FINSUM + Magnifi: Video Game Stock gets Buy Recommendations Across Wall Street
April 8, 2021
Roblox (RBLX) the children's hybrid social media/video game platform received nothing but praise and recommendations to buy from various Wall Street Analysts. Morgan Stanley, BofA, and Truist were vocal advocates of RBLX. Growing revenues were a large part of the fundamentals moving the stock up to $71 up from its March IPO of $45. Additionally, deals with Tencent are moving Roblox into a Chinese market that would vastly grow its clientele. Strike prices range from $78 to $100 as the future looks promising as RBLX plans education, concerts, and movie pairings.
FINSUM + Magnifi: Pay Attention to This Big Bear Market Warning Sign
April 8, 2021
The stock market has been on one of the most historic recoveries in market history, but hedge funds are holding off on their buying. New data shows that hedge funds have some of the lowest levels of their positions in cyclical markets (energy, finance, tech) in the last decade, but instead are heavy on resilient industries such as healthcare and consumer staples. Hedge funds might be suspicious of how normal the economy will look as vaccines roll out, or that the benefits of the stimulus packages will be short-lived.
FINSUM + Magnifi: Water Crisis Give New Dimension to ESG
April 6, 2021
Two extreme water crises have occurred since the new year and are moving water conservation to the top of the ESG pecking order. Access to clean water during Texas blackouts was a major concern and on the other side of the globe, Taiwan is experiencing a historic drought, detrimental to its semiconductor industry. Most ESG opportunities are centered around greenhouse gas emission, however nine of the ten greatest risk factors for humanity are linked to the water crisis. Many companies couldn’t survive without ample water. The Thomas Schuman Capital U.S. Water Security Index gives its weight to the largest 550 companies by their water footprints and risk exposure. Companies like AT&T or Microsoft are given higher weights. The TSC has outpaced the S&P 500 by over 14% since its inception. The Invesco Water Resources ETF directly invests in purification and conservation companies and has also outpaced the S&P.
FINSUM + Magnifi: Why Treasuries Could Not Look Worse
April 6, 2021
Q1 ended about as poorly as possible for the treasury market as losses according to ICE indices hit 4.6%, the worst quarter in over 40 years. The losses were highly concentrated on the longer end of the term structure. Inflation-adjusted (real) yields are negative on 10+ year government bonds. And market-implied 5-year inflation expectations are around 2.6% above the Fed’s target. Many would think that corporate bonds would be a reprieve from the losses but they too posted their worst quarter since the financial crisis. However 30-year yields are on an upswing and it may be the time to buy the dip on long-term treasuries.
FINSUM + Magnifi: BofA Says the Market is Flashing a Big Warning Sign
April 6, 2021
Bank of America’s Sell-side indicator that tracks equity allocation increased to 59.4%. It's the
third month in a row on the rise. This puts it within one percentage point from the bearish sell
sign and its highest level since 2007. This would be contrarian as investors are bullish on stocks
as both S&P 500 and Dow Jones are trading at or near all-time highs. Investors should be
cautious because stimulus and a strong economy are already priced into the market. But
investors looking to hedge might be wise to hold off or look for cyclical or value funds, rather
than a full-blown exit. Although volatility should be expected to resume nonetheless in the
second half of the year as the economy settles back to normal.
FINSUM + Magnifi: Wells Fargo Says Stage is Set for Gold
April 1, 2021
Wells Fargo’s head of real asset strategy John LaForge says gold could hit $2,200 an ounce this year. This
is all because of the news that gold supplies are deficient rather than excessive. LaForge pointed out
that it was supply deficiencies that sent gold on the rally from $250 to $1900 in the decade from 2001-
2011. LaForge said this could be gold's new “bull super-cycle”. Additionally, Wells Fargo sees traditional factors like easy money and a weak dollar as a positive outlook as well.
FINSUM + Magnifi: Chinese Tech Stocks Slip is an Opportunity
April 1, 2021
Chinese technology and financial regulation have been on the rise. And big tech companies such as
Tencent, Baidu, iQiyi, and Vipshop have seen their stock prices fall. Additionally, the forced liquidation of
key investment firm Archegos Capital Management hit these companies hard. However, KraneShares
CIO Brendan Ahern says this just sets the KraneShares CSI China Internet ETF back YTD, and that ultimately they are still bullish on the medium and long-run outlook for this sector. ETF Trend’s CEO
David Lydon, says this is a buying opportunity and these are key innovators in global technology.
FINSUM + Magnifi: Biden’s Planned Tax Hike Will Hit Clients Where it Hurts
April 1, 2021
One of Biden’s most important campaign promises was that he would not raise taxes on the middle
class, or more specifically those earning less than $400,000. However, there is a new Democratic
proposal circulating that would affect a wide range of Americans. The aim of the tax proposal
appears to be funding the new infrastructure bill by targeting “stepped up basis” in inheritance taxes as
a way to raise tax revenue. Right now, when inherited assets get transferred, their basis resets to
whatever the market value is at the time of inheritance. In this way, heirs only pay capital gains on the
increase in value that occurs while they hold the asset. Biden and his administration want to change
the rules in order to keep the basis in place from when the original buyer purchased the asset. This
change would not only affect the wealthy in a big way, but also the middle class, as the basis for many
assets would suddenly be very low, meaning large taxes would be due no matter the size of the estate
being transferred. A good example might be an inherited condo from a parent that was bought 30 years
ago and has appreciated from $100,000 at purchase to $600,000 now. Under the current system, a
middle class earner who inherited and decided to immediately sell the condo would pay almost no
taxes. However, under the new proposal, almost $100,000 in taxes would be due because basis would
be applied to the original purchase price.
FINSUM + Magnifi: Why Financial Stocks Will Rally Big
March 2021
Eyes and ears have been on the Fed as the bond market still is unsure of the future of inflation, but it
was a different Fed announcement that had the market moving on Thursday. The Fed announced that
pending stress tests, the restrictions put on dividends and share buybacks will be lifted this summer. The
measures were put on banks to ensure financial security through the crisis. If banks fail to meet the capital requirements imposed by the Fed, then the restrictions will continue. Banking stocks ticked up
on the news as S&P Bank ETF KBE rose 2.8% on the announcement.
FINSUM + Magnifi: Agriculture Changing the ESG Landscape
March 2021
Farming, often considered one of the original green industries, has fallen out of sync with
environmental, social, and governance (ESG) practices because of the increased use of chemicals and
GMOs. However, the industry is seeing a turnaround with new policies and technology. The Biden
administration is looking to incentivize companies for green initiatives like carbon replenishment of the
soil as agriculture contributed to 9.9% of greenhouse gasses in 2018. Companies like Royal DSM,
Novozymes, and Bayer AG are working on enzymes to increase plant growth, feed additions to minimize
greenhouse gases from animal byproducts, and satellites to improve soil administration. Sustainable
agriculture is gearing up to compete with traditional mainstays.