Top of the Thursday to you as markets were roiled by a dour economic outlook by the U.S. Federal Reserve.
In brief (TL:DR)
- U.S. stocks wound down Wednesday with the S&P 500 (-2.57%), tech-centric Nasdaq Composite (-2.61%) and blue-chip Dow Jones Industrial Average (-2.05%) all sharply lower on comments made by U.S. Federal Reserve Chairman Jerome Powell that the U.S. economy’s recovery is faltering.
- Asian stocks sank on Thursday taking their cue from Wall Street.
- U.S. 10-year Treasury yields steadied at 1.02% as the Fed’s policy of status quo stabilized yields (yields rise when bond prices fall).
- The dollar extended its advance as investors cashed out.
- Oil fell with March 2021 contracts for WTI Crude Oil (Nymex) (-0.28%) down at US$52.70 on poor economic data out of the U.S.
- Gold slipped with February 2021 contracts for Gold (Comex) (-0.58%) at US$1,838.20 from US$1,848.90 with the dollar strengthening.
- Bitcoin (-3.99%) fell to US$30,819 as inflows into exchanges continued to lead outflows and risk assets generally suffered the poor prognosis of the economy by the Fed (inflows typically suggest that traders are looking to sell Bitcoin in anticipation of lower prices).
In today’s issue…
- There’s No Such Thing as “Smart Money”
- Keep Us Well Fed
- Bitcoin Tests US$30,000 Support Again
1. There’s No Such Thing as “Smart Money”
- Reddit forum is driving stock flows that has helped bid up firms like GameStop through options activity
- Fundamentals fall prey to fund flows as retail investors use relatively small amounts of money to buy call options that result in shares being pushed higher by market makers in a concentrated feedback loop
2. Keep Us Well Fed
- U.S. Federal Reserve communicates that there will be no tapering in its asset buying program
- Somber tone of U.S. Federal Reserve Chairman Jerome Powell rattles market sentiment, but promise of liquidity and loose monetary policy ought to reset prices higher
3. Bitcoin Tests US$30,000 Support Again
- Bitcoin tests key US$30,000 level of support again in less than a week
- Technical indicators suggest that Bitcoin has potential to go lower or expand its trading range on heightened volatility, making peaks and troughs harder to call
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