Less than 24 hours after throngs of angry, armed Trump supporters stormed the US Capitol in what lawmakers on both sides of the aisle decried as an act of insurrection, every major US equity benchmark hit a new record high.
While acknowledging that the situation in D.C. is the furthest thing from funny, there is undoubtedly something amusing about this headline: “Stocks surge to record highs after president incites armed insurrection against US government.”
Last week, as 2020 melted into 2021, a familiar refrain was that things couldn’t possibly get any worse. After all, the world had just lost nearly two million people to a previously unknown strain of deadly viral pneumonia and the global economy had just suffered the most acute downturn since the Great Depression.
That’s a pretty hard act to follow, but 2021 is off and running, that’s for sure. Less than a week in, the new year can already “boast” of an insurrection in the United States of America.
That puts this year even (at least) with 2020 through January 7. You’ll recall that last year got cookin’ in earnest when Trump cooked Qassem Soleimani in a brazen assassination on January 3. It was all downhill from there, especially for Trump and America, which, by December, had lost more people to the pandemic than combat deaths suffered in World War II.
Now that you mention it, that’s exceedingly eerie. Speaking in Hamedan, in July of 2018, Soleimani warned Trump. “You may begin the war, but it is I who will end it,” Soleimani said. “I will destroy everything you own.”
As of Thursday, everything in Trump’s circumference was in (figurative) flames. He was persona non grata in the country he nominally leads.
And yet, none of this was enough to deter stocks, which are looking forward to brighter days and a Democratic government which promises to deliver robust economic outcomes and a way out of the pandemic which continues to decimate the economy, destroy livelihoods, and claim lives.
January 6, the day of Trump’s insurrection, was the deadliest day yet for America.
The Nasdaq, which lagged on Wednesday, had its best day Thursday since the election, which is supremely ironic given that the November 4 surge in big tech was predicated on the notion that the Senate would remain in Republican hands.
The bear steepening impulse in Treasurys that manifested so dramatically on Wednesday in the wake of the blue sweep in Georgia continued Thursday. Yields were cheaper out the curve by 4bps.
“The conspicuous absence of investors willing to buy at the highest yields seen since March represents more of a wrinkle than a warning as the repricing continues,” BMO’s Ian Lyngen and Ben Jeffery said Thursday afternoon, adding that “support for Treasurys, while sidelined, still remains and we’re reminded of the time-tested adage that there’s no such thing as a bad bond, just a bad price.”
FX was interesting. The dollar rose pretty sharply, following US yields higher and generally ignoring the insurrection (and undermining the assumption that larger deficits and more spending under Democrats is inherently dollar bearish).
Of course, the flashiest headlines from markets on Thursday revolved, fittingly, around Tesla and Bitcoin.
Elon Musk passed Jeff Bezos to become the world’s richest person, and Tesla, riding a 10-day win streak, matched Facebook’s market cap.
Speaking of “market cap” (and the scare quotes are there for a reason), the market value of cryptocurrencies managed to climb above $1 trillion Thursday.
Try to wrap your head around that — one trillion dollars worth of nothing.
As for Bitcoin, well, it hit $40,000.
One Bitcoin is now 20 times more valuable than an ounce of gold.
Now that’s an “insurrection.”
The country over the course of the eight years could be in for a blow-off top in all manner of domains.
How many stock investors do you think were part of the crowd creating havoc at the Capital Building on Wednesday??
I hear that animals sometimes respond to earthquakes just before we begin to sense the event, coal-mine canaries, as it were. I wonder if the silent rumbles they hear are like the creaks and groans we hear in the macro hull of this economic ship. The stretching of the hull’s crossmembers (ie debt), combined with the torsion on the hull’s spars (ie. flow balancing) with the pelting of wash on the deck (ie. consumer sentiment), an apt metaphor for market risk.
Nice metaphor.
I’d been starting to wonder if the Bitcoin rally, especially as it’s become de correlated from gold, was partly driven by stealth de-dollarization flows, or at least offshoring in preparation to divest of USD. The volatility makes it a terrible FX/transfer vehicle for many investors, but there’s a lot of dark money out there, and if I needed to launder my loot or extricate my sanctioned assets, I’d probably be thinking of doing that before Congress takes a closer look at financial regulations.
Just another creak of the timbers, perhaps.