Emerging markets could be the next big frontier for crypto. A slew of politicians want to follow El Salvador and adopt bitcoin as legal tender.

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  • Emerging markets are pioneering digital and crypto currency usage, trading and mining.
  • Since El Salvador voted to adopt bitcoin as legal tender, a slew of politicians have said they want to follow suit.
  • Many showed their support through tweets or by adding the symbolic laser eyes to their Twitter pictures.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Cryptocurrencies can often stir up concern among conservative investors and few are as conservative as central banks, and regulators are definitely skeptical. But this does not appear to be the case in emerging markets.

Politicians, central bankers and regulators across the developed world might be a little wary, but those in the emerging world are pushing the boundaries of crypto adoption, by pioneering how digital tokens are used, traded and mined.

In fact, they could become crypto’s next big frontier, as a slew of politicians from Brazil, and Argentina and even Tonga have publicly stated that they want their countries to follow the example of El Salvador in making cryptocurrencies legal tender.

El Salvador’s Congress approved a law last week that made the small Central American country the first to accept bitcoin as legal tender, giving it equal status to the US dollar in El Salvador.

“Other countries will follow El Salvador’s lead for two main reasons, making bitcoin legal tender will attract Bitcoin entrepreneurs and ease the burden of sending money internationally.” Edward Moya, senior market analyst at OANDA told Insider.

Indeed, since El Salvador’s president Nayib Bukele first announced the bitcoin bill, a slew of other emerging markets politicians have said that their own countries should follow suit.

Paraguayan congressman Carlitos Rejala tweeted “This week we start with an important project to innovate Paraguay in front of the world! The real one to the moon #btc & #paypal”.

Gabriel Silva, a congressman from Panama said his country could not afford to be left behind and a broader adoption of crypto was necessary for the country to attract technological innovation and entrepreneurship.

Brazilian politician Gilson Marques and the Argentinian Francisco Sánchez were among those who added laser eyes, a symbol used by bitcoin bulls, to their public profile pictures.

Central banks around the world are considering launching their own digital currencies that would be centrally managed and regulated – a key difference to existing cryptocurrencies like bitcoin.

The Federal Reserve and European Central Bank are still in the very early stages of looking into a digital currencies, while many emerging-market central banks are making fast progress in the area.

“Their use in small-scale trading and remittance transfers from workers abroad are among the main reasons for the popularity of crypto currencies in EM. Central bank digital currencies (CBDC) could also facilitate getting social transfers to the poor and improve transparency of the large informal economy. These channels could be positive for economic growth in EM.” a recent Bank of America research note said.

The popularity and value of crypto currencies like bitcoin and ether has boomed over the past year. They’re both an asset class in their own right, as well as a means of payment for goods and services. Various sports teams like the Dallas Mavericks or Oakland A’s for example accept cryptocurrencies as payments for tickets or merchandise.

In El Salvador, a whole town was already running on crypto – El Zonte, also known as ‘Bitcoin Beach’. Soon the whole country could now be working in similar ways and, if some politicians get their will, other emerging markets countries could as well.

El Salvador’s decision has however been received cautiously by regulators and politicians in developed markets. Bank of England Governor Andrew Bailey said just this week that cryptocurrencies are too volatile to be used as a payment form.

And the World Bank rejected El Salvador’s request to help with the implementation of bitcoin over environmental concerns linked to crypto mining. Further, regulators have shown concern about the use of crypto to fund illicit activities.

Bitcoin is already up by 300% in the last 12 months and, if more countries adopt it, it should stand to gain even more, even though regulators are tightening their scrutiny of the market, analysts said.

“Bitcoin becoming legal tender in other countries should support the bull case for bitcoin,” OANDA’s Moya said.

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‘Britcoin’ may soon be a reality after the Bank of England says it is looking more deeply into a digital pound

A close-up of a replica bitcion is seen with a British flag
A close-up of a replica bitcoin is seen with a British flag

  • The Bank of England said it would look more closely at launching its own digital currency.
  • There no decision yet on “Britcoin,” but a digital currency would complement, not replace, banknotes, it said.
  • One possible scenario is one-fifth of all UK retail bank deposits are in a new form of digital money.
  • See more stories on Insider’s business page.

The Bank of England is going to look more closely at launching its own digital currency, although it is still to make a decision on whether to introduce one.

The BoE on Monday released a discussion paper seeking response to its thoughts on a central-bank digital currency, which it put forward last year, as it believes it should “at the very least, be carefully studying CBDCs,” it said.

“The Bank of England has not made a decision on whether to introduce CBDC, but is committed to engaging widely on the benefits, risks and practicalities of doing so,” it said in a statement. “The Bank now intends to deepen its exploration of CBDC.”

CBDCs are effectively cryptocurrencies that are pegged to a national currency and controlled by the central bank. They operate as “stablecoins” – a digital token whose value is pegged to an underlying asset. The key difference between a stablecoin and a CBDC is the former is controlled by a private-sector entity.

Interest in digital currencies among central banks is picking up, as investors big and small jump onto the cryptocurrency bandwagon. Virtually every cryptocurrency, from bitcoin to ether, has hit record highs this year.

China is already running trials of its digital yuan, while the Federal Reserve plans to release a discussion paper in the coming weeks about its thoughts on digital payments. Jon Cunliffe, the BoE’s deputy governor, said last month it was “probable” the central bank would launch its own digital currency, which market watchers have nicknamed “Britcoin”.

“A CBDC could contribute to a more resilient, innovative and competitive payment system, but it would also raise significant questions for the economy and financial system,” Cunliffe said in Monday’s statement.

“The Bank has not yet made a decision on whether to introduce a CBDC. Were it to do so, any CBDC would complement, rather than replace, banknotes,” he added.

In its paper, the BoE laid out a scenario to illustrate what might be the demand for alternative means of payment. Under its model, it estimates 20% of all UK retail deposits will be in new forms of digital money.

“In the illustrative example, a fifth of all UK retail deposits transfer to new forms of digital money. Factors such as convenience, trust, and perceived safety are assumed to play a key role in determining demand for new forms of digital money,” it said.

The central bank plans to join forces with the UK’s finance ministry, the Treasury, to explore the public-policy issues around a CBDC, in order to look more closely into the potential launch of a digital currency. Any CBDC could only be harnessed if it is widely used and easily accessible to a broad range of groups in society, it said.

In addition to respecting users’ privacy, any CBDC would comply with the rules around money laundering or financing crime that exist for current digital payment systems.

Crucially, any CBDC should not interfere with the BoE’s ability to manage monetary policy and ensure financial stability. “For example, the Bank will carefully consider any risks associated with the outflow of deposits from the commercial banking sector,” the BoE said in the paper.

The central bank stressed in the paper that it supports efforts to improve payments in the UK, where these are safe, viable and well understood.

“A CBDC should only be introduced if it adds sufficient value and delivers net benefits, and if launched, should be designed to co-exist with other payments innovations. When exploring CBDC, the Bank will also give full recognition to the potential of private sector alternatives to deliver the outcomes sought,” it said.

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Cathie Wood says central banks might add crypto to their balance sheets. Here’s the list of bitcoin-skeptic central bankers who think otherwise.

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

Superstar investor Cathie Wood said on Thursday central banks in emerging markets could add cryptocurrencies to their balance sheets to protect against the effects of deflation as the economic boom cools.

She told CoinDesk’s Consensus event that emerging market central banks – and maybe even the eurozone – could well start holding hard assets like bitcoin “because they know their currencies are going down, and that they will be under attack as reserves go down.”

Yet central bankers have by and large been dismissive of crypto, including those in emerging economies such as India.

Hours before Wood’s comments, Japan’s central bank chief expressed doubts about bitcoin’s uses and called the asset “speculative.”

“Most of the trading is speculative and volatility is extraordinarily high,” Bank of Japan Governor Haruhiko Kuroda told Bloomberg on Thursday. “It’s barely used as a means of settlement.”

This is what other central bankers think about cryptocurrencies:

Reserve Bank of India Governor Shaktikanta Das

Das said in February he was concerned that cryptocurrencies could threaten financial stability in India.

He told CNBC TV-18 the central bank had told the government about these “major concerns.”

India’s central bank moved to ban banks from handling cryptocurrency transactions, although the Supreme Court later struck down the rule in March. Asia’s third-largest economy has considered banning cryptocurrencies altogether.

People’s Bank of China Governor Li Bo

Li said in April bitcoin is an “investment alternative,” which encouraged many in the crypto community.

“We regard bitcoin and stablecoin as crypto assets … These are investment alternatives,” he said at a panel hosted by CNBC. Yet he said they “are not currency per se” and added that he had doubts about their role in the real economy.

However, the PBoC has a history of acting tough on crypto. It renewed its crackdown on banks accepting cryptocurrencies as payments in May, triggering a plunge in bitcoin.

Central Bank of Argentina

The central bank in Argentina – which is a country prone to currency crises – warned its citizens earlier in May about the risks of cryptocurrencies, in a joint statement with the securities regulator.

It said crypto assets aren’t legal tender and “can cause significant financial losses for its holders, including the possibility of losing the totality of the resources invested.”

Bank of England Governor Andrew Bailey

Bailey had words of warning on cryptocurrencies at the BoE’s latest monetary policy meeting. “I would only emphasize what I’ve said quite a few times in recent years. I’m afraid they have no intrinsic value,” he said.

“Now that doesn’t mean to say people don’t put value on them, because they can have extrinsic value. But they have no intrinsic value.”

Bailey added: “I’m sorry, I’m going to say this very bluntly again: buy them only if you’re prepared to lose all your money.”

The Governor said later in May the rise in bitcoin was a warning sign. “You’ve probably seen all the stories about the price of bitcoin,” he said at a Bank of England event.

“That’s a warning sign. People are looking for investment opportunities. Buy it if you want, but it has no intrinsic value.”

Federal Reserve Chair Jerome Powell

Powell made a similar point to Kuroda in April, saying bitcoin and cryptocurrencies are for speculation.

“They’re really vehicles for speculation,” he told the Economic Club of New York. “They’re not really being actively used as payments.”

In March he compared cryptocurrencies to gold. “They’re highly volatile and therefore not really useful stores of value and they’re not backed by anything,” Powell said at a Bank for International Settlements event.

“It’s more a speculative asset that’s essentially a substitute for gold, rather than for the dollar.”

European Central Bank President Christine Lagarde

Lagarde said she doesn’t think bitcoin is a real currency – a view shared by most central bankers – in February, adding that central banks would not start holding cryptocurrencies.

“It’s very unlikely – I would say it’s out of the question,” Lagarde said at a virtual event hosted by The Economist.

She had been even more downbeat in January, saying bitcoin “is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”

The ECB boss called for more regulation that “has to be applied and agreed upon… at a global level.”

ECB Vice President Luis de Guindos

Lagarde’s deputy expressed similar skepticism towards cryptocurrencies in May, saying bitcoin isn’t a real investment.

“When you have difficulties to find out what are the real fundamentals of an investment, then what you’re doing is not a real investment,” Guindos told Bloomberg TV. “This is an asset with very weak fundamentals and that is going to be subject to a lot of volatility.”

However, the ECB said in its Financial Stability Review in May bitcoin does not pose much of a risk to the financial system.

Danmarks Nationalbank Governor Lars Rohde

Rohde stuck to the central banker line on Thursday, telling Bloomberg that bitcoin is “a very speculative asset at best.”

He said: “There is no stability and no guarantee from any side about the value of cryptocurrencies.” Rohde added that he’s “tempted to ignore” cryptos.

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Why gold is a better investment than bitcoin despite the cryptocurrency’s recent dominance, according to SocGen

bitcoin vs gold 3
  • Bitcoin’s place in investment portfolios is still “highly contested” even after outperforming gold in recent months, says Societe Generale.
  • The cryptocurrency faces multiple risks including regulatory threats and “confusing” messaging from bitcoin backer Tesla.
  • SocGen has assigned gold a 5% weighting in its multi-asset portfolio.
  • See more stories on Insider’s business page.

Societe Generale has concerns about bitcoin’s presence in investment portfolios after a week that saw the ever-volatile cryptocurrency plummet more than 30% in a single day. That has the firm weighing gold as a superior option – despite its recent underperformance – given its better protective qualities against inflation.

Gold’s place in investment portfolios is better understood than bitcoin’s, the bank said, adding that it has assigned gold a 5% direct weight in its multi-asset portfolio. SocGen said the metal can partially offset capital losses on bonds in the event of rising inflation, and, in cases of runaway inflation or a return to deflation, the metal has a protective role in partially offsetting losses on equities.

SocGen said gold should be held in portfolios as a stabilizer, especially as the prospect of Federal Reserve tapering lurking as a headwind for stocks, for which the firm currently has a 59% weighting. It’s an outcome that the central bank has at least discussed, according to minutes from their April meeting.

“It comes as no surprise that the place of Bitcoin in any investment portfolio remains highly contested, precisely because of its erratic price movements,” wrote Alain Bokobza, head of Societe Generale’s global asset allocation, and analyst Arthur Van Slooten in a note published Thursday.

Bitcoin’s climb from around $10,000 in September has helped keep alive debate among investors about whether it’s is a stronger hedge against inflation than gold, which is considered a traditional vehicle for inflation protection. The Fed at the end of August said it would tolerate inflation running moderately above its 2% target for a period of time in an effort to support growth in the economy and the labor market.

The cryptocurrency’s standing took a hit this past week after the People’s Bank of China said digital tokens can’t be used as a payment form by financial institutions. Bitcoin had already been hit hard this month after Tesla CEO Elon Musk said the electric vehicle maker would stop taking bitcoin as payment, citing the “insane” amount of energy required to create new coins and secure the network as reasons for the move.

“The risks to bitcoin remain on the downside,” the analysts said, counting among the risks “confusing Tesla communications, past stratospheric price movements, potential new regulations from central banks on cryptocurrencies,” as well as environmental concerns related to its data mining. In another potential regulatory blow, the US Treasury said Thursday it wants every crypto transfer larger than $10,000 to be reported to the IRS.

Following bitcoin’s “latest leg down … investor enthusiasm must surely have cooled,” SocGen said.

And they’re hardly the first firm to point out a possible shift towards gold. JPMorgan research analysts this week said institutional investors are switching out of bitcoin and returning to gold for the first time in six months amid slumping crypto prices.

Read more: 7 crypto heavyweights told us what’s behind the sudden sell-off that erased over $400 billion from the market in just 24 hours – and whether now is the time to ‘buy the dip’

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Cryptocurrencies will survive the rise of central bank-backed digital coins, but their use will likely decline, Deutsche Bank says

bitcoin
  • Cryptocurrencies will survive, but their use may be limited by central bank digital currencies, Deutsche Bank said.
  • The report says cryptocurrencies will become stronger and more usable in everyday life the longer they exist.
  • Once CBDCs are commonplace, their advantages could outweigh those of cryptocurrencies, the report said.
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Cryptocurrencies aren’t going anywhere in the coming years, but their usage will probably decline when central bank digital currencies (CBDCs) are eventually rolled out, according to Deutsche Bank International Private Bank.

Currently, cryptocurrencies like bitcoin are not a mainstream asset class, but it will become more robust over time, Christian Nolting, Deutsche Bank’s global chief investment officer, wrote in an introduction to a special report.

“The longer cryptocurrencies survive, the more robust and credible they become due to network effects (Metcalfe’s law). Once we see some stability in terms of price fluctuations, the use of cryptocurrencies for the exchange of goods and services goods could increase,” the report said.

Whether this will become reality depends on the rollout of CBDCs and factors such as regulation, environmental impact, security issues and transaction speed, Deutsche Bank said.

Whilst most major central banks are examining the possibility of launching their own digital currencies, China and Sweden are two of the few who have started trials. The US Federal Reserve and the European Central Bank are yet to decide whether to launch their own digital coins.

Deutsche Bank argues the longer central banks take to deploy their own digital currencies, the more scope existing cryptocurrencies will have to establish themselves. As most CBDCs are still at the very early stages of development, this could be a long time coming, but will have a significant impact when their use does become mainstream.

“A widespread introduction of CBDCs accompanied by higher regulation of cryptocurrencies could create a more challenging environment for crypto assets as some (but not all) of their advantages compared to traditional financial assets would fade in the longer term,” the report concludes.

Key differences between cryptocurrencies and CBDCs include the levels of centralization, regulation, oversight, encryption and transparency, Deutsche Bank said.

CBDCs vs Crypto
The key differences between Central Bank Digital Currencies and Cryptocurrencies as outlined in the Deutsche Bank report.

“My belief is that governments and more digitally-aware populations may ultimately prefer to go with CBDC, at least for general use, at the possible expense of some cryptocurrencies,” Nolting said in the report. “If this happens, then the more successful cryptocurrencies are likely to become increasingly differentiated in terms of business models and utility,” he continued, highlighting a potential future path for crypto investments.

The report also urged caution against treating cryptocurrencies as an equivalent to gold in terms of diversification and risk management. Deutsche Bank said the high volatility and low liquidity of cryptocurrencies were key concerns.

Despite this, the incorporation of crypto assets into existing investment vehicles like ETFs may attract more retail and institutional funds into the sector as it makes investments easier, the bank said.

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Central banks must start issuing digital currencies in the coming years because cash will become irrelevant, UBS chief economist says

GettyImages 157012308
  • Central banks need to issue digital currencies as cash will become outdated, a UBS chief economist said.
  • These digital currencies won’t operate like cryptocurrencies and will have no wild swings in value, Paul Donovan said.
  • The supply of an officially backed coin depends on a central bank’s authority to regulate the currency’s spending power.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Central banks will soon need to issue digital currencies as the use of cash slowly becomes irrelevant, according to UBS chief economist Paul Donovan.

“Central bank digital currencies are likely to start becoming part of individual economies’ payment systems in the coming years,” he said in a note published this week.

People are using physical forms of money, like notes and cash, much less than before. Moreover, about half of Sweden’s banks no longer accept cash and its economy is expected to go cashless by 2023.

“We wave debit cards and mobile devices around with the reckless abandon of a first year student at Hogwarts trying out a wand, magically paying for things without ever having to touch cash,” Donovan said, referring to the boarding school in the “Harry Potter” series of children’s books.

Donovan laid out specific differences between how CBDCs would operate compared with cryptocurrencies. CBDCs would be interchangeable with notes and coins in circulation, accepted for tax payments, and wouldn’t have wild fluctuations in value – unlike typical crypto, such as bitcoin. Officially backed digital currency supply could change depending on the central bank’s ability to regulate the spending power of the currency, he said. Meanwhile, cryptocurrencies are decentralized and cannot be controlled by any one party.

He also said digital cash is a direct claim on the private bank to which its account is tied, and not on the government. This means government-produced money is becoming less significant, while digital money produced by the private sector is increasing in importance.

“If central banks want to stay relevant as cash becomes less relevant, they might have to consider entering the world of digital money,” he said.

China is among the leading economies looking closely at CBDCs. The People’s Bank of China aims to become the world’s first to issue a digital currency as part of a push to reduce its reliance on the dollar-denominated financial system, according to Reuters.

Federal Reserve Chairman Jerome Powell said last month a potential digital dollar is a “high priority” project for the US. But he thinks CBDCs should exist alongside cash and other forms of money, rather than replace them entirely.

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Five things you need to know about on the markets this week – Biden, big banks and central banks, bond yields, and Bitcoin

Workers hang the flags on the West Front facade in preparation for President-elect Joe Bidens inauguration
Workers hang the flags on the West Front facade in preparation for President-elect Joe Bidens inauguration

  • The stock market has shrugged off turmoil in DC and investors are focused on Joe Biden’s plans for the economy.
  • Bond yields are around their highest in a year, as traders prepare for a lot less stimulus from the Federal Reserve.
  • Earnings season gets underway, with Goldman Sachs, Netflix and IBM, among others.
  • Visit Business Insider’s homepage for more stories.

Stock markets finished the second week of January having reached all-time highs, overlooking fairly gruesome US labor market data, the ongoing explosion in cases of COVID-19 and unprecedented political turmoil in the final days of Donald Trump’s presidency, as he faces impeachment – again. 

Reflation has been the name of the game across the markets and anything even remotely economically sensitive has surged, including small-cap stocks, oil and gas and, of course, cryptocurrencies, particularly following Joe Biden’s plans for a $1.9 trillion stimulus package. 

Next week brings a heady mix of the political, the macroeconomic, the corporate, and the crypto. Here’s five things we’ll be watching

1. Inauguration of President-Elect Joe Biden

January 20 bids farewell to one of the most controversial US presidents in living memory. After four years in the White House, Trump will bow out, leaving Biden as the 46th president. Trump will also be the first US president to be impeached twice over his role in the storming of the Capitol by violent supporters of his on January 6 who attempted to stop the counting of the electoral college votes.

The siege has had little impact on the financial markets, as the S&P 500 hit record highs, buoyed by economic optimism and hopes that COVID-19 vaccines will eventually offer a permanent route out of lockdowns and mobility restrictions. Even though Trump says he won’t attend the inauguration, there will be more troops in Washington DC on the day than in Iraq and Afghanistan combined to quell any potential security threats. 

2. Pumping up the reflation trade

After having lain dormant for years, inflation could be making a comeback. Market-based expectations for inflation have picked up sharply in the latest week, as a steady rollout of COVID-19 vaccines has helped feed a sense of optimism that, while things are pretty grim right now, they are about to turn a corner. 

With a Democrat-controlled Congress, investors believe there will be less pressure on the Federal Reserve to step in and provide extra support to the economy, whether that is via a rate cut or an increase in its bond purchases that help keep credit cheap.

Bond yields have marched higher and yield curves – the difference between short-dated and long-dated bond yields – have steepened, dragging the dollar higher and reflecting this perception that inflation will start to take root as the economy recovers, which eventually, in theory, will merit a rate rise. 

But for now, investors need not fret too much about a damaging inflationary spiral. This initial increase in expectations is more a matter of making inflation “less low” and should remain the case over the next year, at least, according to RBC Global Asset Management’s chief economist Eric Lascelles said in a note this past week.

Most notably, the US 10-year breakeven inflation rate – a market-based gauge of inflation expectations based on the difference between nominal bond yields and their inflation-linked counterparts – has topped 2% for the first time since late 2018. The prevailing consumer inflation rate is well below there. At the last count it was 1.4%.

“Far from forcing central banks to hike rates prematurely, central banks are likely actually celebrating the development. This is in part for the aforementioned reason: it is dragging inflation and expectations closer to their target,” Lascelles said.

Read more: Morgan Stanley says over 20% could be wiped off Nasdaq 100 valuations if US Treasury yields normalize

3. Inflation to central banks: “You rang?”

Investors will get a chance to see how some of the world’s most influential central bankers are reacting to the pick up in inflation expectations, given that a number of them meet next week to discuss monetary policy. And, on top of that, we’ll get inflation readings from the UK, the eurozone, Germany, Canada, Japan, and New Zealand. 

UBS Global Wealth Management said this past week that the top question among their clients was: “Central banks around the world try to create inflation, but how can they reconcile: higher inflation means higher rates and higher rates will lead to higher debt burdens for most of the counties?”

The People’s Bank of China, the European Central Bank and the Bank of Canada all convene to discuss interest rates and the likely course of monetary policy in their respective economies. 

Managing the ongoing fallout from the COVID-19 pandemic, as economies across Europe, the Americas and parts of Asia impose hefty restrictions on movement and even full-on lockdowns, will be front and center. But, with the advent of mass vaccination, none are expected to do more than they are currently committing to. 

4. Banks, oil services, and Big Tech – old and new – report 4th-quarter results

After the stomach-clenching contraction in the economy in the second quarter of 2020, corporate earnings staged a turnaround. Chief executives expressed confidence about the outlook for earnings growth and the economy and their optimism was reflected in a batch of third-quarter results that contained the most upside surprises in a decade

This week, investors will get a look at how Wall Street weathered the final, turbulent three months of the year, when a contested presidential election, another surge in global cases of COVID-19 and the euphoria from the emergence of a vaccine made for a volatile quarter.

Bank of America, Goldman Sachs and Morgan Stanley report results and there will be a lot of scrutiny over what they say about anything from the provisions they’ve made to deal with struggling consumers, market volatility, and the outlook for 2021 and beyond. 

In the tech sector, pandemic “winner” Netflix reports fourth-quarter results. There will be intense focus on the streaming platform’s subscriber numbers to see if it was able to keep audiences glued to their TV screens and away from rival Disney+, even after the economy effectively reopened from mid-year onwards. 

A couple of “real economy” companies also report next week, which could give the “Great Rotation” trade of late 2020 another shot in the arm. Oil services companies Schlumberger and Baker Hughes – both of which got battered by the historic fall in crude prices in the spring when global transport ground to halt – will deliver fourth-quarter results, along with semiconductor maker Intel and “OG” Big Tech company IBM. 

Read more: BANK OF AMERICA: Buy these 8 US stocks poised to soar in the first quarter of 2021- and avoid these 2 at all costs

5. Don’t forget Bitcoin – no one else has

It’s impossible to talk about markets right now without talking about crypto. Bitcoin hit record highs near $42,000 on January 8 and since then, has been enveloped in huge volatility that has seen the price lose as much as 20% in 24 hours, only to regain it in the following 24 hours. 

Big-name investors have sung its praises, and some investments banks have even talked about it as a viable safe-haven alternative to gold. Last week, however, a growing number of voices began to talk about a possible bubble in cryptocurrencies. They drew comparisons with the dot-com crash of the late 1990s, in which technology company valuations were pumped sky-high by investors keen to jump on the “digital bandwagon,” only to have those prices collapse within weeks. 

Google searches for “Bitcoin” are around their highest since late 2017, when the coin first rocketed to a then-record around $19,890 from around $4,000 in about three months. In the last three months, the price of a Bitcoin has more than doubled to around $35,000 from closer to $14,000 and most market watchers agree that a correction isn’t beyond the realm of the possible. 

Chart of the week

This week’s Chart of the Week takes a look at the shift in market-based inflation expectations and the stock market, most notably, the S&P 500, over the last five years.

US 10-year breakeven inflation rates vs S&P 500
US 10-year breakeven inflation rates vs S&P 500

Our most-read stories in the last week:

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