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IPO Accessibility: SPACs (blank-check companies) and growing financial firms like Robinhood and Social Finance have allowed retail investors to participate in more IPO transactions in the US and UK than ever before. Many view this as a positive development since other parts of the world are less restrictive towards retail-participation and between 1980 and 2000 the average return on the first day of trading after an IPO was 18.4%. Others point out, however, that retail investors don’t understand the complexities associated with IPO transactions and excluding the first day’s performance IPO stocks underperformed the market by 15.8% over the same time period.
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China May Support Inflation: Many analysts are focusing exclusively on US data points to determine their outlook on inflation. Yet, China’s demographics over the next few years could also play a role. Currently, the average age in both China and the US is 38. By 2040 this average will diverge with China's average rising to 47, and the U.S. dropping to 37. With a shrinking Chinese workforce force, rising wages could in turn raise prices of goods exported to the U.S. hitting the wallet of the US consumer.
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Amazon & Unions: Recently Amazon has received more publicity with the workers at one of its fulfillment centers voting whether they will unionize (results expected this week). A Yes vote alone should not impact Amazon meaningfully (it would represent less than 1% of the company’s workforce).But unionizing is a precedent that Amazon's management wants to steer clear of. It is impressive Amazon has largely avoided the issue up until now as the “transportation and warehousing” sector has the second-highest union representation among private sector industries.
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Retail Investors Lose Interest: Individual stock purchases and overall visits to Robinhood dropped 60% and 63% at the end of March. As the country reopens, fewer people are sitting home following the markets as closely. Additionally, the fear of inflation and optimism around the economic reopening has led to an underperformance of many tech and growth-driven companies and the over-performance of companies in the financial, industrial, and energy sectors which many retail investors have underweight positions in. According to Vanda Research the average non-professional investor has underperformed the S&P500 by around 10%
Economic Calendar
Monday: Markit U.S. services PMI (Mar), ISM services index (Mar), Factory orders (Feb)
Tuesday: JOLTS job openings (Feb)
Wednesday: Trade balance (Feb), Consumer credit (Feb), FOMC meeting minutes (Mar)
Thursday: Initial jobless claims (week ended Apr 3), Continuing claims (week ended Mar 27)
Friday: PPI month-over-month (Mar), PPI year-over-year (Mar), Wholesale inventories month-over-month (Feb)
