U.S. Treasury to Spare Crypto Miners and Stakers

MARKET MOVERS

• Apple boosts retail worker pay to cope with a tighter labor market. The company announced the pay increases during store briefings and individual meetings with employees. The increases are catered at least in part to employees who have worked at the company prior to the pandemic’s start in 2020 and are designed to better align veteran staff with more recent hires.

• Oil closes at a 7-year high as White House warns Russia invasion of Ukraine could be imminent. Crude oil extended strong gains, turning positive for the week after White House National Security Adviser Jake Sullivan told reporters that a Russian invasion of Ukraine could happen “any day now,’ including during the Winter Olympic Games underway in Beijing.

• Investors pull $15.8 billion from U.S. junk-bond funds to start the year. The rebuke of junk-bond funds and other risk assets comes as the Federal Reserve prepares to tackle inflation pegged at 40-year highs, first by raising short-term rates, and then by starting to shrink its near $9 trillion balance sheet. Investor sentiment further soured on Friday after White House National Security said the Ukraine invasion could begin soon. Read more here.

• Russia/Ukraine news sent the markets lower but Energy outperformed & Utilities had marginal gain; Tech, Cons Discr & Comm Serv led weakness; REITs lag most YTD, with Comm Serv & Cons Discr not far behind … Russell 1000 Growth & NASDAQ hit hardest today & not doing too well YTD.  Read more here.

• The Big Tech spread trade is moving from trade to investment. The reason for that is Facebook has become a sort of funding short for other investments. Meaning there is no bid to buy that from institutional owners. They'd rather on the margin sell it for additional cash and invest in other companies. Chamath Palihapitiya thinks that Microsoft and Google are the winners here. Source(58:58)

• Bitcoin appears to be decoupling from other risk assets, perhaps on the perception that it’s an effective hedge against still-accelerating inflation. Investors are starting to see the long-term case where Bitcoin could assume reserves currency status and maybe even replace the dollar in a generation. The fiat experimenting is failing and people are looking for an alternative. Source(24:35)

WHAT TO WATCH

• The U.S. Treasury Department plans to spare crypto miners and stakers from rules that would require digital-asset brokers to turn over information on their clients’ transactions to the IRS. The decision, which was included in a letter sent to a group of senators Friday, is a big initial win for the crypto industry. Treasury intends to issue proposed regulations in the future that reflect its thinking on the broker definition.  Read more here.

• 300 banks plan to roll out Bitcoin trading on mobile apps in the first half of 2022, according to a report this week by J.P. Morgan. Many of these banks are working with NYDIG, a Bitcoin financial services firm that has already made some inroads into the banking sector, including a sub-custody deal with U.S. Bank. Traders will be able to buy tokens such as Ethereum, Aave, Cardano, and Chainlink, in addition to Bitcoin. Read more here.

• Population growth in the South and Mountain West will drive new-home demand. Texas and Florida top the list and are the only two states to register a six-figure gain in population growth between 2020 and 2021, according to Frank Nothaft, the chief economist at CoreLogic. He predicts that between 2021 and 2030, the largest population growth will occur in the Mountain West and Southeast regions, plus Texas.

• An emerging Wall Street consensus now sees seven rate hikes coming down the pike, a process that could result in an inverted yield curve. And an inverted yield curve often means recession. Short rates go higher than long rates and the stresses have built up so much that there's an expectation that something is either broken in the economy or will be broken now. That's when the yield curve inverts, says Jim Bianco. Source(5:36)