Credibility is an increasing issue in markets, strategist says

Marketgauge.com Partner and Director of Trading Research & Education Michele Schneider joins Yahoo Finance Live to discuss a federal judge blocking President Biden's vaccine mandate for federal workers, the credibility of the administration, Federal Reserve, analysts, and scientists, the cryptocurrency market, inflation, and Netflix's stock dip as they continue to lose subscribers.

Video transcript

- But we will keep it on markets right now, bring in Michele Schneider from marketgauge.com, partner and director of Trading Research and Education. Michele, thanks for stopping by today. Just want to get your reaction to some breaking news that we just got. A federal judge just blocked Biden's vaccine mandate for federal workers. Omicron has thrown such a wrench into returning back to normal. And I'm wondering, do you think this further hurts productivity?

MICHELE SCHNEIDER: Well, very possibly, it can. Of course, it brings up other issues just in terms of what you can force people to do. And there's all kinds of opinions about that. But I think if we step back and look at the bigger picture of what that means, it's another stab at credibility, which has been in question on so many levels this year, as we were coming into this year-- the credibility of the administration, the credibility of the Federal Reserve, the credibility of the scientists when it comes to omicron, the credibility of analysts.

And so this is just another way that people now don't really know what to sink their teeth into. Is this a blow further to the labor market and the economy, or is this just another aspect of where we're at right now, which is in such disparity in terms of, you know, how we are as a country?

- Michele, I want to switch gears a moment and get your take on what's happening in the cryptocurrency markets. You just heard Jared say that even though Bitcoin is at about $38,000 right now, he says it's more fairly valued at $13,000. Do you think that it's just going to continue to fall out of favor with investors who were using it as a hedge? But you know what? The jig may be up if the Federal Reserve decides to hand us multiple interest-rate hikes this year.

MICHELE SCHNEIDER: OK. Well, there's a few parts to that question. First, let me say, on terms of Jared's point, even though he said, don't quote me on the 13,000, he's probably right. I've been looking at the 2021 levels that came down at 28,000 to 38,000. And that really has to hold, or we could see much lower. Do I think longer term cryptocurrency as a place to be is good? Yeah.

What's interesting, though, is, people were expecting this decoupling where the market would go down, the stock market and the cryptocurrency market would go up. We haven't seen that. I also do believe, though, that the whole technology, in terms of blockchain technology, is still in diapers. I mean, we are going to really be seeing a lot more development as we go on in blockchain.

And then finally, in terms of the Federal Reserve, I don't know how much interest-rate hiking they're going to do, because they're in a real pickle right here. And we've talked about this. This is typical stagflation-type environment, what we have going on. And crypto is not the answer. Interestingly enough, gold is starting to look like it's outperforming.

So in stagflation, the Fed has to decide, do I stagnate the economy further at the risk of higher inflation, or do I, you know, become little-- I wouldn't say more accommodative, but not so hawkish, and wait for this market, starting with your question about omicron and the vaccine, to come back to some level of strength-- 'cause we're limping right here-- and then become more hawkish? I would not want to be in the Federal Reserve.

- How closely do you think they're watching this data? Because so much has changed from their last policy meeting. We've seen, you know, markets in turmoil. We've seen housing numbers that were pretty bleak. We've seen job losses accelerating. How much do they watch? And then how much action can they actually take?

MICHELE SCHNEIDER: Well, that's the point. And the dot plot is what they're looking at. So we have another FOMC meeting coming up. It'll be interesting what they have to say. But Powell has kind of dropped these hints about how he's going to continue to focus on the labor market and some of these economic statistics. And they do have egg on their face in terms of inflation. But I actually really believe that they believe that inflation isn't going to be as bad as they think, and that somehow it'll fizzle out.

And in fact, if you look at something like the Baltic Dry Index, it kind of peaked and fell off. Many people look at that as an indication that, somehow, inflation has peaked. But I don't see that. So they've really backed themselves into a corner. And again, as we go into that credibility conversation, the Fed may be at the top of that list.

- I just want to get your thoughts quick on Netflix, one of our most actively-traded stocks today trending on the Yahoo Finance site, taking a real drubbing here after those disappointing subscriber-growth numbers. What's the long-term game, though, here for Netflix? Are you still seeing upside potential for investors, and is now really a good entry point?

MICHELE SCHNEIDER: Well, I certainly wouldn't be entering right now after we've had this kind of bloodbath in the stock. I mean, you can look at the 200-week moving average, which, when I looked at earlier-- I'm not sure exactly, 'cause I haven't looked at it in a couple hours, but it was around this 400 level. And if we can get some kind of consolidation around there, where we have an interesting risk point, then perhaps.

I mean, Netflix is still Netflix. It still has a tremendous amount of content. I know they're raising their prices. But it also has a lot of competition. But it's also the story of what we're seeing of these stocks that just got so overvaluated that they have to come down.

But to me, it's going to be really interesting, is what happens with Apple earnings, because even though NASDAQ is challenging its 50-week and in correction territory, Apple is $20 away from its 50-week, which is at around 143. So rather than really focus more on the Netflix scenario on what that means for the market, I'm going to be looking at Apple. And of course, just look at Ark. We've talked about this being the harbinger of things to come in tech. And certainly, that continues to go south.

- All right, and I know you like some elements in the commodity space as well. We will have to leave it there. Michele Schneider, marketgauge.com, partner and director of Trading Research and Education. Thanks so much for your insight today.