The continued controversy over the U.S. economy, and the three companies and three colors that deal with bitcoin [김영필의 3분 월스트리트]

viewer

US retail sales for January, which came out on the 17th (local time), surged 5.3% from the previous month, revealing that the economy is recovering rapidly. In the United States, consumption accounts for about two-thirds of the economy. It means that retail sales, which had declined for three consecutive months, have turned to an increase.

In line with this, inflation continues to rise. Producer prices rose 1.3% last month, the highest since December 2009. For this reason, controversy continues on Wall Street as to whether the US economy overheats if an additional $1.9 trillion worth of stimulus is pushed out in this situation.

Of course, there will be no increase in the Federal Reserve’s base rate for the time being. However, as the current situation is important for judging the future economy and stock market, we will convey the thoughts of the market. We will also look at the analysis of the three companies dealing with Bitcoin, which has exceeded $52,000.

First of all, the main reason for the increase in retail sales in January was the $600 cash check. “It’s not difficult to find evidence that the stimulus has played a role in reversing the decline last winter,” said Robert Rosener, senior US economist Morgan Stanley, who referred to a $600 per person check paid earlier last month.

Actual consumption growth has been widespread. Electronic devices soared 14.7%, while households (12%), online shopping (11%), and restaurants and bars that were most affected by the novel coronavirus infection (Corona 19) also increased by 6.9%. Overall, the market predicted that retail sales in January would have increased by 1.2%, but it surpassed it by an increase of 5.3%.

Of course, it’s not what it used to be. Sales of restaurants and bars are down 16.6% compared to a year ago. Clothing and accessories are -11.1%, and appliances are -3.5%. It means there is still a long way to go. Nevertheless, the increase compared to the previous year is huge and encouraging.

viewer

The same goes for industrial production. In January, US industrial production increased 0.9% MoM, exceeding the market forecast of 0.5%. The job market is also improving. The number of new unemployment claims in the first week of February (the week ending on the 6th) was 793,000, which was considerably lower than expected (900,000). Taking this into account, it can be seen that a virtuous cycle is occurring in which production increases and the job market improves with increasing consumption. “Consumption is igniting all sectors,” explained James Knightley’s economist at ING Financial Markets.

As such, there are constant concerns that the passing of a $1.9 trillion stimulus package, including additional cash payments, will lead the US economy to overheating. Previously, former finance minister Larry Summers continued to point out. Earlier this year, he warned at the National Economic Association that last year’s cash payments raised disposable income to 110% compared to the first quarter of 2019, so that an additional $2,000 cash payment would be meaningless and lead to inflation. CNBC said, “Of course, there are many people who need money, but some pointed out by Summers.” “The debate continues over whether or not there are too many stimulus packages.”

As a result, the prices naturally rise. In January, US producer prices soared 1.3%, and service prices rose 1.3%, accounting for two-thirds of the increase in total producer prices. It is also a proof that the service field is reviving. In the market, there is an analysis that “inflation began to rise slowly during the production phase.”

However, there are still mixed views on whether inflation is at the base effect level or whether it actually leads to a significant inflation. Fed Chair Jerome Powell says that even if some inflation continues, it is temporary and limited. William Spricks, senior economist at AFL-CIO, said, “In December of last year and January of this year (individual) income will return and service consumption will increase, leading to higher prices.” I don’t think I will interpret it as coming.” In the United States, at least 20 million people are still receiving unemployment benefits, so there are many predictions that it will be difficult to see large inflation until the labor market recovers.

viewer

The Fed minutes released on this day are similar. The minutes suggested that “the economic situation is far from the Commission’s long-term objectives, and that the current stance should be maintained until it is achieved,” and that monetary policy will remain relaxed for some time.

In the real world, few people expect the Fed to raise its benchmark interest rates this year and by next year or so. What’s important is that inflation is coming, which means that the economy is improving rapidly and could be a sign of an outflow in the stock market. CNBC said, “The Fed will continue to keep interest rates low, and the market says there will be no rate hike this year. It is probably correct.” “What we need to pay attention to is the situation now. “The interest rate is rising.”

On this day, the 10-year Treasury bond yield once soared to 1.33% per year. Apart from not raising the benchmark interest rate, you should read the signals the market is making. If government bond yields continue to rise without the Fed’s disruptive action, this could indicate that the economy is booming and the end of easing measures is nearing.

Inflation has been talked about, but I will also look at bitcoin, which has been attracting attention as a means of hedge inflation for a while. On this day, Bitcoin exceeded 52,000 dollars. It is continuing a terrifying rise.

What’s interesting is that on this day, three major financial companies on Wall Street came up with different approaches to Bitcoin.

First of all, Black Rock, the world’s largest asset management company, revealed that it has begun to touch Bitcoin on this day. “We’re starting to dip our hands in Bitcoin,” said Rick Leader, Black Rock’s Chief Investment Officer for Bonds. “The volatility is very high, but people are looking for value here.” “People are looking for investments that take into account the fact that inflation is higher and debt is higher,” he added. “So we started working with bitcoin a bit.” The interest is spreading to the extent that even Black Rock has jumped in.

viewer

On the other hand, JPMorgan came up with a pessimistic outlook. JPMorgan said the current bitcoin rally is not sustainable and makes no sense. JPMorgan said, “Since the end of September last year, the market capitalization of bitcoin has increased by $700 billion, but the inflow from major institutions is only $11 billion.” “Inelastic bitcoin supply, increased individual investors, speculative transaction prices ( ) Cause”. JPMorgan’s judgment is that the current price is at an unsustainable level.

Anthony Skaramuchi, founder of Skybridge Capital, talked about something that might seem a bit wrong. “By the end of this year, the price of bitcoin will go up to $100,000,” he said. “We currently have over $500 million in bitcoin.” However, he said, “It is only a situation of inconsistency between supply and demand,” he said. “As there is volatility, individual investors should be careful.” As such, it was interpreted as saying that we do, but you (individual investors) do not. There was a reaction that seemed absurd to the actual comment.

Looking at the overall post-war context, it can be said that Bitcoin has been emphasizing that it is an expert’s domain, as Bitcoin has high volatility and prices are jumping due to supply and demand issues rather than fundamental growth potential. I wonder how long the price of bitcoin will rise.

viewer

/New York = Correspondent Kim Young-pil [email protected]

< 저작권자 ⓒ 서울경제, 무단 전재 및 재배포 금지 >