Welcome back to our weekend reading,
We might as well have called this one, “So how about that Coinbase, eh?”
A veritable landslide of headlines from around the markets, with the major trends of the week being ongoing economic stimulus and recovery, with a healthy dose of ESG amongst the mix.
Let’s look back on the week.
Let the Chips Fall Where They May
For anybody long semiconductors, the news cycle is a constant stream of bullish news.
Particularly if you’re reading that news on a brand-new smart phone, or in a Tesla.
President Biden has announced to a panel of automakers that he has gained bipartisan support for a Federal stimulus package, looking to address a shortage of semiconductors which has stalled (pun intended) car manufacturing across the globe.
A letter from 23 senators and 42 House members backed a proposal for USD $50 billion for expanding U.S. semiconductor manufacturing and research capabilities.
Biden addressed a panel of CEOs including General Motors Co. CEO Mary Barra, Ford Motor Co. CEO James D. Farley, Jr., and Sundar Pichai, CEO of Alphabet and Google.
“Both sides of the aisle are strongly supportive of what we’re proposing and where I think we can really get things done for the American people,” Biden said.
“Now let me quote from the letter. It says, ‘The Chinese Communist Party is aggressively – plans to reorient and dominate the semiconductor supply chain,’ and it goes into how much money will be they’re pouring into being able to do that.”
It shows that the times have changed that there was no mention of having a stronger handshake or bigger hand than Xi in that quote…
Coinbase (COIN:NASDAQ) created quite the stir on Wednesday night, opening well above it’s IPO price ($250 USD) at $380 – which then rose to $410, then crashed to $320 all within a night.
You don’t usually get to see this kind of violent swinging outside of a boxing ring and the night’s trading was a mix of winners and losers as a result.
The valuation at one point traded to USD $112 billion – placing it well above the value of Intercontinental Exchange Group and even Nasdaq itself.
Absolutely zero points for guessing that this got the bulls pushing BTC to another record high:
Everything’s Bigger in America
So far we have seen U.S. employment, manufacturing and now retail spending all reporting strong recoveries in the last few weeks.
Retail sales accelerated 9.8% in March, the strongest result reported in 10 months particularly after a sharp decline in February. Uncoincidentally, this coincided with the third round of stimulus checks under the Biden administration.
This also represented a record high levels of total retail sales, hitting $619.1 billion USD.
This certainly plays into the narrative of some of the largest levels of pent up aggregate demand we have seen in history – the sustainability remains to be seen.
Bugs, Bees and Bats
In an effort to promote biodiversity, the ECB has taken an interesting approach to becoming more green – implementing bee hives, ‘insect hotels’ and bird/bat houses outside its Frankfurt HQ.
They have also altered irrigation patterns and implemented water waste measures within their offices – “The ECB is exploring all possible ways within its mandate in which it could contribute to limiting the potentially substantial economic and social consequences of climate change,” Lagarde said in a report earlier this week.
This is of course a slightly smaller action than their ongoing consideration about using monetary policy to combat climate change, however this is at least a symbolic step.
That, or it’s an indication of the strange diet those Europeans have these days.
Kilometre High Club
France has proposed an initiative to ban commercial air travel along some domestic routes, in what they hope to be an example to other nations to make air-travel more environmentally friendly.
The proposal could also align with a European push for improving the capabilities of electric aviation – air travel is one of the fastest-growing sources of greenhouse emissions in the world (in 2019 it contributed to 2% of all man-made CO2 emissions).
*All numbers in USD from BofA Securities
Equities: $25.6bn into equities
Bonds: $17.9bn into bonds
Precious Metals: NIL for gold
Flows to Know
Large inflows into Investment Grade bonds ($9.8bn)
Large inflows into Emerging Markets equities ($5.1bn)
Tech inflows resume ($1.6bn)
The lumber tells tales of pending inflation:
U.S small businesses still struggling to find workers amidst stimulus payments:
Global vaccine doses on pace to exceed 1 billion before end of April
Would Sell His Grandma for a Buck
As an interesting one to end the note, a former JPMorgan financial adviser has been banned from trading after trading his grandmother’s assets without her knowledge.
Evan Schottenstein agreed to the sanction after Finra concluded he wasn’t complying with its investigation into whether he committed misconduct, whilst managing about $80 million for his grandmother Beverley Schottenstein when she was a client of JPMorgan for nearly five years.
The 93 year old brought a case against the investment bank seeking almost $69 million USD in damages – and you have to respect the almost century-old grandma ready to say this about her grandson in court, “that’s exactly what he deserved”.
Meanwhile my Italian grandmother would take a wooden rolling pin and do around as much damage.
Our morning calls continue, please do tune in for a daily dose of market insights and access to some leading experts in the funds management field.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team.
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