Reddit vs Wall Street, FOMC and key earnings
Yesterday was quite eventful, if not for news, then for price fluctuations in financial markets. The day began with the usual growth in demand for risky assets, but with the start of the American session, fear appeared on the market, which provoked a decline in the stock market, as well as some strengthening of the dollar.
At the same time, in general, there were no particular reasons for such a rapid change in sentiments, which is quite symptomatic.
As for the possible reasons for worries, we can only mention the meeting of the FOMC. But this reason is very weak, because the US Central Bank did not change the parameters of monetary policy, which was expected. This means it should not have provoked an emotional outburst.
The largest technology companies in the United States reported yesterday: Apple, Facebook, Tesla, as well as a number of other major players in the US stock market. Everyone expected a repeat of Microsoft's success. In fact, it turned out that way. After all, 2020 was a very successful year for the tech sector. Which, however, in no way justifies its current prices. So our position remains unchanged in 2021, we expect at least a powerful correction, and as a maximum - a full collapse of the bubble.
Speaking of bubbles. A very interesting battle has unfolded between Wall Street whales and small investors and traders. The latter decided to punish the hedge fund Melvin Capital, which sold all sorts of doomed companies like GameStop, BlackBerry and others. So, millions of retail traders rushed to buy the shares of these companies, as well as a number of others that the hedge fund Melvin Capital was selling. As a result, stocks skyrocketed hundreds of percent, and the hedge fund lost billions of dollars. But it was supported by Ken Griffin (founder and owner of Citadel) and Steve Cohen (founder and owner of SAC Capital), who invested $ 2.8 billion in Melvin.
So far, the epic confrontation continues. Considering that the current stock quotes, which are dispersed by Reddit users, have reached absolutely insane values, we would bet on investment whales, that is, the sale of GameStop shares can literally make anyone who dares to sell them rich. The fall of these stocks is actually inevitable. The only question is whether it will take place today or tomorrow.
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