| Good news on vaccine, bond selloff deepens, and oil supply debate heats up. ResultThe first real-world indication that immunization will curb transmission of the coronavirus comes from Israel, which is leading the world in the vaccine race. There, the Pfizer Inc. and BioNTech SE Covid-19 vaccine appeared to stop the vast majority of recipients becoming infected. In the U.K., an aggressive program to distribute the jab is driving rare outperformance in markets as its population prepares for a slow easing of rules. Prime Minister Boris Johnson is set to announce schools will reopen from March 8 as part of his roadmap for exiting the nation's third lockdown. Yields BreakoutMarket reflationistas are winning the day as bond yields spike from Australia to the U.S. A key part of the Treasuries curve -- the gap between 5- and 30-year yields -- touched the highest level in more than six years. There are real-life indications of price pressures to back up the market moves. Figures last week showed U.S. retail sales surging and U.K. prices picking up -- both nations that are moving fast with vaccinations. Even in Europe, the prospect of inflation is being entertained. It's a bad time to be a bond bull: HSBC strategists Steven Major and Lawrence Dyer abandoned their recommendation to buy U.S. long bonds, saying they "cannot ignore" the reflation trade, even as they remain skeptical of it. Oil PoliticsSaudi Arabia and Russia are at loggerheads as they head into an OPEC+ meeting that's renewing the debate on global oil supply. Riyadh is said to prefer keeping output steady while Russia wants to proceed with an increase. Iran is also set to take part as the Islamic Republic engages in a diplomatic back-and-forth that could eventually lift sanctions on its crude exports. Attention will also remain on Texas as the state tries to recover from the extreme weather. West Texas Intermediate crude traded around $60, just off a one-year high. MarketsBonds saw a deepening selloff and metals rallied as investors priced in bets for inflation and faster economic growth. Overnight, the MSCI Asia Pacific Index fell 0.7% while Japan's Topix index closed 0.5% higher. In Europe, the Stoxx 600 Index had lost 0.7% as of 5:40 am as investors questioned whether strong growth will lead governments to pull back on stimulus. Copper vaulted above $9,000 a ton. Coming up... The Chicago Fed National Activity Index for January is at 8:30 a.m., while the Dallas Fed Manufacturing survey for February is at 10:30 a.m. Among companies reporting earnings today are Royal Caribbean Cruises Ltd., Discovery Inc. and Ingersoll Rand Inc. What we've been readingThis is what's caught our eye over the last 24 hours. - Biden's $1.9 trillion stimulus plan enters three-week Congress dash
- What to do if you didn't get your full stimulus check
- Inflation angst is about to rewrite stock market playbook
- If the flood comes, homeowners will be on their own
- Erdogan's fallen economy czar breaks silence
- Bitcoin rally faces falling market liquidity
- Africa and the Antarctic offer glimmer of hope for travel industry
- The two hours that nearly destroyed Texas's electric grid
And finally, here's what Joe's interested in this morningGold is having a bad run and Bitcoin is having a great run. And so there's this narrative getting out there that Bitcoin is stealing gold's mojo and that in a world with no Bitcoin, gold would be on a tear. It's a nice-sounding meme. Digital gold winning hearts and minds. Gen-Z and Millennials putting their money with the (not)-shiny new thing. And there's definitely a lot of bug-on-bug warfare that's enjoyable to watch on Twitter. But the evidence doesn't stack up. There's good reason to think that even if Bitcoin didn't exist, gold would be in the dumps in this macro environment.
To start, here's a chart of gold (yellow line) versus 10-year real interest rates (the white line, flipped over). Ten-year real rates hit their lows twice over the last year, at the beginning of August and in the beginning of January. Both times saw peaks in gold. Obviously the chart is far from a perfect correlation, but you can see that in periods where real rates were declining (white line going up), it was good for gold. And vice versa. You don't need Bitcoin to explain the action.  Next up, for the last three years, you can see that the ratio of the S&P 500 to gold (white line) has tracked pretty closely the ratio of small-cap stocks to the S&P 500. Since the end of September, small caps have been trouncing the large caps. And the S&P 500 has been trouncing gold. Once again, the relationship is holding and you don't need Bitcoin to explain any action.  Okay so it's clear that in this type of environment that we've seen, gold would not likely be doing well, no matter what. But why not? Why wouldn't be Bitcoin be sapping the marginal hedging dollar from would-be gold buyers? Well, although the "digital gold vs. gold" narrative is fun, it's not clear that it's real in any meaningful sense. On a recent podcast we did with Goldman's top commodity strategist Jeff Currie, he pointed out that Bitcoin wasn't behaving like a hedge but much more like a "risk on" asset. In other words, you can talk about Bitcoin's safe-haven appeal, but in actuality it's all part of the same Tesla/MOMO/SPAC/Cathie/Chamath trade, representing energetic animal spirits.  Even this morning, we see it. As of this moment it's looking like a down day for the coin and a down day for NASDAQ futures. As for now, Bitcoin and gold are just fundamentally different things with different drivers, and the movements of one don't explain much about the other. Joe Weisenthal is an editor at Bloomberg. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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