Mixed session for stocks, Bed Bath & Beyond mania, bitcoin in vacation mode

US stocks traded mixed as investors grappled with relatively strong US economic data that might keep the door open for aggressive Fed tightening for the rest of the year.  The economy still looks good as the housing market continues to cool.  Initial jobless claims dipped, easing concerns a little bit that the labor market was starting to head in the wrong direction.  The Philly Fed Business Outlook was a nice surprise given the disastrous Empire manufacturing survey from the beginning of the week.

Stocks will most likely struggle for direction for the rest of the summer as Wall Street is still uncertain how aggressive the Fed will be in September.  Traders, however, will continue to pay close attention to developments with the war in Ukraine. ​ Turkish President Erdogan noted that he discussed ways on ending the war with President Zelensky. ​ An imminent end to the war seems unlikely, but any de-escalations or improved passages for Ukraine grain exports would be welcome news for risk appetite. ​

Bed Bath & Beyond mania

Meme stock mania is making a comeback and the volatility seems like it won’t be going away anytime soon.  After a skyrocketing WallStreetBets infused move, Bed Bath & Beyond is getting crushed after activist shareholder Ryan Cohen’s filing said they might sell up to 7.78 million shares and additional call options that would represent 1.67 million shares. Cohen’s investment vehicle RC Ventures is the second largest holder of the home-goods retailer.

Investor Jake Freeman is becoming a Bed Bath & Beyond legend after selling over $130 million worth of stock after buying 5 million shares in July.  Freeman initially invested $25 million after raising money from family and friends. More stories of Meme stocks wins will keep making believers of the Redditt army.

Meme stock mania has evolved into an aggressive pump-and-dump trade, which will spell trouble for the casual investor hoping for some stock to go to the moon.  Arguments to hold stocks like GameStop and AMC for the long-term will not hold water.  Meme stocks will struggle for substantial trends as most of the fundamentals remain weak for these companies and the retail trader is weakening as the economy crawls towards a recession.

Bitcoin

Bitcoin is officially on vacation.  Despite decent moves with the dollar and Treasury yields, Bitcoin remains anchored between $20,000 and $25,000.  The correlation with equities is coming and going for Bitcoin, but it seems a major move might have to wait until we have a firm handle on market expectations for the September FOMC meeting. If stocks continue to trade rangebound, it seems bitcoin could do the same for the lead-up to the Jackson Hole Symposium.

Bitcoin’s fundamentals haven’t changed much and that should keep it as the ultimate risky asset.

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