Nasdaq rallies on mega-cap tech earnings beats and tax outlook, BOC turns hawkish, US data, bitcoin drops as Shiba Inu steals spotlight

US stocks traded mixed as Microsoft and Alphabet reassert their dominance in the tech space and the Treasury curve flattens.  The Nasdaq continues to outperform following robust mega-cap tech results and as Democrats struggle to find ways to increase taxes.  Kryptonite for big-tech has always been raising taxes and regulation.  With Senator Joe Manchin showing little openness for tax increases, tech stocks are soaring.

BOC to end QE

The Bank of Canada turned hawkish after deciding to end QE and shifting to the investment phase, which has provided a vindication for some traders eyeing four rate hikes next year.  The BOC statement emphasized that the robust economic growth has resumed and that the economy will grow by 5% this year before moderating to 4¼ percent in 2022 and 3¾ percent in 2023.  The BOC wants to ensure temporary forces pushing up prices do not become embedded in ongoing inflation, which supports the idea they will hike in the first half of next year.

The Canadian dollar is the strongest currency on the day and it could have been a whole lot stronger if oil prices did not retreat.

US Data

Durable goods orders dropped less than expected and the goods trade deficit worsened as exports tumbled.  Core capital goods delivered an upside surprise but nothing that will make investors particularly upbeat about the fourth quarter.

Cryptos

The focus on the cryptoverse was supposed to be on Ethereum 2.0 and a steady wave of Bitcoin ETF investments, but the retail market has become fixated on Shiba Inu.  Robinhood traders are pushing for trading app Robinhood to offer Shiba Inu to its roster of cryptocurrencies.  Shiba Inu, a puppy-inspired crypto surged over 30% to fresh record highs.  SHIB, also known as a Dogecoin killer, runs on Ethereum, but the use case argument isn’t quite there.  Shiba Inu headlines are not the news that is needed to help drive crypto growth to the rest of Wall Street that is still hesitant on cryptocurrencies.

Bitcoin’s dip below USD 60,000 has unnerved some investors, as ETF exhaustion is settling in and an easy run towards USD 70,000 did not happen.  Bitcoin seems poised to consolidate around the USD 60,000 level, but a Shiba Inu crash could lead to some broader crypto weakness as retail investors might have a tight lease on long-term bitcoin bets.

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