Monday Morning Reads
Reads
- The Hot Alternative Investments to Watch in 2021
- Libor Proving Hard to Kill
- ‘It Was a Joke’
- U.S. Small Businesses to Get More Cash
- He Created the Web
- Tech Under Attack
- The World’s Largest Tech Show Trades Las Vegas for Cyberspace
- Can Earnings Growth Justify Current Stock Prices?
- The Stock Market Is Causing The Bubbles
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The Consumer Electronics Show kicks off today, the big industry event for consumer technology companies that's normally held in Las Vegas. The show is always full of dazzling displays and latest innovations, but it will take place virtually this year due to the coronavirus pandemic. While over 170,000 attendees interacted with more than 4,500 exhibitors in 2020, this year's program will feature around 2,000 vendors. The cost is also low for exhibitors, with most paying $1,200 to display their wares and without the inflated rates of staying and setting up shop in Las Vegas.
What are organizers doing to recreate the experience? There's going to be a big fight for attention in cyberspace, so CES has introduced a sort of avatar with which attendees can have a digital presence. They'll be able to virtually walk around a room full of startups, where they can check-in to interactive portals referred to as "digital activations" (i.e. Webex-style conferences where they can quickly speak to people and see material). The show will also feature a wide variety of keynotes and roundtable talks, a mainstay of CES for decades.
Companies are going to be pitching a lot of tech to help people cope with pandemic life. Be on the lookout for high-tech masks, smart air purifiers and devices to make working from home easier, while home entertainment vendors will be pitching the latest TVs (QLED, MicroLED, 4K and 8K) to a public that is still stuck in the living room. There are also set to be a number of announcements from the EV space, blockchain and 5G arena.
Thought bubble: It'll be interesting to see what lessons can be learned from this year's conference that become applicable in a post-vaccine world over the next five to ten years. This could be the year CES makes demonstrable changes that have an impact on conferences to come.
Free speech, WhatsApp exodus, #TwitterPurge
The weekend began with Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and Snapchat (NYSE:SNAP) permanently banning and silencing President Trump, but the actions quickly spread across the communication and tech space. The top app stores from Apple (NASDAQ:AAPL) and Google (GOOG, GOOGL), as well as Amazon's (NASDAQ:AMZN) web hosting service, kicked out Parler, a "free speech" platform that has grown in popularity among conservatives and to which many banned users were expected to emigrate.
Why are the tech companies taking action now? The firms cited "risks of violence" and "repeated and severe violations" of their policies following the storming of Capitol Hill, which led to five deaths including one police officer. They might also be foreseeing scrutiny risks. If there was a follow-up to the violence, the social media companies could be held responsible by the incoming Biden administration.
Bigger picture: While the measures taken are legal - private firms aren't subject to the First Amendment - they highlight more starkly than ever the companies' influence over public speech and online conversation. Many of the Big Tech giants own the keys to the pipes and plumbing of the internet, and without those services, many users may be forced to find other providers that will see less interaction among a broad variety of views. That could force many users into like-minded echo chambers that could reinforce their own beliefs and further polarize the political landscape, but the alternative of no moderation can be just as scary.
Other happenings: Millions of users have jumped ship to Telegram and Signal in the past week, according to data analytics firm Sensor Tower, as WhatsApp told users they must share sensitive personal data with Facebook or have their accounts closed. Many on Twitter are also complaining of a #TwitterPurge that deleted scores of followers, though the company called it a routine audit, while Stripe stopped processing payments for the Trump campaign website and Shopify (SHOP) pulled Trump stores from its platform. (26 comments)
Go Deeper: Despite the headline heat, social media companies still getting analyst love.
How many stimulus checks ended up in the stock market?
Direct payments have provided a financial lifeline to millions of Americans, but for others, they represent an opportunity to boost their savings. That is thanks to the $2.3T CARES Act and the latest $908B stimulus bill, which provided $1200 and $600 to all Americans making under $75,000 - regardless of their employment and financial situation.
In fact, securities trading was among the most common uses - across nearly every income bracket - for the government stimulus checks issued in May, according to software and data aggregation company Envestnet Yodlee. For many consumers, trading was the second or third most common use for the funds, behind only increasing savings and cash withdrawals. In fact, Americans that earned between $35,000 and $75,000 annually traded stocks about 90% more than the week prior to receiving their stimulus check.
Quote: "Where are the Robinhoodies going to invest their newfound wealth?" asked Mark Tepper, president and CEO of Strategic Wealth Partners. "Of course they're going to buy a 10th of a share of Tesla (NASDAQ:TSLA). Of course they're going to buy a sliver of Bitcoin (BTC-USD)."
The trend also illustrates how the fallout from the pandemic is dividing the U.S. economy. Claims for unemployment benefits averaged 1.45M a week last year, compared with about 220K in 2019, while at the same time the percentage of disposable income that households managed to stash away has increased, property prices have jumped and the stock market is soaring.
"I would rather support those that do not have a job. We don't need the $1,200 check to everybody anymore because a lot of those people have now found work," Kevin O'Leary, chairman of O'Shares ETFs and Shark Tank investor, said before the latest coronavirus aid package was passed by Congress. "I would prefer to have a transitional support unemployment for those that are leaving industries and sectors that are out of favor, like movie theaters, airlines, cruise ships and certain restaurants that are never going to come back."
Go deeper: There might be more direct payments in sight. Stocks ended at all-time highs on Friday after President-elect Joe Biden said he was assembling a multitrillion-dollar relief package that would boost stimulus payments for Americans to $2,000. (248 comments)
Nearly $170B was wiped off the cryptocurrency market in 24 hours as Bitcoin (BTC-USD) slumped as much as 20% to $34,130 after a huge rally and some profit-taking from investors. Other cryptocurrencies are selling off as well: Ripple (XRP-USD) -19.1%; Ethereum (ETH-USD) -17.2%; Bitcoin Cash (BCH-USD) -19.2%; Litecoin (LTC-USD) -20.5%.
Signs in Bitcoin's technical chart point to a 25%-30% sell-off that's likely to hit early in the new year, Miller Tabak chief market strategist Matt Maley told CNBC on Thursday.
Quote: "There's no question it's been a melt-up, and it could last a little bit longer. I think on a short-term basis it could continue a little bit longer, and I'm very bullish on it on a very long-term basis. But intermediate term, I'm a lot more concerned than I think a lot of other people. Part of the problem is the market's excess liquidity... over the summer, the sideline money fueled the mega-cap tech rally, but now that those stocks have stabilized, it's driving Bitcoin."
Point of view: The same argument is taking place in high-flying shares and the equities market in general. "The Nasdaq from late 1998 to early 2000 went up over 200%. Now, we're up almost 100%, and we may very well be on that same track," long-time bull Edward Yardeni said Friday. "Everything I'm looking at points to a melt-up... it's just part of the bull market in everything. It’s very important whether you’re in or not in bitcoin to just stare at the chart, and realize when it’s going straight up - it's certainly a sign of exuberance, of speculative excess." (34 comments)
The China crackdown seen on Wall Street is extending to the Far East, where Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) said they will delist 500 Hong Kong-listed structured products linked to China Mobile (NYSE:CHL), China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU), as well as local indexes including the Hang Seng Index. Last week, the Office of Foreign Assets Control clarified a November order from President Trump that banned Americans from investing in Chinese companies that the U.S. considers to have links with China's military.
Global index providers MSCI (NYSE:MSCI), FTSE Russell and S&P Dow Jones Indices (NYSE:SPGI) already said they would also cut the three Chinese telco giants from benchmarks, wiping a combined $5.6B off the value of their Hong Kong-traded shares on Friday. After some flip-flopping, the New York Stock Exchange (NYSE:ICE) also announced it would delist the three firms' U.S.-traded American Depositary Receipts starting today.
What happens if you own a share of a Chinese company that gets delisted? Removal of a stock from a major exchange doesn't mean investors can't trade it, but it comes with greater risk. Shares go "over-the-counter," meaning they're outside the system of major financial institutions and cannot guarantee sellers will quickly find a buyer without losing money.
Outlook: It's still unclear how President-elect Joe Biden will handle financial flows and relations with China. A trade war commenced by President Trump just over two years ago has spilled into tech and finance, and last month he signed a law that would kick Chinese companies off American exchanges if they have failed to comply with the U.S. Public Accounting Oversight Board's audits for three years in a row. (13 comments)
What else is happening...
Corporate America reconsiders political funding after storming of U.S. Capitol.
State Street (NYSE:STT) demands companies report diversity of boards - FT.
ARK Investment's Wood will talk markets in big week for biotech.
Sriwijaya Air crash: Safety problems or another crisis for Boeing (NYSE:BA)?
U.S. urged to ramp up genome sequencing to detect new COVID variants.
Today's Markets
In Asia, Japan closed. Hong Kong +0.11%. China -1.1%. India +1%.
In Europe, at midday, London -0.5%. Paris -0.5%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.6%. S&P -0.5%. Nasdaq -0.4%. Crude -0.9% to $51.79. Gold +0.8% at $1849.60. Bitcoin -12.1% to $34666.
Ten-year Treasury Yield flat at 1.1%
Today's Economic Calendar
12:00 PM Fed's Bostic: Economic Outlook
1:00 PM Results of $58B, 3-Year Note Auction
6:00 PM Fed's Kaplan Speech