5 things to start your day

Tensions remain high over Ukraine, it’s PMI day, and Bitcoin drops again. War riskThe U.S. ordered family members of diplomats in Kyiv to le [View in browser]( [Bloomberg]( Tensions remain high over Ukraine, it’s PMI day, and Bitcoin drops again. War risk The U.S. ordered family members of diplomats in Kyiv to leave due to the “continued threat of [Russian military action](.” The move came after talks last week [failed to]( end the standoff. The U.K. government warned that Russia is plotting to install a [pro-Kremlin government in Ukraine](. Russian troops are building in Belarus ahead of exercises planned for [early next month](. With neither side showing any signs of backing down, markets are [starting to take notice](. In Europe the [main worry]( is that supplies of natural gas could be choked off [just when they are needed most](. The Swiss franc hit the highest level against the euro [since June 2015]( as the currency gets haven bids. Growth Purchasing managers survey data showed a mixed outlook for growth. In France and Germany there was a better-than-expected [rise in manufacturing activity]( while the servicers sector showed signs of continued pressure from [pandemic curbs](. Across the euro area as a whole the services reading was at 51.2, the [slowest expansion since April](. Survey respondents continued to cite rising costs as a key concern. U.K. data showed that firms [aggressively raised prices]( in January in an attempt to cover input costs. PMI numbers for the U.S. economy are published later this morning. Bad weekend The plunge in Bitcoin is continuing this morning with the largest cryptocurrency trading close to $33,000 this morning, a loss of [more than 50%]( from its all-time high in November. Ether—the second-largest token—has lost almost a third of its value since Thursday. Memecoins such as Dogecoin have [also tumbled](. Bitcoin’s [correlation with stocks]( continues as the currency’s drop this morning came as Nasdaq 100 futures turned negative. Bloomberg has launched a new crypto newsletter, the essential read on the crypto universe delivered [straight to your inbox]( twice a week. Markets drop The standoff over Ukraine coupled with pressure on growth stocks ahead of the Federal Reserve’s imminent rate liftoff has investors firmly in risk-off mode. Overnight the MSCI Asia Pacific Index slipped 0.8% while Japan’s Topix index closed 0.1% higher. In Europe the Stoxx 600 Index had tumbled 2.2% by 5:50 a.m. Eastern Time with travel and tech names leading the losses. S&P 500 futures pointed to a [drop at the open](, the 10-year Treasury yield was at 1.728%, oil was [close to $85 a barrel]( and [gold rose](. Coming up... The Chicago Fed National Activity Index for December is at 8:30 a.m. U.S. PMIs are published at 9:45 a.m. The U.S. sells $54 billion of 2-year notes at 1:00 p.m. Secretary of State Antony Blinken speaks to [European foreign ministers](. Halliburton Co., Brown & Brown Inc. and International Business Machines Corp. are among the companies reporting results. What we've been reading Here's what caught our eye over the weekend. - Odd Lots: The electric vehicle revolution is on and [it’s going to change everything](. - China’s “[little giants](” are its latest weapon in the U.S. tech war. - U.S. stocks historically [deliver strong gains]( in Fed hike cycles. - The charismatic developer and the [Ponzi scheme]( that suckered San Diego. - Activist investor pushes Peloton to [fire CEO]( and seek sale. - What [not to do]( on your CV. - Oumuamua is [still a mystery](. And finally, here’s what Joe’s interested in this morning Wreckage in speculative tech-land continued on Friday, with ARKK falling 5.6%, WCLD down 3.3%, and SPAK down 2.5%, along with more pain across the cryptos. The selloff has been worsening lately and getting a lot of attention, but the truth is that this market boom has been fading for a long time. Almost a year now in fact. [At the end of last year](, I wrote about how 2021 was not a "year of two halves" as the cliche often goes, but rather a year of "1/6th and 5/6ths." So much of the crypto/meme stuff peaked last February and has been steadily down ever since then. This is apparently born out in the performance of retail traders. [An astonishing chart from Christopher Metli at Morgan Stanley's trading desk]( estimates the the rolling P/L of retail traders peaked last February and has been heading down ever since. The retail crowd has been badly lagging the S&P 500 for awhile now. The whole "Reddit vs. Hedge Funds" meme that came out of the GameStop story really did turn out to be the peak of the mania. The fact that this part of the market has been getting clobbered so long suggests strongly that there's a lot more to the story right now than just Fed tightening. Concerns about rising rates and inflation very certainly could be part of the story in recent declines for the S&P and the Nasdaq. But a broader shift started happening well before those hot inflation prints and the pivot in the Fed's language. It seems highly plausible that a lot of this stuff (various low-quality IPOs, SPACs, unprofitable tech companies etc.) just isn't going to come back, even if the broader market were to turn higher again. The other thing I keep thinking about is how, in the wake of the dotcom bubble, people had an incredibly hard time "letting go" of positions, particularly with memories of portfolio all-time-highs fresh in the memory. During the roughly 2 1/2 year selloff from the Nasdaq peak to its bottom in late 2002, there were three rallies of more than 40%, including one over 50%. The lesson here is not, necessarily, that any index is going to go down for 2 1/2 years. Rather, a lot of the believers who bought into the story of the last two years may not capitulate anytime soon. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Five Things - Americas newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](