Stocks shake shutdown, bond yield curve, crypto: Market Takeaways

00:03 Miles

All right, the three major indexes notching records amid AI buzz even as the US government shutdown drags on. Yahoo Finance’s Jared Blikre joins us now with the trading day takeaways. Jared.

00:10 Jared

Thank you Miles. We got to start with the shutdown which Wall Street is completely ignoring. Not a big surprise. Uh sometimes you see it hit the bond market, but we are talking about record highs. As I said at the close today, five in a row for the Dow, the Nasdaq, S&P 500. Not only that, there was a record high in the S&P 500 equal weight. So, it’s not just a story of concentration as we’ve been worried about for years. I mean, we see real things happening with some of the smaller guys.

00:46 Jared

And to that point, if I take a look at my leaders, my basket of ETFs that I kind of looked at, we’re going to talk about crypto in a minute here, but look at Arc Invest is number two, that’s disruption, solar, IPOs, uh, we got a couple chips in there, biotech, China, you put it all together and then meme stocks, those have been jumping too.

01:12 Jared

Miles, I brought you a present here.

01:13 Miles

Oh boy, here we go.

01:15 Jared

Here we go. Guess what? Tootsie Roll.

01:17 Miles

Oh, thank you.

01:18 Jared

That’s right. So, finally hit a record high.

01:21 Miles

Oh my goodness. Look at this chart.

01:23 Jared

That is a great chart. That I don’t even know if that shows you the um what happened over the pandemic uh because it was intraday. It literally spiked right up here.

01:23 Miles

Unbelievable.

01:37 Miles

Yeah, I kind of remember this. Yeah.

01:38 Jared

So, but that was intraday. So we got the first record high in about two and a half years for Tutsy Roll. I think that kind of speaks volumes about the rally that we’re seeing. Yeah.

01:50 Miles

Well, when you brought up the equal weighted, I of course thought of our old friend Josh Shafer, who is constantly banging the table on the equal weighted S&P. But, you know, we we sit here and it’s like, oh, Mag 7 this, Mag 7 that. But I think that that strength underneath the surface, and I know we call these memes, but Robin Hood, Coinbase, these are companies making money now. Like they’re in a different phase. Pate’s in the S&P 500. Like these are in a different phase of their corporate life. And while they do act like memes at times in the market, um this is, in a way, diversifying out of, well just buy Nvidia every day, which by the way is also trading at a record high too.

02:26 Jared

Yes, and the entire chip complex, Sox hitting a record high. So, yeah, you put it all together, very much risk on here. Yeah.

02:37 Miles

All right, uh you mentioned the bond market. Let’s talk a little bit more about the nitty-gritty there. Um and you know, we’ll talk the curve, which is always a, you know, you want to be in the know, folks, just say, oh, I’m looking at the curve. Yes.

02:51 Jared

All right, so yes, we’re going to talk about capping the curve. Now, as I said, bond yields were kind of low over the last two days, so not a big deal right now, but there are concerns that if the Fed lowers rates too much or too quickly, that’s going to stoke inflation and then the Fed will lose control of the long end because they don’t directly act on that. So, uh we uh we sat down with uh Joe Bruce Willis and he’s a chief economist at RSM and we talked about this about this with him specifically on stocks and translation. Episode is out today, so catch that and here’s what he had to say about it.

03:23 Joe

Now, here’s the problem. When Marin introduced the third mandate,

03:28 Joe

it spooked Wall Street. More uncertainty. because Marin’s pushing for excessive rate cuts. That would almost guarantee that the Fed loses control of the long end, 10 to 30. and Mr. Marin, if you’ve noticed, have softly walked away from that. They’ve back peddled. But, you know, Jared, you know, Ally, we’re going to be talking about MBS, QE, Operation Twist, and yield curve control, I think going forward. because the logic of economic populism is you want to goose the economy, no matter what, and you deal with those consequences down the road.

04:02 Jared

I love how he talked about QE, purchasing mortgage back securities, which is kind of part of QE, yield curve control. That’s where the Fed specifically operates on the long end. He also mentioned operation twist. So this is a potential for a future problem, not one that we’re dealing with right now, but I think it’s very important to think about. Mhm.

04:26 Miles

Yeah, um, and maybe someone in future press conferences will ask if Jay Powell will tolerate an inverted yield curve. See if we can bring that one back. Um, all right, let’s talk about the main event. Let’s talk about what’s going on in the crypto market. Bitcoin, 120,000 tonight.

04:36 Jared

Sounds great.

04:42 Jared

Yes, yes. So, we had a nice little shakeout. I think it was over the last weekend, and that was something that I was hoping to see. It didn’t quite go down as far as I thought it might. But uh let’s go over the last 10 days, because that’ll capture exactly what I’m trying to show here. So, we had this brief dip below 110,000, hit like 108 and change there, and then we just rallied over the last few days. And you don’t get the sense of it necessarily looking at these line charts. So I’ll give you a two-month candlestick chart, but you can really see all these green bars here. So, what I like about the current setup in Bitcoin is that uh and here’s another look. This is 6 months. Is that when we hit this high, we had a nice momentum. Yeah.

05:21 Jared

Then when we hit this high, which actually exceeded it, we did that on less momentum. That’s called divergence. And so a lot of people would expect it to go down, Bitcoin to go down. And that’s what happened. But as we are climbing back to these highs, we have a lot of momentum. So that keeps up, should be able to blast past those old highs. Another thing I like is that we have participation. It’s kind of like the breadth of the crypto market. So that’s what I’m looking at too. Ethereum, Ripple, Solana, all this stuff, even dogecoin up 5%. That’s breadth.

05:52 Miles

Yeah, let’s take a look at the ETH chart as well because this was um this was a big story, you know, I mean, we can see it here in that August period when we saw Bitcoin get back to those record levels. Um it was like, oh, finally, ETH is waking up, right? I haven’t seen these guys in forever. Um and now we’re talking about ETH, uh pretty darn close to a record high. I feel it was at 4,800 maybe back in 2022. Yeah.

06:15 Jared

When the shoeshine boy talks about gas fees, that’s when you know it’s time.

06:18 Miles

Well, and so, I I’m curious then, you mentioned like that overall thing, like, where you see ETH in in in the context of the overall crypto market?

06:26 Jared

I I think it blast past 5,000 by the end of the year.

06:29 Miles

All right, we’ll leave it there. Jared Blikre, thanks so much.

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