[ad_1]
Tuesday is shaping up to be tough for tech stocks, after a sell off that welcomed investors to start the week.
The Nasdaq Composite COMP,
– up 40% in the past 12 months – fell 2.5% on Monday amid concerns that rising bond yields could make these tech stocks expensive. When so-called “risk-free” returns rise, it is all the more difficult to justify valuations of stocks that appear high.
Electric car maker Tesla TSLA is the technology leader at the bottom of pre-market,
down 6% after falling around 8% on Monday. Our call of the day comes from Saxo Bank’s head of equity strategy Peter Garnry, who has warned clients that Tesla is entangled in a “risk pool” that involves Bitcoin and Cathie Wood’s investment management firm ARK.
Tesla announced a $ 1.5 billion bitcoin investment earlier this month. Along with Tesla’s weakness, bitcoin fell 10% early on Tuesday, which some attributed to criticism from Treasury Secretary Janet Yellen (see below). This crypto drop “will obviously illustrate the volatility in earnings that Elon Musk delivered to Tesla,” Garnry said.
Read: Tesla’s Bitcoin gambit has already made $ 1 billion, more than 2020 profit from car sales, analyst says
Meanwhile, Tesla “is also the most important position among all ARK Invest ETFs, which has increased pressure on its largest fund, the ARK Disruptive Innovation Fund ARKK,
losing 6% yesterday. This is exactly the group of risks that concerns us and written about two weeks agoSaid the strategist.
Read: Stocks aren’t in a bubble, but here’s what, according to fund manager Cathie Wood
In Saxo’s memo that dived deep into the fund’s hugely popular and actively managed holdings, Garnry pointed to ARK’s concentration in biotech names which he said could be risky if the market decides to reverse. And Tesla shares represent 6.7% of total assets under management in ARK’s five actively managed ETFs, according to data Saxo analyzed two weeks ago.
“What this means is that a correction in stocks for whatever reason, could be higher interest rates or extended lockdowns from COVID-19, could trigger sales on either biotech stocks either on Tesla shares and cause performance to deteriorate, which could lead to a net AUM exit, and then the feedback loop began, ”Garnry said at the time.
For her part, Wood, managing director of ARK Invest and manager of popular exchange-traded fund ARK Innovation, said last week that she was surprised at how quickly companies are embracing bitcoin and that her “confidence in Tesla increased”.
The steps
ES00 futures contracts,
YM00,
NQ00,
are down, led by technology, with SXXP European equities,
sinking out of some travel stocks. Asian markets had a mixed day 000300,
CL00 oil price,
are rising, while the closely watched yield on the 10-year TMUBMUSD10Y T-bill,
is trading at around 1.35%.
Table
Treasury Secretary Yellen may have blurted out bitcoin BTCUSD,
after reiterating some concerns about cryptocurrency in an interview with the New York Times Dealbook. Bitcoin was the last one down 13% to $ 47,909, taking a bunch of other cryptos with it.
The buzz
All eyes are on Federal Reserve Chairman Jerome Powell, who is throwing a two-day testimony on Capitol Hill. With more than 10 million Americans still out of work, “Mr. Powell will go out of his way, I’m sure, to put the tapering to bed and rightly so, because I dread thinking what a 2020s taper-tantrum will look like, ”said Jeffrey Halley, senior market analyst, Asia-Pacific, Oanda.
We will also receive the latest housing construction indices from S&P CoreLogic Case-Shiller and the Federal Housing Finance Agency, as well as an update on consumer confidence.
Shares of home improvement retailer Home Depot HD,
fall despite optimistic results.
Shares of the special purpose acquisition company Churchill Capital CCIV,
also known as the blank check company, sink into pre-market. After weeks of rumors, Churchill has finally announced a deal to buy electric vehicle company Lucid Motors.
Mourning over 500,000 American lives lost to COVID-19, President Joe Biden observed a moment of silence on Monday evening and urged the public to “hide.”
Facebook FB Social Media Group,
said he will restore links to news articles in Australia, five days after the proposed change to media law in the country.
Shuffle playback
“I can say obscenities to people and they have no idea.” Redditors on positive pandemics.
Need to Know starts early and is updated until the opening bell, but register here to have it delivered to your inbox. The emailed version will be sent out at approximately 7:30 a.m. Eastern Time.
Want more for the day ahead? Sign up for Barron’s Daily, a morning investor briefing featuring exclusive commentary from the editors at Barron’s and MarketWatch.
[ad_2]
Source link