To recap my previous post, Reddit’s Wallstreetbets (WSB) Gamestop (GME) excitement ended a few days later with hedge funds losing billions and retail investors showing they are the new force in the game. This is being called the democratization of markets where now retail investors can have a much greater impact.
GameStop Corp (GME) YTD chart
Last week Reddit users focused their attention on Silver, claiming an opportunity for a short squeeze. Silver was already positioned to break out and seemed like it only needed a push. ETF prices and futures rose early in the week with March futures hitting $28. Most retail investors do not invest in futures contracts however, the excitement quickly abated, and prices fell back to $26.
This week the Cannabis industry was in the spotlight. Stocks such as Tilray had big moves this week, but lost strength on Thursday and now its chart looks a lot like GME.
Tilray Inc (TLRY) YTD chart
Looking at commodities, chatter is picking up that the next commodity bull run may have begun. We are starting to see major moves in some of the agricultural commodities, metals, and oil. The last peak in the commodity cycle was in 2008. Demand is being driven by China (China recovered quickly from the pandemic) in addition to monetary stimulus and a weak U.S. dollar. As a reminder, commodities have served in the past as a hedge against inflation. There are several commodities reaching six year price highs and the Bloomberg Commodity Index keeps trending higher.
Bloomberg Commodity Index (BCOM Index) YTD chart
Everyone remembers oil hitting all-time lows in the second quarter of 2020, where its price fell below zero. This had never been seen before. This week, Brent passed the $60 dollar mark amid signs of economic recovery. New Covid-19 cases are falling each day and vaccination rates are rising. In addition, the House Panel cleared $1400 stimulus payments and tax credits for low-income workers and families. All these measures are positive signs under the additional stimulus coming from Biden’s $1.9 trillion rescue plan.
Brent Crude Oil Future (CO1) YTD chart
Lastly, Bitcoin. Elon Musk, Tesla’s CEO, announced on Monday that the electric car company had invested $1.5 billion in Bitcoin and is in the process of accepting the crypto currency as payment. Tesla had over $19 billion in cash and equivalents at the end of 2020 according to its latest SEC filing. Musk has showed support for cryptocurrencies in the past, yet his move and announcement pushed Bitcoin’s price to a new record.
Bitcoin Currency (BTC Curncy) YTD chart
