CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Stocks rebound, but there’s no saving crypto as Bitcoin, Ethereum and Dogecoin bomb lower

July 20, 2021, 9:48 AM UTC

This is the web version of Bull Sheet, a no-nonsense daily newsletter on what’s happening in the markets. Sign up to get it delivered free to your inbox.

Good morning, Bull Sheeters.

The buyers are back. U.S. futures are recovering, following European stocks higher. With the exception of Asia, there’s a lot of green on the screens as investors buy on yesterday’s mighty dip.

There’s no such relief in crypto land, however. Bitcoin, Ethereum, Dogecoin… they’re all down. In fact, investors overnight wiped close to $100 billion off Bitcoin’s market cap as it sinks below $30K.

In today’s essay, we look at stodgy old bonds, and what they’re telling us about investor sentiment. Below that, I take you to a 4th Century party villa.

But first, let’s see what’s moving the markets.

Markets update


  • The major Asia indexes are extending yesterday’s losses with the Hang Seng down 0.8%.
  • Add Nippon Telegraph & Telephone, Fujitsu, and NEC to the list of Japanese corporate giants whose executives will pull out of the Olympic Games. It’s perhaps not surprising as the Summer Games will have no spectators. Still, it’s not a great look.
  • Meanwhile, tensions between Beijing and the West continue to worsen after the U.S., the EU and NATO all came out accusing China of being behind the Microsoft Exchange hack attack from earlier this year.


  • The European bourses were higher out of the gates with the Stoxx Europe 600 up 0.6% in early trading. The benchmark European index suffered its worst trading day of 2021 yesterday.
  • Yesterday was “Freedom Day” in England as the Boris Johnson government officially relaxed months-long COVID-19 lockdown measures. There wasn’t much rejoicing though as cases continue to spike, the U.S. just slapped a “do not travel” stamp on the whole of Britain, and the Delta variant, it turns out, has an unmistakable man problem in the U.K.
  • Shares in Volvo were down 3% in early trading as the truck-maker warned of supply disruptions thanks to—yes—chip shortages.


  • What’s this? U.S. futures are climbing this morning with tech leading the way. That’s after all three major exchanges had a rough Monday with the Dow falling the most since last October.
  • Shares in Apple were up 0.5% in pre-market trading after the tech giant reportedly decided to push back its return to the office start-date until October.
  • Amid yesterday’s carnage, Moderna was a standout. The biotech firm climbed a further 9.5% (it’s up again pre-market) as it’s poised to join the S&P 500 this week.


  • Gold is up, trading above $1,800/ounce.
  • The dollar continues to gain ground even with stocks heading higher.
  • The sell-off in crude on Monday was a whopper with WTI falling 7.5% on the session. Today, oil is recovering, but Brent trades below $70/barrel.
  • Bitcoin is trading below $30,000.


A real fix

The markets are rebounding this morning, but let’s go back to what we saw yesterday.

A lot of attention was paid to the plunge in stocks, but what we should have been focusing on is the fixed-income market. “We’ve always said that of all the indicators the bond market tends to get it right most often,” Brian Levitt, Global Market Strategist at Invesco, wrote in an investor note yesterday.

Safe-haven bonds rallied yesterday, pushing the yield on the 10-year Treasury note down by 11 basis points, a huge move for the fixed-income market. (A reminder: bond yields move inversely to price, so when investors pour into bonds, the yields fall, and vice versa.)

What’s so notable about yesterday’s move is that the markets are clearly telling us the new concern is over growth—that both economic growth and corporate profits have peaked. There’s a related growth fear, of course—that the Delta variant will run rampant among the unvaccinated and cause spikes in sickness, hospitalizations, deaths and, yes, force governments to adopt new lockdown measures. That would really squelch the recovery.

We should have seen days like yesterday coming. Growth concerns have been apparent for some time now. In BofA’s latest fund manager survey, for example, asset managers said they now see economic growth, and inflation, peaking, and beginning to flatten.

I know what you’re thinking. Weren’t the bond markets just telling us the real concern was inflation? Yes. And, as you recall, yields were climbing through much of Q2, amid a real bear market in bonds.

But now the opposite is happening.

“Inflation fears have turned to a growth scare as investors turn their attention to the rising cases of the coronavirus attributed to the Delta variant,” Levitt notes, adding that “a bull flattening of the yield curve (long-term rates decreasing more rapidly than short-term rates) has historically not been a great near-term environment for equities.”

For example, in 2010-11, during the European debt crisis, we saw a “bull flattening” episode in rates akin to what we’re experiencing today. Back then, the S&P 500 fell 15%, Levitt says. That was one of the worst episodes. Smaller shocks over the past decade have triggered smaller draw-backs in stocks.

One take-away: growth stocks tend to outperform value stocks in such an environment, he says.

He advises a few things: first, watch Delta closely. “The per capita level of new cases and hospitalizations is 3-4X higher in the quartile of least vaccinated states than in the quartile of most vaccinated states,” he details.

This fits with what public health experts have been saying. Last week, the Centers for Disease Control warned that what we’re seeing “is a pandemic of the unvaccinated.” 

Yesterday felt a bit like where we were six months ago when there was little visibility about the vaccine rollout campaign, and questions loomed whether we’d be able to beat back wave upon wave of COVID-19 infections.

Perhaps not surprisingly, bond yields on Monday retreated to the very levels we saw in January and February.


Not far from here is the splendid Villa Romana del Casale, a sprawling palazzo built around the fourth century in the hills outside the sleepy town of Piazza Armerina. There’s a bit of mystery about who commissioned the construction. The theory is it was the brainchild of a wealthy Roman senator who liked to throw extravagant parties, giving us an insight into how the ultra-wealthy and well-connected from that period lived.

The place is extraordinary as so much of its elaborate mosaics are still intact. If you like to geek out at the tile shop, this is the place for you.

There are banquet halls with scenes of elaborate hunts. There are thermal baths with various gods at your feet. There’s a room that celebrates female athletes. They’re dressed in sporty two-pieces, like the beach volleyball champions of their day.

There’s a grand entrance way with animal heads. Both the menacing bear and the mighty bull are featured equally prominently.

I took a photo of this one as inspiration for the Bull Sheet.

Original photo: Bernhard Warner

Bull Sheet needs a good logo, I’ve long been saying. Now, I’m starting to think Bull Sheet needs a party pad. With elaborate mosaics.


Have a nice day, everyone. I’ll see you here tomorrow… Until then, there’s more news below.

Bernhard Warner

As always, you can write to or reply to this email with suggestions and feedback.

Today's read

Buckle up. Yesterday's sell-off goes down as one of the worst of 2021. And some market pros think we're only at the beginning. "We are due for some volatility, especially considering the S&P 500 is up more than 90% from the March 2020 lows," LPL Chief Equity Strategist Jeff Buchbinder tells Fortune.

How to pick a stock. This morning I learned that 15% of today's stock traders first started investing in 2020. The Wall Street Journal has a great video explainer that takes you through the pros and cons of value (think financials), growth (tech) and highly speculative (meme) stocks. Complimenti!

Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.

Market candy

Quiz time

Blue chips bombed lower yesterday. Which sector saw the biggest sell-off on Monday?

  • A. Energy
  • B. Tech
  • C. Financials
  • D. Consumer Staples

The answer is A, energy. The S&P sector fell 3.6% on Monday. The OPEC+ deal can't explain the whole drop. Energy, one of the first-half's big winners, is down nearly 11% in the past month as the rotation trade unravels.

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.