Bitcoin tumbles, futures flatline as investors press pause on the earnings-led rally

Global stocks are lower today, but U.S. Futures are holding their own as investors await earnings from the likes of Boeing, McDonald’s and Bristol-Myers Squibb; Big Tech is back on deck tomorrow.

The crypto market, meanwhile, is under pressure. Bitcoin has fallen more than 6% to trade below $60K. Lousy Robinhood results are not helping sentiment.

Speaking of volatile assets, Tesla this morning is down in pre-market trading. In today’s essay, I do a special by-the-numbers take on TSLA’s incredible recent rally.

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

Markets update

Asia

• A pessimistic cloud hangs over the Asian markets today with the Hang Seng down 1.6% in afternoon trading.
• Chinese tech stocks—namely Alibaba, Tencent and Meituan—are the big losers in Hong Kong today, once again sending the HSTech Index lower.
• With COP26 just a few days away, Australia and Saudi Arabia have made headlines for their big net-zero announcements. Here’s why the Saudi push and the Aussie gesture aren’t quite what they claim to be.

Europe

• The European bourses too were under pressure at the start, with the Stoxx Europe 600 down nearly 0.4% two hours into the trading session.
• The banks are again in focus on Wednesday. Shares in both Deutsche Bank and Santander were lower out of the gates. The latter gave investors a bullish view on its U.S. Business while the German banking giant reported a decline in trading revenue.
• The courtship between Draftkings and Britain’s Entain ended in no-deal yesterday, and investors couldn’t be more pleased. Shares in both gambling firms jumped on the news.

U.S.

• U.S. Futures are off their lows, to trade in the green. Just barely. That’s after all three major averages closed a wee bit higher on Tuesday.
• Shares in Robinhood are down 8.5% in pre-market trading—that puts it below its IPO price—as the popular investing app warns of a slowdown in retail trading. If the retail crowd are in fact taking some time off from trading, that could be felt throughout the market.
• Going in the opposite direction is Microsoft. Shares are up nearly 2% in pre-market trading as the software-and-cloud-giant delivered top- and bottom-line beats after the bell yesterday.

Elsewhere

• Gold is down, trading around $1,790/ounce.
• The dollar is a touch lower.
• Crude is down with Brent trading below $85/barrel.
• A few minutes ago, Bitcoin tumbled below $60,000. It’s down more than 10% in the past week… At the request of a BullSheet reader in Florida—Donovan—let’s check in on an alt coin I’ve been neglecting recently, Dogecoin. It’s down, trading at 25 cents. Sorry, Donovan.

***

Musk to the moon

Tesla bulls, you’ve head one heck of a year. Again. Yesterday the EV stock hit a new intraday high of $1,094, putting it 95% above its March lows. Yep, 95%.

By now, you know most of the data points about its outsized performance. But here’s a few worth mentioning:

• At $1 trillion (and change), the Tesla market cap exceeds that of its top five competitors—Toyota, Volkswagen, Daimler, General Motors and Ford—combined.
• As Morgan Stanley pointed out, at one point yesterday the TSLA share-surge was roughly equal to 2X Ford’s entire market cap.
• And, according to The Market Ear, the trade yesterday in Tesla options—just options, mind you—topped $16 billion, equivalent to 55% of the entire U.S. Options market. (Dear reader, if you were trading options yesterday in something other than Tesla, what was it? Please let me know.)
• As of Sept. 30, Tesla was No. 7 on the S&P 500’s Top 10 of companies by index weight. That’s pretty amazing considering it was only added to the benchmark in December.
• According to Goldman Sachs, as of Friday’s close, TSLA was outperforming the S&P 500 by 78% dating back to June 2020.

Daily stock moves are noisy. They don’t tell us much beyond inflows and outflows. To get a clearer idea of sentiment, it makes sense to zoom out to the 200-day moving average of a stock. And Tesla is now trading 25.6% above that 200-day line, which confirms what our eyes are telling us: TSLA is on yet another one of those epic runs. The sentiment is really strong.

I don’t have any special knowledge—or even any recent analyst reports on TSLA—to share on the company’s future. So, there’s no expert investment advice to go along with this by-the-numbers analysis.

I’m just going to let the numbers speak for themselves today.

***

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

Democrats unveil corporate minimum tax plan to pay for Biden’s agenda—and it has Sen. Kyrsten Sinema’s backing—Coins2Day

The housing market will cool off in 2022, but not by much, says Fannie Mae—Coins2Day

Market candy

100 bucks

It's nearly COP26 time, and so the climate is on my mind. Which brings us to this report by the personal finance specialists at MoneySuperMarket who are the latest to calculate the carbon footprint of crypto. The report authors say that every transaction paid in Bitcoin consumes a lot of  electricity. How much electricity? There's a bit of debate, but the consensus is more than $100 worth of electricity.