The charts that matter: Tesla buys bitcoin and commodities surge

published 13 February 2021

Welcome back.

Don’t miss the MoneyWeek podcast this week. Merryn talks to one of our favourite people on Twitter, Duncan Lamont of Schroders. Duncan tells Merryn where the most promising sectors in an overvalued market are right now, and they have a chat about the difficulties of getting people to be honest about ESG investing. Have a listen here.

In this week’s issue of the magazine, Dr Mike Tubbs does an excellent job of explaining how the Covid vaccines work and looking at the companies behind them. We also look at private equity funds and other ways to invest in small, fast-growing companies. Subscribe now to get your first six mags free.

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Our latest “Too Embarrassed To Ask” video looks at what “hedge funds” are. The short answer is - they’re a lot less glamorous than they look. Find out more in just over two minutes by watching our video here.

Here are the links for this week’s editions of Money Morning and other web stories you may have missed.

Monday: Here’s why you need to take claims for ESG investing with a big pinch of salt
Merryn’s blog: How to buy into the next big commodities bull market
Tuesday: Tesla just bought a load of bitcoin – get ready for executive FOMO
Wednesday: Markets are starting to bet on inflation returning – you should too
Thursday: There’s more to soaring commodity prices than the post-Covid rebound
Friday: Why you don’t need to worry about the GDP figure, however ugly it is

Now for the charts of the week.

The charts that matter

Gold recovered from last week’s lows, helped by the dollar dipping.

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) dipped this week as US economic data was weaker than had been forecast, with inflation, consumer confidence, and the latest jobless figures missing expectations.

(DXY: three months)

The Chinese yuan (or renminbi) was broadly flat against the US dollar (when the red line is falling, the yuan is strengthening).

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond was raring up for another shot at the 1.2% level. It’s clear that despite some mediocre economic data, investors are starting to believe the inflation story.

(Ten-year US Treasury yield: three months)

Again, one to keep an eye on is the yield on the Japanese ten-year bond.It’s still very close to 0% but it’s higher than it has been in some time.

(Ten-year Japanese government bond yield: three months)

The yield on the ten-year German Bund was higher (still very negative, but higher than it has been since September 2020).

(Ten-year Bund yield: three months)

Copper surged this week. Suddenly everyone is a believer in a new commodities supercycle.

(Copper: nine months)

With commodities surging higher in general, the Aussie dollar rebounded strongly from its recent dip.

(Aussie dollar vs US dollar exchange rate: three months)

Cryptocurrency bitcoin has shot back up to a fresh all-time high after Tesla founder Elon Musk said the company was following in the footsteps of some other early adopter CEOs and putting a large chunk of its cash into the cryptocurrency. It’s funny yet strangely inevitable that two of the more speculative assets in this particular market cycle are coming together. If I’m being entirely honest with you, I think I’d rather own bitcoin than Tesla though I wouldn’t put a huge chunk of my money in either.

(I’ve just put the finishing touches on a guide to bitcoin that Dominic has put together for us – we’ll be giving you more details on how to get that next week.)

(Bitcoin: three months)

US weekly jobless claims fell to 793,000, compared to 812,000 last week (revised higher from 779,000). That was worse than economists had expected. The four-week moving average fell to 823,000 from 856,500 (which was revised higher from 849,500) the week before.

(US jobless claims, four-week moving average: since Jan 2020)

The oil price (as measured by Brent crude) surged even higher this week. It’s partly because Iran is now making uranium again, which means that Joe Biden is going to be hard-pressed if he wants to try to end sanctions against the regime. But it’s also partly because the market is finally waking up to the fact that oil is still something that we need.

(Brent crude oil: three months)

Amazon slipped again this week. It’s still trading in that tight range that it’s been in since peaking in September last year.

(Amazon: three months)

Tesla slipped this week, which is interesting, given that this is also the week that Musk announced that he’d bought bitcoin. He also talked about adding “James Bond-style” rockets to the Tesla to make it hover. I’m wondering if people are getting a bit fed up with the endless hype. One thing is for sure – I originally included Tesla here as a “blue-sky” indicator of market exuberance. I think that was the right decision. I also suspect that when the stock crashes it will crash very hard indeed.

(Tesla: three months)

Have a great weekend.

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John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.