Stocks snap losing streak, PPI Surges, et tu, Elon?

US PPI rises, jobless claims fall

Wall Street can’t get inflation out of its head.  The day after consumer prices delivered the largest 12-month increase since the summer of 2008, saw another hot pricing pressure-filled report that showed the largest annual increase since the BLS began tracking data in 2010.  Weekly jobless claims also fell to a fresh pandemic low, which should provide some optimism that the labor market recovery has not completely stalled due to a shortage of available workers.

Surging producer prices often lead to higher consumer prices so today’s hot print should have provided another mover higher in Treasury yields, but it did not.  US stocks are rising today because the bloodbath with technology stocks had to stop.  Despite inflationary fears, US stocks are still where everyone wants to be and that is why the algos bought the S&P 500 index after the three-day slide knocked it down 5% from record-high territory and tested the 50-day SMA.  The Nasdaq intially led the charge higher as most of the FAANG stocks rebound and many of the smaller cloud and software companies make a big comeback.

The rally in stocks, especially technology ran out of gas after US Trade Representative Tai delivered some hardline comments against China.  Tai noted that the US and allies must confront and work China on economic and political policies.

Cryptocurrencies

When it rains bad news for cryptocurrencies, it pours.  The news was bad across the board for the cryptoverse: Troubles for the bitcoin mining industry, the Shiba Inu coin crash, another investigation for Binance, and the end of the Colonial Pipeline was a USD5 million cryptocurrency payout.

The Elon Musk tweet that stunned the crypto world late yesterday, sent bitcoin into freefall.  Musk brought all the environmental concerns to the limelight and that has Wall Street thinking twice over some of the recent breakthroughs bitcoin has had with mainstream acceptance and adoption.  Tesla and Musk are still heavily invested in bitcoin, but this pivot is detrimental for the short-term outlook.

A collapse with the Shiba Inu coin came out of nowhere when a crypto billionaire donated USD1.5 billion of coins to non-profit organizations.  Vitalik Buterin, the programmer that founded Ethereum, sold USD one billion of Shiba Inu coin that he was given, stunning everyone because he was expected to just hold onto it.  Social Media crypto trades were all over Shiba Inu coin and this type of collapse will hurt retail confidence in the smaller coins.

Binance Holdings, the world’s largest crypto exchange is once again being investigated, this time on anti-money laundering and tax concerns.  Binance has not been accused of anything yet but the probe is raising concerns federal agencies are about to overwhelm the exchanges with inquiries.

The Colonial Pipeline cyberattack ended with a USD5 million ransom payout in untraceable cryptocurrencies.  Bad players were a big part of cryptos in the early years and this recent hack to a key part of the economy will draw tremendous attention from Congress.

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