Happy Friday, Bull Sheeters.
The markets are well on their way to another positive week, but that rally could hit a speed bump today. Tech futures—in particular, chips and social media stocks—are weighing heavily on the S&P 500 this morning. That’s after the benchmark closed at an all-time high yesterday.
What could give stocks some lift: The Biden Administration all but waved the white flag on corporate tax hikes, which would help corporates maintain earnings growth throughout the next year.
Over in crypto land, Bitcoin has been fairly choppy in the past 24 hours. The price board for alt-currencies is a blur of red at the moment.
Let’s see what else is moving markets as we close out the trading week.
Markets update
Asia
- The major Asian exchanges are mixed to finish the week, with the Nikkei up 0.3%.
- Investors are breathing easier today after troubled property developer Evergrande made a crucial bond payment, avoiding default. Shares in Hong Kong were up nearly 4%.
- K-pop giants BTS, which, as Bull Sheet readers know, were the world’s top-selling recording act last year, will reportedly join up with Universal Music Group, news that’s sending shares in the music label up nearly 0.8% at the open.
Europe
- The European bourses are mostly higher with the Stoxx Europe 600 higher by nearly 0.6% in the second hour of the session. Industrials, tech and staples are gaining, bank stocks are falling.
- No cars go… Hit by the chip shortage, Renaulttells investors it will build far fewer cars than previously forecasted. Shares in Paris were off 0.5% at the open.
U.S.
- U.S. Futures have been slipping throughout the morning, pulled lower by tech.
- A big drag today could come from the social media wing of Big Tech today. Snap’s shares fell more than 20% in pre-market after warning investors that advertisers are pulling back on online advertising as supply chain woes reverberate throughout the economy. That’s dragging down Facebook and Twitter, pre-market.
- Also weighing on tech is Intel. The chips giant reported a Q3 bottom-line beat, but also tightened its forecast, sending shares down nearly 9% in extended trading.
Elsewhere
- Gold is up, trading above $1,790. It’s flat over the past week.
- The dollar is down.
- Crude is up with Brent trading above $85/barrel.
- I hope you didn’t jump in on Bitcoin when it hit $67K on Wednesday. The king of crypto is down 3.5% in the past 24 hours, sitting around $63,000.
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By the numbers
249.32
A few weeks ago—it was Oct. 4, to be precise—I published here in this space Bull Sheet readers’ take on the markets. The mood at the time was hardly impavid, as you may recall. One reader said he’d cashed out. Another was no fan of all the volatility. I bring that up because on that day the S&P 500 closed at 4,300.46, a two-and-a-half-month low. The benchmark has since roared back, gaining nearly 250 points, a jump of 5.8%. As I wrote above, the S&P closed yesterday at a fresh all-time high. What happened? Well, for starters, stronger than expected earnings is putting optimism for growth prospects over inflation fears. The good news: earnings season has only just begun. That bad news: we got some warning signs from big tech players yesterday that the supply-chain tumult could ripple through more industry sectors.
4.3 billion
You know what’s performing even better since Oct. 4? Small-cap stocks. The Russell 3000 is up 5.9% in the same period. What’s going on there? The markets data firm Retail Radar reports that retail traders were huge buyers last week. Net stock purchases from this group amounted to a $4.3 billion net inflow into equities last week, its best performance since last November. On cue, small-caps are soaring. A big hat-tip to the great Market Ear blog for pointing that out.
73%
Earlier this week I wrote about the historic “quit rate,” and the potential impact on your stock portfolio. The upshot: the extreme turnover risks pushing up inflation as the labor market tightens further. That’s bad news for consumer discretionary and tech stocks, Morgan Stanley says. The great resignation is also keeping bosses up at night, a new Coins2Day–Deloitte CEO survey shows. Nearly three out of four chief executives polled said “labor/skills shortage is the most likely external issue to disrupt their business in the next 12 months,” my colleague Lance Lamber writes. In fact, the coming labor/skills shortage is more of a worry than COVID variants and cyber attacks, the CEOs say.
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Have a lovely weekend. But first, there’s more news below.
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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
Investors drive up Trump-linked SPAC by more than 350% in one day—Coins2Day
Is this a Bitcoin bubble? The debate is roiling some of Wall Street’s most seasoned investors—Coins2Day
Home price growth will slow dramatically in 2022, says CoreLogic—Coins2Day
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Market candy
18.7%
Had you allocated 2.5% of your portfolio to Bitcoin in 2014, you'd have seen a return of about 18.7%. "A 5% Bitcoin allocation would have doubled" that, writes Coins2Day's Jessica Mathews in her must-read weekly columnThe Dividend. This week's topic: "How crypto can fit into your overall portfolio."