Feb. 15 Markets Report: Inflation Pops, Markets Drop

U.S. inflation hit a 40-year high, as stocks decline and bond yields rise. The DoJ flexed their cyber muscles by solving a 6-year old crypto cold case. This weekend we saw the most expensive CryptoPunk sold to date while large companies continue to rush into NFTs and the metaverse. And will oil prices reach a 8-year high amid Russia-Ukraine tensions? Check out the details and get updates on more of your favorite asset classes below.

Over the past year, consumer prices have been soaring mostly due to supply chain bottlenecks, labor shortages and monetary stimulus. Investors were on the edge of their seats this past Thursday as the CPI (consumer price index) for January came in at a 40-year high of 7.5% — 0.3% higher than economists were expecting. 

This surprise jump in inflation overshadowed any positive news around wage growth and declining jobless claims. The S&P 500 dipped 1.8% while the tech-heavy Nasdaq Composite dropped 2.7%, with big cap stocks like Microsoft (MSFT) and Meta (FB) down 2.8% and 1.7%.

At the same time, the U.S. 10 Year Treasury Note broke above 2% — the highest it’s been since 2019. Analysts are now expecting up to 7 interest rate hikes from the Federal Reserve this year, which does not bode well for risk-on assets like stocks.

Meanwhile over in cryptoland: Just when you thought that hackers could get away with stealing millions, the DoJ announced that they had arrested Ilya Lichtenstein and his wife Heather Morgan for laundering crypto linked to Bitfinex’s $71 million hack in 2016. 

So, how many millions did law enforcement recover? Well since crypto prices have skyrocketed in recent years, this seizure has become the DoJ’s largest ever at $4 billion worth of Bitcoin. 

It’s also worth mentioning that Deputy Attorney General Lisa O. Monaco said that “cryptocurrency is not a safe haven for criminals” (we’re looking at you Wormhole hacker).

Funny enough, law enforcement was only able to access the funds because the alleged criminals stored their private keys in the cloud. I know it’s still early, but I think the Biggest L of 2022 already belongs to this Bonnie and Clyde of crypto. Did I mention that the wife releases god-awful rap music under the name ‘Razzlekhan’? 

Speaking of rap, Drake just made a killing after betting over $1 million in Bitcoin on the Los Angeles Rams and his boy OBJ.

This past week also saw a tidal wave of institutional adoption. Global accounting firm KPMG announced that they have added Bitcoin and Ethereum to their corporate balance sheet. Wells Fargo, the fourth largest bank in the U.S., published a report that embraced cryptocurrency—specifically Bitcoin—as an investment.

Russia’s government announced that it would begin to regulate crypto as foreign currencies starting this month. And finally, Apple unveiled their new Tap to Pay feature that’ll support crypto payments, which is expected to go live sometime this year.

On the consumer side, Super Bowl LVI (also known as “Crypto Bowl”) was flooded with ads from FTX, Coinbase, eToro and Crypto.com featuring celebrities like Lebron James and Larry David. Coinbase, in particular, experienced such a heavy inflow of traffic that its site briefly crashed. Here’s to more crypto adoption in 2022.

CryptoPunks is one of the O.G. NFT projects, with over  $2.4 billion in volume to date. So most of us don’t bat an eye when hearing that a CryptoPunk sold for a few million dollars. But this past Saturday Deepak Thapliyal, CEO of blockchain company Chain, bought CryptoPunk #5822 for a whopping $23.7 million (8,000 ETH). This sale broke the previous record held by CryptoPunk #7523, which sold for $11.8 million in 2021.

In other news, YouTube CEO Susan Wojcicki mentioned that they were considering introducing NFTs to help creators with crowdfunding and revenue sharing among community members. But YouTube isn’t the only one looking to get in on the action. McDonalds also recently filed trademarks for “Operating a virtual restaurant featuring actual and virtual goods,” and “operating a virtual restaurant online featuring home delivery.” among other metaverse shenanigans.

Don’t call it a comeback. In 2021, gold struggled to reach new all-time highs amid soaring stocks and cryptos, finishing the year at a low of $1,796 per ounce. But with risk-on assets selling off due to record high inflation rates, gold is positioning itself to become one of the best-performing assets of 2022. That is, unless the Fed’s aggressive interest rate hikes prompt investors to flee to bonds and other interest-yielding assets.

Energy was the best-performing stock market sector in 2021. Given today’s high demand coupled with low supply and rising inflation, are we destined to repeat history? Brent crude futures are already sitting at around $94. And with OPEC already struggling to ramp up production, analysts fear that prices could soar past $100 per barrel if Russia invades Ukraine. For context, the highest we’ve seen oil prices was in July 2008 — at which point a gallon of gasoline cost as much as $4.11. Yikes.

In anticipation of Super Bowl LVI, football cards are some of the biggest gainers this month. Of particular note are Matthew Stafford (Los Angeles Rams) and Joe Burrow (Cincinnati Bengals) rookies. There’s a 2009 Topps autographed Matthew Stafford rookie going for half a million dollars on eBay right now. And given the Rams victory on Sunday, it’s fair to assume that all his other rookies will start seeing upward price movement in the weeks to come.

As of writing this, there’s a 2000 Playoff Contenders Championship Ticket Tom Brady Rookie Autograph/100 BGS 8.5 card being auctioned for $1.7 million. If you’ve got that kind of money to blow, then hurry on over to PWCC marketplace before the sale ends in 4 days.

Another day, another unicorn.. literally. Last month 45 companies joined the Crunchbase Unicorn Board, bringing the total to 1,200 companies collectively valued at over $4 trillion. Before 2021, there were only half as many unicorns. This mind-boggling growth has prompted more investors to wonder whether this a bubble about to burst. We’ll just have to wait and see. But given the Nasdaq’s recent nosedive, I’m not expecting us to set a new record for most unicorns created this year. Don’t quote me on that.