2 Min Market Summary: 22 Feb 2019

• The U.S. and China began working on six memorandums of understanding on structural issues that would outline the path to a trade deal, according to Reuters. Specific details on talks have been sparse, though, with China’s Ministry of Commerce spokesperson saying that there was nothing new to report. The market’s nonchalant disposition despite the reported progress possibly suggested the market’s patience for hopeful-sounding headlines may be wearing thin, especially when taking into account the number of rallies that took place amid upbeat headlines, but little concrete progress.
• U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased three basis points each to 2.53% and 2.69%, respectively. The U.S. Dollar Index increased 0.2% to 96.62. WTI crude declined -0.3% to $57.00/bbl.
• The movers in the FX market yesterday was the sharp reversal (from .7169 – .7207) and big declines (high of .7207 to low of .7071) in the Aussie. At first, Aussie was positively surprised by the labor market data that showed solid hiring at the start of the year. More than 39K (consensus 15.2k) jobs were created in January with full time work rising by the strongest amount in nearly 2 years. The unemployment rate held at a 7 year low of 5% (consensus 5%). However shortly thereafter, Westpac said the Reserve Bank could cut interest rates twice this year. They felt that a lower growth profile and higher unemployment rate will require a response by the RBA in August and November. What really killed the rally in Aussie was China’s decision to ban imports of Australian coal into their northern port of Dalian. Not only is this a big hit (2% of all Australian coal imports are destined for Dalian) for the industry but China is also getting tough on Australia after they banned Huawei from their 5G network last year. 

• The S&P 500 lost -0.35% on Thursday, as disappointing economic data helped simmer the market’s lengthy rally.
• The S&P 500 energy (-1.6%), health care (-0.9%), and communication services (-0.6%) sectors underperformed the broader market. Conversely, the utilities (+0.8%) and consumer staples (+0.3%) sectors showed relative strength.The stock market began the day slightly lower as weaker-than-expected economic data tempered buying interest. U.S. business investment declined for the second consecutive month in December, and the eurozone manufacturing sector experienced its first contraction since 2013.
• Nike (NKE 83.95, -0.89, -1.1%) was under pressure following some on-the-court drama. College basketball sensation Zion Williamson sustained an injury when his Nike sneakers broke apart during a highly-anticipated game. Nike issued a statement that they were working to identify the issue.
• Tesla (TSLA 291.23, -11.33) for its part lost 3.7% after Consumer Reports dropped its Model 3 recommendation due to the car’s reliability issues. On a related note, Tesla has been under scrutiny for its untimely handling of returns and refunds.

BLOCKCHAIN & CRYPTOCURRENCY UPDATES

Japanese Banking Giant Mizuho to Launch Its Yen-Pegged Stablecoin in March

Japan’s banking giant Mizuho Financial Group will launch its bespoke stablecoin for payments and remittance services on March 1. In a partnership with around 60 counterpart financial institutions — which together reportedly host 56 million user accounts — Mizuho’s new “J-Coin” digital currency platform will reportedly directly link existing bank accounts with digital wallets. The currency will reportedly be managed by a dedicated mobile app, dubbed J-Coin Pay, using QR codes at checkout to complete retail payments. According to Nikkei, the currency will be a digital stablecoin fixed at a price of 1 yen (~$0.01) per unit, and transfers between bank accounts and J-Coin wallets are set to be zero-fee. According to Nikkei, prospective J-Coin wallet users will not be required to undergo credit checks and the service will be open to users below the age of 18. J-Coin wallets will also serve a more flexible range of payments and remittance services than traditional bank accounts. Mizuho Financial Group reported over $1.8 trillion in total assets as of Dec. 31, 2018.

Mark Zuckerberg Considers Blockchain Authorization of Data in Recent Interview

Facebook CEO and founder Mark Zuckerberg considered the ramifications of blockchain-based authorization of user data during an interview with Harvard Law professor Jonathan Zittrain. During a discussion covering such topics as the future of technology and society, Zuckerberg noted that he “think[s] about the work we [Facebook] are a decentralizing force in the world.” Zuckerberg mentioned that he was considering a potential blockchain use case by which users could have control over their data, adding “Basically, you take your information, you store it on some decentralized system and you have the choice to log into places without going through an intermediary.” He said that one example of how the company is moving toward a more decentralized structure is through offering encryption in its messaging services. Zuckerberg outlined the benefits of encryption like privacy and security.

ConsenSys Backs Ethereum-Based Unlisted Infrastructure Investment Startup Allinfra

Ethereum (ETH) blockchain-focused development company ConsenSys has invested in an infrastructure investment startup, Allinfra. Allinfra will rely in part on ConsenSys’ technological capabilities and expertise in the tokenized assets area. The exact amount of the investment has not been disclosed. Allinfra facilitates direct investments in unlisted infrastructure assets via the Ethereum blockchain, providing users with the ability to create, purchase and transfer economic or ownership interests in these assets. As per ConsenSys, the solution makes the sector available not only to large institutional investors, but to a broader audience of investors. “In the case of unlisted infrastructure, a traditionally restricted, and illiquid asset class, Allinfra will enable a wider audience to efficiently access and participate in the economic benefits of these assets”  said Joe Lubin, Ethereum co-creator and ConsenSys founder. Dave Sandor, Co-founder and CEO of Allinfra, revealed that within several months the company “will be in the market supporting a flagship infrastructure tokenization project.”