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Tech punished; Nasdaq drops 2.5%

TAKEAWAYS


•    Nasdaq index slides -2.5% while industrials lift the Dow
•    Tech stocks continue to struggle amid higher bond yields and rotation into cyclicals
•    Wild ride for Bitcoin which slumps to $47,000 then bumps back to $55,000
•    Oil traders buy the dip sending oil soaring over 4% after Goldman forecast
•    Gold continues to bounce of multi-month lows, silver highest since Reddit squeeze
•    Euro supported by upswing in German IFO data
•    USD/CAD dips below January low, Loonie highest since 2018
•    Tesla sees biggest drop since September amid Bitcoin crash
•    Democrats aim to pass Biden’s Covid relief bill this week
•    US COVID-19 deaths reach half million
•    DAY AHEAD: UK unemployment, Eurozone CPI, Powell testimony

GURU WISDOM


“I made my first investment at age eleven. I was wasting my life until then.” - Warren Buffet

 


MARKETS


*Daily closing price
↗ EUR/USD    1.2157        (+0.26%)
↗ GBP/USD    1.4062        (+0.26%)
↘ USD/JPY    105.07        (-0.43%)
↘ S&P 500    3876.50    (-0.77%)
↘ Hang Seng    30,319.83    (-1.06%)
↗ Gold        1809.70    (+1.47%)
↗ Oil (Brent)    64.90        (+4.44%)
↘ Bitcoin    54,726.2    (-4.62%)

 


NEWS

 


Tech stocks were getting hit hard at the start of the new week, sending the tech-heavy Nasdaq down 2.5%. This contrasted sharply with the Dow which was up on the day thanks to its more reflation-friendly industrial makeup.


For the moment tech stocks are inversely correlated with US Treasury yields. Today the US 10-year yield reached 1.38%. The higher the yield, the higher cyclicals stocks go and the lower tech stocks go.


A new bullish forecast of $72 per barrel on US oil from Goldman Sachs sent oil prices buzzing higher by 4%. The oil market had pulled back for two days and traders happily bought the dip in what has been a strong uptrend.


Bitcoin slumped around $10,000 early Monday after Elon Musk tweeted: “BTC & ETH do seem high lol”. Musk’s outspoken support for crypto has been one of the major drivers of the latest leg-up. Disparaging comments later on from Treasury Secretary Yellen appeared to support a rebound of $8,000.


What was bad for Bitcoin seemed to be good for gold. The next driver for gold, the dollar and possibly BTC will be Congressional testimony from Fed Chair Powell today.

 


DAY AHEAD 


*Times in GMT
07:00 – UK ILO Unemployment Rate (3M)(Dec) [5.1 % Exp vs. 5 % Prev]
10:00 – Eurozone Consumer Price Index (YoY)(Jan) [0.9 % Exp vs. 0.9 % Prev]
10:00 – Eurozone Consumer Price Index - Core (YoY)(Jan) [1.4 % Exp vs. 1.4 % Prev]
15:00 - Fed's Chair Powell testifies 
17:30 - BoC's Governor Macklem speech
 

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