Week of 5/17/2021 Market Recap

1. Tech Barely Comes Out on Top

Just like the Warriors-Lakers play-in tournament game where the lead changed many times, the market was very volatile this week. The S&P 500 and Dow Jones lost .08% and .48%, respectively. On the other hand, like Lebron hitting that clutch 3 at the end of the game, bullish tech investors came out just on top, with the NASDAQ breaking its losing streak and gaining .36% on the week. In other news, like Curry on a hot streak, the robust economic recovery reduced the P/E (price-to-earnings) ratio from 24 to 22 on average as earnings surprised analysts.

As earnings and economic recovery skyrocket from pandemic lows, like the dark horse team in the playoffs, inflation is always lurking to upset. After cooling down to end trading two weeks ago, on Thursday, yield rates, which gauge inflation expectations, spiked back to around 1.6%, their same level in March. So far, inflation rates are treading water and haven’t risen. But if they do, expect the whole market to react rapidly and severely.

Unlike the stagnant inflation and yield rates, housing prices have rocketed in the last year as demand has jumped and the price of lumber has temporarily increased. Prices are 10% higher over the last year and up nearly 35% from the peak in 2007. This is no cause for concern as unlike the housing crash, lending conditions are prudent, demand is at an all-time high, and the price of lumber will eventually subside.

2. COVID-19 Update

As many parents flock to their nearby pharmacies with their kids in tow to get the newly-approved vaccine, COVID cases continue to decline. Vaccinations continue to rise at a promising rate, and with millions now eligible to receive a vaccine, this trend should continue. This leads many people to believe that progress towards normalcy in the summer is achievable, and children can go back to enjoying life similar to their pre-COVID ways.

As this is happening, new trends in hospitalizations show that racial disparity affects much more than education and future success. According to the CDC, African American hospitalization rates have disparity between living conditions. Additionally, if you or a younger sibling has recently got the Pfizer vaccine, fevers are common and nothing to be concerned about. Tiredness, muscle pains, and chills are also common at the injection site and nothing to be concerned with. Getting vaccines might become mandatory for some students, as more than 100 colleges have mandated vaccination before returning on campus for the fall semester.

3. Wild Ride on the Crypto Train

When hopping onto the crypto train, volatility is the expectation, not the anomaly. However, in this past week, a sector-wide crash in crypto knocked out $1 trillion worth of value. Bitcoin was down 50% from its peak to $30,000, with Dogecoin hitting 30 cents and Ethereum losing 30% of its value. But what happened?

Like some of you may have read, like Drake for the Raptors, crypto’s biggest hype-man Elon Musk was front and center. After Elon retracted Tesla’s commitment to accept Bitcoin for payment for their electric vehicles, the market took a nosedive. The real fuel for the crash came on Wednesday when Chinese officials started a crackdown on cryptocurrency use in their country.

The threat of regulation tanked the general market as most major coins fell off a cliff after the news. This is somewhat ironic considering cryptocurrencies are supposed to be decentralized and not subject to governmental influence. But remember, instead of judging LeBron for a single missed clutch shot and ignoring his whole career, the big picture is important: Bitcoin is still up 400% from 2020 with other altcoins up even more.