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Tesla and Apple Show Dominance in Their Industries, Stocks Start the New Year with a Bang & Bitcoin Enters it’s ‘Teen’ Years

Happy New Year!

Stocks surge to start the New Year!

U.S. and European stocks started 2022 in the green.  The traditional Santa Claus Rally continued into the New Year as investors continue to shrug off reports of surging Omicron cases.  Although last week saw over 10 million cases of Covid-19, nearly double the previous record from April 2021, hospitalizations and deaths appear to be decoupling from case counts.

The market appears sanguine about the surge of infection from Omicron and some observers even hope it may bring about the end of Covid-19 as a pandemic.  This is offset by concerned health officials and differing view among politicians and countries as they fear the effect of both the disease itself and the massive shortage of workers that is looming on the horizon as the virus spreads.

💡 Despite hitting record highs…
As was the case in South Africa, where the country declared itself past the latest COVID peak, many countries around the world hope for the best as it seems Omicron, though highly contagious doesn’t produce a disease as severe as previous variants of the virus.

Airlines remain the poster child for the impact of missing workers on the economy as thousands of flights are being cancelled daily.  Despite the disruption airlines stocks in the U.S. were generally up on Monday.  Southwest (LUV) saw its shares up by 2.35%, while American Airlines (AAL) rose by 4.42%, Delta (DAL) was up 3.15% and United increased by over 4% as well.

In mid-afternoon trading the Dow & S&P 500 had both risen by 0.45% and the Tech-laden NASDAQ was up close to 1%. 

In Europe the FTSE wasn’t trading but the DAX closed up 0.86% and the CAC 40 end the day).90% higher.

Bitcoin becomes a teenager

Thirteen years ago on January 3, 2009, the Genesis Block of Bitcoin was mined. For many this marks the official launch of BTC as a cryptocurrency, rather than the Bitcoin whitepaper released by Satoshi Nakamoto in October of 2008.

💡Where is crypto headed?
What started as a curiosity for some has become decidedly mainstream, even if the majority of people surveyed still do not understand how the Blockchain and Crypto work, hardly anyone isn’t aware of the asset class at this point. Nevertheless, despite its growing popularity among investors, as well as having other applications in the digital space, many people are speculating against Bitcoin’s volatile price.

In 2021 the cryptocurrency passed a number of milestones such as a $1 trillion market cap and set a number of record highs before peaking, for now, at $69,044 on November 10th. While we don’t know where BTC will head in 2022 we do know that 90% of the available coins have been mined through its computing intensive proof of work model and interest is at an all-time high based on the hash rate of computing power driving the network.

Tesla and Apple continue to dominate their industries

Tesla (TSLA) increased by 12.35% to 1,187.30 as the electric carmaker reported record vehicle deliveries for 2021 and appears to be managing the covid-19 induced cheap shortage better than it rivals.  Investors continued to ignore bad news as a recent spate of recalls and traditional concerns around the valuation of the company do not seem to be giving buyers of both the vehicles and the stock any pause.

💡 Apple, now worth $3 Trillion
Apple is the first company to reach the milestone

Apple (AAPL) was up 2.61% to $182.21 in the afternoon session and was briefly the first U.S. company to hit a $3 trillion market cap when the shares traded above $182.86 earlier in the day.  Investors were reacting to good news about holiday sales particularly in the Company’s Wearables segment.

“The desire of gold is not for gold. It is for the means of freedom and benefit.”

Ralph Waldo Emerson

Richard Ellison, CFA CAIA