Tuesday is set to be a tough time for tech stocks, after a sell-off greeted investors to start the week.
The Nasdaq Composite COMP,
– by 40% higher in the last 12 months – tumbled 2.5% on Monday over concerns that rising bond yields could make technology stocks look bigger. As so-called ‘risk-free’ returns rise, it is much more difficult to justify high-value equity valuations.
Tesla TSLA, the manufacturer of electric cars, is the leading technician lower on the front market.
by 6% lower after falling by about 8% on Monday. We call of the day comes from Saxo Bank’s head of equity strategy, Peter Garnry, who warned customers that Tesla is entangled in a ‘risk cluster’ involving bitcoin and Cathie Wood’s ARK Investment Management business.
Tesla announced a $ 1.5 billion bitcoin investment earlier this month. Along with the weakness of Tesla, bitcoin declined by 10% early Tuesday, some attributing to criticism from Finance Minister Janet Yellen (see below). The crypto decline will “obviously illustrate the volatility of earnings Elon Musk has delivered to Tesla,” Garnry said.
Read: Tesla bitcoin gambit has already earned $ 1 billion, more than 2020 profit from car sales, estimates analyst
Meanwhile, Tesla’s is also the largest position in all ARK Invest ETFs that the largest fund, the ARK Disruptive Innovation Fund ARKK, has added.
lost 6% yesterday. This is exactly the risk cluster we were concerned about and wrote about two weeks ago, ”Says the strategist.
Read: Shares are not in a bubble, but they are, according to fund manager Cathie Wood
In the Saxo remark that the deeply coveted shares of the extremely popular, actively managed fund have entered, Garnry emphasizes the concentration of ARK in biotechnology names which he believes could be risky if the market decides to reverse. And the Tesla shares represent 6.7% of total assets under management in ARK’s five actively managed ETFs, according to data that Saxo slashed two weeks ago.
‘What this means is that a correction in equities for whatever reason could be higher interest rates or long-term COVID-19 closures, could trigger the sale of biotechnological equities or Tesla equities and weaken performance. , which is the net outflow of AUM and then the feedback loop started, ”Garnry said at the time.
In turn, Wood, CEO of ARK Invest and manager of the popular ARK Innovation Exchange Traded Fund, said last week that she was amazed at how quickly companies were adopting bitcoin, and that her “confidence in Tesla had grown.”
The markets
Equity futures contract ES00,
YM00,
NQ00,
falling, led by technicians, with the European shares SXXP,
apart from some travel supplies. Asian markets had a mixed day 000300,
Oil prices CL00,
rising, while the noted return on the 10-year treasury note TMUBMUSD10Y,
traded at around 1.35%.
The graph
Finance Minister Yellen may have steamed some bitcoin BTCUSD,
after some concern about the crypto-currency in an interview with the New York Times’ Dealbook. Bitcoin was last 13% lower to $ 47,909, which took a bunch of other cryptocurrencies with it.
The buzz
All eyes on Federal Reserve Chairman Jerome Powell, who kicks off the two-day testimony on Capitol Hill. “With more than 10 million Americans still unemployed,” he said. “I’m sure Powell will go out of his way and go to bed at the same time because I’m afraid to think what a tapered tantrum of the 2020s will look like, ‘said Jeffrey Halley, senior market analyst at Asia Pacific. Oanda.
We also get the latest home building index from S&P CoreLogic Case-Shiller and the Federal Housing Financing Agency, along with an update on consumer confidence.
Shares of Home Improvement Dealer Home Depot HD,
declines despite positive results.
Shares of acquisition company Churchill Capital CCIV,
also known as a blankcheck company, sagging in the forex market. After weeks of rumors, Churchill finally announced an agreement to buy the electric vehicle company Lucid Motors.
In the mourning of 500,000 American lives lost to COVID-19, President Joe Biden maintained a moment of silence late Monday, urging the public to ‘hide’.
Social media group Facebook FB,
says it will restore links to news articles in Australia, five days after the proposed media law changes in the country.
Random reading
“I can express obscenities to people and they have no idea.” Redditors on pandemic positives.
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