Stocks sell-off goes global as bond yields climb—Bitcoin grinds higher

That didn’t last long. The markets are once again gripped in a risk-off murk. From Hong Kong to Frankfurt, stocks are tumbling, and U.S. Futures are in retreat.

What’s the culprit today? The usual factors: rising bond yields, spiking energy prices and inflation jitters.

Crypto remains the one bright spot. Bitcoin crossed $50K yesterday, and continues to hold on to most of its gains.

In today’s essay, I take the long view. With the help of teenagers.

But first, let’s check in on the global markets.

Markets update

Asia

• The major Asian markets were lower with the Hang Seng off nearly 0.5%, pulled down by a tech sell-off. In fact, the Hang Seng tech index closed at a record low.
• The Shanghai Composite, off on holiday again today, is far underperforming global stocks this year. And now big-time Western investors are warning now is not the time to put “money into China.”
• Back to the Evergrande crisis… The feared collapse of the teetering property giant is unlikely to hobble China’s financial services sector. But Beijing isn’t messing around. It’s sending a message to the markets that it “wants to rein in debt and tamp down property speculation,” argues a senior fellow at Brookings.

Europe

• The European bourses were a blur of red at the open, with the Stoxx Europe 600 down 1.7% two hours into the trading session. Tech stocks, a big gainer yesterday, is one of the big sector losers.
• The big topic again today is Europe’s rising energy prices, a subject that’s dominating the markets and poltics. In Europe and the U.K. Yesterday, natural gas future prices jumped about 20%, single day records. It’s hit new records today. If you think the spike in wood prices was crazy, check out these charts.

U.S.

• Up, down, up, down…and down again. U.S. Futures have been trading lower throughout the morning. That’s after the S&P jumped 1% on Tuesday; it’s still down for the week. As Deutsche Bank points out, it was the fourth straight session in which the benchmark moved by at least 1%, showing volatility is back in the markets.
• Tech stocks had a better day on Tuesday, with the FANG+ recovering 2.2%. That’s despite the travails of Facebook—the big “F” in FANG. A whistleblowertestified before Senate yesterday that the social media giant is “morally bankrupt” and “disastrous.” My kids, meanwhile, are like: what’s Facebook?
• Shares in PepsiCo closed up 0.6% yesterday as the drinks-and-snack-food brand raised its full-year-outlook, but warned it will be forced to raise prices again by Q1 2022 thanks to supply chain woes.

Elsewhere

• Gold is off, trading below $1,750/ounce.
• The dollar is up again this morning.
• Crude is cruising. Brent trades around $83/barrel, up nearly 8% in the past seven days.
• Crypto grinds higher, with Bitcoin trading above $51,000. Ether is a whisker below $3,500.

***

Don’t underestimate this market

They love Chick-Fil-A and plant-based meat. They prefer cash, but are avid Venmo—the PayPal app—users. They still spend their free time on Snapchat and TikTok—not so much on Instagram. Oh, and their favorite celebrity is…Adam Sandler.

Who is this bizarre cohort? America’s teens, a market with surprising buying power. According to the Piper Sandler’s latest survey of 10,000 U.S. Teens, each of them will spend nearly $2,300 this year, on everything from video games, to Starbucks frappuccinos to crypto currency. Twenty-three-hundred bucks may not sound like much, but teens’ year-on-year spending increase, at +6%, is keeping pace with inflation (and then some).

I’ve been following the Piper Sandler research for years. I’m always curious to see what’s trending with GenZ, tomorrow’s influencers/consumers/investors. As my kids approach their teenage years, I like to check how American and un-American my Rome-born girls are.

They’ve never heard of Chick-Fil-A, but they are very familiar with other brands topping the teens’ most-popular list, including Amazon (the runaway leader as preferred shopping website), Nike (top clothing brand), Netflix (top streaming service), Snapchat (top social media platform) and Pepperidge Farm Goldfish (top snack brand).

To the horror of my wife, the kids discovered “flavor-blasted” Goldfish on a trip to New York a few years ago, and we cannot seem to undo that epicurean misdemeanor. Don’t get me wrong: Italians do junk food, but it’s fairly tame stuff. Translation: no flavor-blasting.

Here’s a snapshot of Piper Sandler’s hottest brands list: (The fuller breakdown can be found here.)

What does this tell us about the markets, and investing? For starters, teens’ preferences really drive family purchase decisions. Teens also pick up on, and drive, new consumer and pop-culture trends. So, if your portfolio is long consumer discretionary, retail and tech stocks, this is the kind of research you should be tuning into.

Here’s one insight from the report that caught my eye:

“With 91% of teens coming back to school in-person, we are not surprised to see time allocation in mall-based specialty pick up. Still, teens are staying connected—estimating they spend 4 hours a day on social media. Snapchat & TikTok are the top-two social media platforms. While Amazon remains the No. 1 website—it did see mindshare slip year-over-year as female-centric websites like SHEIN are on the rise,” said Erinn Murphy, Piper Sandler senior research analyst.

Lastly, this generation—the Greta Thunberg generation—isn’t all about mindless consumption. They do engage in social issues, and the environment is top of mind.

My kids (and all their friends) know Greta Thunberg. They wouldn’t be able to pick Adam Sandler out of a comedy-film police lineup.

***

Bernhard Warner
@BernhardWarner
[email protected]

As always, you can write to [email protected] or reply to this email with suggestions and feedback.

Today's reads

Is this the sound of a stock market bubble popping?—Coins2Day

Europe’s messy transition to clean energy is making some investors very rich—Coins2Day

As the clock ticks on a debt ceiling deal, SEC chair warns of ‘uncharted waters’—Coins2Day

Is the world economy going back to the 1970s?—Economist

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