A bitcoin implosion could ‘spill over’ into stocks, warns Wells Fargo
Trading Nation
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Bitcoin saw one of its most dramatic recent price swings yet on Friday, prompting Coinbase to briefly disable trading.
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The Dow and the S&P 500 posted gains for the fifth straight week after Trump signed a bill that lowers corporate taxes.
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Despite trading at relatively extreme levels, some still see them as buys.
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This Friday, Coinbase trading was disabled temporarily and Trump signed the tax bill, a major legislative win for the GOP.
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Chris Harvey, head of equity strategy at Wells Fargo, discusses bitcoin and the market heading into 2018 with Brian Sullivan.
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As bitcoin going through this correction, investors should be cautious about buying into the dip
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Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn’t likely to cause significant long-term market impact.
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Boris Schlossberg of BK Asset Management says the ISM non-manufacturing report is key to watch ahead the jobs data released Friday.
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Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it’ll begin to strengthen heading into the second half of the year.
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Stacey Gilbert is the head of derivative strategy at Susquehanna.
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Managing Director, ACG Analytics
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Managing Director, Head of Technical Analysis, Evercore ISI
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Brian Sullivan is co-anchor of CNBC’s “Power Lunch” (M-F,1PM-3PM ET), one of the network’s longest running programs, as well as the host of the daily investing program “Trading Nation.” He is also a frequent guest on MSNBC’s “Morning Joe” and other NBC properties.
Christopher Harvey, the firm’s head of equity strategy, is paying close attention to the unprecedented activity in what could be one of the most epic bubbles of all time.
“There is a significant amount of froth in the crypto markets. We do think that if that froth comes out, it will start to spillover,” he warned recently on CNBC’s “Trading Nation.”
Bitcoin and its peers have been seeing wild price swings seen over the past week. Last week, bitcoin lost one third of its value in a single day before rebounding. That capped days of volatility which saw the digital currency surge to a new record near $20,000.
“What we’re worried about is froth coming out of that market, and that’s starting to affect equities,” said Harvey. “You’re seeing it a little bit, but just not to a large degree. And, it’s something to watch out for in 2018.”
Harvey has a 2863 S&P 500 Index year-end price target for 2018 — about a six percent gain from Friday’s close. It comes far below the 20 percent gains Wall Street has seen so far this year.
“You have to lower your expectations for next year. A lot of good news is already priced in, and we just don’t see that much going forward. It’ll be a decent market, it just won’t be a banner year,” he said.
Harvey sees the first half of the year stronger than the second. By then, he predicts stocks will come up against new challenges — whether the crypto market implodes or not.
“What the market will have to contend with is EPS [earnings per share] peaking, ISM potentially peaking, you’re going to have the yield-curve in all likelihood flattening — and in addition to that, you’ll likely have multiples start to compress, ” Harvey said. “You’re going to have to scratch and claw to stay afloat for it to break even.”
Not a Scientific Survey. Results may not total 100% due to rounding.
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