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International Women's Day #IWD2021: Today marks International Women's Day 2021. Google has unveiled $25M to fund their Impact Challenge - a program designed to address inequalities and systemic barriers so that woman worldwide have access to economic opportunities, build financial wealth, and pursue the entrepreneurial spirit.
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Caution in China: Following the Chinese stock market’s incredible rise last year (the iShares MSCI China ETF [ticker: MCHI] rose 41% in 2020) some analysts are becoming less optimistic about its future growth for three reasons: 1) Aging population: The falling fertility rate will effect the size of the labor force in the future and the problem is not going away. Last year the number of newborns fell by 15%. 2) US relations: There is bipartisan support to have a tougher stance with China – a sentiment that is likely to be stronger after China’s recent cyber hack against Microsoft. 3) Regulation: China’s government has already shown a willingness to intervene when they suspect large corporations (ex: Alibaba) are acting monopolistically or in a way they don’t approve of. Regulators may soon reduce access to easy credit as they have voiced concerns about a bubble in real estate prices.
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Bitcoin & Inflation: Some proponents of bitcoin view it as an inflation hedge. That theory was called into question last week when bitcoin fell alongside other risky assets after Fed Chairman Powell’s comments renewed fears of inflation. It is possible, however, that we are in a unique market and historical price correlations will not hold up in the short-term. For example, Gold (like Bitcoin) has also fallen recently and the dollar and oil have been rising together despite the inverse correlation historically.
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SPAC or SAIL: Recently SPACs or special acquisition companies have made up around 95% of the IPO market, accounting for millions of dollars in fees to a few banks (mostly Citi, Credit Suisse, and Goldman). Now Morgan Stanley, which has a mere 5.4% of the SPAC IPO market, is trying to increase its role by developing an alternative SPAC model called a SAIL (stakeholder aligned initial listing). The SAIL model would make some of the sponsors compensation (through additional promote shares) contingent on how the price of the shares appreciate post acquisition, something that current SPACs don’t do.
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remARKKable: Cathie Wood’s largest fund, ARK Innovation (ARKK) gained notoriety last year as it rose over 140%. Over the past month, however, the fund has lost around a quarter of its value as the share prices of some of its largest holdings like Tesla (which makes up around 10% of the fund) fell. The question now becomes whether this actively managed fund that had more capital inflows than any other actively managed ETF last year will resume its accent or fall further as investors take more profits and view the valuations of its investments in innovative companies (with high valuations) with more caution.
Economic Calendar
Monday: Wholesale inventories (Jan)
Tuesday: NFIB Small business index (Feb)
Wednesday: Consumer price index (Feb), Core CPI (Feb), Federal budget (Feb)
Thursday: Job openings (Feb)
Friday: PPI (Feb), U. Mich Consumer sentiment index (Mar)
