The Great Resignation's Impact on Inflation; Coinbase and the Crypto Bowl

cryptocurrency coins over tablet with trading app

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U.S. equity markets are beginning the week mixed, with tech stocks higher and blue chips lower, as investors digest the mixed signals of potential war in Eastern Europe and rising U.S. interest rates. Some claim the ubiquity of cryptocurrency ads in last night's Super Bowl points to crypto's ongoing entry into the limelight, with Coinbase's site crashing after running an ad that gave away $15 worth of Bitcoin to new users.

Key Takeaways

  • Tech stocks are higher and blue chips lower, as investors digest mixed signals of potential war in Eastern Europe and rising U.S. interest rates.
  • The dollar continued strengthening against the euro and bond yields advanced further.
  • Oil and gas both rose.

Almost all of the stocks in the Dow are in the red, in a broad-based sell-off. 3M Co. shares (MMM) are falling after the maker consumer products ranging from Post-it notes to Ace bandages said declining demand for COVID-19 protective masks will hurt sales. 

Moderna Inc. (MRNA) and other COVID-19 vaccine makers are dropping as more pandemic restrictions are dropped with virus cases declining. However, shares of travel-related companies are gaining, with Expedia Group Inc. (EXPE) the best-performing stock in the S&P 500. 

Shares of semiconductor companies are jumping after Advanced Micro Devices Inc. (AMD) announced it has completed its $49 billion purchase of Xilinx Inc. (XLNX). Coinbase Global Inc. (COIN) shares are higher on interest created by its Super Bowl ad (more below). 

Bond yields are climbing as St. Louis Federal Reserve Bank President James Bullard repeated his call for the Fed to be more aggressive in increasing interest rates to fight inflation. The yield on the 10-year Treasury note is above 2%.

Oil futures had soared to $95 a barrel before pulling back on indications of easing tensions between Russia and Ukraine. Shares of Chevron (CVX) and other energy companies are falling. 

The dollar was again stronger against the euro. Major cryptocurrencies are trading higher.

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Chart of the Day: Resignation Inflation

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The Great Resignation and the large number of U.S. workers changing jobs since the COVID-19 outbreak have been important factors in the recent surge in inflation, according to a new report.

The Chicago Federal Reserve found the increase in those who left the workforce and the jump in the percentage of working people who searched for a new job boosted wage costs.

The study noted that, by applying for positions in a different firm, employed workers can spur salary competition, and labor becomes more expensive to retain and hire.

The Labor Department has reported the number of job quits set several records during 2021, with a peak of 4.5 million in November. 

1.1 Percentage Point Rise

The Chicago Fed estimated the Great Resignation led to a 1.1 percentage point rise in inflation. It noted inflation pressures peaked in May 2021 and declined slightly in September.

The authors said more research into why so many workers wanted to change jobs will be needed to determine how persistent the employment-related inflationary pressures are likely to be.

Stock of the Day: Coinbase Global

Coinbase Global said its app had more than 20 million hits in one minute from its Super Bowl ad last night, causing the digital trading platform's system to temporarily crash because of the volume. Despite the outage, Coinbase's beaten-down shares are getting a boost today.

The 60-second commercial consisted almost entirely of a colorful QR code moving around like a screen saver, inviting viewers to scan it.  

When they did, they were sent to a promotional page explaining that new customers would get $15 in Bitcoin and could sign up for a chance to win $3 million in the cryptocurrency. 

After the app was knocked out, the company tweeted a picture of a Dogecoin dog meme and explained, "Oh wow, that was more popular than we expected." Coinbase CMO Kate Rouch added along with the flood of scans, it also had engagement six times higher than its previous benchmarks.

Crypto Going Mainstream

Rouch claimed that the Coinbase ad and several other expensive crypto-based spots during the big game revealed that digital currency is bursting into the mainstream.

Shares of Coinbase Global are up 4% today but are still down 38% from their first day of trading in April 2021. 

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