Long have the markets relied on oversimplifications like bullish or bearish, hawkish or dovish, risk-on and risk-off.
Well, in the current global environment, we can probably add lockdown and recovery to the basic market themes.
And by “recovery mode” we of course mean new all-time highs for several of the top U.S. indices. Not the Nasdaq though.
It seems the world’s top tech stocks, which were largely treated as safe havens during lockdown trading are now doing their part to fuel the next leg in the rally by selling off a bit.
Now, earnings season is mostly behind us and a vast majority have reported earnings that surpassed the expectations of “analysts.”
Not only that, but companies have largely utilized their third-quarter earnings calls to talk up expectations of future growth, a rare phenomenon no doubt.
On paper, it’s almost as if Q3 of 2020 was a smashing success for corporations and markets, if not for the average citizen.
By rhetoric however, the central bankers who act as caretakers to the money system still largely regard the recovery as lopsided and uneven.
Volatility has come down somewhat from the extremes, but remains elevated at this time. This tells us that there are plenty of opportunities in the markets right now.
Good riddance
The world bids a gleeful farewell today to U.S. Securities and Exchange Chair Jay Clayton, who officially announced his departure from the SEC.
Clayton made a political gamble under President Donald Trump by vying for a higher office of U.S. attorney that put him in a bit of hot water.
His declaration of intent to resign is clearly an unnecessary confirmation of what we already know.
There’s no chance that President-elect Joe Biden would keep him on anyway. Yet, as a crypto advocate, seeing this headline in the Financial Times still put a wide smile on my face this morning.
Clayton’s sole legacy, as can be seen in the article, is basically a lot of fancy words for “he led the US crackdown on cryptocurrencies.”
He’s been the number one player behind the continuous denials to approve a bitcoin exchange-traded fund, despite the protestation of his own team, and was the key figure behind the unorganized response to the 2017 initial coin offering phenomenon.
Needless to say, his departure is very good news for bitcoin, and very good news for the world of crypto, especially with the presence of Acting Comptroller of the Currency Brian Brooks, who we hope will be able to keep up his current work under the new administration.
Speaking of which, it seems a bit off-topic but certainly noteworthy that another lovable character may be making a comeback, as former Fed Chair Janet Yellen now seems to be on the short list to fill the spot of Secretary of the Treasury in the new administration.
Difference of opinion
So on one screen right now Janet is Yellen on a Bloomberg panel about financial inclusion, while on the other, the bitcoin chart is making its move, testing a fresh high of $16,500.
Normally, a phenomenal run up like the one we’ve seen should be followed by some kind of a pullback.
As we discussed last week, the price has come from $10,000 all the way up to where it is now, with relatively few pullbacks and indeed, we’re now quite high above the 200-Day Moving Average, which is now passing $10,800.
According to his latest video, Tone Vays says that he’s expecting a near-term top to form over the next month or so. Contrary to his belief, however, and uncannily asymmetrical, is a senior analyst at Citibank who just called for the price to top $300,000 by the end of next year.
It seems a running theme with bitcoin enthusiasts. Everyone seems to think that the price can go ridiculously higher in the medium-term but when looking at the short-term, they get cold feet.
The fact that we’re grinding higher right now in spite of the widespread recovery trade that’s happening in the traditional markets and in spite of the long journey we’ve already taken this year is testament enough that expectations are high.
At this point, charts barely even matter. The extraordinary fundamentals, the fact that the world’s top corporations and billionaires are now taking up the call, a U.S. senator explaining digital scarcity on the evening news, this is what’s driving the sentiment now.
