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Happy BTD (buy the dip) Friday, Bull Sheeters.
Asian and European stocks are closing out the week with strong performances. U.S. futures, too, are all in the green.
Yesterday, the S&P 500 rallied to its best single-day performance since March 5, helped by strong earnings and solid labor market data. Today, Goldman Sachs and PNC Bank, among others, report.
Over in crypto land, Bitcoin looks set to top $60,000.
In today’s By the Numbers, we look at the crazy rally in oil, the price tag of achieving net zero on a global scale, and the down side of this Bitcoin rally. Spoiler: BTC 🚀is bad news for 🌎.
Let’s see what else is moving markets as we close out the trading week.
- The major Asian exchanges are all in the green to finish the week, with the Nikkei up 1.8%.
- Investors are cheering news that China’s banking regulators will ease mortgage-lending rules, a kind of vote of confidence for China’s housing market amid the Evergrande debacle.
- In chips news…Taiwan’s TSMC, the world’s largest contract semiconductor manufacturer, reported a gaudy beat yesterday and announced that it was increasing output with a new fab plant in Japan. That helped send global tech stocks higher on Thursday.
- The European bourses had a decently strong open with the Stoxx Europe 600 up 0.4% in early trading. Retail, banks and energy stocks were leading the way at the open.
- Car sales in Europe have completely stalled. European automakers reported their worst September sales figures since 1995 as the chips crisis saps supply. Even with that, Europe’s auto stocks were pulling out gains this morning.
- Beginning today, all workers in Italy will have to present a valid COVID-19 Green Pass to get into a workplace—or be sent home without pay. The new mandate, along with France’s, are seen as the toughest in the world. The public is more or less fine with the new rules, but employers are fretting just how disruptive they might be.
- U.S. futures are trading higher this morning. After yesterday’s rally, all three major averages are higher for the week.
- After last Friday’s dud of a jobs report, the markets got a welcome update with better-than-expected jobless claims yesterday: a pandemic low of 293,000.
- There were a bevy of beats yesterday from the likes of Bank of America, Morgan Stanley and Citigroup, lifting bank stocks. These names are so closely watched for what they tell us about the American consumer. And so far in Q3, we’re seeing results that show things are pretty stable—no notable surges in spending and lending, but also no sign things are getting any worse.
- Gold is falling, trading below $1,790.
- The dollar is down a tick.
- Crude is gaining with Brent trading around $85/barrel.
- The BTC bulls are out in force today, too. Bitcoin came within 39 bucks of $60K overnight. As I type, it sits around $59,300.
By the numbers
It seems every Friday I have an item on crude. This morning is no different. Brent, the global benchmark, just topped $85 per barrel, a three-year high. It’s a cinch to score an eighth straight week of gains as the global energy crunch worsens. Brent has now climbed more than 30% during this stretch, and oil analysts see plenty of gains ahead—that is, unless the big producers intervene to boost supply. As I point out here frequently, energy is the top-performing sector on the S&P 500, up 51% YTD. That’s the good news. The bad: the cost can be seen throughout the economy. Higher energy prices, of course, are pushing up inflation, and that’s forcing the Fed to rethink whether these price-rises we’re all seeing truly are transitory.
You’re going to hear a lot more about the economics of climate change as we get close to the COP26 summit in Scotland. To prep us, BofA Securities has an excellent report on what it will cost to tackle this problem. Here are a few data points that struck me. To reach net-zero on a global scale the cost will be staggering. How long will it take? A good 30 years. How much will it cost? $5 trillion per annum. That then comes to a price tag of $150 trillion, which is, according to BofA, 2X global GDP. “At an estimated $150 trillion over 30 years, boosting funding sources to $5 trillion a year is equivalent to the entire U.S. tax base, or 3x the COVID-19 stimulus this decade,” BofA Securities strategist Haim Israel writes. “But it can be done, with technology, economy, markets and ESG joining forces.” Actually, it has to be done. Why is that? Because the cost of inaction is far higher. BofA calculated the stick-your-head-in-the-sand approach will shave 3% annually off global GDP annually by 2030. And it doesn’t end there. The annual cost will hit $69 trillion by 2100, “and circa 5% of global equity stock market value ($2.3tn) [will be] wiped out permanently by climate policy re-pricing, with a potentially extreme hit to corporate earnings for certain sectors,” they write. I’ll take option A.
Sticking with save-the-planet stuff, there’s of course a crypto angle. “A single Bitcoin purchased for ~$50,000,” BofA Securities calculates, “has a carbon footprint of 270 tons.” That’s equivalent to the emissions spewed each year by 60 automobiles that run on internal combustion engines. Bitcoin holders, beware. Climate activists may be singling you out as well.
Here’s a sweet little verse for your Friday morning.
I came across this yesterday.
When the twins were in fourth grade their homework each week was to memorize a new poem. That meant either my wife or I had to play memory coach. I got the ones in English. She took the poems in Italian.
This little gem comes from the brilliant mind of—yep, Robert Louis Stevenson. I’m sure Bull Sheet readers know it well from their grade-school days.
Have a lovely weekend, even if it means singing in the rain. But first, there’s more news below.
As always, you can write to firstname.lastname@example.org or reply to this email with suggestions and feedback.
Crypto, options, margin, REITs: How to tackle the market’s most complex areas—Fortune
Young climate activist confronts Shell CEO at pre-COP26 conference—Fortune
No jab, no job: Europe’s workers face tough measures as politicians lay down the law—Fortune
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Quote of the day
We’re about to witness the revenge of the dogs.
Value-stock devotees, here's some good news: these "unloved, unsexy"—as Fortune's Shawn Tully calls them—stocks are poised to make a killing over the next decade. He bases much of that conclusion on a new paper from the investment strategists at Research Affiliates which finds a bunch of overlooked gems among the ranks of strong-dividend, stable-growth companies. It's part of Fortune's Quarterly Investment Guide that we published yesterday for our subscribers.
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