WEEKLY MARKET UPDATE 1/19/2024

For the first time since January 3, 2022, the S&P 500 closed at all-time highs as the week’s economic data was generally stronger than expected and boosted the soft economic landing narrative.  For example, despite energy prices falling last month, retail sales for December still beat expectations for the sixth consecutive month (per Bespoke).  Weekly jobless claims came in far lower than expected and were the lowest since September 2022.  Lastly, Friday’s consumer sentiment survey for January came in at its highest levels since July 2021 while inflation expectations fell to their lowest levels since 2020 (per FactSet).  Next week the S&P 500 earnings season picks up steam with roughly 15% of the index reporting.

SELL THE BITCOIN NEWS

On Thursday January 11th ten spot bitcoin exchange-traded funds (ETFs) began trading with huge fanfare.  Initially cryptocurrency enthusiasts cheered the move as regulators have long been reluctant to bless such crypto investment vehicles.  However, the ETF debut increasingly looks like a textbook “buy the rumor, sell the news” event.  For example, from the beginning of October through January 10th, when the U.S. Securities and Exchange Commission finally gave bitcoin ETFs the green light, bitcoin rose almost 70%, due in large part to anticipation of regulators eventually approving these funds (buy the rumor).  Since these ETFs starting trading, however, bitcoin has fallen over 10% in just over a week (sell the news).  Cryptocurrency investors now find themselves looking for the next catalyst and it will be very interesting to see if the debut of these ETFs marked the top for bitcoin’s near-term prospects.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder


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