FINSUM + Magnifi: There’s a Global Chip Shortage but These Two Chipmakers are in Prime Position
April 29, 2021
The global chip shortage continues to ravage many sectors, most notably automotive. However, traders are betting on producers AMD and Nvidia to see the largest gains. AMD has lagged the SMH Semiconductor ETF, but strong demand and a weak Intel are projecting it to eat a larger market share. Intel had a 20% decline in data center revenue, while AMD saw growth in chips. As Intel continues to shrink in the space, AMD pushes ahead in performance, innovation, and costs. Others are bullish on Nvidia. Nvidia has stalled since the chip shortage at around $600 per share, but traders are setting a $700 target price point.
FINSUM + Magnifi: Chinese Stocks are Big Winners Despite Delistings
April 29, 2021
Chinese companies allowed to raise funds in the US market saw those funds jump by 440% in the first few months of 2021. This staggering $11 billion raised on the New York Stock exchange and Nasdaq is a record for Chinese companies. The biggest winners RLX Technology and Tuya raised the funds via a combination of IPOs, follow-on share sales, and bond issuance, but another 20 additional companies contributed to the record breaking quarter. This all came as the NYSE delisted three Chinese telecom companies with potential ties to China’s military. This came off the back of China’s 18% annual GDP growth. While stocks have stalled on mainland China, higher P/E ratios in the US (32 in the US vs 19 in China) are showing value in Chinese companies.
FINSUM + Magnifi: JP Morgan Warns of Big Tech Correction
April 29, 2021
For anyone who has enjoyed the big rally in tech shares after the rough February through March period, JP Morgan has bad news for you. The bank says that while the reflation and “reopening” trade has paused for the last month, it is poised to resume. This would rotate capital out of growth and quality into cyclicals and value, which could pose big trouble for FAANGs and other tech funds. According to the bank, “With U.S. and Europe cases now declining, the fast pace of vaccination and seasonal tailwinds (Northern Hemisphere), we believe that the reopening and reflation trade will resume with a move that will be bigger than we saw early this year... As the COVID-19 recovery takes place, reopening, reflation and inflation themes, and value likely will significantly outperform growth and defensives”.
Wind Energy
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While wind energy as a reliable and standard resource may seem far off, the technology is being adopted at record speed. In fact, wind energy is one of the fastest-growing energy sources in the world, according to the U.S. Department of Energy.
That’s especially true for 2020, a banner year for the wind industry, according to a report by American Clean Power (ACP).
In the fourth quarter of 2020 alone, the U.S. wind industry installed 10,593 megawatts of new wind power capacity—the highest quarter on record. In fact, that’s more wind power capacity installed than in any given year except 2012.
Texas led with 2,197 megawatts installed, followed by Wyoming with 895 megawatts, Oklahoma with 866 megawatts, Iowa with 861 megawatts, and Missouri with 786 megawatts.
Who is investing in all of this wind? Developers commissioned 16,913 megawatts, representing an 85% increase over 2019. Project owners commissioned 54 new projects across 20 states in the fourth quarter.
This rapidly accelerating trend is being driven by a combination of increased policy initiatives, more scalable technologies, increased demand from corporate and residential customers alike, and more positive customer perception overall. The Biden Administration’s climate plan, for example, includes the ambitious goal of becoming carbon-neutral by 2035. To achieve that, renewables like wind energy will need to become increasingly less fringe as they move to permanently replace fossil fuel power.
What is wind energy?
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The information and data are as of the November 17, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
FINSUM + Magnifi: The Big Loophole to Biden’s Tax Plan is…
April 27, 2021
In its fourth-quarter earnings report, BofA stole public attention by cutting its 2020 corporate tax
rate to 5.8% from what would have been 21%. How in the world did it do so? The answer made
it the envy of Wall Street. It accomplished this by increasing the share of its investment in
environmental, social, and corporate governance. This move was met with jealousy from
smaller businesses as other Wall Street Giants such as Citigroup, Morgan Stanley, and
JPMorgan also saved with ESG. The trillion-dollar ESG club plans to ramp up its investment in
upcoming years as part of portfolio pledges to net-zero emissions. These initiatives are good for
regulators, shareholders, activists, and the bottom line. Investors are looking to the future and
ESG will be a useful tool in limiting its tax bill with the New Administration.
FINSUM + Magnifi: China Forcing Financial Institutions to Go Green
April 27, 2021
Central Bank Governor Yi Gang said that Chinese financial institutions will have to commit to green finance as soon as possible to meet the country's climate goals. President Xi Jinping has made it clear that the country wants to hit peak emissions pre 2030 and neutrality by 2060. The central bank wants financial institutions to be an integral part of this change and is introducing new measures to ensure they hit their target. The central bank will target ratings, deposit insurance rates, and macroprudential policies. It will also incentivize green bonds and direct climate change stress tests for the macroeconomy. The details of these plans will be unveiled this year to meet the country’s carbon requirements ASAP.
FINSUM + Magnifi: These Tech Stocks are Too Cheap Because of the SPAC Plunge
April 27, 2021
The market has been hard on special purpose acquisition companies (SPACs) as prices have fallen dramatically across the board. However, some technology companies caught up in the crossfire are trading too cheap. EV charging companies have sound fundamentals yet despite this they are trading 43% less than their annual highs. Meanwhile, the Biden administration is writing a two trillion dollar infrastructure plan with over $300 billion in EV incentives. EV stations are growing and will be a major part of the ‘pump landscape’ by 2030. Four stocks in the EV market trading at the discount are ChargePoint Holdings, EVgo, Volta, and box.
FINSUM + Magnifi: Healthcare Will be a Headliner Even After the Pandemic
April 23, 2021
Healthcare has been one of the dominant stories of the pandemic, but its stock prices haven't matched the pace of the overall market. Healthcare stocks have lagged the S&P 500 earnings by 5% YTD. However, the biggest reason for this is the pandemic has shifted priorities and healthcare relies on the overall economy (making up about 18% of GDP) to pick up before it can fully bounce back. Additionally, the Biden Administration has yet to appoint a Food and Drug Commissioner which will be crucial in the upcoming years. However, valuations and earnings reports have been positive: UnitedHealth trades at 21x this year's forecast and Pfizer about 12x, well within normalcy. Healthcare will be in a good position as more speculative stocks settle down.
FINSUM + Magnifi: Tech Sector Health Looks Strong on IBM Earnings
April 23, 2021
IBM stock price rose about 4% on trading early this week as the company had its first market-beating earnings report in some time and first quarter of revenue growth in the last four. Earnings came in at $1.77 per share vs the expected $1.63 that markets were predicting. IBM’s Cloud and Cognitive, Global Business Services and Systems divisions all had revenue growth ranging from 2-4%. Client-based business volume bounced back such as retail and consumer products. These were some of the worst suffering areas from the pandemic. Additionally, IBM announced the acquisition of two cloud computing-related companies: Taos and 7Summits.
FINSUM + Magnifi: Bank of America Warns Investors of Bond Market Correction
April 23, 2021
After a consistent rise in yields in late February and March rates are finally falling as the 10-year
treasury yield sits just over 1.5%. This is mainly coming from the fact that markets are softening to
the recovery and at peace with above-average growth and steering towards full employment by
2022. However, economists at Jefferies are predicting faster growth and lower unemployment
and markets having to re-adjust. This means spikes in 3 and 5-year T-bill yields. Deutsche Bank is
taking a leaning toward a different scenario. Where the Fed outpaces the economy, it is causing too
much wage inflation and causing higher unemployment and sinking yields. Bank of America
likewise warned that the recent fall in yields was not sustainable and the trend will be higher.
Income investors will want to keep their eyes on economic data to see which scenario is playing
out in real-time.