The tail end of December is a good moment to sum up the year that is about to end, and plan for the one ahead.
In today’s DB we will trace back the most salient moments of the year just past.
January – GME
On the last trading day of 2020 GME closed at around $18. Twenty trading days later, it touched $483. Its return since 2019’s trough was over 100x.
A self-organised mob centered around then-unknown subreddit r/wallstreetbets recognized a chance to squeeze the short hedge funds who had been attacking the company and the rest is history. Some traders who used options saw returns in the order of 10,000x.
Keith Patrick Gill, going by the alias RoaringKitty on Youtube, led the way with a gain that net him $30M+- embodying the dream of the self-reliant trader – who does not need a job because they can make money on the market.
February – Bezos steps back
The then-richest man in the world steps back from running Amazon as he’s got his sight on a bigger fish – space.
March – NFTs and Checks
March is a big month for markets.
President Biden signs a $1.9TN stimulus bill that includes a $1,400 support check for Americans in need. Forced lockdown and economic support will lead many to reconsider their career choices, ultimately leading to a labour shortage.
In parallel, digital artist Beeple sells digital rights to a collage of his works for $69M at Christie’s – launching the NFT craze.
A Evergrande container blocks the Suez Canal, worsening the global supply chains crunch.
April – Archegos blows up, BTC soars
Hedge fund Archegos leaves a $10bn smoking crater across various global brokers after a few highly leveraged bets go poorly.
Meanwhile, BTC touches a new high of $63k, marking a 10,000x performance over 10 years from $6-7 in 2011.
May – The world re-opens, and inflation begins to look suspiciously strong
In the US and worldwide, lockdown restrictions ease and the hospitality industry breathes a sigh of relief.
Inflation reaches 4.2% in the US. The market seemed to have anticipated it, as the first week of May sees SPX drop 5% peak-to-trough, save resuming its trend higher a few days later.
The month remains a flat one for US equities.
June – Home prices jump, AMC is up 30x ytd
In another salvo in the inflation wars, home prices in the US post a 24% increase vs the year prior – led by abundant liquidity, strong employment and work-from-home considerations.
Meanwhile AMC is the new squeeze story, reaching $60+ at the beginning of the month from $2 at the start.
July – Tech booms and as the space race heats up
Markets remain buoyant as the space race continues, with Branson and Bezos running for the stratosphere and beyond.
Whilst the Delta variant raises the prospect of further lockdowns and restrictions, the Tech sector is in full boom with all-time-high record profits for the quarter.
August – Fed tapering, Crypto hits a low
Regulators begin to take action on the widespread adoption of cryptocurrencies, and Bitcoin falls 50% to $30k.
Meanwhile, the Fed opens the door to tapering its bloated $8TN balance sheet.
September – China wages war on Crypto
China decided that the energy consumption of crypto is not in line with the PRC’s objectives and bans mining. This is a boon for miners worldwide as up to that point China had represented 50% of global crypto mining activity.
Meanwhile AMC rallies back above $50, promising another start of the short squeeze rally of a few months prior.
Pictured below is the WSJ’s brilliant take of the love story between AMC’s CEO Adam Aron and the WSB crowd, who often refer to themselves as ‘apes’.
October – Oil is Back
U.S. crude closes above $80 a barrel for the first time since 2014, up 125% in one year.
November – The market peak
Bitcoin hits a new all-time-high and TSLA briefly peaks above $1,200 per share, for a total market cap of $1TN+. SPX touches $4,700 and stops there.
Time will tell if this was the peak month of the bull market or just of 2021.
Meanwhile, Powell is confirmed for a second term at the Fed, as broadly expected.
December – Inflation at 6.8%
US inflation hits its fastest annual pace since 1982. The Fed changes tone drastically, and other central banks follow suit.
The war on inflation is on, with Democrats clamouring for tighter policy to tame prices ahead of elections.
The weapons being deployed have spooky names such as “3 rate hikes next year” and “accelerated tapering”.
One does not need a crystal ball to wonder if the stock market might be a casualty.
Asset Spotlight: RTY
Equity Yields indicators for Russell 2000 rose and historically, this led to a median increase in Russell 2000 price of 18% over the following 3M.
TOGGLE analyzed 4 similar occasions in the past to produce the median projection and this insight received 5 out of 8 stars in our quality assessment.
Chart Source: TOGGLE
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Originally Posted on December 22, 2021 – A Year in Review!
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