You are currently viewing Market Snapshot May 18, 2021

Market Snapshot May 18, 2021

city skyline

Good Tuesday,


Today’s only notable economic release is helping the bond market get off to a stronger start today.  New Residential Construction, came out weaker than expected with Housing starts at 1.569m versus a median forecast of 1.710m.  Labor and materials issues are implied by the fact that building permits were much closer to consensus (1.76 vs 1.77).


With that, bonds were willing to add a bit more buying to modest overnight strength, but unless 10-yr yields challenge 1.62% (currently at 1.65%), the trend remains sideways to slightly weaker.  On the other hand, if yields aren’t moving up and over 1.75%, the recently weaker trend exists inside a broadly sideways trend between 1.53 and 1.75. Mortgage bond price remains squeezed between the 25 and 50 day moving averages. Expect that squeeze to narrow until price is forced to make a decision as to which direction it pops. It is always tough to bet on the improvement and playing defense is a better plan. Tomorrow may have some volatility as markets will digest the FOMC minutes from the last meeting at 11am.


Interesting and somewhat funny piece from Bloomberg on Crypto…


Late last month, I wrote a piece about where the cryptocurrency world was headed. We’re living in the golden age of Ponzis, pump & dumps, and pyramid schemes.


There are a few things that make this moment in crypto unique. The key thing is the rise of so-called decentralized exchanges, where literally anyone can create a token and have it listed. In the past, for a token to list on a legit exchange, it had to demonstrate that it was a serious project. Or it had to pay a large fee to an exchange like Binance, in exchange for listing. No more. With decentralized exchanges where the trading happens right on a blockchain itself, there’s no gatekeepers. And in many cases, it doesn’t take much in the way of development chops to create a coin. (Just copy and paste the code from somewhere else and change a few things, like the name.)


Throw into the mix TikTok and other social media platforms where influencers can pump the coin, and you have a recipe for transparent games. Everybody knows it’s a joke, but nobody cares, because as long as they get into the joke early enough and sell before the peak, they’re happy. That’s the game.


Anyway, Dave Portnoy did a thing on Twitter yesterday where he announced his support for some sh**coin, and he picked one called SafeMoon, and then he said the magic words: “if it is a ponzi, get in on the ground floor.” As I said on April 28, the great thing about coins right now is “you can get in early on the next Bernie Madoff” and I thought maybe that was a little harsh. But he just went and said it!


Please remain safe and healthy, make today great!