Market mayhem 💸

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Observers of both the NFL and the US stock market have for the past 48 hours been heard screaming variations on "are you kidding me?!" Let's get into it.

By Allison Morrow

MARKET MAYHEM

What a wild day.

US stocks were really taking it on the chin Monday morning, coming off their worst week since the steep March 2020 selloff.

The Dow dropped more than 1,000 points at one point, and the S&P 500, the broadest Wall Street index, fell into correction territory – investor-speak for a 10% fall from its most recent high. But then, with just minutes to go in the trading session, the major indexes reversed course and turned green. The Dow finished 0.3%, or 99 points, higher.

That late-afternoon whiplash came from investors who spotted an opportunity to gobble up battered tech stocks, aka buying the dip.

What's going on?

Two big concerns are prompting investors to retreat from riskier assets like tech and cryptos: the Fed and Ukraine. Here's why:

The Fed

The US central bank has been propping up financial markets for nearly two years, but that pandemic-era support is gradually drying up.
Investors are bracing for this week's Fed meeting, which will wrap up with a policy statement Wednesday afternoon. Right now, the consensus is that the Fed's likely to keep interest rates near zero for now, and then begin the first of several hikes this year after its next meeting in March.

The Putin factor

Fears are growing around the world that Russia will invade Ukraine, which could, among other things, disrupt the flow of energy supplies to Europe, sending already-elevated oil and natural gas prices into the stratosphere.
"The more markets are feeling this could evolve into a fully fledged geopolitical disaster, the more risk sentiment will be impacted," ING analyst Francesco Pesole told my colleague Julia Horowitz.

What's next?

Market corrections are totally normal and typically short-lived. But they can also mark the start of a bear market (a 20% decline) if valuations keep falling. We're nowhere near that yet.

But if you ask a bear, the pain party is just beginning. Jeremy Grantham, co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo, says stocks are in the midst of a "superbubble." And bubbles, notoriously, don't end well. Grantham argues that many investors don't want to believe the stock market is overdue for a broader pullback.

"In a bubble, no one wants to hear the bear case. It is the worst kind of party-pooping," Grantham wrote. "For bubbles, especially superbubbles where we are now, are often the most exhilarating financial experiences of a lifetime."

#️⃣ NUMBER OF THE DAY

$33,000

Stocks are having a rough time, but over in crypto land, it's a bloodbath. Bitcoin prices are about 50% below their all-time high from November, falling briefly below 33,000 on Monday. That's having knock-on effects for platforms like Robinhood and Coinbase. Shares of both companies slid to new all-time lows Monday before rebounding with the broader market.

🚲 PUMMELING PELOTON

It's been a rough couple of months for Peloton.

Sales have been flagging, the bike basically got blamed for offing Mr. Big in the first episode of the Sex and the City reboot, and now one of its own investors is coming for the CEO.

On Monday, Blackwells Capital, an activist investor that owns less than 5% of Peloton, said it has "grave concerns" about the company and is calling on its board of directors to fire CEO John Foley immediately and to explore a sale.

Harsh. But probably fair. Among the firm's grievances:

Peloton failed to capitalize on its 2020 success. ICYMI: The pandemic turbo-charged sales after gyms closed. But Peloton now finds itself with a glut of inventory and much lower demand.
Shares have tumbled 80% from their peak. Last week, the stock fell below its IPO price for the first time since the company listed its shares in 2019.
Foley is under fire for "repeated failures," such as a head-scratching decision to cut prices on Peloton's Bike and Tread, only to raise them again a few months later.
Foley's also been accused of dragging his heels on a treadmill recall last year despite pressure from consumer advocates and safety regulators.
Key quote: "We believe that no board exercising reasonable judgment could leave Mr. Foley in charge of Peloton," and Foley "should have enough self-awareness and enough self-interest to resign as a director."

Peloton declined to comment Monday.

What would a sale look like for Peloton?

It's far too early to say for sure, but let's not let that silence the Wall Street speculation. One oft-mentioned theoretical suitor: Apple. It's got a ton of cash, plus a budding fitness business that, so far, lacks Peloton's die-hard fanbase.

Another idea, put forward by short seller Citron Research, would marry Peloton and Blue Apron, the meal-kit delivery pioneer. A nutrition + fitness match made in late-capitalist heaven.

RELATED: There are some real-life boardroom dramas playing out right now that make "Succession" look like child's play. Activist shareholders are the Barbarians at the Gate, eyeing struggling companies like Peloton and Kohl's and going for the jugular, my colleague Paul R. La Monica writes.

WHAT ELSE IS GOING ON?

📱 A bipartisan group of attorneys general sued Google, alleging that the technology giant has used "dark patterns" and deceptive practices to track users' physical location even when those users have made efforts to block Google from doing so.

🎥 Abigail Disney, the activist and granddaughter of Disney co-founder Roy Disney, made a documentary lambasting the way the Walt Disney Co. treats its theme park employees.

📰 A judge delayed Sarah Palin's defamation trial against The New York Times after the former vice presidential candidate and tested positive for coronavirus.

TWEET OF THE DAY

In this deeply divided world, it's heartening to see that we can all come together to dunk on Aaron Rodgers.

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