Netflix dived up to 25% in Friday, pulling Nasdaq along with it. Bitcoin hit the $34K during the weekend on poor risk appetite due to the hawkish Fed expectations.

FOMC meets this week, yet most of the hawkish cards have already been played, which suggests that the week could see some recovery in risk assets.

Yet, investors need breath-taking earnings from the US Big Tech to stop worrying about a further tech meltdown. Apple, Microsoft and Tesla are among the most monitored companies due to release their Q4 earnings this week.

Elsewhere, Rivian and Sono Motors shares continue their journey south. Many investors wonder whether the current prices could be an opportunity to buy a dip, yet the macro environment remains less than ideal for these stocks to shine in the foreseeable future.

We saw a second day of gains then losses in major US indices. The stocks first rallied on the idea that the Federal Reserve (Fed) hawks may have gone ahead of themselves with the pricing of a 50bp rate hike in March, then gave in to the bad thoughts.

Nasdaq was trading almost 2% higher when the wind turned direction abruptly, sending the index below its 200-DMA. Is this the beginning of a further dive? Possible…

What’s sure is Netflix will feel the pinch of lower subscription growth forecast at the open as the stock price dived 20% in the afterhours trading.

Zooming out. The Fed must fight back inflation because it’s gone just too far to threaten the economic health of the country, but they can’t do it with heavily hemorrhaging financial markets. Therefore, the idea of 50bp is certainly far stretched, and the corresponding pricing should be scaled back, which should give a certain relief to the risk assets in the coming sessions.

But of course, the corporate earnings must be strong, as the actual Big Tech pricing reflects a fantastic earnings growth for the coming quarters, and investors won’t settle with anything less than fireworks.

Elsewhere, Bitcoin fell below $40K on the back of an overall lack of risk appetite, and the news that Russia wants to ban the use and the mining of cryptocurrencies. Are they right, are they wrong and more importantly, are we mistaken on the potential purpose of use of cryptocurrencies?

Market sentiment is mixed. There is a certain will to buy a dip in US indices, yet the aggressive hawkish Federal Reserve (Fed) pricing doesn’t allow the appetite to get restored. It results in hectic pricing as the US yields go up.

The sharp rise in US yields is the number one reason pushing the stock indices lower since the start of this year, and the major indices are much more vulnerable to interest rate hikes now than they were before, because the Big Tech has an increased weight in the indices, and they are vulnerable to rate hikes.

Limited risk appetite and mounting tensions between Ukraine and Russia support a rise in gold prices despite the rising US yields.

Ukraine-Russia tensions, combined with OPEC+ struggle to revive output are also giving an extra push to the oil bulls.

Strong earnings are the only hope for the equity bulls in the short-run. The bank earnings have been strong, but not perfect.

Netflix will be the first FAANG stock to reveal its Q4 results. The expectations are soft, while the tech stocks don’t have the luxury of deceiving their investors at an environment of rising Fed expectations, so a softer-than-expected set of results could further hammer the investor appetite.

Microsoft buys Activision Blizzard to enter the metaverse, Walmart announced it will throw its won cryptocurrency. But no news is enough to give a smile to investors who are too worried about the rising US yields.

The US 2-year yield is now above the 1% mark, and the US 10-year yield is flirting with the 1.90% level. We are now at the pre-pandemic levels, so wondering whether it could slow down the Fed hawks? And if it does, could it reverse the selloff in US equities.

In a separate discussion, I explain why staking stablecoins could be risky and what risks you should consider when you aim for the staking income.

It was quiet session yesterday as the US stock and bond markets remained closed for bank holiday, while the European equities kicked off the week mostly in the positive, especially with the FTSE 100 leading gains in Europe thanks to the rising oil prices.

US crude advanced to the $85pb mark having gained close to 12% just since the start of the year and the FTSE 100 is now surfing on the positive energy vibe.

And equities, especially the cyclical sectors, are the best place to seek a solid hedge against inflation, meanwhile gold could fall off the race due to rising US yields.

US is back after a long weekend, Nasdaq futures hint at a soft start as investors seem to be fleeing the growth stocks in favour of value ones, in line with the so-called reflation trade.

In the FX, the US dollar crash is seen temporary, in Europe, inflation is seen transitory, and in Japan, the rising consumer prices are seen as a dream come true!

China exceeded the growth expectations, but the People’s Bank of China (PBoC) cut the policy rate to reverse the slowing growth. That was certainly good news for the doves, as the Federal Reserve (Fed) expectations get increasingly more dovish to the four-decade high inflation in the US.

In fact, inflation went to high that even the banks see it reversing the positive impacts on earnings and profits.

Sentiment is mixed this Monday, the US dollar index rebounds from its 100-dma, pulling the EURUSD and GBPUSD lower.

Dogecoin rallied 20% after payments in Doge went live on Tesla’s website on Friday, but the upside remained short-lived.

Bitcoin traders are confused: in one hand the death cross formation calls for deeper downside, but on the other hand, holding support at $40K could give the coin a boost to reverse the actual selloff.

Optimism about a less dovish speech from the Federal Reserve (Fed) Chair Jerome Powell and a ‘not higher than expected’ inflation print earlier this week remained rather short-lived, as other FOMC officials didn’t beat about the bush and hinted at an imminent rate hike in the US.

Rate-sensitive Nasdaq fell the most among the major US indices, as losses in the Dow Jones, which is believed to be better equipped to cope with higher rates remained limited.

In the FX, one would’ve expected the US dollar to recover on the back of a series of hawkish comments from the Fed officials, but the dollar index continued to move lower.

Investor attention shifts from macro data to corporate earnings as a couple of big banks are due to release their Q4 earnings today, including JP Morgan, Wells Fargo, BlackRock and Citigroup. There is no doubt that financials will benefit from a rising interest rate environment. But, expectations on bank earnings got quite high, which means that they now they must live up to these strong expectations to keep the rally going.

On the other hand, good earnings are the only thing that could clear investors’ heads from the Fed-induced bearish thoughts.

It has been a relief to see the US inflation not going above the expectations for once! The consumer price index in the US rose 7% y-o-y in December, the highest pace in four decades, BUT, the figure was in line with analyst expectations, and brought forward the idea that this could be the point we see a peak in the inflation levels and light at the end of the long and dark inflation tunnel.

But, this is just a bet for now, as we haven’t seen the data print a number lower than a previous one just yet. Yesterday’s data was still stronger than the previous month’s read of 6.8%. And today’s PPI read should confirm that the factory-gate prices may have advanced to 9.8% in December in the US.

US stock indices reacted positively to the four-decade high inflation read yesterday.

There is potential for further recovery in US equities given that the Federal Reserve (Fed) hawks went ahead of themselves at the start of the year.

With the Fed hawks losing field, the dollar index tanked below the 95 mark and even slipped below its past six-month up-trending channel base. The EURUSD and the GBPUSD are up.

US crude on the other hand consolidates above $80pb, and the European energy stocks are on fire! What’s the upside potential?

Global equities breathed a sigh of relief yesterday as the Federal Reserve (Fed) Chair Jerome Powell said, at his congressional confirmation yesterday, that he could pull off the hard task of fighting back inflation without damaging the economy.

All eyes are on the US inflation as today’s data may reveal that consumer prices in the US advanced to or above the 7% mark, a four-decade high.

US dollar is giving toppish signs as the dollar index slipped below its 50-dma, where it had been finding support for the past six months. The EURUSD finally broke above its 50-dma average, gold advanced to $1821 per ounce and US crude is drilling into the above-$80pb offers.

Elsewhere, Tesla sold a record amount of cars in China, and the success is not a coincidence.

Yesterday was quite a stressful session for stock traders as we saw an aggressive selloff at the beginning of the session, which, then softened, brought back the ‘dip-buyers’.

Warnings that the Q4 sales may have not been as strong as expected from some retailers like Lululemon dampened the mood, which was already well fragilized by the hawkish Fed expectations after the US jobs figures supported the idea that the Federal Reserve (Fed) could and should move fast to rectify its relaxed behaviour against inflation last year.

The question is, does the Fed have any interest in wreaking havoc in the financial markets just to fight back inflation? The answer is no. This is why the whole thing is data-dependent and given how hawkish the market shifted recently, there is a chance we see a certain softening in hawks’ positioning, which could lead to a certain positive correction to the latest equity selloff.

But - and there is always a but - the appetite is of course dependent on tomorrow’s inflation read in the US.

Elsewhere, Bitcoin holds ground near the $40K mark but technicals remain favourable for further decline, and the German 10-year bund yield is preparing to step above zero for the first time in three years hinting that the EURUSD could clear the 50-dma offers.