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Wall Street Breakfast: Who Let The Doge Out?

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Who let the Doge out?

Another crypto craze is taking the market by the storm as a parabolic rally for altcoins (cryptos other than bitcoin) took the value of all digital tokens past $2.3T. Dogecoin (DOGE-USD), a crypto that started as a joke, is now changing hands at 68 cents, up about 63% in the past 24 hours, 131% over the past week, and over 11,000% so far in 2021. Dash (DASH-USD) also spiked 35% over the last 24 hours and Ethereum Classic (ETC-USD) rose almost 50%, helping crash crypto trading on Robinhood's popular trading app, while Force DAO and Tierion (TNT-USD) surged more than 1,000%.

What's happening? Some are pointing to Elon Musk’s upcoming SNL appearance as the "Dogefather," as well as the future of DeFi and other crypto trends, but one of the more immediate catalysts appears to be a change in trading sentiment. Once upon a time, investors had talked about the time value of money and the advantages of compounding, but who's looking for 10% a year, when one could make 50% or more per day? That kind of attitude, while risky, has been increasingly adopted by a new generation of traders, while institutions can take advantage of the price moves by easily entering and exiting positions.

The fact that "HODLing" is even a term in the cryptosphere, where investors buy and hold their positions regardless of price, has put a certain support under the industry that possibly cannot be rivaled in any other asset class. Throngs of new traders are also piling into the crypto arena, even with small positions, due to FOMO or "just in case" digital assets do eventually go mainstream. Enthusiasm is meanwhile building across social media, where the Winklevoss twins said the Gemini crypto exchange would now support Doge. "Yes, it's a meme coin, but all money is a meme!" Cameron wrote on Twitter.

Outlook: While some see this as a mere opportunity to get in on the action, bigger believers say the current rally is a breakthrough moment that will provide cover against a future dollar devaluation. Others see the entire system as a kind of pyramid scheme, but even among the biggest backers of crypto, some see the current altcoin rally as unsustainable. Famed investor Mike Novogratz said recently he'd be "very, very worried" were one of his friends to invest in Doge, but thinks crypto returns "will beat the crap out of stocks, but not forever." "They will hit an equilibrium, there's no free lunch in the world," he added. "Right now, it feels like there's a free lunch because the government's losing everything."

Yellin' about Yellen

"It may be that interest rates will have to rise somewhat to make sure our economy doesn't overheat," Treasury Secretary Janet Yellen said on Tuesday, triggering a selloff in the tech sector which depends on low rates for its growth and expansion. The Nasdaq closed 2% lower on the news, before a correction was issued by the press office. "Let me be clear, it's not something I'm predicting or recommending," Yellen later explained at a WSJ event.

Following the less-than-earth-shattering comments, many were quick to highlight the clarification, while others pointed out that the real decision-making lies with Jerome Powell and Co. The Fed Chair has previously insisted that he's "not even thinking about thinking about higher rates" until the labor market recovers from last year's economic downturn. "Think of the comments coming from Yellen the Economist rather than containing any policy guidance," added Mohamed El-Erian, chief economic adviser at Allianz. Sentiment today has shifted in favor of that outlook, with Nasdaq futures up 0.6%, following by a 0.4% gain for the S&P 500 and 0.3% advance for the DJIA.

Thought bubble: What's wrong with an overheated economy? The bustling economic activity and increase in consumer wealth generally lead to high levels of inflation, asset bubbles and external economic shocks. The sharp rise in costs could also result in inefficient allocations as suppliers overproduce and create excess production capacity. When things slow down, a recession can hit, and central banks may attempt to raise interest rates before then to lower the amount of spending and borrowing in the economy.

More raw material... Yellen's remarks came as commodity prices, a leading indicator of inflation, continue to rip higher. WTI crude oil prices are up more than 17% over the past quarter and have soared nearly 12% in the last month. Some commodities like copper and corn have even jumped to their highest levels in almost a decade as major economies rebound from the pandemic. Is this the start of a supercycle given recent inflation trends, or will commodity prices retreat as shortages and logjams are smoothed out along the supply chain?

End of an era for open outcry

Cue the scenes from Trading Places... CME Group (NASDAQ:CME) is permanently closing most of its open-outcry pits in Chicago, including trading of agricultural commodities like soybeans, wheat, cattle and hogs, as well as the trading of options on the S&P 500. In fact, the only part of CME's trading floor that will remain open is its Eurodollar options pit (the interest-rate contracts still represent one of the exchange's largest marketplaces). While many of the CME's pits were already replaced by electronic trading, the remaining ones were temporarily closed in March 2020 to prevent the spread of COVID-19.

Quote: "I guess I am not surprised," explained Dan Huber, an independent broker who spent 31 years on the trading floor. "Sad to see it end this way but we will all turn the page and move on. It was a good run."

Some history: Options pits and floor trading for agricultural commodities stretch back 173 years in Chicago. They've long been part of the heritage of CME Group, which took its name from the Chicago Mercantile Exchange, now one of the company's subsidiaries. With many exchanges adopting automated systems in the 1980s, floor trading was gradually replaced with telephone trading, and by the 1990s, those systems began to be replaced with computerized networks and electronic platforms. Most floor traders were replaced by the 2000s, and by 2015, open outcry had fallen to just 1% of CME's total volumes.

If you still want to get a look at open outcry showmanship, there are some venues still available. Those include the New York Stock Exchange's (NYSE:ICE) trading floor in Manhattan, and several options floors at Cboe Global Markets (NYSE:CBOE) - CME's rival in Chicago. Across the pond, the London Metal Exchange is considering permanently closing its red sofa trading ring, which is the last open outcry floor left in Europe.

Forget about broadband

SpaceX (SPACE) has so far received more than 500,000 orders for its satellite internet service, which is designed to beam high-speed internet to consumers anywhere on the planet. The news came during the webcast of its 26th Starlink mission, which launched another 60 Starlink (STRLK) satellites into orbit. "Only limitation is high density of users in urban areas. Most likely, all of the initial 500k will receive service," Elon Musk wrote on Twitter. "More of a challenge when we get into the several million user range."

Backdrop: Starting in October, SpaceX began a public beta program for Starlink, with service priced at $99 a month. That's in addition to a $499 upfront cost to order the Starlink Kit, which includes a user terminal and Wi-Fi router to connect to the satellites. While the company formally began accepting $99 preorders for Starlink in early February, SpaceX emphasized that the preorders are "fully refundable" since "placing a deposit does not guarantee service." At the time, the company also disclosed that Starlink had "over 10,000 users in the United States and abroad."

Race for global internet coverage: Facebook (FB) abandoned plans for Aquila in 2018, which aimed to deliver service via solar-powered drones, while Alphabet (GOOG, GOOGL) pulled the pin on Project Loon in January, a decade-old venture that planned to beam internet to Earth via giant balloons. The backdrop is prompting companies to increasingly look to space to blanket the globe in connectivity, allowing them to reach the other half of the world's population that doesn't have Internet. Those projects face steeper initial costs and take longer to deploy, but they might provide more consistency with longer lifetimes.

While Amazon's (NASDAQ:AMZN) Project Kuiper and Facebook's Athena are still mostly on paper, SpaceX has now launched more than 1,500 internet satellites of its planned Starlink fleet into low earth orbit. "Once we can predict cash flow reasonably well, Starlink will IPO," Elon Musk wrote in a tweet on Feb. 9. He has also suggested that retail investors will get "top priority" in the coming offering.

What else is happening...

"Flippening" chatter is gaining steam in the crypto world.

JPMorgan's (JPM) Dimon is fed up with Zoom calls and remote work.

Full approval for Pfizer's (PFE) vaccine could come by end of May.

Jessica Alba's Honest Company (HNST) prices IPO at $16 a share.

Virgin Galactic (SPCE) gains as rival prices flights at $500K per seat.

Facebook (FB) oversight board to announce decision on Trump ban.

Climate activists bombard BlackRock (BLK)

to move against Exxon (XOM).

GE (GE) shareholders disapprove CEO Larry Culp's pay plan.

Equinox in talks to go public via a Social Capital SPAC (IPOF).

Krispy Kreme files confidentially for initial public offering.

Tuesday's Key Earnings

Activision Blizzard (ATVI) +5.4% AH on an easy beat-and-raise.
Caesars Entertainment (CZR) +7% AH with "sold-out weekends in Vegas."
ConocoPhillips (COP) -0.3% paring gains after headlines in Malaysia.
CVS Health (CVS) +4.4% as an improved outlook topped consensus.
Dominion Energy (D) -1.2% posting mixed results.
DuPont (DD) +1.6% with all business segments showing growth.
Lyft (LYFT) +6.1% AH topping rider estimates, narrowing loss.
Match Group (MTCH) +5.8% AH predicting a 'summer of love.'
Pfizer (PFE) +0.3% boosting anticipated vaccine revenue.
Under Armour (UAA) -1.2% despite earnings topper, guidance lift.
Prudential Financial (PRU) +1.9% AH adding to buyback plan.
T-Mobile (TMUS) +2% AH raising guidance across the board.

Today's Markets

In Asia, Japan closed. Hong Kong -0.4%. China closed. India +0.9%.
In Europe, at midday, London +1.1%. Paris +0.8%. Frankfurt +1.4%.
Futures at 6:20, Dow +0.6%. S&P +0.4%. Nasdaq +0.3%. Crude +1.1% to $66.44. Gold flat at $1776.40. Bitcoin -1.8% to $55421.
Ten-year Treasury Yield +1 bps to 1.60%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:30 Fed's Evans: Monetary Policy
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
11:00 Fed's Rosengren Speech
12:00 PM Fed's Mester: Economic Outlook
3:00 PM Fed's Evans Speech

Companies reporting earnings today »

This article was written by

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Wall Street Breakfast, Seeking Alpha's flagship daily business news summary, is a one-page summary that gives you a rapid overview of the day's key financial news. It's designed for easy readability on the site or by email (including on mobile devices), and is published before 7:30 AM ET every market day. Wall Street Breakfast readership of over 3.4 million includes many from the investment-banking and fund-management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day: http://seekingalpha.com/account/email_preferences Podcast RSS feed: https://www.spreaker.com/show/5725002/episodes/feed

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Comments (66)

VoiceofSanitySometimes profile picture
Someone needs to explain to me the current economic model of protesting.

And before I start asking questions, let me point out that I am anything but opposed to protesting. I did a lot of it in my youth. I've organized protests among younger people and adults in our school district to fight for what they deserve.

What is curious to me is that because of that background, I know how hard it is to organize even a simple rally. Getting 20 or 30 parents to show up a school board meeting to make a case for something that impacts their kids takes days of planning and hours and hours of e-mails and phone calls.

Yet every time I hear news these days, there seem to be protestors there before the electrons even get to my computer screen. Sometimes, like a Supreme Court decision, it is known in advance when the decision will be made so they can be ready, but most times that isn't the case. How do they know?

Is there a protesting industry that has people always at the ready? Is it a job you can get? Are they like the folks who chase tornadoes, driving around waiting for the call that there is a funnel cloud only 40 miles away in Wichita? Are there strategically located storerooms filled with posterboard and markers, and do they have people trained in writing protest slogans while they race to the next location? Is it like obituaries, where slogans are planned in advance for things that might happen?

I'm sure this sounds like a lot of dumb questions, but I'm actually very curious...
Doge is a joke remember

say it with pretend experts

“ We were wrong”
Who made the fake coins for the picture?

Those might be worth something.

An NFT for sure must be out there for the first fake physical bitcoin and dogecoin.
VoiceofSanitySometimes profile picture
A federal judge just overturned the national eviction ban.

I've asked many times how it was possible the CDC had the authority to institute such a thing, and apparently Judge Dabney Freidrich has the same questions.
luckylalo profile picture
A friend of mine from high school, real pretty girl, with no investment experience has made $50,000 plus off of dogecoin.

I am happy for her but a little salty that I cling onto my value investing and keep missing out.
Was she a cheerleader? Has she hit the sell button yet?

Unless she sold, hasn’t made anything yet.

Once this beauty starts crashing, it will not be pretty for the baggies.
luckylalo profile picture
@Entreri I know what you mean. But I keep thinking things are speculation and stay away. And these prom queens from high school are getting rich.
@Wall Street Breakfast Steve Brown is the BEST when it comes to doing this gig! Keep up the great work! 😀
DOGE going to a Dollar!
With cheerleader and biggest recipient of it's rise, Elon Musk, behind it, it will soar so he can book his profits, as he knows how to skin a cat.
GreenEggs&Ham profile picture
I wouldn't touch crypto...again.

Ethereum is the one to own imo. That said I bought
about $500 worth in 2016. Sold at a small loss a short time later. If my math is correct, and I suck at math, it would be worth around 150K now.

I own no crypto or crypto related stocks.

My 2 oldest have owned it for a while. Since 2014 I think.
My youngest daughter bought some dogeycoin at .8
Her fiancé bought $2k worth @ around .30

I don't trust crypto. Worried the government could somehow put the kibosh on it.

They're young so if it goes south they have many years to make back any losses.

My 2 oldest can't lose unless it becomes worthless.
@GreenEggs&Ham clueless btc is king
@GreenEggs&Ham Why do you think the govt would put a 'kibosh' on it?
Made some easy dough on litecoin. Dogecoin is best scam there. It's cheap.
JAMES CARLINI profile picture
Crypto! ,,,, CRYPTO!!....CRYPTO!!!!! Sounds a lot like Brighto!!

Until cryptocurrencies are accepted by governments and central banks, they are a crapshoot. They are NOT considered a store-of-value. They are ALL speculative - like stocks. Why? The volatility.

Those who have bragged they took a $600 investment and are now hovering at $50,000 - GREAT for you!! Cash half of it in before it implodes.

Not a player in Crypto. The craze is out there - granted - but don't think it is a "safe bet". It isn't.
@JAMES CARLINI I don't think that guy bragged for his $600 turning into $50,000. He actually seemed to be very modest and admitted this is just making money out of thin air
@JAMES CARLINI - stocks...e-currecy...futures...what's the diff? It's all legalized betting.
Crypto is a greater fool meda influencing (advertising) mind control experiment.
Invader from Earth profile picture
It will be good to have the world get well again. However, these variants in India and Brazil have me stumped. Are these really “natural” variants or “unnatural variants.” Are we convinced that China has stopped its release of these horrible viruses? Has the United Nations even begun to hold China accountable for COVID-19? This virus has a severe hold on our stock markets and economy. Gold is looking more attractive as the dollar weakens.
Invader from Earth profile picture
@Invader from Earth The answer is no. The UN has not held China accountable for much if anything. Where is the WH? Congress? Tariffs on China goods and services? What about a California port tax? Why do we still support USA tobacco sales at the USDA?
@Invader from Earth Israel has 71 cases of the India COVID and chilli variant, Brazil too! As long as the planes are flying so will this virus! The whole point of this virus was to cripple world economies which is what I read. G d help us
I also heard china’s military is the largest in the world
Plus they sent a rocket that malfunctioned into space and no one knows where it will drop.
@Invader from Earth said "Tariffs on China goods and services? "

Still there, last time I looked they have not been withdrawn.
GratefulGuy57 profile picture
Crypto coins sprouting like Spring dandelions! Where's the scarcity and promise of limited supply that justifies higher valuations? I realize fiat money has a similar problem but it is government sanctioned and it's supply growth pales in comparison to crypto. In the crypto world all you need is a funny name and you are in business.
Muppets and algos buy anything that's going up. Momo trading is pro cyclical.
Fischel profile picture
@GratefulGuy57 yes, to eeditorialize this properly, we have to say the US dollar is sprouting like tulips ... and the altcoins are merely a parallel universe , except with the altcoins, the people running them are not politicians and are generally decentralized and thus more fair
blueline profile picture
["It may be that interest rates will have to rise somewhat to make sure our economy doesn't overheat," Treasury Secretary Janet Yellen said on Tuesday]

Raising interest rates will probably have the opposite effect that Yellen wants.

We had the best economy in history and then intentionally crashed it and all we had to do was open it back up. Instead they print trillions of dollars and dump it into the economy.

Of course the economy is going to overheat. "The latest Atlanta Fed GDPNOW reading has the economy growing at a pace of 13.6 percent in the second quarter, and the consensus forecast of Wall Street economists is for growth between nine and 10 percent."
VoiceofSanitySometimes profile picture

Can someone tell me what it means for an economy to "overheat"? Does that mean it is too good? Does it mean there are too many jobs? Does it mean people have too much wealth?

One of those strange terms I've never understood.

The problem right now isn't that jobs are being created at a rapid rate or that the stock market is booming, it is whether (or when) getting there by printing money and creating govt debt will cause "the other shoe to drop".
Xempler profile picture
@VoiceofSanitySometimes Its a long and convoluted subject with many competing ideas about what constitutes a market overheating or the cause. Best if you google it and read several articles with different perspectives.
@VoiceofSanitySometimes Did you read the article? Literally from the above:

""""Thought bubble: What's wrong with an overheated economy? The bustling economic activity and increase in consumer wealth generally lead to high levels of inflation, asset bubbles and external economic shocks. The sharp rise in costs could also result in inefficient allocations as suppliers overproduce and create excess production capacity. When things slow down, a recession can hit, and central banks may attempt to raise interest rates before then to lower the amount of spending and borrowing in the economy.""""
SaltyDog62 profile picture
How does one invest in DOGECOIN?
Good to see Elon Musk getting the publicity he so richly deserves.
Buyandhold 2012 profile picture
If Elon Musk thinks that he is the Dogefather, then what about Janet Yellen?

Is she the Dogemother?

Has she taken a large position in DOGE?
artesianwell54 profile picture
Yeah Doge a joke well it isnt now and its going to that No 1 place looks like, too many people behind it
Fuyuki Wataru profile picture
Doge, if it grows too big will cause crypto to crash. Ripple did the same thing last time, and bitconnect.
@Fuyuki Wataru I bought ripple at .20 cents.

It’s almost 2$
Most cryptos mysteriously go up in price together.

And spike lower on weekends together.
@Phil Dumfee what’s your point?
I don’t care how ridiculous I think doge is, I’m mad I missed out on the ride
@equitygotti So is Warren Buffett
@equitygotti - if you are smart enuf or have connections, make your own. Easy enough to do.
Ironically I had FOMO in December in crypto and invested a fraction of a percent of my portfolio in DOGE to be safe. My $600 investment is now at $50k+ in my portfolio. Ironically I am one of the HOLDers you are talking about. I view my investment as $600 not the $50k and we will see if it goes to the moon or if I squandered $600. Either way I don’t believe in crypto at all but amazed by the craze. It’s pretty exciting
@charbert i would take some of that off the table now. Like the 600 + a handful multiples of that. But who am I to say - my $5 position in Doge grew to $10 in a week or so ))
@mrvgg maybe, looking at trends it doesn’t seem the crypto craze is anywhere close to over. It more seems to be getting heated up.
@charbert It's a sign of the times when you can say an investment that gained 80x in 4 months isn't already at the moon.
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deercreekvols profile picture
Open invitation to Brunch.

Hope you are able to stop in after Breakfast.

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