Market Update (February 8)

MARKETS:

Written By: Sergio Lopez Elizondo, Junior Analyst

Overview

Good day for the markets

February 8, 2022 played out well for the three major indexes as they all closed the day with approximately 1% growth. This bodes well for the recent recovery in the market as investors await for the forthcoming rise in interest rates. The Fed announced in late January that due to the high inflation rate of over 2%, it would raise the interest rates in March. Consequently, the markets began to rise, and we have continued to see the major indexes experience consistent growth. This effect on American markets has spread around the globe, and especially in Asia, the major indexes have mirrored domestic growth. These markets, as well as investors at home await for this Thursday’s release of inflation data

U.S. Economy & Drugs

The US faces unprecedented loss in opioid related deaths

The U.S. Commission on Combating Synthetic Opioid Trafficking has released their report on opioid overdose deaths, and it has found that last year the number of fatalities was 100,000 Americans. This number of deaths was a 30% increase from the previous year. Experts have calculated that these drug overdose deaths are costing the United States $1 trillion dollars every year. This staggering number arises from the lost productivity of the people that pass, along with any costs associated with health care and enacting any subsequent criminal justice. The number of drug overdoses has been rising steadily since the early 2000s, and President Biden has declared the illicit drug trade a national emergency.

Facebook

Facebook closes at lowest market valuation since May 2020

Facebook’s market cap closed the day by falling to $599.32 billion, the lowest it has been since May 2020. While this was a loss of 2.1%, such a drop in the market cap of Facebook will potentially benefit the company rather than indicate a downward trend in stock value. The company is currently under an antitrust lawsuit against its acquisition of WhatsApp and Instagram. This drop in valuation might actually help Facebook with this lawsuit and future business dealings. It coincidentally happens that House legislators chose $600 billion as the minimum market cap value for a company to be included in a set of potential bills that target big technology companies. By falling below this figure, Facebook might find some pressure relieved from their current lawsuit and less scrutiny from the Federal Trade Commission. While this might seem good for Facebook, other senate bills have proposed a minimum market value figure of $550 billion along with a clause that allows companies that dip below the minimum value to still be targeted by such bills. 

Social Security

Social Security is on track to cut benefits by 2034

A recent report by the Social Security Trustees found that benefits of retirees will be cut to 78% of expected value in 2034. This will result in over 50 million retired workers not receiving the promised benefits that they have paid into Social Security throughout their life. Social Security hasn’t had a deficit since 1983, and this deficit was quickly overturned through bipartisan legislation. Today’s political sphere also requires a bipartisan agreement and new legislation to fix the funding for Social Security. The two main methods that Congress might use to properly fund this program are to either cut benefits now or increase the retirement age, or to increase tax revenue by increasing the tax rate or increasing the maximum tax amount of $147,000. Such methods seem drastic but are needed to fix the funding issue; unfortunately, given the length of time between present day and the expected date that benefits will be cut, it is unlikely that Congress will act on this issue.

Works Cited

“Asian Markets Rise as Investors Await U.S. Inflation Data.” MarketWatch, MarketWatch, 8 Feb. 2022, https://www.marketwatch.com/story/asian-markets-rise-as-investors-await-u-s-inflation-data-01644380975.

Cox, Jeff. “Federal Reserve Points to Interest Rate Hike Coming in March.” CNBC, CNBC, 26 Jan. 2022, https://www.cnbc.com/2022/01/26/fed-decision-january-2022-.html. 

Feiner, Lauren. “Facebook Market Cap Falls below $600 Billion - Which Could Actually Help It Dodge New Antitrust Scrutiny.” CNBC, CNBC, 8 Feb. 2022, https://www.cnbc.com/2022/02/08/facebook-market-cap-under-600-billion-threshold-for-antitrust-bills.html.

Langley, Karen, and Will Horner. “Bond Yields, Stocks Rise amid Earnings.” The Wall Street Journal, Dow Jones & Company, 8 Feb. 2022, https://www.wsj.com/articles/global-stocks-markets-dow-update-02-08-2022-11644309070.

Taylor, Chloe. “Drug Overdoses Are Costing the U.S. Economy $1 Trillion a Year, Government Report Estimates.” CNBC, CNBC, 8 Feb. 2022, https://www.cnbc.com/2022/02/08/drug-overdoses-cost-the-us-around-1-trillion-a-year-report-says.html.

Market Update (March 29)

MARKETS:

Written By: Sarah Lee, Vice President of Investments

Economic Risks

Investors’ Concerns Are No Longer COVID-19 Related

In an improving and recovering economy, professional investors new number 1 fear is inflation. Based off a survey through BofA Securities, fund managers now say that inflation topples COVID-19 as the biggest threat to the bull market. From the survey, 91% see the economy improving and 48% said we’re in a “V-shaped recovery.” However, higher bond yields that signal economic growth also means a higher borrowing cost, which could reverse the recovery. Additionally, a higher discount rate means lower valuation for assets like stocks.

The White House has discussed a tax on high income individuals or corporations to help with Covid-19 relief. Treasury Secretary Janet Yellen, is using the Organization for Economic Cooperation and Development to press for a global minimum corporate tax that would end historical corporate tax-cutting competition.

U.S. Employment

Jobless Claims Reach Lowest Level of the Pandemic

Signaling a prosperous economy is low unemployment. Jobless claims fell to their lowest level last week since the start of the pandemic as hiring and consumer spending drive a U.S. economic revival. Unemployment filings have fell to 684,000 last week form 781,000 a week earlier. Although a decrease in unemployment filings are a go for the economy, the benefits of the recovery aren’t reaching everyone yet. Many Americans are suffering from spells of long-term unemployment. Americans are still ramping up spendings with stimulus checks out into their pockets and widespread vaccinations. In-person services are also seeing pre-pandemic levels such as salons, gyms, hotels, and restaurants.

Real Estate

Hot Housing Market with Overflow of Real-Estate Agents

Where there were 1.04 million homes for sale at the end of January (record low from 1982), the number of real-estate agents surge in comparison to homes for sale in the U.S. This phenomenon reflects both the extremely tight supply of homes on the market and how the uptick in prices are convincing thousands of Americans to sell their real estate. As the pandemic eliminated millions of jobs, many people sign up for the real-estate profession. The booming housing market suggests theres a lot of money to be made selling houses. Newer agents are struggling as home sellers generally favor agents with years of experience and a track record of selling homes. Consequently, most agents make little or even no money in the beginning since they typically rely on commissions. Realtors with two years of experience or less earned a median gross income of $8,900 from their real-estate work in 2019.

Financials

Big Banks Limiting Losses With Fast Sale of Archegos Assets

Goldman Sachs Group Inc. and Morgan Stanley were quick to move large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of hedge fund’s losses became apparent. Formerly ran by Tiger Asia Manager Bill Hwang, the losses at Archegos have triggered the liquidation in excess of $30 billion in value. Throughout Monday, blocks of stocks linked to Archegos continued to sell off. Archegos took concentrated positions in companies and help some positions in a miix of stock and swaps. Their losses threatened to spill over into the prime brokerage businesses. Morgan Stanley sold 45 million shares of ViacomCBS Inc. Sunday night, and other banks continued to sell blocks of companies such as Discovery Inc., GSX Techedu Inc., and Vipshop Holdnigs Ltd.

Archegos losses comes as a council of top U.S. regulators known as the Financial Stability Oversight Council and is already scheduled to meet on Wednesday to discuss hedge-fund activity during the pandemic-triggered crisis. Many are pointing to cases that may effect many on Wall Street in the coming week.

Works Cited

Cambon, Sarah. U.S. Jobless Claims Reach Lowest Level of the Pandemic - WSJ. https://www.wsj.com/articles/weekly-jobless-claims-coronavirus-03-25-2021-11616627094?mod=itp_wsj&ru=yahoo. Accessed 29 Mar. 2021.

Chung, Maureen Farrell, Margot Patrick and Juliet. “Goldman, Morgan Stanley Limit Losses With Fast Sale of Archegos Assets.” Wall Street Journal, 30 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/goldman-morgan-limit-losses-with-fast-sale-of-archegos-assets-11617062028.

Friedman, Nicole. “New Realtors Pile Into Hot Housing Market. Most Find It Tough Going.” Wall Street Journal, 21 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/new-realtors-pile-into-hot-housing-market-most-find-it-tough-going-11616328002.

Jasinski, Nicholas. This Is Investors’ Biggest Concern Right Now. (Hint: It’s Not Covid.). https://www.barrons.com/articles/investors-are-wary-of-covid-but-their-new-top-risk-is-inflation-51616197535. Accessed 29 Mar. 2021.

Market Update (March 24)

OVERVIEW

Down day for the markets

After starting the day higher than yesterday, all three major indexes closed in negative territory. This week, stock prices have varied, leading investors to figure out the impact of the volatility of the US bond market. In recent weeks, bond yields have increased, resulting in a dip in the investment of technology stocks. However, bond yields have decreased every day this week, yet technology stocks are still not stable. Apple, Netflix, and Amazon stocks all decreased today, yet these stocks fueled market growth last year. Additionally, the volatility of the market is expected to continue and gains are going to be harder to achieve for the rest of the year according to Brian O’Reilly, the head of market strategy at Mediolanum International Funds.

GASOLINE

Gasoline prices are close to being $3 per gallon

As summer starts to come around, more and more drivers are taking to the streets. As such, the price of gasoline is increasing, and according to experts, this is a sign of economic recovery. Last week, the average price for a gallon of gasoline was $2.88, up more than a third from a year ago. Generally, gasoline prices increase closer to the summer as families drive to vacation spots. In past years, many drivers said that they would consider other modes of transportation if gasoline prices crossed $3 a gallon. However, observers expect drivers to be less sensitive to price this time around due to the pandemic. Regardless, gasoline prices might have hit their peak as many Americans are either unemployed or working from home.

ETFs

Young buyers discover the QQQ

A new generation of investors, including Reddit’s Wall Street Bets, have discovered QQQ, an ETF launched 22 years ago at the climax of the dot-com boom. QQQ tracks the Nasdaq-100 and is concentrated in high-growth stocks that have been labeled as “' ‘innovative’ and ‘disruptive’ “. Over the past year, shares have soared by 90% while funding has drastically increased to $150 million. Overall, the embrace of QQQ by younger investors has been a success, however, future problems may arise. For example, technology stocks are not performing as well as they previously have, leading to an outflow of $1 billion from the QQQ fund in 2021.

FACTORIES

Resurgent economies are creating factory disruptions

As global economies are bouncing back, spearheaded by the US, the demand for consumer goods is creating a strain on supply chains, and the Suez Canal’s as well as a fire in one of the factories of the leading auto chip makers have added to the pressure. This will lead to worse shortages and higher prices of consumer goods. These events come shortly after the winter storm in Texas, which has closed many petrochemical factories. Overall, the Federal Reserve expects the US to recover faster than projected, which is continuing to add pressure to global supply chains. If these shortages are continuing, they may create a cause for concern for the recovery of global economies.

Works Cited

Carpenter, Julia. “Young ETF Buyers Discover the Tech Sector's Old Friend, the QQQ.” The Wall Street Journal, Dow Jones & Company, 24 Mar. 2021, www.wsj.com/articles/young-etf-buyers-discover-the-tech-sectors-old-friend-the-qqq-11616587201?mod=markets_lead_pos3. 

Hannon, Paul. “Global Factories Pay Higher Prices as Surge Strains Supplies.” The Wall Street Journal, Dow Jones & Company, 24 Mar. 2021, www.wsj.com/articles/global-factories-pay-higher-prices-as-surge-strains-supplies-11616583929. 

Horner, Will, and Caitlin McCabe. “Stocks End Lower Amid Decline in Tech Shares.” The Wall Street Journal, Dow Jones & Company, 24 Mar. 2021, www.wsj.com/articles/global-stock-markets-dow-update-03-24-2021-11616575197?mod=markets_lead_pos1. 

Wallace, Joe. “Leap in Gas Prices Puts $3 a Gallon in Sight.” The Wall Street Journal, Dow Jones & Company, 24 Mar. 2021, www.wsj.com/articles/unusual-leap-in-gas-prices-puts-3-a-gallon-in-sight-11616578202?mod=markets_lead_pos5. 

Market Update (March 12)

Written By: Emily Vo

Utilities

Utilities resume shutoffs despite many still battling the pandemic

When the COVID-19 pandemic hit the United States a year ago, many states passed emergency laws that banned both evictions and utility shutoffs. However, a year later, these laws are going out of effect. Moratoriums on electric shutoffs are expiring and utilities are resuming shutoffs, despite many people across the United States still battling COVID-19. A map from the National Association of Utility Regulators (NARUC) reveals that there are now a total of 38 states where their moratoriums on shutoffs have expired or are now only voluntary for utility companies to abide by. Many residents, such as Mashelle Fields, have had their electricity shut off due to missed payments. Fields contracted COVID-19, which put her out of work for several weeks. Now she doesn’t have the money to pay her electric company to resume power in her apartment. Many other people across the United States are dealing with the same issue, and many are facing evictions as well. Though the pandemic has gotten arguably better due to improved testing and a greater distribution of vaccinations, it is still a large challenge for many working-class Americans who now have even more issues to deal with.

Microsoft vs. Google

At a House Judiciary subcommittee hearing on Friday, Microsoft and Google traded shots at one another

The feud between Microsoft and Google was reignited at a hearing on Friday when Microsoft’s president lashed out of Google. Microsoft President Brad Smith had discussed how Google feeds search and advertising networks so it needs better support the news industry. Smith expressed his support for legislation that would allow news organizations to have more power in bargaining with companies such as Google and Facebook. He also criticized Google’s lack of support for journalists and news overall. Google’s Senior Vice President of Global Affairs Kent Walker had defended Google’s adequate support of journalism beforehand. Walker stated that Google has paid publishers for their work and in turn, accused Microsoft of attacking its rivals to only lobby for its own interests. He also pointed out what Google’s top lawyer fired back in the hearing: that Microsoft’s recent criticisms have come up amid the discovery of their involvement in two recent hacks. Since the early 2000s, Microsoft and Google have fought over who would be the internet’s “gatekeeper.” And Microsoft has not been silent on its criticisms and lobbying against Google, such as in this hearing. While Google continues to defend its support of journalism, Microsoft has similarly worked to support news and publishers. Both are working on offering a news app, with Microsoft’s offering content from more than 1,200 publishers and Google committing $1 billion to support publishers globally on their app, Google News Showcase.

Stocks

Value stocks are beating growth stocks by the widest margin in two decades

Value investors have a reason to celebrate as value stocks are beating growth stocks by a fairly large margin. With COVID-19 vaccines rolling out and economic recovery following a year of shutdowns, portfolio managers are buying up cyclical stocks, or value stocks. These include banks, energy companies, and other stocks that are closely tied to economic growth. Since the financial crisis, growth stocks have been outperforming value stocks. However, there has been a shift in bets that is reversing this trend, which can be seen in the rise of large tech companies such as Apple and Amazon. The gap the value stocks have from growth stocks are the highest they have been since 2001 according to data from Dow Jones Market. Previously, the beginning of the pandemic last March allowed growth stocks to maintain a large lead from value stocks. With the ongoing economic recovery, value stocks have been able to not only catch up, but to outperform as well. Aside from tech stocks, other stocks such as JPMorgan Chase and Chevron have also been rising. These stocks were in decline in 2020, however, they have shown strong growth in line with the improving economy this year.

Food Prices

Global food prices are on the rise, posing threats around the world

For the past few months, global food prices have been rising. This trend has caused additional pressure on the world’s poorest people, and many fear it will lead to unrest. In the past, spikes in food prices, especially staple foods, have been connected to periods of social unrest. For example, the Arab Spring was connected to high food prices. In February, it was reported today by the Food and Agriculture Organization’s Food Price Index that global food prices rose 2.4%. This means that global food prices have risen for the ninth straight month. Adjusted for inflation, this means that prices have reached their highest level since July of 2014. In 2020 and within the United States alone, it was reported that food prices rose 3%. And other countries such as Brazil, Russia, Nigeria, and Indian are not far behind. Governments are concerned about this price increase as they are often very destabilizing. Shutdowns related to COVID-19 have not helped alleviate this issue either. Future implications of this issue have yet to be seen, but many governments are wary of what is to come. While governments and experts worry, the world's poorest people continue to suffer the most from this rise.

Coupang

South Korea’s equivalent of Amazon has just gone public

Coupang is the largest e-commerce company in South Korea, and last week, they went public. Now, Coupang ranks as South Korea’s second-largest publicly held company, just trailing Samsung. Coupang is the largest U.S. initial public offering by a foreign company since Alibaba in 2014. It is also the biggest U.S. new issue of any kind since Uber in 2019. Coupang was founded in 2010 by Bom Kim, who dropped out of Harvard Business School. The company makes up 4% of all of South Korea’s consumer commerce and has become a large force in South Korea’s economy. Coupang is comparable to Amazon, however, it also includes features from companies such as Instacart, DoorDash, and Netflix. It also has geographical and technological advances in comparison to Amazon. South Korea overall is a very dense and tech-savy country, aiding in Coupang’s responsiveness. The company is also working to be very environmentally conscious after already eliminating almost 75% of packaging for its products. In 2020, Coupang saw a total revenue of $12 billion, a 91% increase from 2019. Its growth has also been above 90% in each of its previous four quarters. Though newer than Amazon, Coupang has already shown concrete advancements over its U.S. counterpart. And Coupong shares that are now available to the public are not cheap either. In the IPO, Coupang sold 130 million shares at $35 apiece. Their stock opened for trading at $63.50, giving Coupang a $114 billion market cap. Though, after close on Thursday, their valuation lowered and totaled $90 billion for approximately $50 a share.

COVID-19

The U.S. has surpassed 100 million COVID-19 vaccines administered nationwide

On Friday, the U.S. has officially administered more than 100 million vaccinations across the country. This new milestone comes as the inoculation drive gains pace in the U.S. and as COVID-19 cases have lowered in the past few weeks. President Biden has also announced that he plans to make all adults eligible for the vaccine by May 1st. His plan is a strong indication that the administration is confident in the rollout of vaccines. Though, getting the U.S. on its way to having health guidelines allow small gatherings by July 4th will be a challenge. This requires finding enough health workers to administer the vaccine and having mass vaccination sites across the nation. Underserved communities must also be considered in this plan and they must also be given access to the vaccine. The public may also view Biden’s new plan where all adults will have received the vaccine by May 1st, which is not the case. Simply, enough vaccines will be available for all adults by then according to the plan. Biden also has plans to expand the qualifications for the vaccine in the coming weeks, allowing more people to receive it. All these efforts will hopefully allow the U.S. to complete Biden’s goal by May 1st.

Works Cited

Armour, Stephanie, et al. “U.S. Surpasses 100 Million Covid-19 Vaccines Administered.” The Wall Street Journal, Dow Jones & Company, 12 Mar. 2021, www.wsj.com/articles/more-than-100-million-covid-19-vaccines-administered-in-u-s-cdc-says-11615580615?mod=hp_lead_pos5.

Langley, Karen. “Value Investors Finally Have Reason to Celebrate-for Now.” The Wall Street Journal, Dow Jones & Company, 12 Mar. 2021, www.wsj.com/articles/value-investors-finally-have-reason-to-celebratefor-now-11615545000?mod=hp_lead_pos3.

Matarese, John. “What Pandemic? Utilities Resuming Disconnections.” WCPO, WCPO, 11 Mar. 2021, www.wcpo.com/money/consumer/dont-waste-your-money/what-pandemic-utilities-resuming-disconnections.

Mickle, Tripp, and Aaron Tilley. “Google Says Microsoft's Stance on News Is Effort to Distract From Hack.” The Wall Street Journal, Dow Jones & Company, 12 Mar. 2021, www.wsj.com/articles/google-fires-back-at-microsoft-as-long-simmering-feud-intensifies-11615577733?mod=hp_lead_pos1.

Savitz, Eric J. “Coupang Is the Amazon.com of South Korea, but Maybe Even Better. And Now You Can Buy the Stock.” Coupang Is the Amazon.com of South Korea, but Maybe Even Better., Barrons, 12 Mar. 2021, www.barrons.com/articles/coupang-is-the-amazon-com-of-south-korea-but-maybe-even-better-51615590150.

Walsh, Bryan. “Food Prices Are Rising - and That's Bad for Global Stability.” Axios, 10 Mar. 2021, www.axios.com/global-food-prices-coronavirus-protests-9d81f4c6-7665-4aa5-9250-a5b670efdb30.html.

Market Update (March 10)

COVID-19 Stimulus

Congress passes long awaited stimulus bill

On Wednesday, Congress officially passed the massive $1.9 trillion coronavirus relief bill, sending it to President Biden, who hopes to sign it on Friday. This is the largest ever stimulus package passed in the US, extending $300 unemployment benefits till September 6, sending $1,400 stimulus checks to eligible Americans, expanding child tax credits, providing aid to small businesses and state governments and more. The passing of the bill boosted markets early in the day, as it had been long awaited for the past few weeks and serves as the first major win of the Biden administration. Increase in spending is also allocated towards vaccinations, which are ramping up and Biden setting a goal for all adults being vaccinated by the end of May.

Unemployment

Better than expected job report shows recovering economy

The Labor Department released data for the week ended March 6 showing less than expected jobless claims, to a seasonally adjusted 712,000 vs expected 725,000. Continuing jobless claims continued to fall, alongside news that a vast majority of the population will be vaccinated in the near future. Strong hiring sprees amid a rapidly recovering economy added 379,000 jobs in February. Household spending has also risen due to the government stimulus checks and unemployment is down to 6.2% in February from a high of 14.8% in April 2020.

MORTGAGES

Mortgage rates continue to decline

Based on data provided, mortgage rates have declined again, especially the 10 year mortgage and refinancing rates falling, down 2% and 2.125% respectively. Both remain hovering around all time lows, as increasing amount of people are looking to buy new homes with the coronavirus pandemic seemingly coming to an end soon and a full economic recovery on the frontier. Despite this, mortgage refinance demand is down 43% from a year ago, while mortgage applications for home buyers rose 7% for the week, and is up 2% from the year prior. Rising interest rates are fears that are plaguing investors, but for the meantime, the general public remains optimistic as more people continue to borrow.

US MARKETS

Markets were up Wednesday following positive economic outlooks

US markets were up on Wednesday following Tuesday’s surge and tame inflation data. While rising Treasury yields and potential inflation worries current investors, positive economic data is easing these fears as the market shrugged off these worries. In addition, the US government announced Wednesday morning that February consumer price was up 0.4%, and certainly to be boosted in March and subsequent months due to the passing of the coronavirus stimulus package.

GE

General Electric announces sale of jet leasing business in merger with AerCap

Amid a struggling time for the aviation industry, GE on Wednesday announced they would be selling their jet leasing business to AerCap in a deal valued at $30 billion. The merger would give GE a 46% stake in the combined firm and reported to generate $24 billion in cash. The deal would streamline and combine GE’s GE Capital with the broader corporate structure of the entire conglomerate. The deal is set to reduce up to $30 billion of debt as both GE and AerCap were trading lower in the afternoon. This is following reports that S&P Global Ratings is planning on lowering the firm’s credit score due to higher than normal debt leverage due to the consolidation of GE Capital, which took massive blows during the financial crisis. The deal is a step forward for both companies, with increased market capitalization, consolidation of assets, debt reduction, and diversification into the aviation sector which many believe will rebound.

Works Cited

Belvedere, Matt. “5 Things to Know before the Stock Market Opens Wednesday.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/5-things-to-know-before-the-stock-market-opens-march-10-2021.html.

Fenske, Chris. “Daily Global Market Summary - 10 March 2021.” IHS Markit, 10 Mar. 2021, ihsmarkit.com/research-analysis/daily-global-market-summary-10-march-2021.html#:~:text=Most%20US%20equity%20markets%20closed,%2DNAHY%20%2D10bps%2F300bps.

Franck, Thomas. “Weekly Jobless Claims Rise Less than Expected with Biden Set to Sign $1.9 Trillion Covid Package.” CNBC, CNBC, 11 Mar. 2021, www.cnbc.com/2021/03/11/weekly-jobless-claims.html.

Jennings, Chris. “Today's Mortgage Rates Continue to Decline, Hover near Historical Lows: March 10, 2021.” Fox Business, Fox Business, 10 Mar. 2021, www.foxbusiness.com/money/todays-mortgage-rates-march-10-2021.

Josephs, Leslie. “GE to Merge Aircraft Leasing Unit with Rival AerCap in a $30 Billion Deal as Industry Faces More Pandemic Turmoil.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/general-electric-aercap-aircraft-leasing-merger.html.

Olick, Diana. “Mortgage Refinance Demand Plunges 43% from a Year Ago, as Higher Interest Rates Take Their Toll on Borrowers.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/mortgage-refinance-demand-plunges-43percent-from-a-year-ago.html.

Pramuk, Jacob. “House Passes $1.9 Trillion Covid Relief Bill, Sends It to Biden to Sign.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/stimulus-update-house-passes-1point9-trillion-covid-relief-bill-sends-to-biden.html.

Market Update (March 9)

SEC

SEC to review practices regarding small investors’ stock being filled by high-speed trading firms.

In response to the recent GameStop saga, the SEC acting chairwoman, Allison Herren Lee, has signaled support for the widespread review of practices regarding the trade of small investors’ stock by high-speed trading firms. The current system, payment order flow, is decades old, but is under attack as the number of individual investors who trade on brokerage apps continues to increase. Consequently, Lee wants regulators to make sure that all practices are fully disclosed and “' ‘consistent with best execution obligations.’ “ Lee’s letter was in response to Senator Elizabeth Warren who sent questions to the SEC after “meme stocks” created large amounts of volatility, resulting in brokers having to curb trade to meet margin calls. In the past, the SEC has signaled its liking into payment order flow, so the issue is something to looked at in the near future.

Bond Market

Flood of debt tests the Bond Market

Experts on Wall Street are starting to believe that the US government’s borrowing is testing investors’ appetite for treasury debt. Overall, falling bond prices have pushed the treasury note from around 1% to more than 1.5%, the highest the note has been in over a year. As such, investors claim that the COVID-19 vaccine and economic resurgence (led by stimulus checks) will lead the Federal Reserve to raise short-term interest rates. Additionally, the supply of 30-year treasury notes has been an accelerant of higher yields. In general, people on Wall Street are divided over the supply of treasury yields. In the past, these supplies have had little impact on on yields, however, the current situation is unprecedented, leading some to believe that different outcomes could occur.

ROBLOX

Roblox set to go public on March 10

Roblox (RBLX) will be traded on the NYSE staring March 10. Roblox’s reference price is set at $45 based on a formal IPO price and recent private-market transactions. However, Roblox is going public through a direct listing and not the traditional route of an IPO. A direct listing allows Roblox to float its shares on the NYSE without having to pay investment banks for an IPO. Initially, Roblox was set for an IPO in 2020, but after the strong debuts of Airbnb and DoorDash, company officials found it difficult to gauge the correct price of Roblox’s shares.

Chinese Tech. Stocks

Chinese tech. stocks are falling harder than their US counterparts

As US tech. stocks are entering the correction territory, Chinese tech. stocks continue their downward trend. Over the past three weeks, the largest Chinese tech. stocks listed in Hong Kong have fallen by around 26%. The Hang Seng Tech Index, which tracks 30 companies, closed Tuesday at a drop of at least 20% from a recent high, marking its lowest level in 2021. In comparison, the Nasdaq closed 10.5% lower than a recent high. Investors claim that the US and Chinese market both took a hit due to the rise in treasury bond yields, but China took a larger hit because of an influx of money from investors in mainland China. However, investors can still remain optimistic as Chinese tech. stocks long-term growth outlook remains intact.

US Dollar

Investors worry as the dollar strengthens

Investors expected the dollar to decline, but it is actually up 2% since its low in early January. Since the US Presidential Election in November, investors have predicted the US dollar to drop by at least 20%, however, the drop turned out to only be 3.3% and has risen since. Consequently, people are starting to worry that if the dollar keeps strengthening, the recovery in emerging markets, which rely on dollar funding, could be hurt. For example, the dollar has significantly strengthened in comparison to the Brazilian real and Mexican peso, hurting their recovery efforts. Additionally, the dollar sits 1.7% higher than the euro, which was supposed to be a major player for global recovery. A reason for the increase in the US dollar is because of rising bond yields, and this condition makes financial conditions in the rest of the world stricter. As such, recovery in those economies could be restricted.

Works Cited

Davies, Paul J. “Dollar Strength Confounds Investors and Sparks Some Worries.” The Wall Street Journal, Dow Jones & Company, 4 Mar. 2021, www.wsj.com/articles/dollar-strength-confounds-investors-and-sparks-some-worries-11614870716?mod=markets_minor_pos2. 

Goldfarb, Sam. “Flood of New Debt Tests Bond Market.” The Wall Street Journal, Dow Jones & Company, 10 Mar. 2021, www.wsj.com/articles/flood-of-new-debt-tests-bond-market-11615372201?mod=markets_lead_pos3. 

Michaels, Dave. “GameStop Saga Prompts SEC to Weigh Review of Payment for Order Flow.” The Wall Street Journal, Dow Jones & Company, 9 Mar. 2021, www.wsj.com/articles/gamestop-saga-prompts-sec-to-weigh-review-of-payment-for-order-flow-11615316739?mod=markets_lead_pos6. 

Yu, Xie, and Joanne Chiu. “Chinese Technology Stocks Have Fallen Harder Than U.S. Peers.” The Wall Street Journal, Dow Jones & Company, 9 Mar. 2021, www.wsj.com/articles/chinese-technology-stocks-have-fallen-harder-than-u-s-peers-11615288384?mod=markets_major_pos12. 

Ziobro, Paul. “Inside Roblox's Stock Debut, from Direct Listing Decision to Its Financial Outlook.” The Wall Street Journal, Dow Jones & Company, 9 Mar. 2021, www.wsj.com/articles/inside-roblox-stock-debut-from-direct-listing-decision-to-its-financial-outlook-11614179052?mod=markets_lead_pos11. 

Market Update (March 8)

MARKETS

Written By: Sarah Lee, Vice President of Investments

ENERGY

Intercepted Missile and Drones at Saudi Arabian Oil Site

On Sunday, Saudi Arabian oil infrastructures came under missile and drone attack, escalating the regional hostilities and pushing up crude prices. The attacks were intercepted and oil output appeared to be unaffected, but the assault came from Iran-back Houthi rebels. Oil prices were push to above $70 a barrel for the first time since January 2020. There was no loss of life or property, but it is confirmed that the oil tank farm in Ras Tanaura terminal was targeted – the world’s largest oil export port. Prior to this attack, last September Saudi oil instillations came under fire through strikes resulting in a cut in production for about a month. This also exposed the vulnerability of the kingdom’s petroleum industry. This attack will further complicate efforts by U.S President Joe Biden to engage in nuclear diplomacy with Iran. Intraday, BRENT is down at $67.96 (-1.40%)

FED

Selloff in U.S. Government Bonds Eroded Demand for Technology Stocks

The Dow Jones Industrial Average climbed Monday to record levels, surging up 306.14 points (1%) to 31802.44, following progress on a new fiscal stimulus bill that is creating optimism in the economy. Meanwhile, NASDAQ Composite fell 2.4% as tech stocks are still on their decline. The result of rising bond yields halt the favoring of growth stocks such as big tech companies. As the economy shifts, value stocks are be favored. Apple shares dropped 4.2%, adding onto their declines for the year to 12%, while Tesla slid 5.8% losing more than 20% in 2021. Within the bond market, yield on benchmark 10-year U.S. Treasuries ticked up to 1.599% on Friday, which is its highest since February 2020. Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management stated, “The underlying strength of the U.S. economy, growing expectations that the stimulus gets fully passed, plus inflation expectations rising because of oil: These are all likely to continue to push bond yields higher.”

REAL ESTATE

Manhattan Apartments Rental Market at a Slump

With the reduced demand of Manhattan apartments during the pandemic, landlords are pulling unrented apartments off the market, tightening inventory while rents are low. This is commonly known as “warehousing,” where the supply of apartments are reduced when demand is at a low. It has come under scrutiny from housing advocates and lawmakers, because it creates an artificial scarcity that worsens the city’s housing shortage. However, landlords say that warehousing is necessary to respond to both regulatory and economic changes. Landlords are using this practice to avoid signed deeply discounted leases, and could be betting on potential price rebounds this spring and summer leasing season when the Covid-19 vaccine is more accessible. The median rental prices are down more than 17% for the year ending in December.

AIRLINE

American Airlines Target to use Frequent-Flier Program to Raise $7.5 Billion

AA and other carriers have found relatively stable cash flows form their frequent-flier programs, and poses as a rich source of collateral for financing. The company said it would raise $7.5 billion back by its program, to repay a loan from the federal government during the peak of the coronavirus as it wiped out demand for air travel. The carrier said on Monday that it would issue $5 billion in notes and seek a $2.5 billion term loan back by AAdvantage. Currently, this is common in the industry as both Delta Air Lines and United Airlines tapped their respective frequent-flier program to land extended financing. The main way airlines earn money from frequent-flier programs is by selling miles to banks and retailers that then award them to customers who sign up for credit cards. Therefore, airlines benefit from every swipe of a co-branded card, whether customers are buying plane tickets or groceries. Airlines stated that this revenue has been more stable than ticket sales as demand for that has withered away.

TECH

IonQ, the Quantum-Computing Startup Plans Public Debut through SPAC Merger

The Quantum-computing IonQ Inc. plants to merge with blank-check firm dMY Technology Group Inc. III, making it the first publicly traded company specifically focused on commercializing quantum-computing hardware and software. On Monday, they stated its intention on filing paperwork in a week with the SEC to go public on the NYSE through a SPAC, valuing the combined entity at about $2 billion. IonQ is in hot competition with International Business Machines Corp., Microsoft Corp., Alphabet, and D-Wave Systems INC., to commercialize quantum computing using various approaches. As of today, there has not been a scalable, commercial-grade quantum computer on the market. It has been projected that by 2023, 20% of global organizations are expected to budget for quantum-computing projects, which is up form less than 1% from 2018. If IonQ’s deal goes through, it will have raised $734 million in funding since its founding in 2015, which includes $300 million through the merger with dMY Technology III and another $350 million in private investment funding from Hyundai Motor Co. Additionally, the company has raised $84 million in venture-capital funding.

COVID-19

CDC New Guidelines Direct Fully Vaccinated People Can Gather Privately Without Masks

The Centers for Disease Control and Prevention stated people who are fully vaccinate against the new coronavirus can gather privately in small groups without masks or physical distancing. The agency left its travel guidance unchanged, and said vaccinated people should continue to hold off on long trips. New cases, hospitalizations and deaths related to Covid-19 have fallen in recent weeks following a winter surge, but public-health officials say people should remain cautious. President Biden stated last week that the U.S. would have enough vaccines for all American adults by the end of May, and encouraged Americans to wear masks while some states have lifted restrictions. A person is considered fully vaccinated two weeks after receiving the second does of the two-shot vaccines made by Pfizer and Moderna, or after two weeks of receiving the Johnson & Johnson vaccine.

TECH

Pandemic Leading to a Surge in Day Trading, Making TikTok and Discord Users the New Wall Street Trading Desks

Through the pandemic, the influx of day trades have flooded social media sites as they help push stocks to record highs and turning companies into market sensations. Platforms such as TikTok, Twitter, YouTube, Reddit, Instagram, Facebook and Discord have become the “new Wall Street trading desks as retail investors gather to talk about hot stocks such as Tesla. More than talking about trades, they piggyback on each others’ ideas and trades, bringing momentum to dying stocks. Shares of Chinese electric-vehicle maker NIO Inc. are an example as the stock has received enduring interest from individual investors.

Many young investors on TikTok have been swamping the app with video snippets under the tag #nio with an accumulated 35 million views, as they question if it’s the new Tesla. On Twitter, it was mentioned nearly 6,800 times on a single day in November. Social media platforms have power to influence many, and new investors are not missing out. Young day traders state that they spend around 5 hours a day scrolling through TikTok, YouTube and other platforms for ideas on what to trade.

WORKS CITED

Abbott, Brianna. “CDC Says Fully Vaccinated People Can Gather Privately Without Masks.” Wall Street Journal, 8 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/cdc-says-fully-vaccinated-people-can-gather-in-small-groups-without-masks-11615219222.

Castellanos, Sara. “Quantum-Computing Startup IonQ Plans Public Debut in $2 Billion SPAC Merger.” Wall Street Journal, 8 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/quantum-computing-startup-ionq-plans-public-debut-in-2-billion-spac-merger-11615201201.

Frankl-Duval, Caitlin McCabe, Gunjan Banerji and Mischa. “TikTok and Discord Are the New Wall Street Trading Desks.” Wall Street Journal, 11 Jan. 2021. www.wsj.com, https://www.wsj.com/articles/tiktok-and-discord-are-the-new-wall-street-trading-desks-11610361004.

Hirtenstein, Ana. Stocks Diverge as Bond Yields Rise - WSJ. https://www.wsj.com/articles/global-stock-markets-dow-update-03-08-2021-11615192681?mod=hp_lead_pos1. Accessed 8 Mar. 2021.

Maidenberg, Micah. “American Airlines to Use Frequent-Flier Program to Raise $7.5 Billion.” Wall Street Journal, 8 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/american-airlines-to-use-frequent-flier-program-to-raise-7-5-billion-11615217163. 

Nereim, Vivian. “Saudi Arabian Oil Site Attacked, Stoking Regional Tensions.” Bloomberg.Com, 7 Mar. 2021. www.bloomberg.com, https://www.bloomberg.com/news/articles/2021-03-07/saudi-coalition-intercepts-five-drones-from-yemen-pursuing-more.

Parker, Will. “Manhattan Landlords Take Apartments Off Market During Rental Slump.” Wall Street Journal, 7 Mar. 2021. www.wsj.com, https://www.wsj.com/articles/manhattan-landlords-take-apartments-off-market-during-rental-slump-11615140000.

Market Update (March 4)

Written By: Emily Vo

utilities

ERCOT overcharged Texas $16 billion for electricity during the winter storm

An independent market monitor has reported that the Texas power-grid operator made a mistake that caused $16 billion in overcharges last month. Texas kept wholesale prices high for 33 hours longer than warranted as the winter storm caused blackouts and power shortages across the state. The independent market monitor recommended that Texas should have repriced its wholesale power market and now needs to reverse $16 billion in charges. Many participants in the power market are suffering and a reversal of these charges would greatly benefit them. Retailers, electric cooperatives, and wind farms have suffered significant financial harm as a result of these charges. Furthermore, ERCOT is also suffering financially and is reportedly $2.5 billion short in payments right now. Resetting the prices in the wholesale market would allow many of these participants to recover and continue to offer their services for power in Texas.

Google

Google says it will now only use “privacy-preserving technologies" after it stops supporting cookies

On Wednesday, Google announced in a blog post that it will not use technologies that track people on the internet. They will only use “privacy-preserving technologies” that utilize things such as anonymization or aggregation. These ‘privacy-preserving technologies” will be used after Google stops supporting cookies, which are small pieces of code that websites deliver to a visitor’s browser and that stays with them as this person visits other internet sites. In January of 2020, Google had already announced that its browser, Chrome, will no longer support third-party cookies within the next two years. Cookies are essential to digital advertising and Google’s intent to discontinue supporting them has many future implications for advertising and markets.

COVID-19

Texas and Mississippi join a dozen other states in repealing their mask mandates

Texas and Mississippi are the recent states to join a dozen other states in removing their mask requirements. Greg Abbot announced his intent to have Texas fully reopen on March 10th, which includes removing the current mask mandate. Mississippi’s governor Tate Reeves followed suit in ending its mask mandate and allowing businesses to operate at full capacity. Both governors declared that people and businesses should have the freedom to determine whether or not to continue wearing masks or operate at full capacity. These decisions have been highly criticized by many, including President Joe Biden. Both states feature an extremely high number of COVID-19 cases and many feel that repealing the mask mandates now is too soon. Vaccines have arrived, but most people are not vaccinated yet. Despite this decision, many businesses are continuing to enforce masks and other prevention methods including social distancing and limited capacity.

economy

Fillings for unemployment benefits reach their lowest level in almost three months

It has been reported that in the latter half of February, fillings for unemployment benefits reached a three-month low. This is a sign of labor-market improvement, even if it is slow. The Labor Department reported that unemployment benefit claims were under 800,000 on the week of February 27th. Though this number is still high in comparison to pre-pandemic levels, it is the lowest it has recently been. The number is also predicted to improve as COVID-19 cases decline and more vaccines are distributed. Economists also expect February’s employment report to show some job gains as well. Hiring is also picking up in certain industries, contributing to this improvement. This economic recovery has been slow, but progress is being made.

Stimulus Package

Democrats aim to pass a $1.9 trillion relief bill over republicans

Democrats in Congress are working to meet a mid-March deadline for President Joe Biden’s COVID-19 relief package before federal unemployment benefits expire. The House and the Senate recently passed a budget resolution earlier this month that has allowed them to formula a $1.9 trillion relief package. This package includes $1,400 stimulus checks for those making under $75,000 annually and continued unemployment benefits of $300 a week. $8.75 billion is also allocated to facilitate vaccine distribution and testing. The bill also includes around $130 billion for funding K-12 schools and $350 billion in aid for state and local governments. However, this package will not include an increase in the federal minimum wage, something many have been fighting for. Republicans are also highly unlikely to back this bill, but Democrats will be able to pass it without their support.

Costco

Costco’s sales have risen 15% in the latest quarter

In the latest quarter, Costco’s sales have climbed once again. Their revenue rose to $44.77 billion in the latest quarter ended on February 14th. This is a 14% increase from the year-earlier period. Analysts projected $43.7 billion, but with strong demand for food and household items, Costco’s revenue was able to top this prediction. Though, Costco has had some challenges, specifically in their supply-chain system that has led to some shortages and delays in goods such as seafood and furniture. Their Chief Financial Officer Richard Galantini has expressed how he expects these pressures to ease and these challenges to pass. Overall, Costco is performing very well despite the pandemic and their growth is only expected to rise.

works cited

Chin, Kimberly. “Costco Sales Rise 15% in Latest Quarter.” The Wall Street Journal, Dow Jones & Company, 4 Mar. 2021, www.wsj.com/articles/costco-sales-rise-15-in-latest-quarter-11614894599?mod=searchresults_pos6&page=1.

Gibson, Kate. “Retailers Put Brakes on Texas and Mississippi Move to Scrap Mask Mandates.” CBS News, CBS Interactive, 4 Mar. 2021, www.cbsnews.com/news/mask-mandate-texas-mississippi-retailers/.

Gold, Russell. “Texas Overcharged $16 Billion for Power During Freeze, Monitor Says.” The Wall Street Journal, Dow Jones & Company, 4 Mar. 2021, www.wsj.com/articles/texas-overcharged-16-billion-for-power-during-freeze-monitor-says-11614894714?mod=hp_lead_pos2.

Lang, Hannah. “U.S. Jobless Claims Hold Nearly Steady.” The Wall Street Journal, Dow Jones & Company, 4 Mar. 2021, www.wsj.com/articles/weekly-jobless-claims-coronavirus-03-04-2021-11614811082?mod=searchresults_pos15&page=1.

Megancgraham. “What Google's Latest Cookie Announcement Means for Top Ad-Tech Stocks, According to Analysts.” CNBC, CNBC, 4 Mar. 2021, www.cnbc.com/2021/03/04/what-googles-latest-cookie-news-means-for-top-ad-tech-stocks.html.

Rubin, Gabriel T. “Stimulus Package Update: Biden's Plan Includes Third Checks, Vaccine Funding and Jobless Aid.” The Wall Street Journal, Dow Jones & Company, 4 Mar. 2021, www.wsj.com/articles/stimulus-update-biden-covid-19-relief-package-11614095748?mod=searchresults_pos11&page=1.

Market Update (March 3)

Written By: Nayan Bandaru, Junior Analyst, Technology

The Bears are out of Hibernation

Markets close red with rotations out of large-cap and tech 

The NASDAQ fell by 2.7 percent today marking the largest 2-day drop for the index since September 8th. This is due to the fact that investors are moving away from growth stocks which are essentially tech stocks (Tsla, Sq, Roku) in the current market, to value stocks that investors feel are currently undervalued. The ARK Etf which has been flying due to large investments in Tesla has fallen around 20% since its peak in late February in response to the market rotation. Despite all this, analysts believe that the current bear market is just a small correction in the overall larger bull market that has not ended. They base this claim around data from past bull markets and how much the market rose in response to them and their durations. The average bull market since 1957 for the S&P 500 has lasted 5.8 years and resulted in a 179% price change. The current bull market has lasted for only 11 months and resulted in a 79% price change. Analysts believe that the bull market will continue to follow the historical trend and still rise despite the small hiccup. The circumstances around the bull market this time around are different from past ones and there is still a cloud of uncertainty around the future. The economy should stay strong as vaccines begin to roll out in larger quantities but larger cap and growth stocks may take a hit as vaccines help out the smaller industries that took a large hit during covid-19.

SN10 Lands, Then blows up

The SpaceX prototype decided to blow after landing 

SN10 is the third iteration of Elon Musk’s Mars spaceship and took flight later in the day on March 3. It took off from the southern tip of Texas and flew a little over 6 miles before returning to land. Initially, the spaceship descended horizontally, making many people assume that the landing would be a failure once again. However, SN10 ended up turning itself upright right before it landed on the pad. All seemed well with the landing, until about 15 minutes later when the spaceship rose back up into the sky and blew up. Despite the fireworks, Elon was happy with the progress they had made on the landing since the last two spaceships (SN8 and SN 9) blew up upon impact with the landing pad. Elon eventually wants to reach a point where his spaceships are commonplace for the transportation of people and items to mars and the moon. 

Bitcoin when will the run end??

Bitcoin continues to climb yet still has lots of upside

Bitcoin has been a star recently with the crazy volatility it has been seeing and investments from firms in large amounts. This has fueled the price of Bitcoin to rise over 50k. Now people are starting to question how much more upside Bitcoin truly has. Analysts predict that Bitcoin could easily still rise 300% to around 500% within the coming years. This is due to the halving period of Bitcoin. The halving period is essentially when a certain number of Bitcoin has been mined; the amount of Bitcoin which is awarded to miners from that point on is halved in value. It follows Bitcoin’s finite nature as near 19 million of the 21 million Bitcoins available have been mined. Every time that Bitcoin reaches a halving period its price skyrockets hundreds of percent on average. We are only halfway to the next halving period so when Bitcoin reaches that period it could go ballistic, cannonballing it into the hundreds of thousands of dollars per coin. It would be a historical event as Bitcoin becomes more and more integrated within the current digital society and as a value growth asset. 

Global Market Scare

Investors look to Powell over Rising Bond Prices

Global shares take a hit due to the fact that bond prices in the United States are on the rise. The 10 yr treasury rose today to 1.477 rising back to its year high of 1.614 which was set last week based on a strong economic opening outlook from vaccine rollout. This rapid rise was a part of why many global stocks fell in value today as fund managers don’t want to risk the current extreme volatility of the situation. Investors all have their heads toward Jerome Powell to speak upon the issue since he is said to speak at a Wall Street Journal event before the Federal Reserve Policy-making committee reconvenes in the coming weeks. 

Sources 

https://www.marketwatch.com/story/spacex-starship-lands-successfully-then-blows-up-on-landing-pad-01614818969?mod=newsviewer_click

https://www.marketwatch.com/story/why-the-s-p-500s-bull-market-run-probably-is-only-getting-started-11614820819?mod=newsviewer_click

https://www.marketwatch.com/story/cathie-woods-highflying-ark-etf-just-entered-a-bear-marketa-sign-of-the-times-11614809080?mod=home-page

https://www.reuters.com/article/global-markets/global-markets-bond-scares-spook-world-shares-investors-look-to-powell-idUSL2N2L20CO

Market Update (March 2)

Overview

Materials sector rises as tech drags on Wall Street

Wall Street ended lower on Tuesday, dragged down by declines in Apple and Tesla stocks as they fell 2% and over 4% respectively. On the other hand, stocks in the materials sectors were up as there is high anticipation for another US stimulus package being passed by Congress in the near future. Gains in materials stocks drove Canada’s TSX up as materials rose 2.22% with additional gains in financials, energy and real estate. Meanwhile back home, Wall Street investors resumed a rotation of investments, as they pulled out of stocks that outperformed during over the past year due to the coronavirus pandemic and switching to stocks viewed as lucrative should the pandemic end soon. Such stocks include those in the materials sectors as supply chains are being restored and demand for raw materials picks back up again.

POLITICS

Stock futures up over optimistic economic outlook and stimulus package

Following a broad decline across most sectors on Tuesday, stock futures were trading up slightly as the US Senate is debating on the passage of another coronavirus stimulus deal that includes $1,400 in stimulus checks, and extended unemployment benefits, with the bill costing upwards of $1.9 trillion. This comes as talks of increasing government spending and reopening of businesses give investors hope of a strong economic recovery. Although in spite of this, fears of increasing interest rates and rising inflation stemming from last week’s jump in Treasury yields.

COVID-19

President Biden sets May as new vaccination goal

On Tuesday, President Biden announced that his administration is eyeing May as the goal to have every adult who wants a Covid-19 vaccine vaccinated. In addition, it was announced a partnership between Merck & Co. and Johnson & Johnson to mass produce its newly approved vaccine. This vaccine differs from the Moderna and Pfizer ones where it only requires one dose instead of two. 3.9 million doses have already been shipped out, with J&J aiming for 100 million by the end of June. This comes as Texas becomes the largest state to ease on its Covid-19 restrictions and lifting its mask mandate. The state has suffered massive setbacks in vaccinations due winter storm Uri shutting down the entire state for a week.

Target and Kohls

Retail giants Target and Kohls beat expectations

Both retail store giants Target and Kohls released their adjusted fourth quarter financials, largely exceeding Wall Street expectations. Although it was unable to provide a future forecast due to high volatility because of the pandemic, it still shows that the economy is in an upwards trend. The $600 stimulus checks provided led people to spend more during the holidays, boosting Target’s sales. This report also shows the increasing importance of a strong online, e-commerce presence, as this was a driving force for increasing sales. Target is greatly outperforming competitors such as Macys and other retailers with sales increasing 5.3% in January and revenue rising 21% to $28.34 billion. Target shares, although closing lower on Tuesday, are up 81% over the past year as it looks to invest more into its online business.

Works Cited

Gomez, Julia, and Sarah Kolinovsky. ABC News, ABC News Network, abcnews.go.com/Politics/biden-announce-merck-produce-johnson-johnson-covid-19/story?id=76204113.

McCormick, Emily. “Stock Market News Live Updates: Stock Futures Open Slightly Higher.” Yahoo! Finance, Yahoo!, finance.yahoo.com/news/stock-market-news-live-updates-march-3-2021-231939919.html.

Repko, Melissa. “Target Earnings Top Estimates as Sales Rise 21%, Boosted by a Surge of Post-Holiday Shoppers.” CNBC, CNBC, 2 Mar. 2021, www.cnbc.com/2021/03/02/target-tgt-earnings-q4-2020.html.

“The Close: TSX Gains as Materials Rally; Wall Street Lower as Apple and Tesla Retreat.” The Globe and Mail, 2 Mar. 2021, www.theglobeandmail.com/investing/markets/inside-the-market/market-news/article-premarket-european-shares-pause-awaiting-next-move-in-bonds/.