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Cryptocurrency market to hit $1 trillion valuation in 2018: Kraken CEO

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The entire cryptocurrency market will reach a total value of $1 trillion this year, according to the chief executive of a top digital currency exchange.

Jesse Powell, founder and CEO of Kraken, said Tuesday that the cryptocurrency market would continue to see an “acceleration” of growth — despite a sharp pullback in recent weeks.

He told CNBC: “You’ve got a lot more kids graduating from crypto programs at universities now. I think we’re just going to see it continue exponentially from here.”

Asked whether he thought the market capitalization of all cryptocurrencies would hit the $1 trillion mark in 2018, Powell agreed.

The current market cap of all cryptocurrencies stands at around $417 billion, according to data from industry website CoinMarketCap. It hit an all-time high of more than $800 billion in early January, before falling dramatically as a result of a huge cryptocurrency sell-off.

Traders have been weary of regulatory signals recently as government ministers in South Korea and India have both upped their rhetoric against virtual currencies. On Monday, three top European Union regulators issued a warning to consumers about the risks associated with buying cryptocurrencies.

However, cryptocurrency enthusiasts seemed to be mostly positive about a hearing on cryptocurrencies held by the U.S. Senate Banking, Housing and Urban Affairs Committee last week.

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Stock futures are flat in overnight trading after Dow closes above 34,000 for the first time

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Traders on the floor of the New York Stock Exchange.

Source: NYSE

Stock futures were little changed in overnight trading on Thursday after the Dow Jones Industrial Average crossed the 34,000 threshold for the first time ever.

Futures on the Dow Jones Industrial Average gained 10 points. S&P 500 futures traded near the flatline and Nasdaq 100 futures dipped 0.2%.

During regular trading hours, the blue-chip Dow rose 300 points to top the 34,000 milestone amid blowout economic data. The S&P 500 and the Nasdaq Composite gained more than 1% each on Thursday.

“The Dow’s push through 34,000 is a signal that investor appetite for future growth prospects is spilling over into more value-oriented names,” said Peter Essele, head of portfolio management at Commonwealth Financial Network. “The demand for industrials and more cyclically-oriented areas should continue as the vaccines take hold and earnings potentially come in higher than originally expected.”

Investor sentiment was boosted by economic data on Thursday that pointed to a rebound in consumer spending and the jobs market.

Retail sales jumped 9.8% in March as additional stimulus sent consumer spending soaring, topping the Dow Jones estimate of a 6.1% gain.

Meanwhile, U.S. jobless claims dropped to the lowest level since March 2020. The Labor Department reported 576,000 first-time filings for unemployment insurance for the week ended April 10. Economists polled by Dow Jones expected a total of 710,000.

“Retail sales, much like every other data point in the past month, is the polar opposite of the same period a year ago,” said Jamie Cox, managing partner for Harris Financial Group. “The data were off-the-charts horrible, now the data are off-the-charts terrific. It’s what happens from here that matters.”

The first-quarter earnings season started on a high note with big banks reporting results above expectations. Morgan Stanley is set to release its earnings Friday before the bell.

Wall Street is poised to wrap up another winning week. The S&P 500 has gained 1% this week, on pace for its fourth straight positive week. The Dow has climbed 0.7%, while the Nasdaq is up 1% through Thursday.

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10-year Treasury yield slid. Why it could be good news for stocks

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The Charging Bull or Wall Street Bull is pictured in the Manhattan borough of New New York, January 16, 2019.

Carlo Allegri | Reuters

The benchmark 10-year Treasury yield slid to a one-month low Thursday in a counterintuitive move that should be a positive for the stock market.

Treasury yields, which move opposite price, had been falling, but they picked up momentum after two early morning economic reports on Thursday. One was March retail sales, which jumped nearly 10%, and the other was weekly jobless claims, which fell to 576,000 — the lowest level since the early days of the pandemic.

Strategists said the bond market was beginning to price in a peak for economic growth, expected to be as much as 10% this quarter. It also was responding to news of possible Japanese buying in Treasurys, as well as some worry about Covid.

The 10-year yield fell as low as 1.53%, before coming back to 1.57%. A basis point is equal to 0.01 percentage points. The market watches 10-year Treasury closely because it influences mortgage rates and other consumer and business loans.

Thursday’s move in the bond market is the opposite of what might normally be the case.

Generally, very good news on the economy would have triggered a fear that the Federal Reserve would be comfortable raising interest rates, and yields would hold at higher levels or rise further. Stocks rallied on the reports, as investors took them as good news.

Andy Brenner, head of international fixed income at National Alliance Securities, said there are a number of reasons for the move lower in yields, but he views it as temporary. “I’m not changing my view of higher yields later in the quarter,” he said. “This is good for stocks for now.”

Some strategists said the bond market may be moving into a period in which it trades in a range instead of moving to new highs or heading sharply lower.

Treasury yields’ relationship with stocks

Treasury yields had been a source of volatility for stocks before this month. The abrupt run-up in the 10-year — from under 1% at the end of 2020 to a high of 1.77% at the end of March — jolted the stock market. Investors feared interest rates would keep rising, stealing investment dollars from stocks.

Strategists said the move lower amid strong data was being viewed as a sign that the market was now looking at those statistics in the rearview mirror.

The yields had been moving higher on expectations for a very strong second quarter and economy in general. Stimulus spending and the amount of debt needed to pay for it also influenced the climb in yields.

“Number one, we’re delivering into high expectations for data…This was the way the market thinks about it. If it’s strong now, it’s taking from the next one. In the second quarter, we’re going to get peak data and we’re going to get peak fiscal stimulus spending,” said Jim Caron, Head of global macro strategies on the global fixed income team at Morgan Stanley Investment Management.

“Third quarter will be strong, but it will be weaker than second quarter,” he said.

In terms of data, “the rate of change starts to go the other way. You start to say well around 1.7% [10-year yield] is probably not a bad place to get long,” Caron said.  

He said it could mean less volatility, and that would be good for stocks and other assets.  

“I think we can enter in a range as the Treasury market is notorious for doing. It can sit in a 20 basis point range for months,” Caron said.

Concern around the pandemic

Brenner of National Alliance Securities said one reason yields are moving lower is concern about Covid cases increasing and the trouble with the Johnson & Johnson vaccine slowing the path to herd immunity.

He said news about the vaccine, which was paused for blood clots in six patients, could raise overall concerns about the safety of vaccines, particularly among parts of the population that are already inclined to oppose them.

But Brenner said that’s just one factor. “I think you were able to get the 10-year below the 1.60% level and that caused an acceleration,” he said.

“Bonds are doing better because they’re viewing the economy as possibly slowing. Stocks are doing better because interest rates are going lower and the economic numbers, which are backward looking, are really good,” Brenner said.

He said hedge funds have also been pushing yields lower, after covering shorts in the 1.70% to 1.75% area. Another big area for shorts is 1.345%, Brenner added.

He said the 1.47% level should act as a floor, and strategists note that the 1.50% level is psychological support. But Brenner expects the period of yields heading lower will be short-lived.

“The Covid stuff will take the back burner and the vaccines will get ahead of it. You had a window that allowed hedge funds to push the market,” said Brenner.

Ian Lyngen, head of U.S. rates strategy at BMO, said another reason for the buying spree in Treasurys was prompted by a Japan Ministry of Finance report.

“If you look at the [Ministry of Finance] data, which came out overnight, we see the week ended April 9 the Japanese bought more than $15 billion in overseas notes and bonds. The market is assuming the vast majority of that was allocated to U.S. Treasurys,” he said.

“This also occurred at a period when the market was losing bearish steam,” Lyngen said. “We stopped trading strong data toward higher rates. That has let rates simply drift lower.”

Treasurys also passed another test this week, with a series of big auctions. The 10-year was auction was Monday. “They bought $38 billion at 1.68%,” Brenner said. “You’ve got a 14.5 basis point profit.”

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Biden will ‘take further actions’ if Russia escalates actions against U.S.

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WASHINGTON – President Joe Biden on Thursday addressed the sweeping sanctions his administration imposed on Russia, a move that seeks to address a litany of malign behaviors and is expected to peeve Moscow.

“If Russia continues to interfere with our democracy, I’m prepared to take further actions to respond. It is my responsibility as president of the United States to do so,” Biden said from the White House.

“I was clear with President Putin that we could have gone further, but I chose not to do so, I chose to be proportionate,” Biden said of the measures, adding that he did not want to “kick off a cycle of escalation and conflict with Russia.”

Biden also said that he proposed in a phone call with Putin that the two meet in person this summer in Europe to discuss a range of pressing issues.

The Biden administration unleashed several sanctions that named 32 Russian individuals and entities for their roles in attempting to influence the 2020 U.S. presidential election, five individuals and three entities linked to Russia’s illegal annexation of Ukraine’s Crimea, and six technology companies for supporting support Russian Intelligence Services.

In addition, the State Department announced the expulsion of 10 officials from the Russian Embassy in Washington.

Russia has long brushed off allegations of meddling in U.S. elections, human rights abuses, cyberattacks as well as reports of placing bounties on U.S. troops serving in Afghanistan.

Last month, the Biden administration issued its first sanctions on Russia over the alleged poisoning and subsequent detention of Putin critic Alexey Navalny.

Navalny, a leading critic of Russian President Vladimir Putin, flew to Russia from Berlin, where he spent nearly half a year recovering for a nerve agent poisoning that took place last August. He was arrested at passport control and later sentenced to more than two years in prison. The U.S. reiterated its calls for his immediate release.

The Kremlin has repeatedly denied having a role in Navalny’s poisoning.

Moscow’s fiery reaction

Russian President Vladimir Putin attends a Victory Day military parade marking the 74th anniversary of the end of World War II.

Anadolu Agency | Getty Images

Russia described the latest moves by the White House as a blow to bilateral relations and vowed to impose swift retaliatory measures. The Kremlin also blamed the United States for weakening the diplomatic relations between Washington and Moscow.

Also on Thursday, Biden signed an executive order that allows Washington to sanction any sector of Moscow’s economy, significantly broadening the scope of sanctions authority. Under this new authorization, U.S. banks are prohibited from conducting transactions in the primary market for new ruble or non-ruble-denominated bonds from Russia after June 14.

A senior Biden administration official, who spoke on the condition of anonymity, described the measure as having a rippling effect in the Russian economy.

“When you remove U.S. investors from the primary market, it causes a broader chilling effect,” the official explained. “What you see is that Russia’s borrowing costs rise, you see that there’s capital flight and you see the currency weakens in tandem. And you know, that has an impact on Russia’s growth rate and it has an impact on Russia’s inflation rate,” the official added.

Russian Finance Minister Anton Siluanov described the new sanctions as a missed opportunity for U.S. banks and investors, adding that he expected demand for Russia’s state debt to remain high. Siluanov also said that the ministry will closely monitor market conditions.

The Central Bank of Russia also said on Thursday that it was carefully watching the market and that it was “ready to use the tools at its disposal in order to maintain financial stability.”

The sanctions package comes on the heels of a Tuesday call between Biden and Putin, the second between the two leaders since the Democratic president took office in January. Biden later described the call as “candid and respectful.”

On the call, Biden proposed holding a summit somewhere outside the U.S. and Russia “to discuss the full range of issues facing” the countries.

The Kremlin later on Tuesday said in a statement that Biden had “suggested considering the possibility of holding a personal summit meeting in the foreseeable future.”

A senior administration official, who spoke on the condition of anonymity, said that Biden informed Putin of his decision to impose the sanctions.

“We also want to be clear that we have no desire to be in an escalatory cycle with Russia, we intend these responses to be proportionate and tailored to the specific past activities, paths, actions that Russia has taken,” the official said.

The administration official declined to speculate on possible retaliatory actions Moscow would take on the heels of the sweeping sanctions.

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