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Could the protests boost rail or air transport stocks like Canadian Pacific (NYSE:CP), Genesee & Wyoming (NYSE:BIP), CSX (NASDAQ:CSX), Expeditors International (NASDAQ:EXPD) or UPS (UPS)?
Things could get worse: In a bulletin to local and state law enforcement agencies, the Department of Homeland Security said it has received reports that truckers are planning to "potentially block roads in major metropolitan cities." A convoy could begin in Southern California as early as this weekend, possibly disrupting traffic around the Super Bowl, and reach Washington in March in time for the State of the Union address. North of the border, demonstrations are going into their third week in Ottawa, where truckers have clogged up traffic and paralyzed the Canadian capital. 
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Things could get worse: In a bulletin to local and state law enforcement agencies, the Department of Homeland Security said it has received reports that truckers are planning to "potentially block roads in major metropolitan cities." A convoy could begin in Southern California as early as this weekend, possibly disrupting traffic around the Super Bowl, and reach Washington in March in time for the State of the Union address. North of the border, demonstrations are going into their third week in Ottawa, where truckers have clogged up traffic and paralyzed the Canadian capital.
Trending
Bonds on Thursday got battered by another jump in inflation, which sped up to 7.5% in January to mark a fresh four-decade record, or the highest pace seen since the early 1980s. That led the benchmark 10-year Treasury yield to cross the 2% level, ending the session 6 bps higher, while the two-year yield jumped the most since 2009. While yields are still low by historical standards, the speed of the recent Treasury movement is highlighting a meaningful shift for borrowing costs across the economy, or an input that investors use to value stocks and other assets. It was only a month ago that the 10-year yield was hovering around 1.5%.
Bigger picture: For those doubting recent signals from the Fed, it's pretty clear that the hawkish monetary era has arrived. St. Louis Fed Chair James Bullard, a voter on the FOMC this year, said he now favors a half-point interest rate hike in March, the first increase of that magnitude since 2000. While Bullard is on the more hawkish side of the central bank, other policymakers have also expressed urgency about rate increases and reducing the size of the Fed's balance sheet, which could put further upward pressure on yields.
In fact, Fed-funds futures now point to a more than 70% chance the Fed will raise short-term rates from their current level (near zero) to at least 1.75% by the end of the year, according to data from CME Group. That was up from a 22% probability on Wednesday and 1% a month ago. Economists also keep lifting the pace of their forecasts, with Goldman Sachs (joining Bank of America) in raising rate hike expectations to seven times for 2022, up from five projected earlier.
Outlook: Equities, especially tech and growth stocks, came under pressure after the explosive inflation data, and many are warning that the recent volatility could rise across all asset classes in case of a policy mistake (acting too late, too strong, or not strong enough). However, should the rate hikes successfully put a lid on price pressures this year, early losses could be followed by strong gains for equities. In terms of the 10-year Treasury yield, the rate is likely to settle into a range between 2% and 2.5%, according to strategists at Morningstar and Neuberger Berman.
Bigger picture: For those doubting recent signals from the Fed, it's pretty clear that the hawkish monetary era has arrived. St. Louis Fed Chair James Bullard, a voter on the FOMC this year, said he now favors a half-point interest rate hike in March, the first increase of that magnitude since 2000. While Bullard is on the more hawkish side of the central bank, other policymakers have also expressed urgency about rate increases and reducing the size of the Fed's balance sheet, which could put further upward pressure on yields.
In fact, Fed-funds futures now point to a more than 70% chance the Fed will raise short-term rates from their current level (near zero) to at least 1.75% by the end of the year, according to data from CME Group. That was up from a 22% probability on Wednesday and 1% a month ago. Economists also keep lifting the pace of their forecasts, with Goldman Sachs (joining Bank of America) in raising rate hike expectations to seven times for 2022, up from five projected earlier.
Outlook: Equities, especially tech and growth stocks, came under pressure after the explosive inflation data, and many are warning that the recent volatility could rise across all asset classes in case of a policy mistake (acting too late, too strong, or not strong enough). However, should the rate hikes successfully put a lid on price pressures this year, early losses could be followed by strong gains for equities. In terms of the 10-year Treasury yield, the rate is likely to settle into a range between 2% and 2.5%, according to strategists at Morningstar and Neuberger Berman.
Events
With the ability to advertise on the largest stage in the world, Crypto companies are set to take a big part in Super Bowl LVI on Sunday. In recent times, watching commercials has turned into somewhat of a similar tradition as the game itself, with many firms shelling out up to $7M for a 30-second slot. Some are even calling it the "Crypto Bowl," a play on the "Dot-Com Bowl" in 2000, when early, speculative internet companies sought to gain mainstream acceptance (remember the Pets.com liquidation?).
Snapshot: New crypto brands like Coinbase (NASDAQ:COIN) and Crypto.com are not the only ones getting in on the action. Old timers, like Budweiser (NYSE:BUD), are also throwing their hat in the ring, running an online NFT contest during the big game. Others will make a point of exploring blockchain technologies, while an ad from crypto exchange FTX features a trading spoof on now-retired quarterback Tom Brady. "I've missed out on a lot, but I'm not going to miss out on this," reads another FTX commercial called "The Dust Bowl," which warns viewers to get into the sector while they still can.
Elsewhere, the U.S. this week seized about $3.6B in Bitcoin (BTC-USD) stolen during a 2016 hack of the Bitfinex currency exchange - the largest financial confiscation to date. Ilya Lichtenstein and his wife Heather Morgan were arrested for the alleged conspiracy, and were accused of conspiring to launder 119,754 Bitcoins (BTC-USD) that were stolen from the platform. Using fictitious identities, the couple deposited stolen funds into accounts at a number of virtual currency exchanges and darknet markets, and then withdrew the capital in a practice known as "chain-hopping."
What's the fair value of Bitcoin? Around $38,000, or 13% below the current trading price, according to JPMorgan analysts led by Nikolaos Panigirtzoglou. The estimate is based on Bitcoin (BTC-USD) being about four times as volatile as gold, though JPMorgan's long-term theoretical target - which would mirror the total amount of gold held privately for investment purposes - suggests the crypto could potentially reach $150,000. "The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption," the strategists added in the research note.
Snapshot: New crypto brands like Coinbase (NASDAQ:COIN) and Crypto.com are not the only ones getting in on the action. Old timers, like Budweiser (NYSE:BUD), are also throwing their hat in the ring, running an online NFT contest during the big game. Others will make a point of exploring blockchain technologies, while an ad from crypto exchange FTX features a trading spoof on now-retired quarterback Tom Brady. "I've missed out on a lot, but I'm not going to miss out on this," reads another FTX commercial called "The Dust Bowl," which warns viewers to get into the sector while they still can.
Elsewhere, the U.S. this week seized about $3.6B in Bitcoin (BTC-USD) stolen during a 2016 hack of the Bitfinex currency exchange - the largest financial confiscation to date. Ilya Lichtenstein and his wife Heather Morgan were arrested for the alleged conspiracy, and were accused of conspiring to launder 119,754 Bitcoins (BTC-USD) that were stolen from the platform. Using fictitious identities, the couple deposited stolen funds into accounts at a number of virtual currency exchanges and darknet markets, and then withdrew the capital in a practice known as "chain-hopping."
What's the fair value of Bitcoin? Around $38,000, or 13% below the current trading price, according to JPMorgan analysts led by Nikolaos Panigirtzoglou. The estimate is based on Bitcoin (BTC-USD) being about four times as volatile as gold, though JPMorgan's long-term theoretical target - which would mirror the total amount of gold held privately for investment purposes - suggests the crypto could potentially reach $150,000. "The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption," the strategists added in the research note.
U.S. Indices
Dow -1.% to 34,738. S&P 500 -1.8% to 4,419. Nasdaq -2.2% to 13,791. Russell 2000 +1.5% to 2,033. CBOE Volatility Index +17.8% to 27.36.
S&P 500 Sectors
Consumer Staples -0.6%. Utilities -2.3%. Financials +1.5%. Telecom -1.4%. Healthcare -0.1%. Industrials +0.8%. Information Technology +0.1%. Materials +2.7%. Energy -1.%. Consumer Discretionary +0.6%.
World Indices
London +1.9% to 7,661. France +0.9% to 7,012. Germany +2.2% to 15,425. Japan +0.9% to 27,696. China +3.% to 3,463. Hong Kong +1.4% to 24,907. India -0.8% to 58,153.
Commodities and Bonds
Crude Oil WTI +1.8% to $93.93/bbl. Gold +2.9% to $1,860.4/oz. Natural Gas -12.6% to 3.997. Ten-Year Bond Yield -11.1 bps to 1.918.
Forex and Cryptos
EUR/USD -0.86%. USD/JPY +0.17%. GBP/USD +0.27%. Bitcoin +1.7%. Litecoin +4.%. Ethereum -3.%. XRP +16.%.
Top S&P 500 Gainers
Newell Brands (NASDAQ:NWL) +14%. Freeport-McMoRan (NYSE:FCX) +11%. Royal Caribbean Group (NYSE:RCL) +11%. Tyson Foods (NYSE:TSN) +11%. Micron Technology (NASDAQ:MU) +11%.
Top S&P 500 Losers
Lumen Technologies (NYSE:LUMN) -19%. Zebra Technologies (NASDAQ:ZBRA) -12%. Under Armour (NYSE:UAA) -11%. PayPal Holdings (NASDAQ:PYPL) -9%. Advanced Micro Devices (NASDAQ:AMD) -8%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
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