Animal spirits unleashed, Bitcoin eyes $90,000, Shopify soars, OPEC cuts
As most of you know, Friday was my last day at BNN. They gave me a beautiful send off. If you missed it, you can watch here. They went all the way back to my first years on air – when I was a nervous girl with something to prove and naturally occurring collagen production.
Flippening: Bitcoin is nearing $90,000 and now sports a market valuation of $1.7 trillion. It is getting harder to ignore. In fact, if it was in the S&P 500 it would be the 7th most valuable company. It is now more valuable than Meta, JP Morgan and Berkshire Hathaway. And it is not just Bitcoin. Elon Musk’s fan favourite Dogecoin is now worth more than Newmont Gold (the world’s most valuable gold mining stock), Ford, and General Mills. Institutions are starting to notice. Yesterday morning, Bernstein’s head of crypto research reportedly said investors should “buy everything you can.” It is that kind of euphoria that can make the skeptics take pause. Indeed, Bitcoin’s own Fear & Greed Index now says we are in Extreme Greed territory. However, since this is such a retail driven market I took a look Google search interest. As you can see below, while it is poised to perk up, we are well off the interest levels back in 2021.
Animal spirits: Markets look to take a breather this morning after a stunning rally. European indices are down more than 1% across the board. Just how stunning has the rally been? We are smashing all sorts of records. The S&P 500 closed above 6,000 for the first time. The index has put up its strongest year-to-date performance since 1995, it’s strongest election year performance since 1936. For only the third time in the last 100 years the S&P 500 is on track to rise by more than 20% in back-to-back annual gains, according to Jim Reid at Deutsche Bank. The forward 12-month P/E ratio for the S&P 500 is 22.2. This P/E ratio is above the 5-year average (19.6) and above the 10-year average (18.1), according to John Butters at Factset. Earnings are expected to grow 10% this year and 15% next year. They better. Because the market is pricing in nothing less than that. Watch the bond market today, yields are rising again after a holiday yesterday.
Popify: Shares of Shopify are soaring more than 14% in the pre-market. Sales grew 26% and the company is forecasting sales growth in the mid-to-high 20s in the current quarter. I’m old enough to remember when they warned six months ago that they might not be able to grow above 20% this year. The stock fell 20% on that warning. Turns out that was a great buying opportunity because the stock is up more than 40% since then. “Q3 was outstanding,” said Harley Finkelstein, President of Shopify in the press release this morning. The call is at 8:30 and I’ll listen for commentary about what changed so dramatically in the last six months.
Rebuilding year: Home Depot is higher in the pre-market after boosting its forecast on higher demand stemming from hurricane damage. Home Depot sales are still falling as high mortgage rates keep the housing market subdued, but they didn’t fall as much as feared. Thanks to demand from consumers rebuilding after hurricane damage, Home Depot says sales are only going to fall 2.5% this year instead of their previous view of 3-4%. I’ll watch for if this rally holds. Hurricane demand is one-time in nature, the stock has already had a big run up and there has been no change to mortgage rates even with the Fed cutting.
The fourth cut is the deepest: OPEC is cutting its forecast for oil demand for a fourth consecutive month. OPEC now expects crude demand to grow by just 2% this year, which is well below what they saw in July. The reduced forecast is because of less demand from China, India and Africa. Lower oil prices already reflect this, so not sure how market moving it is. But something to keep in mind amidst all this ebullience. On the TSX, Suncor reports tonight.
