Progressives hold out on infrastructure vote, more corporate earnings, and U.S.-China tensions rise again.
Not yet
Liberal Democratic lawmakers in the House are
holding out for more details on President Joe Biden’s economic plan before backing a vote on the infrastructure package already passed by the Senate. The clock is ticking. The
gubernatorial elections take place next Tuesday in some states while funding arrangements for a slew of federal highways will be phased out from this weekend. All that means House Speaker Nancy Pelosi is under pressure to get the
package passed in the coming days. Progressives’ call for an actual bill on the
now-$2 trillion plan means there is a risk that neither the stimulus package nor the infrastructure measure get passed by the end of this month.
Earnings
The generally positive market reaction to bank earnings came to a halt this morning with Deutsche Bank AG dropping more than 5% after reporting a drop in investment-banking revenue. Earnings from dealmaking also rose less than U.S. rivals. In results due later today, Ford Motor Co. and General Motors Co. will be watched for any more fallout from the shortage of semiconductor chips. At Boeing Co., the focus will be on the outlook for aircraft demand as the airline industry continues to recover from the pandemic.
Tensions
China condemned U.S. Secretary of State Antony Blinken’s call for greater participation by Taiwan in UN organizations, saying it violated the “one China” understanding between Beijing and Washington. China’s focus on military development is also causing increasing concern in the U.S., with the country’s top uniformed military officer saying the recent suspected test of a hypersonic weapon system is close to a Sputnik moment. Regulators in Washington, meanwhile, also remain concerned about Chinese technology in the U.S., shown by the cancelling of China Telecom (Americas) Corp.’s permission to operate in the country.
Markets slip
A mixed collection of earnings numbers and a drop in commodity prices have spurred a pause to the global equity rally. Overnight the MSCI Asia Pacific Index slid 0.5% while Japan’s Topix index closed 0.2% lower. In Europe, the Stoxx 600 Index was down 0.4% at 5:50 a.m. as a cut to Germany’s growth forecast added to pressure. S&P 500 futures pointed to a small move into the red at the open, the 10-year Treasury yield was at 1.592%, oil was close to $83.50 a barrel and gold slipped.
Coming up...
U.S. Wholesale Inventories and Durable Goods Orders for September are at 8:30 a.m. Governor Tiff Macklem is expected to announce the reduction weekly government bond purchases when the Bank of Canada reports its latest decision at 10:00 a.m. Crude oil inventory numbers are at 10:30 a.m. Brazil’s central bank announces its latest decision at 5:30 p.m., with some analysts looking for a dramatic hike in rates. U.K. Chancellor of the Exchequer Rishi Sunak delivers his annual budget.
What we've been reading
Here's what caught our eye over the last 24 hours.
And finally, here’s what Joe’s interested in this morning
Tesla recently passed a $1 trillion market cap and Elon Musk is worth nearly $300 billion. And yet he still found the time to tweet about Dogecoin. Something about the tweet felt super quaint. Dogecoin feels so... early 2021. Remember? It was briefly the #3 coin in the world. And Elon going on SNL was supposed to be this big moment for it. And the *very first* question on Coinbase's first-ever earnings call after it went public was about when it would start listing Doge. That feels so long ago.
Now every day I wake up and there's a new story about a different puppy-inspired coin: Shiba Inu (SHIB), which is breaking new records all the time, and now has a market cap of around $20 billion.
It's tempting to just call SHIB just a Dogecoin ripoff, but it's got two huge advantage over its Trad-Crypto uncle.
1. SHIB is built on Ethereum, and so has more advanced smart-contracting capabilities. Yes, I just wrote the words "more advanced smart contracting capabilities" to refer to a doggy coin. But it's true. You can check out Shibaswap, a Uniswap-like decentralized exchange for the SHIB community. It's got NFTs, liquidity mining. All of it. Meanwhile Dogecoin doesn't have any of this right now. It's like Bitcoin. Dogecoin just sits there, and billionaires like Elon tweet about a theoretical roadmap. And Mark Cuban is into it. And very serious Wall Street analysts ask questions about it on conference calls.
2. More importantly though, SHIB is a lot cheaper. I don't mean cheaper in terms of how we traditionally think of the concept of cheapness in finance (PE ratios, Price-to-Book, and things like that), but rather one SHIB is nominally way less expensive than one Doge. One Doge these days costs $0.23. One SHIB costs $0.00005111. Eric Spiegelman, a podcasting executive in Los Angeles, told me that he owns 120 million SHIB tokens. 120 million! Of course that's just a little over $6000.
Meanwhile buying 120 million Doge would be prohibitively expensive for all but the super-rich. Spiegelman also told me he owns 400 billion (yes, billion) of yet another -- smaller, less liquid -- dog coin. But I'm not going to put that ticker on here, cause it's so small. Anyway, there was a point where you could have fun buying tons of Dogecoin and feel token rich, but it's just gotten way too expensive for that. Spiegelman added that he "read the SHIB white paper and I'm not sure I understood a single word."
So SHIB has advanced smart contracting, NFTs, a decentralized exchange, and it's orders of magnitude "cheaper" to buy. You might still say it's a total joke, and that there are more serious crypto projects that should be getting attention. And maybe that's true. But as the longtime holder who goes by Shib Barbie on Twitter told me: "People are always going to hate things that aren't what they view as serious. Take the MCU (Marvel Cinematic Universe) for example. There are still people who don't consider them seriously films, despite making obscene profits and getting rave reviews." Can't argue with that. She also engages in SHIB-staking and other activities on Shibaswap, and is a general fan of the project's roadmap.
Anyway, get your popcorn. According to Coinmarketcap, Doge is the 10th biggest coin and Shib is number 11. The real "flippening" could occur any day now. Expect all out chaos in the memecoin community if it happens.
Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart
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