European and US stock futures are trading unchanged today as traders still want to build on yesterday’s gains. February has been a good month for the European and US stock markets. The US stock indices have already recorded several record highs so far this month. The optimism in the market is very much driven by two main factors. Firstly, it is the ongoing support from the monetary and fiscal policies from lawmakers around the globe. Secondly, traders know that very decent progress has been made on the coronavirus vaccination front. In addition to this, we are also seeing good earnings numbers, which further fuels the optimism among investors. It does seem like the stars are getting aligned, and there are strong odds stacked in favour of another bull rally. In other words, we would need a major catalyst to shift the current market narrative among traders that could trigger a minor pullback-let alone a serious correction.
Lawmakers in Washington appear to be moving closer to achieving their task—another fat stimulus bill. Treasury Secretary, Janet Yellen, has already indicated that she completely supports this move. Yellen doesn’t see any reason why the US economy needs to suffer. It appears that for her, the stimulus bill is the medicine that the sick patient needs currently. Without this, the patient will be suffering from more pain, and the path of recovery could not only be a long one but arduous as well.
In terms of the economic docket, investors are going to be looking at the NFIB’s small business survey data along with JOLTS Jobs Opening numbers today. These economic numbers aren’t usually of significant importance, but since Covid, investors have started to pay close attention to these numbers because of the US’s higher unemployment rate. The forecast for the JOLTS Jobs Opening number is 6.42M, against the previous reading of 6.53M. As for the NFIB Small Business Index, the forecast is for 96.6, while the previous reading was at 95.9.
St Louis Fed President James Bullard is also scheduled to speak later today, and investors will be looking for one particular thing: are the Fed members on the same page in terms of their monetary policy stance? Any change of heart or alteration in their stance (towards the monetary policy) could certainly create enormous pain for the stock market.
Bitcoin Another All-Time High
The crypto digital king recorded another all-time high today. It seems like the bull rally is in full swing now, and nothing is going to stop the Bitcoin price from touching the $50K price level. There is no doubt that the rally in Bitcoin was very much driven by PayPal news. The platform allowed users to use Bitcoin. Tesla’s Bitcoin news has taken things to a new territory. This is because now we are thinking of supply shortage issues for Bitcoin because of massive demand. Why is that? Well, the answer is in the low-interest rate. Companies are holding big cash piles in their bank account, which is not earning them much at all. These cash rich companies do not know what they should do with their cash. Hence, a new trend could be emerging, which has been put in motion by Tesla.
It is true that Tesla’s investment in Bitcoin is tiny compared to its market cap or its balance sheet. But the important point to pay attention to here is if other cash rich companies like Apple, Microsoft, Facebook also begin to invest their cash in Bitcoin as an alternative investment. Even less than one percent of their cash in Bitcoin is going to be a huge amount. If this strategy becomes the main street, we could see some serious cash purchasing of Bitcoin, and that could knock the supply equation out of its place—after all, there is only a limited supply of Bitcoin.