Top News  Shutterstock A round of late-afternoon buying boosted the Dow Jones average to another record high on Friday as rising optimism around the global economic reopening continued to encourage the rotation into cyclical stocks. But surging bond yields rekindled valuation fears in the big tech names, dragging the Nasdaq to a loss on the day. The 10-year Treasury yield jumped 10 basis points to 1.64% at its session high, hitting its highest level since February a year ago. Yields rose in an atmosphere of further anticipation of growth following the signing of the $1.9 trillion stimulus bill and as the White House declared its goal of having every adult eligible for a COVID-19 vaccination by May 1. For the week, the Dow led the major market benchmarks with a 4.1% gain, while the Nasdaq jumped 3.1% despite its see-saw action and the S&P 500 added 2.7%.    | | Top News Shutterstock A round of late-afternoon buying boosted the Dow Jones average to another record high on Friday as rising optimism around the global economic reopening continued to encourage the rotation into cyclical stocks. But surging bond yields rekindled valuation fears in the big tech names, dragging the Nasdaq to a loss on the day. The 10-year Treasury yield jumped 10 basis points to 1.64% at its session high, hitting its highest level since February a year ago. Yields rose in an atmosphere of further anticipation of growth following the signing of the $1.9 trillion stimulus bill and as the White House declared its goal of having every adult eligible for a COVID-19 vaccination by May 1. For the week, the Dow led the major market benchmarks with a 4.1% gain, while the Nasdaq jumped 3.1% despite its see-saw action and the S&P 500 added 2.7%. | |
| Stocks It was a volatile five sessions to say the least, with investors fretting over rising bond yields and a sharp acceleration in inflation. That contrasts with a stock market where bulls were rooting for another big stimulus package during the push-and-pull negotiations at the end of the Trump administration. Every time yields rose, the tech sector declined, where high-growth valuations have been underpinned by low interest rates (the reverse was also true). A resurgence of "meme stock" trading was also seen with wild moves for GameStop (GME), Koss (KOSS) and AMC Entertainment (AMC).
Thought bubble: While many are concerned about inflationary effects, the Fed has been vocal that it has no immediate plans to tighten monetary policy. In fact, its main worry doesn't appear to be inflation, but rather the damage done to the labor market by the pandemic. The last time the U.S. had a bad bout of sustained price increases was in the 1970s, when its economy was more insulated from the world, it depended on foreign oil and ended the Bretton Woods system that rendered the dollar a fiat currency. That picture looks much different today, and since the 2008 financial crisis, the U.S. economy has even struggled to achieve its inflation goals.
The bulls: "While we expect conditions to remain volatile, the most recent developments on three of the main market drivers - stimulus, pandemic news, and inflation data - point to further equity upside," wrote Mark Haefele, chief investment officer at UBS Global Wealth Management. "This windfall comes on top of existing signs of pent-up demand from U.S. consumers.
The bears: "We think the U.S. 10-year yield has further room to go and could reach 1.8%," said Sebastien Galy, a senior macro strategist at Nordea Investment Funds. "Growth stocks maintain a high sensitivity to rates, which continues to suggest that they are quite overvalued." (74 comments) | |
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| Economy President Biden signed a $1.9T economic stimulus bill into law, also known as the American Rescue Plan, marking one of the largest relief packages in U.S. history. It was hailed as a centerpiece of his first 100 days in office, and includes $1,400 payments for most Americans, expanded unemployment insurance, funding for schools and public health, and state and local government aid. The legislation also includes a per-child cash payment of at least $3,000 for one year, an expansion of "Obamacare" subsidies for two years, as well as aid for restaurants, agriculture and small businesses.
Thought bubble: The consensus among economists is that the stimulus will boost the economy and supercharge the recovery. A forecast from Moody's says the plan can add up to 7M American jobs - which is important given the levels of unemployment - while the OECD said Tuesday that the program highly enhances the economic outlook even outside the U.S. But there are also those that have raised concerns that the sheer scale of the spending could lead to a spike in inflation, as well as deficit hawks who have expressed worries about additional borrowing and what that might mean for the national debt.
That conversation is also playing out in the political sphere, where Democrats have dubbed it the "largest anti-poverty measure in a generation" or what White House Press Secretary Jen Psaki called the "most progressive piece of legislation in history." On the other side of the fence, GOP members have said the package goes too far in its expansion of public assistance, pointing to the only $75B (7% of the $1.9T price tag) which is directed at COVID testing, contact tracing and vaccine distribution.
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Statistics: A Pew Research Center poll released this week found that 70% of U.S. adults favor the $1.9T coronavirus relief bill, including 41% of Republicans and Republican-leaning independents and 94% of Democrats and Democratic leaners. In assessing the proposed spending in the aid package, 41% of Americans view it as about right, while another 25% say it spends too little, and only a third of Americans say the legislation spends too much money. (
133 comments)
| Tech On Wednesday, Roblox (RBLX) soared as high as $73 following its highly-anticipated debut on the NYSE via a direct listing. The prior evening evening, the exchange set a reference price of $45/share, which is in line with a recent Series H funding round that resulted in a valuation of $29.5B (up 7x its last round in February 2020). The company previously delayed a traditional IPO planned for December and also postponed a direct listing it sought in February.
Backdrop: Roblox is a social gaming platform that allows users to play, create games and hang out with their friends - all in one place. More than half of the kids in America currently play on the platform, which has been a huge beneficiary of the COVID-19 pandemic. Daily active users jumped 85% in 2020 to 32.6M, while the number of hours that players spent on the app more than doubled to 30.6B. CEO Dave Baszucki's ultimate vision for the company is an online world where users can work, play and entertain themselves (a.k.a. the "Metaverse").
In its latest update to its prospectus, Roblux said it paid developers $328.7M in 2020, up almost 200% from 2019. That heavily surpassed the company's sales growth of 82% last year, when it booked $923.9M in total revenue. In addition, more than 1,250 developers earned at least $10K in the digital currency Robux, which can be exchanged for real money. Over 300 earned $100K or more, while the company plans to spend additional cash on incentivizing higher-quality content and funding bigger teams of engineers and designers.
Outlook: Cathie Wood picked up shares, while Atlantic Equities expects great things, rating it Overweight. The firm pointed to plans for international expansion and attempts to "age up" the demographics, along with diversified platform use cases and solid monetization. Seeking Alpha contributor Donovan Jones also notes that Roblox has seen sales and marketing expenses decline as a percentage of total revenue, even as sales have risen. (31 comments) | |
| Covid In his first prime-time address from the White House, President Biden told states he wants all adults in the U.S. made eligible for vaccines by May 1. The new goal follows another he made of getting 100M doses jabbed into American arms in his first 100 days, though the U.S. was already approaching a pace of 1M shots a day when he was inaugurated, nearly guaranteeing the target would be achieved. However, Biden did outline the country would hit the threshold next week, just 60 days into his presidency, with vaccinations sharply accelerating to a pace of more than 2.2M shots per day.
He also expects enough doses from Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and J&J (NYSE:JNJ) to fully vaccinate nearly 300M people by June. Alaska this week already became the first in the nation to open vaccine eligibility to all adults, and many states and municipalities are expected to follow soon.
Quote: "If we do all this, if we do our part, if we do this together, by July 4 there's a good chance you, your families and friends will be able to get together. But a lot can happen. Conditions can change. And scientists have made clear that things may get worse again as new variants of the virus spread."
Other efforts: The Biden administration also announced it would double the number of retail pharmacies and federal mass vaccination sites, as well as mobilizing thousands of vaccinators, including active-duty military, FEMA and retired doctors and nurses. The government is additionally launching a new website and opening a 1-800 number to help Americans find available shots, while offering technical support to states developing their own such services. Earlier in the week, we reported on the corporate vaccine response, as well as corporate mask policies. (50 comments) | |
| Trending NFTs are becoming wildly popular among investors as the latest crypto craze takes the digital art world by storm. Auction house Christie's sold Beeple's Everydays - The First 5000 Days for $69.3M, far eclipsing anything that has been bought in the industry. The JPEG is a mosaic of every image that artist Mike Winkelmann, who goes by the name Beeple, has made since 2013.
What is an NFT? It's a type of encrypted file - run on Ethereum blockchain - that's used to represent a unique asset and is valued as collectors' items. They offer ownership of memes, GIFs and videos, not just a screenshot or copy of an item. NFTs work like other speculative assets, where buyers hope their value goes up and they can be sold for a profit. Some investors caution the market could represent a price bubble, but ARK Invest feels NFTs will "unlock more value for content creators than any platform in history."
The latest sale vastly outstrips the previous record for a Beeple work, which was the $6.6M paid last week for a 10-second video. It would also make Beeple among one of the top three most valuable living artists. Many didn't even think Everydays - The First 5000 Days could hit such an astronomical figure, given that the two-week online auction originally commenced bidding at $100.
Bigger picture: Earlier this month, Twitter (TWTR) founder Jack Dorsey listed an NFT of his first tweet for auction; the highest offer currently stands at $2.5M. Square's (SQ) agreement to buy Jay-Z's Tidal platform could also be an opportunity for another Dorsey company to use NFTs to help musicians sell their works directly to fans and collectors, rather than relying on streaming services such as Spotify (SPOT). NFTs have also been gaining traction in sports, with the NBA offering NFTs of sports "moments" that fans can bid on. A LeBron James dunk sold for more than $200K in late February. (9 comments) | |
| U.S. Indices
Dow +4.1% to 32,779. S&P 500 +2.6% to 3,943. Nasdaq +3.1% to 13,320. Russell 2000 +7.4% to 2,354. CBOE Volatility Index -16.1% to 20.69.
S&P 500 Sectors
Consumer Staples +2.2%. Utilities +4.4%. Financials +3.2%. Telecom +0.7%. Healthcare +1.3%. Industrials +3.6%. Information Technology +1.9%. Materials +4.4%. Energy +1.1%. Consumer Discretionary +5.7%.
World Indices
London +2.% to 6,761. France +4.6% to 6,047. Germany +4.2% to 14,502. Japan +3.% to 29,718. China -1.4% to 3,453. Hong Kong -1.2% to 28,740. India +0.8% to 50,792.
Commodities and Bonds
Crude Oil WTI -0.8% to $65.57/bbl. Gold +1.6% to $1,725.6/oz. Natural Gas -3.8% to 2.599. Ten-Year Treasury Yield -1.2% to 131.84.
Forex and Cryptos
EUR/USD +0.33%. USD/JPY +0.66%. GBP/USD +0.53%. Bitcoin +15.9%. Litecoin +19.7%. Ethereum +6.%. Ripple -5.5%.
Top Stock Gainers
Entera Bio Ltd. (NASDAQ:ENTX) +389%. Second Sight Medical Products (NASDAQ:EYES) +163%. NLS Pharmaceutics AG (NASDAQ:NLSP) +157%. Exela Technologies (NASDAQ:XELA) +127%. Nova LifeStyle (NASDAQ:NVFY) +121%.
Top Stock Losers
Graybug Vision (NASDAQ:GRAY) -48%. ACADIA Pharmaceuticals (NASDAQ:ACAD) -45%. HighPeak Energy (NASDAQ:HPK) -34%. AnaptysBio (NASDAQ:ANAB) -28%. MingZhu Logistics Holdings (NASDAQ:YGMZ) -27%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section. | |
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