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5 things to start your day

January 12, 2021
Five Things
Bloomberg

Democrats push ahead with impeachment, more companies distance themselves from the president, and the Treasury market is getting interesting. 

Demands 

The House is set to demand that Vice President Mike Pence invoke constitutional authority to remove President Donald Trump, a move that is likely to produce little result after the two agreed yesterday to work together until the end of their term. House Speaker Nancy Pelosi will go through with a vote on a single article of impeachment as soon as Wednesday, with attention then turning to the Senate where it remains unclear whether the chamber will start work on the issue when it reconvenes or wait 100 days to allow the incoming Biden administration to get crucial work done before turning to the issue. 

Fallout 

The backlash continues against President Trump and his cohort of supporters involved in the riot in Washington D.C. Deutsche Bank AG and Signature Bank are both pulling back from Trump, with the German lender saying it will not conduct any further business with the president and his company, while Signature announced it is closing two of his personal accounts and called on him to resign. Twitter Inc., which banned Trump from its platform last week, said it has closed more than 70,000 accounts for spreading QAnon-associated conspiracy theories. The president is also losing more political allies, with Acting Homeland Security Secretary Chad Wolf abruptly resigning yesterday. The FBI is warning of further armed protests ahead of the Jan. 20 inauguration of Joe Biden. 

Treasury test 

With the yield on the U.S. 10-year Treasury rising almost a quarter of a percent already this year, hitting 1.16% this morning, today's record-matching $38 billion auction of 10-year bonds at 1:00 p.m. Eastern Time will be closely watched. The beginning of 2021 has also seen a rapid steepening of the yield curve, as the prospect of a unified Democratic government led investors to reprice expectations for economic stimulus and debt issuance in the wake of the Georgia runoff result. The moves in the Treasury market are raising concerns about the resilience of the market rally, particularly in emerging markets. 

Markets quiet 

Global stocks stabilized this morning after yesterday's losses, with the halt in the rise of the dollar giving some room for dip-buying. Overnight the MSCI Asia Pacific Index added 0.3% while Japan's Topix index closed 0.2% higher. In Europe, the Stoxx 600 Index had gained 0.1% by 5:50 a.m. with cyclical sectors recovering from yesterday's slump. S&P 500 futures pointed to some green at the open, oil was at $53 a barrel and gold gained. 

Coming up...

November JOLTS job openings data is at 10:00 a.m. The DOE January crude oil output forecast and the WASDE report are both at 12:00 p.m. Fed Governor Lael Brainard, Kansas City Fed President Esther George and Boston Fed President Eric Rosengren speak later. Rosengren and George are joined by Minneapolis Fed President Neel Kashkari at a separate event on racism and the economy. CES continues and Jeffrey Gundlach holds his annual webcast. 

What we've been reading

This is what's caught our eye over the last 24 hours.

And finally, here's what Joe's interested in this morning

Twitter kicked Donald Trump off its site and then over the weekend Amazon stopped the app Parler from using AWS, rendering it basically unusable. And suddenly everyone was reminded again how much power a few big tech companies have to unilaterally decide who gets to use the internet and how. This is an exaggeration maybe, but only slightly.

It didn't get as much attention as Amazon and Twitter, but we also saw the fintech platform Stripe cut off payment services to Trump's campaign website, a reminder that access to payments is something private companies can deny people as well. Unironically, all of this news should have been "Good for Bitcoin" in theory, not because Trump is likely to set up a Bitcoin wallet for donations anytime soon, but just as an impulse for people to buy into a network that can't kick anyone off for any reason. A safe haven, so to speak, of internet property out of the reach of centralized companies or centralized regulators.



Except it wasn't good for Bitcoin at least in the short term, with the digital currency having one of its biggest one-day crashes since March yesterday. So what was the crash all about? Lol, it's impossible to answer of course. It just does that sometimes. But it's interesting that it came on the same day that Tesla finally got hit hard, falling nearly 8% for its worst day since late September. Also for much of the day yesterday, Bitcoin seemed to track the S&P in direction.

In other words, people can talk about Bitcoin as some hedge against the Fed, or some alternative to centralized networks. But in the here and now, mostly it's a Risk-On MOMO Meme stock. The marginal buyer here isn't buying it as some real macro trade. What matters is that it's been going up a lot and it's got a cool story.

Whether it's Tesla, Bitcoin, or the latest company to go public through a Chamath Palihapitiya SPAC, it's all about the optimistic pessimism or pessimistic optimism. The old versions of things (internal combustion engines, fiat currency, Wall Street banks) are perceived as lame and corrupt. The new versions are in demand at any price.

Joe Weisenthal is an editor at Bloomberg.

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