US Close – Stonk Gambling Continues, Trading Curbs, Dollar sinks after US data supports stimulus case

US stocks bounced back as investors saw the end approaching of the frenzied Reddit-driven stock market dislocations.  Today’s economic data also bolstered the prospects of stimulus and after a night’s sleep over some key mega-cap tech earnings, the results don’t justify the abandonment of the everyone’s’ stay-at-home stocks.  Apple, Facebook, and Tesla are all trading lower, but given the recent run, a couple percentage points of softness is nothing to fret over.  Apple is in a super-cycle and that should be very positive for the tech space once we get past the retail traders’ short squeeze on short-sellers. 

Robinhood, Etrade, Interactive Brokers, and other brokerages are unleashing some trading curbs that should slowly end the Reddit-fueled stonk-gambling.  Robinhood could have changed the rules, but a complete restriction on trading was wrong and that is why we are seeing AOC and Ted Cruz on the same side of that argument.  However, taking advantage of a structural weakness in the stock market won’t last because it is wreaking havoc on the brokerages risk models and they have every right to increase margins.  Eventually, this type of trading will become too expensive, but for now stonk gambling continues.    

US Data/FX

A wrath of US data showed the US economy still needs fiscal support.  US GDP in the fourth quarter disappointed with 4% growth, softer than the 4.3% consensus estimate.  Jobless Claims came in better-than-forecasts at 847,000, but still remain over 4X the pre-pandemic levels.  The total number of Americans receiving benefits increased over 2.29 million to 18.2 million. 

The economic recovery has hit a wall and virus variant concerns should completely justify both the Fed’s current level of accommodation and pave the way for Congress to deliver at least $1.2 trillion dollars in fiscal support next month. 

The dollar weakened after a plethora of US data confirmed the US will not slow down their monetary and fiscal stimulus efforts. 

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