The buy-everything rally is back: Crypto, tech stocks and crude are all popping

December 7, 2021, 10:12 AM UTC

Good morning, Bull Sheeters.

From Tokyo to London, the markets are a lovely shade of green. Can New York join the club? It looks that way as U.S. futures surge for a second straight day. Even Nasdaq 100 futures are popping.

The risk-on rally extends across risk assets this morning. Crude and crypto are also climbing. Bitcoin cleared $50,000 enroute to a 10% gain. I guess the buy-the-dip crowd has come back.

In today’s essay, we look at the year-ahead, and examine a very bold call for tech stocks.

Before we get into that, let’s see what else is moving markets.

Oh, and a reader note: I will be off for the rest of the week. Rey Mashayekhi will take the keys in my place. As such, Bull Sheet will likely land in your inbox at a later hour.

Markets update


  • The Asian markets rebounded nicely with the Hang Seng leaping more than 2.7%, helped by tech stocks.
  • The big winner today was Alibaba, soaring more than 10% at one point, its best trading day in nearly five years. That’s after BABA tanked on Monday.
  • That surge was enough to lift by more than 4% the HSTech index, which tracks Hong Kong‘s 30 biggest listed technology firms. The tech-heavy index had plumbed all-time lows in recent days.


  • The European bourses rose out of the gates. The benchmark Stoxx Europe 600 was up 1.8% two hours into the trading day, with every single sector trading higher.
  • Shares in U.K. miner Rio Tinto gained 2.5% at the open as iron ore prices soared this morning. The reason: China is once again revving up its purchases of the base metal ahead of the Winter Olympics.


  • U.S. futures are on the rise again. That’s after the Dow jumped 650 points yesterday, a rally that erased all of last week’s losses.
  • Shares in Intel popped after hours—it’s up 8.3% in pre-market—after the chips-maker told investors it plans to spin off and take public its Mobileye self-driving car business next year.
  • The rosier outlook on Omicron hit the COVID vaccine makers hard yesterday. Moderna shares plunged 13.5% Monday. They’re off nearly 25% over the past week.


  • After an up-and-down Monday, gold is bouncing back. It trades above $1,780/ounce.
  • The dollar is flat.
  • Crude is adding to its impressive Monday. Brent trades above $74/barrel this morning.
  • Crypto saw a nice bump yesterday as dip-buyers returned. Bitcoin trades around $51,000. Ether is faring even better, up more than 10% in the past 24 hours to trade once again near $4,400.


Looking ahead to 2022

For investors, what’s worse than a mutant COVID variant like Omicron? Answer: a Fed policy that mutates from loose to tight.

That’s the take of Michael Wilson, equities strategist at Morgan Stanley. Wilson and his team see tapering as a bigger threat to equities than Omicron. He wrote that before the markets concluded largely the same thing yesterday: that Omicron won’t be enough to derail the global economy and, therefore, won’t sink the markets.

Spoiler: it’s way too early to call Omicron a pipsqueak public health risk.

But it’s not too early to look ahead to the Fed winding up its monthly bond purchases over the next six months and then pushing up interest rates.

With that in mind, Wilson’s colleague at Morgan Stanley, Lisa Shalett, sees a new cycle emerging in 2022, one brought on by “more balanced monetary and fiscal policies.” That’s code for a world with less Fed intervention and higher rates. She also sees 2022 as a world of strong real GDP growth—helped by strong to above-average corporate productivity—and above-average, but moderating, inflation. She also sees a tight labor market.

That sounds pretty benign, but it won’t be smooth sailing for all stocks, Shalett warns.

In fact, she has a pretty bold call. She sees economic conditions that merit a shift back to the familiar—that is, a shift from value stocks to growth stocks. And that’s not all. Here’s her full call, which is pretty unique:

“During 2022,” she writes, “we see a classic reflationary rebalancing in which higher nominal and real rates reflect higher average growth and inflation rates, yield curves steepen, profit margins get squeezed by rising costs and P/Es compress in rate-sensitive sectors.

“Look for the S&P 500 to be rangebound and volatile,” she continues, “and bond returns to be negative net of inflation. Consider rebalancing portfolios: US equities versus non-US; growth versus value; cyclicals versus defensives; megacap versus small- and mid-cap stocks; and active versus passive management.”

There are a lot of equity strategists and money managers saying the opposite—that rising interest rates are a reason make the transition from growth to value stocks. That kind of thinking was reinforced yesterday when bond yields climbed, taking bank stocks higher.

What Shalett is saying is that there are far more factors to consider in the year ahead that just inflation. And mutant COVID variants, I would add.


Following on yesterday’s wine-inspired Postscript, here’s a further update on what Italian seventh-graders (well, our two middle-school students) will be learning in technology class in the new year.

The scene: the kitchen table this weekend.

Me: How’s the wine-making progressing?

M.: Good. Do you know what we’re making next year?

Me: No. What?

M.: Beer.

Me: You’re going to make beer in technology class? I’m so jealous!

T.: And cheese!

Me: Beer, cheese and wine? Is the plan to open up a bar?

T.: No, but the parents are invited to school to taste what we’ve made.

Me: I like this technology teacher!


Bernhard Warner

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Today's reads

Investors are betting $27 billion that Web3 is the future of the internetFortune

Here are the cities around the world where the cost of buying an apartment has soared the highestFortune

Home price growth is finally decelerating—and it’s just the startFortune

Rout in Chinese Internet Stocks Rolls On in Hong KongWall Street Journal

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Market candy

Quiz time

The FAANG stocks—yes, I'm still calling Meta Platforms, "Facebook"—have had a rough quarter. Over the past three months, just one member of the Fab 5 trades in the green. Is it...?

  • A. Facebook
  • B. Apple
  • C. Amazon
  • D. Netflix
  • E. Alphabet's Google

The answer is B, Apple, up 5.5% over the past three months. All the others trade in negative territory over the same period. Facebook—erm, Meta—is the worst of the bunch down nearly 17% in that period, (even after yesterday's stellar gains).

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