June 21, 2021

The great crypto sell-off continues as market jitters go global


U.S. futures are nudging higher, but crypto is tanking.

And the market’s uneasy
Real rates are jumpin’
And the dollar is high
Oh, your meme-stonk nephew’s rich
Crypto just ain’t that good lookin’
So hush
Little baby
Don’t you cry

I prefer the Coltrane version, personally.

Good morning, and happy summer solstice!

From Tokyo to Toronto, it’s shaping up to be another volatile day. U.S. futures are off their lows, and have even turned positive at times. Meanwhile, Asia is getting pummeled, and Europe, after a rough start, is following U.S. futures higher.

There are no such glimmers of hope in crypto land. Bitcoin is down a further 7% this morning after sharp sell-offs in recent days.

In today’s essay, I take a closer look at the winners and losers from last week’s surprise FOMC meeting. Spoiler: there aren’t many winners.

I’m plugging in the winners/losers chart that’s to accompany the essay here as formatting issues won’t let me do so below.

Ok… moving on… let’s check in on the rest of the markets action.

Markets update


  • It’s a brutal day in Asia with the Nikkei down nearly 3.3% in afternoon trade, off steeper losses.
  • The reverberations from last week’s bombshell FOMC meeting are hitting overseas markets hard this morning. “Concerns over rate normalization continues to keep a lid on risk sentiment,” analysts at Singapore’s OCBC Bank wrote in an investor note picked up by CNBC.
  • Nuclear talks with Iran broke down over the weekend with no deal in sight. That, and the election of hardline cleric Ebrahim Raisi, is pushing oil up this morning.


  • The European bourses were a blur of red out of the gates with the Stoxx Europe 600 down 0.65% in the opening minutes, before gaining. Banks, energy and basic resources are being hit particularly hard.
  • Thrifty Brits. A new YouGov study of 17 countries shows Britons squirreled away more than anyone else during the lockdown, but their sense of optimism about the reopening (and presumed willingness to go out and spend) puts them middle of the pack.
  • As of this morning, the whole of Italy minus tiny Valle d’Aosta (where Hannibal crossed the Alps on giant pachyderms back in the day) is considered zona bianca, which means more of the economy is open for business in time for the summer tourism season. Alas, an investor note this morning from Berenberg bank forecasts a somewhat disappointing tourism boost to the Mediterranean economies.


  • U.S. futures are rebounding this morning. That’s after all three major exchanges finished the week in the red.
  • Shares in American Airlines were up 0.3% in pre-market after the carrier revealed its cutting about 950 flights from its summer schedule, a sign of softness in the travel market.
  • There’s not much on the calendar this week save public appearances by Fed officials who may give more insight into where they stand on future rate hikes. Also, the Fed releases bank stress test results on Thursday, which could give financials a nudge.


  • Gold is up a touch, trading around $1,770/ounce.
  • The red-hot dollar is taking a breather this morning.
  • Crude is rebounding again, with Brent around $74/barrel.
  • Bitcoin had a rough weekend. It’s trading below $33,000 this morning.

Taking stock

We saw a huge reversal last week. The hot assets—energy, small-cap and financial stocks; commodities and crypto—all collapsed. Meanwhile, one of the biggest dogs of the past quarter—the buck—had an astounding turnaround, truly living up to its billing as the almighty dollar.

What happened? Wednesday’s FOMC meeting happened. The Fed’s more hawkish stance on rates is sending jitters across the markets that not only the easy-money days are coming to an end, but that peak growth is just about over.

For the week, the Dow fell 3.5%, its worst week since October as investors sold off stocks across just about every sector, erasing some $2.3 trillion in market cap off global equities.

As the chart up above shows, one of the most surprising developments is the collapse of the value-stock-heavy reflation trade.

Financial stocks were absolutely crushed last week. You can see the pain in the chart above, as represented by the SPDR bank ETF (ticker: KBE). You’d think banks would be sitting pretty with real rates rising, but what’s pounding them is the flattening 5s/30s yield curve, a theme to watch in the coming days. Translation: investors are more bearish on near-term debt, which throws into question how lenders will grow in a higher-rates environment.

The biggest loser of all was crypto.

Bitcoin has fallen further since I put this chart together over the weekend. It’s hard to know what exactly drives moves in this volatile asset (particularly on weekends), but it would stand to reason that investors are selling out of crypto to cover losing bets elsewhere. In any event, crypto is not looking like that wondrous hedge against inflation that bulls maintain.

The safe-haven dollar, meanwhile, is the big winner in all this markets tumult. Some analysts say long-dollar could be the big “pain trade” of the summer. Reminder: a strong dollar hits multinationals and dollar-denominated commodities particularly hard.

That said, it would be wise to watch the dollar’s moves, too.

Let me leave you on a positive note. In an investor note this morning, Goldman Sachs points to a few bright spots on the horizon. Firstly, there’s a record $5.5 trillion in cash sitting on the sidelines. And, corporate buybacks are expected to take off in the second half of the year. “We maintain our full-year forecast of $300 billion of net equity demand by corporations through year-end, representing the largest source of net US equity demand for the remainder of 2021,” Goldman analysts write.

In other words, buckle up.


Today’s Bull Sheet comes to you from Italy’s Adriatic coast, the land of Fellini, la piadina and all manner of fried goodness that comes from the sea.

This time of year it’s also home to the Italian junior gymnastics national finals, which is why I’m here. I drove the proverbial team bus over the mountains this weekend to a beachside hotel in Rimini. The Ministry of Gymnastics secured us the lodging, a 40€-a-head hotel (breakfast and dinner included) that sits at the intersection of the late 1970s and early ‘80s, replete with a rotary phone bolted to the wall which the kids declared the coolest piece of technology they’d ever seen. 

Che fico! Si gira la rotella, un numero alla volta!, they exclaimed, which roughly translates to, yep, you spin the little wheel to dial a single number.

I’m impressed. Your Italian is improving, dear reader!

Up the road from here is Ravenna. (Incidentally, you must pass the Rubicon to get there). As any classics majors will no doubt recall, Ravenna was the Roman empire’s second city, a Byzantine gem on the Adriatic.

After Rome got the sack in the fifth century, the capital city was in serious decline (some would say it still is). The Western flank of the empire was in turmoil. Rome and its traditional trading partners across Europe were hurting. The big growth was in the East, towards Constaninople. The money managers of the day would have pointed to the ancient map, and indicated, behold, emerging markets

Back then, Rome had a problem. It was on the wrong side, geographically, of all that markets action. Conversely, Ravenna, with its deep port, was like a growth stock, a strategic outpost that became the new center of commerce, and with it, the center of influence for centuries. And so was born the new capital of the Western Roman empire. Later, it would become the hub for the Eastern Roman Empire, one of the great spin-offs in the history of trade and empire-building. 

Ravenna may have been established by emperor decree, but its heyday was bankrolled by traders and financiers. With their growing wealth, they invested in the construction of a city today famous the world over for its mosaic arts, earning it a top spot on the Unesco World Heritage list. Near the spectacular cathedral of San Vitale, the streets are named for the city’s early benefactors. One banker, Giuliano Argentario, is said to have kicked in the funding for several non-fungible wonders.

There’s another thing scholars are quick to recall about the mighty rise of Ravenna. It became known across the empire as a place of supreme tolerance. The ruling parties welcomed all faiths, races and languages. There were lively Greek, Jewish and African communities living alongside the locals. Together, they added to the city’s splendor, wealth and influence in an incredibly volatile period.

Ravenna was an early example of what social scientists today call the power of diversity and multiculturalism in building an economic powerhouse.

Ah, it’s good to be out again—to rediscover these things.

ARK losing its spark? Cathie Wood’s ARK Innovation ETF far outperformed the markets last week, but not everyone’s impressed. CNBC’s Jim Cramer thinks the “ARK Invest phenomenon” is running out of steam, noting that she no longer has the buying power to make these high-growth stocks “pop.” Certainly, her conviction in Bitcoin hasn’t borne much fruit recently.

Crude awakening. We haven’t seen $100 oil since 2014, but suddenly über oil bulls believe we’re heading back to that reality. A reminder: that would be really bad news for motorists and airlines, to name a few. Fortune‘s Katherine Dunn examines the likeliness of oil climbing to those heights, and what impact strong energy prices would have on the economic recovery and on renewables.


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