make of this yet, but I think that it is definitely an attempt to strike while the iron is still hot. Let’s see what happens after it has been on the market a little while
In the rest of the finance world, the tech selloff in tandem with rising rates are dragging the rest of the market down with them. Investors seeking a reaffirming voice from our friend Jerome Powell did not get it, but there’s not much for him to say really. There are some indications that the movement in bonds is a result of positive momentum being seen in the economic picture (more on this in a bit). Many are still trying to ask for cooler heads to prevail and see the bigger picture, so we can only hope that the message sinks in over the weekend.
Elsewhere, crude oil is making a steady climb upward, gold retracted from its level last week, and our friend Bitcoin is back below $50,000.
Bonus Reads:
Regional Bank Stocks Rise as Bond Yields Climb (via WSJ)
Guggenheim’s Minerd says don’t count on rising yields, believes U.S. could even see negative rates (via CNBC)
Albert Edwards And Scott Minerd Agree: US Yields Could Go Negative (via The Heisenberg Report)
Economic data and stimulus
The economic picture showed signs of improvement in the near term. Today, the Bureau of Labor Statistics (BLS) released the February jobs report, which showed signs of labor market improvement over the month, laying the foundation for what many hope to be a continued recovery in the Springtime. The U.S. economy added 379K jobs in February and the unemployment rate was printed at 6.2%. There is still some room before we return to pre-pandemic status, but this positive report tells us the direction we’re heading in currently is a positive one.
On the other side of this coin, we are about one year into the pandemic and we are still seeing extremely high weekly jobless claims. When looking at this, it puts that pre-pandemic goal-line is further away than it seems.
And then there’s articles with some economists predicting nearly 10% GDP growth in Q1 2021. A lot of the underlying catalysts that have boosted recent economic data have been on the heels of continued government stimulus efforts, which cannot last indefinitely.
Speaking of stimulus, the latest and greatest iteration of the fiscal support is making its way through a heavily divided senate. Joey B gave up in the first hurdle (minimum wage boost) and now the Ds and Rs are fighting over the unemployment assistance.
All the while, people are still really worried about inflation…
Bonus Reads:
Is Inflation a Risk? Not Now, but Some See Danger Ahead (via WSJ)
The Citi report…
An article by Christopher
The Bitcoin brigade continues, as we all know it will. This time, it shows itself as a comedy of errors. Being one of the first in-depth reports by one of the world’s largest financial institutions about the viability and potential adoption of Bitcoin, it needed to be a very sharp report. Instead, we got something that has been quoted being “embarrassingly bad” by the FT. Avid readers from all walks of finance dove into the paper and either loved every word of it, or tore it apart for its numerous errors and ‘chart sins.’
They also mention but stop short of commenting about the ownership of mining facilities (“…almost half of the world’s Bitcoin mining capacity is situated in southwest China…”). Where a currency is meant to be decentralized, it must be addressed how/if ownership over the mining facilities comes to impact the ownership of the currency itself. This was something of concern I’ve seen from others but also was interested in learning more about myself.
While I am not the biggest fan of Bitcoin (more specifically the notion of it becoming a mainstream, go-to currency option), I am interested in at least hearing the arguments for/against it with an unbiased mind. I am still making my way through the Citi paper, but I’m currently falling on the opinion that this report did not do anything to push the conversation forward, but that stands to change as I continue to parse the document and cross-reference other papers and commentaries on the topic. I do think that this will only be the start of more formalized reporting from large financial institutions about Bitcoin.
Read more here, here, and here for the original report.
Quick Takes
To fill in the gaps
Shares of Rocket took off after the Redditors targeted the heavily shorted stock. (via CNBC and via WSJ) - Obligatory 🚀 needed
Texas dumps all COVID 19 restrictions (via Axios), and businesses fight back. (via WSJ)
2021 could be the year of the EV. (via CNBC)
Square breaks into banking. (via CNBC)
Joey B moves up the vaccination timeline. (via WSJ)
Google to stop selling ads based on personal web browsing history. (via WSJ)
Robinhood chooses NASDAQ as its exchange of choice for upcoming IPO. (via CNBC)
Things are not looking good for Greensill after Credit Suisse suspends investment funds. (via WSJ)
General Banter
What’s on the minds of our editors and writers
A note of appreciation to all my friends and mentors in the finance world. It is great to be connected, share ideas, and grow a community that feels worthwhile to be a part of each and every day. Thank you.
Reader’s Corner
A place for suggestions for readers like you
The reader might enjoy signing up for the first-ever FinTwit Summit 2021, taking place on March 19 and 20. Signup is currently $10 and its profits are being donated to charity! See below:
What I’m Reading:
Options, Futures, and Other Derivates (10th edition) [for education]
Beyond Order: 12 More Rules for Life [for interest]
Well done. You’ve made it through the madness. I’ve worked hard to ensure that you leave this page having learned something, and I hope that it benefits you in your daily adventure. Thank you again for checking in.
Do you like what you have read? If you know of anyone missing Market Madness, save them the trouble, and share it with them!
Check out Behind the Madness for all the cool links and sign ups I used to have at the bottom of the weekly edition. Updated weekly!
Check out A Series of Financial Musings for informative threads related to all kinds of financial learning points, novel retentions, and commentary on research papers.
Continue the conversation with me on Bookshlf, “a dedicated space to help people organize, curate and discover the content they love, no matter where it's from. A place to save it for yourself, or share it with communities who will love it, too.”