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Tag: MSTR

  • JPMorgan’s Alleged Short On Strategy (MSTR): How A 50% Price Jump Could Spell Major Troubles

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    Strategy, formerly known as MicroStrategy, the largest public holder of Bitcoin (BTC), finds itself at the center of a stormy controversy involving JPMorgan as Bitcoin prices continue to struggle. 

    With signs of a potential bear market emerging, fresh rumors suggest that one of the world’s largest banks allegedly holds a significant short position on Strategy’s stock (MSTR), which has plunged 69% from its record high of $543 per share last year.

    Strategy Faces Potential MSCI Exclusion

    The turmoil escalated last week when JPMorgan issued a warning that Strategy might soon be removed from major equity indices, specifically the MSCI USA Index. 

    JPMorgan’s analysts noted that the issues facing Strategy extend beyond the recent downturn in cryptocurrency prices, which have seen Bitcoin fall more than 30% from its all-time highs. 

    As of this writing, Bitcoin is trading around $86,000, while the broader crypto market has experienced a staggering $1 trillion decline in total market capitalization over the past month.

    Related Reading

    JPMorgan’s analysts indicated that MSCI is considering whether companies with over 50% of their total assets in digital currencies should qualify for inclusion in traditional equity indices. Given that Strategy’s balance sheet is heavily weighted with Bitcoin, it is at significant risk of exclusion. 

    The analysts stated that “MicroStrategy [is] at risk of exclusion from major equity indices as the January 15th MSCI decision approaches.” They speculated that removal from the MSCI could trigger approximately $2.8 billion in outflows, and if other index providers follow MSCI’s lead, the total could reach as high as $8.8 billion.

    The situation is complicated by market dynamics, particularly the timing of JPMorgan’s bearish note, which coincided with Bitcoin’s weakness and MSTR’s decline, all while liquidity was thin and overall sentiment fragile. 

    JPMorgan Faces Account Closures Surge

    According to analysts at the Bull Theory, JPMorgan has been noted for timing its market reports—bearing down when prices are already weak and striking a more bullish tone near market peaks. 

    The analysts have highlighted that share lending for MSTR has reportedly increased, allowing brokers to lend shares to short sellers, which can exacerbate downward pressure on the stock price. 

    Additionally, there are escalating reports of widespread account closures at JPMorgan, with thousands claiming to have exited due to perceived manipulation of both MSTR and Bitcoin. 

    Amid these developments, the fear of a potential short squeeze is growing. The analysts believe that if Strategy’s stock were to rally around 40% to 50%, it could trigger a short squeeze in the bank’s position and spell major financial troubles. 

    In response, Michael Saylor, the CEO of Strategy, has sought to clarify the company’s identity, emphasizing that it is not just a passive Bitcoin holder. He pointed out that Strategy operates as a software business with an active financial strategy, countering the narrative circulating around MSCI’s concerns.

    As the situation unfolds, several key points emerge. The October 10th crash appeared to align with the MSCI announcement, coinciding with an already fragile market state. JP Morgan’s strategic timing of its bearish insights has amplified existing fears, creating further uncertainty as MSCI’s final decision looms.

    The daily chart shows MSTR’s valuation trending downwards, trading below $170. Source: MSTR on TradingView.com

    Featured image from DALL-E, chart from TradingView.com

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    Ronaldo Marquez

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  • U.S. stocks little changed in cautious trading ahead of inflation report, bank earnings

    U.S. stocks little changed in cautious trading ahead of inflation report, bank earnings

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    U.S. stock indexes were edging higher on Wednesday with technology stocks looking to extend gains ahead of the December inflation report, which is expected to shed more direct light on when the Federal Reserve could dial back its two-year-long effort to tighten monetary policy and cool the economy.

    How are stock indexes trading

    • The S&P 500
      SPX
      rose 8 points, or 0.2%, to 4,764

    • The Dow Jones Industrial Average
      DJIA
      was up 38 points, or 0.1%, to 37,562

    • The Nasdaq Composite
      COMP
      gained 43 points, or 0.3%, to 14,901.

    On Tuesday, the Dow industrials fell 0.4%, to 37,525, while the S&P 500 declined 0.2%, to 4,757, and the Nasdaq Composite gained less than 0.1%, to 14,858.

    What’s driving markets

    Inflation and its impact on bond markets and the Federal Reserve’s monetary-policy trajectory are the primary focus for markets this week as investors remain on hold ahead of Thursday’s December inflation reading and high-profile corporate earnings reports on Friday, when some of the big banks will kick off the fourth-quarter 2023 earnings season.

    The S&P 500 sits less than 0.7% shy of its record high of 4796.6 touched a little over two years ago, after rallying strongly in the last few months primarily on hopes that easing inflation will allow the Fed to lower interest rates sooner and faster than the markets previously anticipated.

    The yield on the 10-year Treasury
    BX:TMUBMUSD10Y,
    the benchmark for borrowing costs, has fallen from 5% in October to 4.014% on Wednesday.

    But for this bullish narrative to play out, inflation must be seen continuing to fall back to the central bank’s 2% target. That’s why great importance is therefore being placed on the consumer-price index for December, which will be published at 8:30 a.m. Eastern on Thursday.

    See: These traders bet on surprise blip higher in key December inflation reading

    Economists forecast that annual headline CPI inflation inched up to 3.2% last month from 3.1% in November. The core reading, which strips out more volatile items like food and energy, is expected to fall from 4% to 3.8%.

    Adam Phillips, director of portfolio strategy at EP Wealth Advisors, said the CPI report may give investors enough confidence that the disinflation is likely to continue, even if the price levels are “still a very long way from anything that is considered healthy.”

    However, he cautioned that the economy has “certain factors” that are beyond the Fed’s control, such as the volatility in supply chains and growing geopolitical risks, as well as a potential resurgence in inflation, he told MarketWatch via phone on Wednesday.

    “[E]quities have remained broadly range-bound since just before Christmas, with little to push them in either direction,” said Jim Reid, strategist at Deutsche Bank.

    “That might change soon, since we’ve got the U.S. CPI print tomorrow, and then the start of earnings season on Friday, but for now at least, there’s been few headlines for investors to latch onto, just a bit of indigestion after over exuberance before New Year left markets with a little bit of an extended hangover,” Reid added.

    In U.S. economic data, the wholesale inventories declined 0.2% in November, in line with Wall Street expectations, as manufacturers continue to juggle with a fragile economy, according to the Commerce Department.

    New York Fed President John Williams will speak in White Plains, N.Y., at 3:15 p.m. Eastern time.

    Companies in focus

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  • Coinbase, Newmont, Tilray, Hexo, Virgin Orbit, and More Stock Market Movers

    Coinbase, Newmont, Tilray, Hexo, Virgin Orbit, and More Stock Market Movers

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    https://www.barrons.com/articles/stock-market-movers-8b6c2e7b

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