Morning Minutes

Cryptocurrencies Crumble and Stocks Slide As Investors Go Defensive

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The market selloff appears to be taking on a life of its own this week. With US consumer price inflation still running above 8.0% over year and US producer price numbers announced this morning still running hot (11.0% vs street 10.7% and previous 11.2%), capital continues to flee risk markets for defensive havens.

Cryptocurrencies in particular have seen losses accelerate overnight. After falling under $30,000 yesterday, Bitcoin is down another 4.7% this morning, while a 9.7% plunge for Ethereum has knocked it back under $2,000. Stock markets around the world have also been selling off overnight and this morning. US index futures are down 0.6% to 1.4% with the NASDAQ leading the way lower again. Overseas, the Dax, Hang Seng and FTSE are all down 2.1%, while the Nikkei and the S&P/ASX both lost about 1.75%. In commodity action, copper is getting hammered for a 3.7% loss, while WTI crude oil is down 1.8%.

Interestingly, despite the high inflation, the US 10-year treasury note yield continued to fall away from 3.00%, sliding below 2.85% this morning. At this same time, the US Dollar is rallying, with gains of 0.8% against the Euro, 0.6% against Gold, 0.2% against the Pound and the Loonie, and 1.0% against the Aussie Dollar. The only major currency doing better against the greenback is the beleaguered and likely oversold Japanese Yen with a 1.4% gain. This action suggests a heavy rotation of capital into US and Japanese bonds as defensive havens.

Overnight earnings reports have been very mixed on both sides of the border. Canadian results were headlined by insurance giants Manulife ($0.77 vs street $0.82) and Sun Life ($1.44 vs street $1.41). In the US today, Disney is down 5.3% premarket after warning that Disney+ streaming subscriber growth may not be as strong as investors have been expecting. Beyond Meat is down 27.2% premarket after reporting a worse than expected loss (-$1.58 vs street -$1.01). Luxury goods retailer Tapestry did manage to beat the street ($0.51 vs street $0.41).  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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