Stocks are at record highs.
As we get into the teeth of earnings season the major U.S. stock indexes continue to press to new highs, with the Dow and the Nasdaq hitting fresh record highs on Friday while the benchmark S&P 500 closed less than two points away from an all-time high hit on Wednesday.
On Friday, markets got the two most anticipated economic data points of the week with the September report on retail sales coming in better-than-expected while inflation slightly missed forecasts.
Consumer confidence was the surprise economic headline to end the week, with the University of Michigan’s preliminary reading on sentiment in the month of October beating expectations and hitting its highest level since March 2004.
In the week ahead, the economic calendar will be a bit more quiet, with a few points of housing market data, industrial production, and the Federal Reserve’s latest Beige Book report all set to make headlines.
The bigger focus over the next couple of weeks will really be corporate earnings with dozens of high-profile results expected after the big U.S. banks got things underway at the end of this week.
Some of the headliners for the week ahead are expected to include Netflix (NFLX), Morgan Stanley (MS), Goldman Sachs (GS), IBM (IBM), United Healthcare (UNH), American Express (AXP), United Airlines (UAL), Yahoo Finance’s parent company Verizon (VZ), Travelers (TRV), GE (GE), and Procter & Gamble (PG).
Investors will also keep an eye on Washington, D.C., though this week presented markets with an all-too-familiar amount of noise on President Donald Trump’s plan to cut taxes, which is now rapidly bumping up against Congress’ already tight schedule for the rest of this year.
Economic calendar
Monday: Empire State manufacturing, October (20.7 expected; 24.4 previously)
Tuesday: Import price index, September (+0.6% expected; +0.6% previously); Industrial production, September (+0.2% expected; -0.9% previously); Homebuilder sentiment, October (64 expected; 64 previously)
Wednesday: Housing starts, September (-0.5% expected; -0.8% previously); Building permits, September (-2.9% expected; +5.7% previously); Federal Reserve Beige Book
Thursday: Initial jobless claims (240,000 expected; 243,000 previously); Philly Fed manufacturing index, October (22 expected; 23.8 previously)
Friday: Existing home sales, September (-0.9% expected; -1.7% previously)
Wall Street won’t stop talking Bitcoin
During a week in which stocks hit a record, the Trump administration kept talking up tax reform, and U.S. consumer confidence hit a 14-year high, the big story was Bitcoin.
After breaking through $5,000 for the first time on Thursday, Bitcoin was up another 5% on Friday afternoon to trade near $5,700. Earlier in the day Bitcoin topped $5,800 to hit a fresh record.
After saying on Thursday that he was done talking about Bitcoin, JP Morgan (JPM) CEO Jamie Dimon on Friday broke his brief silence, saying at the annual Institute of International Finance membership meeting in Washington, D.C. that he could care less about Bitcoin. Dimon had sworn off discussing the cryptocurrency after making waves last month by saying Bitcoin was in a bubble that would eclipse the size of the tulip bubble seen back in the 1600s.
And yet that Dimon can really lay off ripping Bitcoin seems, at this point, to be in doubt.
According to Bloomberg, Dimon said the cryptocurrency is a “great product” if you’re a criminal, resurfacing the narrative around Bitcoin that dogged the digital currency in its early years given its close association with Silk Road.
Speaking alongside Dimon at the IIF event, BlackRock (BLK) CEO Larry Fink said, “Bitcoin just shows you how much demand for money laundering there is in the world.”
Dimon also said that one day governments will crush Bitcoin and that people who buy Bitcoin are stupid. Bloomberg also said Dimon asked rhetorically, “Who cares about Bitcoin?”
Well, a lot of people do. Including those on Wall Street.
In a note to clients published on Thursday, analysts at UBS took a long look at Bitcoin, cryptocurrencies, and the blockchain technology that underwrites this whole enterprise.
Looking only at pricing, UBS said that, “a twenty-fold increase in bitcoin prices in just two years, and an absence of any fundamental economic backing, cryptocurrency prices are almost certainly a bubble.”
This does not, however, require one to walk away from, again, the technology which is really exciting the true believers in this boom.
“While we are doubtful whether cryptocurrencies will ever become a mainstream means of exchange, the underlying technology, blockchain, is likely to have a significant impact in industries ranging from finance to manufacturing, healthcare, and utilities,” UBS writes. “We estimate that blockchain could add as much as USD 300-400bn of economic value globally by 2027.”
On Thursday, after Dimon said he was done discussing Bitcoin further, JP Morgan’s CFO Marianne Lake said the bank is, “very open minded to the potential use cases in the future for digital currencies that are properly controlled and regulated.”
And the commentary out of JP Morgan came on the heels of Goldman Sachs (GS) reportedly looking at setting up a trading venue for Bitcoin and other cryptocurrencies. Meanwhile, Goldman Sachs CEO Lloyd Blankfein said on Twitter earlier this month that he was “still thinking” about Bitcoin but wasn’t endorsing or rejecting the concept.
Blankfein added that, “folks also were skeptical when paper money displaced gold.”
But Bitcoin doesn’t have to replace money and blockchains don’t even need to become the primary means of executing and settling transactions for the hype around this technology to be on some level validated.
Moreover, during a year in which the story with the stock market has been that stocks are going up but no one is happy about it, Bitcoin has given traders the kind of volatile asset that reminds so many why they got into the business in the first place. As Bespoke Investment Group noted on Friday, Bitcoin has traded in the $2000s, $3000s, $4000s, and now $5000s within the last month. The S&P 500 has traded between 2,490 and 2,560 during that same period.
And in today’s market, that volatility alone is enough to attract interest.
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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