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Megacap Highs, Japanese Bonds, Crypto Crash: Key Takeaways
As the trading week comes to a close, Yahoo Finance reporter Jared Blikre provides a breakdown of the most significant market trends of the dayincluding the continued rise in large-cap tech stocks, the Bank of Japan’s (BOJ) intervention in Japanese 10-year bond yields, and bitcoin (BTC-USD exchange rate) sharp decline.
For more in-depth insights and the latest market action, click Here to watch the full episode of Asking for a Trend.
This post was written by Angel Smith
Video Transcription
The S&P 500 NASDAQ Index closes at record highs, ending a holiday-shortened week.
Investors welcomed the idea that the June jobs report could push the Fed toward a rate cut.
Yahoo Finance’s Jared Blicker is here to provide more insights into the trading day.
I am Jared.
Well, thanks, Josh.
I think that when it comes to mega-capitalisms, you know, we talk about concentration, we can’t talk about it enough for a month.
So I say these are record mega caps.
We had four today, Christmas in July.
This is a reference to seasonality, this bullish seasonality that we’ve had.
So I’m not going to show any seasonality maps, but I want to show the mega caps and four of these four of the seven magnificent seven records that were released today, Microsoft Alphabet, Apple and Meta Amazon, which just missed them by less than a dollar in the videos read there.
But I think in a way it tells the whole story.
We have this strong seasonality and what do the markets have the tenacity to do to go higher?
And this is what we’re saying: It’s just Big Tech, Jared?
Is this all we have?
No, and there’s more.
Well, you know, I’ve noticed that software is catching up lately, so I like IGV as a software ETF that’s just below all-time highs.
We are seeing it spread to other sectors, but is software so different from technology, from the whole story of artificial intelligence?
Let me show you this is the NASDAQ 100 versus the Russell 2000.
This all dates back to the late 1980s.
Here is the .com bubble and what you will notice is that we are higher.
Therefore, small-cap stocks have an even lower valuation premium than large-cap stocks.
And I’m using the NASDAQ 100 in the Russell 2000 proxies, so that tech bubble that we had 24 years ago.
So something is a little different.
Okay, Jared bl point number two intervention is N in Japan?
Near.
I don’t hear that word very often.
Don’t you hear, you know what?
I like the intervention too.
You could just do a Portman toe with it.
I brought some charts and here we have the 10-year Japanese bond versus its target and its range.
So in purple we have the link, which goes back to 2016, 2017.
The story continues
And these blue dotted lines represent the Bank of Japan, that’s where they’re trying to contain it, as you’ll notice here, but they can’t actually do it.
They keep trying to keep him there, but then they are forced to capitulate.
And while they were playing this, while this was unfolding, the yen weakened, the yen remained the yen.
How do you explain this decline in the yen, which has weakened to levels not seen since 1986?
So this is the US dollar versus the yen.
And let me put a maximum graph.
So, as you can see, this all dates back to the late 1990s.
Um, here we are, we’re at the highest point we’ve ever seen in this entire chart.
Torsten Slack Apollo, Global Chief Economist.
He says the yen would be at 140.
It’s at 160 now, and it would be at 140 if the Bank of Japan wasn’t pulling all these levers.
So there’s a big, there’s a big dislocation in there.
And the concern is that this dislocation will occur and hit the market all at once.
Spread things out.
Overall it’s fine.
But sometimes, um, you run into some problems if everything comes out in the open once and for all, you know, we have to talk about cryptocurrencies, cryptocurrencies never sleep.
And we are faced with another thing, from 2 to 48 hours here without prices, but not in cryptocurrencies.
So I’ve been following this cryptocurrency crash which has been quite significant because Bitcoin itself has broken out of a trading range that has been going on for seven, several months.
Now I will publish our cryptocurrency heat map and voila.
So you will see Bitcoin in the red by three percent.
Yesterday we had a problem and we received this news on Monk Ox.
We also have Germany overall, with something like Ireland less, 190,000 Bitcoin.
So if you multiply that price by 190,000, you get 10 billion, something like that.
This is a potential maximum amount of sales that will hit the market, but that doesn’t mean it will all happen at once.
But I think it’s instructive that we’re looking at this interval.
So Bitcoin is somewhat notorious for false failures.
If we are back above 60,000 by Monday, I would say it is another case, but that is probably not my base case.
So I think we are going to be in for a bit of a longer downturn for cryptocurrencies in general.
There are all the right levels to look at.
Thanks, Jared.
Thank you.
Appreciate it.