Anticipating The Anticipation
Notes on the Global Chip Shortage & Ethereum
Happy Friday everyone, what a week…
Welcome to all the new subscribers and I appreciate everyone who has supported & shared so far. I’ll keep it light today, we all deserve it.
U.S markets traded lower, ending an eventful week for Stonks. The U.S continues to post encouraging data suggesting the recent surge in cases is temporary, vaccinations are rising and the economic recovery is progressing as expected. Inflation was again in focus with the fed keeping its usual stance on policy, sending bond yields higher and causing rates to spike from last week’s decline.
Headlines
⚙️ Where are the chips?! If you’ve seen the news, you’ve certainly heard of a global chip shortage. Computer chips are the new hottest commodity with sectors like Auto, Electronics and Industrials all fighting for a limited amount of chips. According to Goldman Sachs, more than 169 U.S Industries are currently being affected. So what exactly is going on? A few things. First, a pandemic that has changed consumer spending patterns sent companies scrambling for inventory, with some companies unable to fully meet demand and others cutting orders due to lack of demand. Second, U.S sanctions on Chinese tech and extreme weather are causing further strains to the supply chains of the semiconductor manufacturers. The supply & demand imbalance is causing higher prices and longer wait times from products like iPhones to Teslas. Further info from (Washington Post).
💶 EU betting on Ethereum Blockchain The European Investment Bank issued its first ever digital bond on the Ethereum blockchain, ether’s underlying network. Details from (CNBC). Following the news, Ethereum posted a 2,800$ new high before retreating early Thursday. Ethereum has been getting a lot of attention recently with the decline of Bitcoin. Increasing adoption of the Ethereum network and the overdue upgrade to Ether 2.0 will be tailwinds for Ether moving forward. The crypto market seems to be rebounding from its recent decline, reclaiming its above $2T market cap. Can we get a 3k Ethereum please! If you like to read, this 79 pager is for you (Ethereum to 150k by 2023).
🛢 Oil’s Covid Woes Oil is trading down in Friday’s session on the back of a resurgence of cases globally, but more importantly India. Southeast Asian output has fallen to as high as 3 million bpd, offsetting some of the demand that’s picking up in the UK and the US. Details from (BBG).
with no further due, the tale of the tape:
Tale of the Tape
As of 4/30/21 close.
U.S Markets
📈 Market Rotations and more rotations, Rates and Volatility (VIX) All indexes marched lower with energy leading the decline. Rates moved lower, reversing yesterday’s rise but still well of its 1 week low. With todays stabilizing rates, investors seem to be re-rotating back into some of the technology players (yes this market is all sorts of crazy), most notably, secular growth complex FAAMG. Although this is true, Pro-cyclical industries like Energy, Financials and Industrials were the high performers for the week. The VIX ended the week considerably higher from 16.95 to 18.65, clipping a roughly 12% gain. Markets have been an absolute chopfest lately, can May finally give us some light?
Here’s a weekly look on every sector in the S&P500 from SPDR.
Earnings
🏗 Exxon & Chevron Both companies reported slightly lower then consensus, sending shares down. U.S Oil companies have been critically hit by the pandemic and also by Winter storm Uri. CEO’s are confident that rising oil prices and increased demand will lead to stronger EPS and revenue. Read more (Here).
💉 AstraZeneca Reported a strong Q1 driven by its lung cancer drug Tagrisso, achieving more than $1B in sales. The company also exceeded its target of $275 Mln in Covid Vaccines sales and is on track to deliver more than $200M doses in April. Details from (Morningstar).
Full U.S Earnings Calendar (Here).
Corporate News
📺 Roku slashes YouTube TV While no one was looking, Roku has removed YouTube Tv from their channels, leaving the consumer with a big question mark. YouTube Tv’s contract expired today and conflict of interests between streaming giants are complicating the relationship. As companies fight for domination, expect more clashes between streaming giants. Details from (The Verge).
💵 Silicon Valley $1B Crypto Fund Crypto market getting a huge bet from Andreessen Horowitz, one of Silicon Valley’s highest profile venture capital firms. The company was an early investor in Coinbase and is now ready to venture in the space. Details from (FT).
I wish everyone a great weekend. See ya’ll on Monday, don’t get too lit 😉!
“Successful investing is anticipating the anticipations of others” ~ John Keynes
Disclaimer: I am not a financial advisor. This is not a recommendation to buy or sell any securities. When investing, always do your own research and asses your own risk.