Brian Chappatta, Columnist

Bitcoin and Tesla Have Gotten the Fed's Attention

The central bank isn’t likely to scale back its bond purchases anytime soon, but officials may continue mentioning the possibility to avoid wild market bubbles.

January 11, 2021 at 6:21 PM UTC

By Brian Chappatta

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Too bubbly.
Photographer: Nicolas Tucat/AFP/Getty Images

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The Federal Reserve isn’t happy about the pervasive talk of asset bubbles.

Consider Tesla Inc., for instance. From my Bloomberg Opinion colleague John Authers: “The risks far outweigh the potential rewards. The more we see of such crazy behavior, the more we should prepare to take evasive action against a true investment bubble.” Or cryptocurrencies, from Scott Minerd, chief investment officer with Guggenheim Investments: “Bitcoin’s parabolic rise is unsustainable in the near term.” More broadly, Bank of America Corp.’s checklist of signals that historically indicate an impending bear market correction in risk assets is starting to fill up.