Tuesday Morning Reads

Tuesday Morning Reads








Correcting the correction?

The Nasdaq is leading the charge on Wall Street this morning, with futures tied to the index ahead by 2.5%, followed by a 1.2% advance for the S&P 500 and 0.6% gain for the Dow. It marks some renewed momentum for tech shares, which have been beaten down in recent weeks as investors rotated into value sectors like energy, financials and industrials. In fact, the Nasdaq closed in correction territory on Monday, down 11% from an all-time high in February.

Bigger picture: "The Nasdaq is quite sensitive to yield changes at the moment," said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg Bank. Overnight, the 10-year Treasury yield halted its recent rally, dropping 6 bps to 1.53%. "Even though we got somewhat of a respite from the rising-rate reaction, we do think that's really important to keep an eye on," added Lisa Erickson, head of traditional investments at U.S. Bank Wealth Management. "Certainly the trajectory for rates is up as the economy reopens, so a lot of it just depends on the speed and the pace of how quickly rates go up."

Yesterday, U.S. Treasury Secretary Janet Yellen also echoed comments made by Jerome Powell on inflation. She dismissed fears that the $1.9T coronavirus relief bill is so big that it will cause price problems, or that it is excessive given the economy's signs of a recovery. Yellen additionally called the impact on women and minorities from COVID-19 "absolutely tragic," but said the U.S. would return to pre-pandemic levels of employment in 2022.

Latest on the aid package? According to Democratic aides and lawmakers, the bill will return to the House from the Senate today. Changes were made to appease moderates and comply with parliamentary rules (i.e., dropping a proposed minimum wage increase), though the modifications were likely mild enough to have progressive Democrats climb aboard. The final House vote could potentially slip to Wednesday due to logistics, though if passed, some Americans might start receiving direct payments as soon as this week. (25 comments)

Coinbase listing

Shares of prominent crypto exchange Coinbase (COIN) changed hands at a roughly $90B value last week, according to a fresh report from Bloomberg. It's an astounding valuation given that the company was appraised at $8B in October 2018. The valuation is based on $350 a share, the price the stock was trading on the Nasdaq Private Market on Thursday. The auction was the last before Coinbase goes public in late March, though private trading is usually more restrictive and volumes are smaller, so it's not a perfect picture of a company's value.

Backdrop: Coinbase started operations in 2012 and operates one of the largest digital currency exchanges. The bulk of its revenue comes from trading fees, though it also launched the Coinbase Index Fund in 2018, which is available only to accredited investors (defined as those with an annual income of $200K or a net worth of $1M or more). Going public can help push cryptos like Bitcoin (BTC-USD) and Ethereum (ETH-USD) towards mainstream adoption and may give investors more optimism for digital finance. Bitcoin is up 8% this morning to $54,153.

By the numbers: Coinbase boasts 43M retail users and 7,000 institutional clients. There are also 115K partners based in over 100 countries worldwide. Last year, the crypto exchange swung from a prior loss to a profit of $322M, while net revenue more than doubled to $1.14B.

Bigger picture: The offering will be the first major direct listing (where a company floats existing private shares) to take place on the Nasdaq. All the previous ones happened on the New York Stock Exchange - like Spotify (SPOT), Slack (WORK), Asana (ASAN) and Palantir (PLTR). Direct listings, along with SPACs, have grown in popularity over the past year as companies sideline the traditional IPO process via cheaper and less complicated ways to go public. (5 comments)

Corporate Covid response

Looking to speed up vaccinations of their employees, many corporations are getting clearance from public health officials to administer COVID-19 jabs. Among them: AbbVie (NYSE:ABBV), Abbott Laboratories (NYSE:ABT), American Airlines (NASDAQ:AAL), Caterpillar (NYSE:CAT), Deere (NYSE:DE), Exxon Mobil (NYSE:XOM), Tyson Foods (NYSE:TSN) and United Airlines (NASDAQ:UAL). In many cases, the companies are giving priority to those over 65 years old or who work in operations/manufacturing, while some of the events are "closed," meaning only their staff are eligible and not the public.

Other corporations are offering incentives to encourage their workers to get a shot. Dollar General (NYSE:DG) and McDonald's (NYSE:MCD) are providing four hours of paid time to employees who receive the vaccine, while Trader Joe's and Aldi are giving two hours' worth of pay. Target (NYSE:TGT) is also offering compensation for the time its workers may have to take off, as well as $15 each way for staff who use Lyft (NASDAQ:LYFT) to get to their appointments.

Thought bubble: Can your boss fire you if you refuse to get a COVID vaccine? Yes, but most companies are leaving that decision up to their employees. If it were to be mandated, only a few exceptions would be permitted under law, such as medical reasons, the workforce is unionized, or if taking it is against a "sincerely held" religious belief.

Note: Corporations are also weighing in on mask policies as states update their COVID restrictions. An example can be seen in Texas, where Gov. Greg Abbott recently announced plans to open businesses to full capacity and repeal the state's mask mandate. While grocer Albertsons (NYSE:ACI) has dropped the requirements, others like Hyatt (NYSE:H), Starbucks (NASDAQ:SBUX), CVS (NYSE:CVS) and Target are keeping mask restrictions in place. (13 comments)

Next tech frontier

With recent data from Gartner showing smartphone sales dropping for the last two years, Big Tech is looking around for the next big thing. Some are pointing to the wide world of mixed reality, which brings together real-world and digital elements. It also allows users to interact with and manipulate both physical and virtual items and environments, using next-generation sensing and imaging technologies.

Flashback: Back in 2007, Apple's (NASDAQ:AAPL) Steve Jobs unveiled the iPhone. While it was not the first smartphone to hit the market (remember BlackBerries?), it created a whole new way to interact with the devices via touch screens, "pinching" to zoom in or out, as well as an App Store. It eventually revolutionized the entire industry, replacing everything from digital cameras to GPS systems, and building entire app ecosystems.

Notable Apple analyst Ming-Chi Kuo is now saying the tech giant will release a mixed reality headset in the middle of next year. It would be priced at around $1,000 and weigh as little as 100-200 grams (if Apple can solve some technical problems). Augmented reality glasses would follow by 2025, while the TF International Securities analyst thinks a "contact lens type" wearable will arrive between 2030 and 2040.

Go deeper: Facebook (NASDAQ:FB) CEO Mark Zuckerberg said on Monday that by 2030, people could use advanced smart glasses to "teleport" to locations like other people's homes, or allow workers to "basically teleport to work." The company plans to release a pair of smart glasses in partnership with Ray-Ban later this year, although they won't be "full AR." Meanwhile, Microsoft's (NASDAQ:MSFT) augmented reality headset, Hololens, is still a niche device at a cost of $3,500, while Alphabet (GOOGGOOGL) started re-selling Google Glass last year for $999 through some of its hardware resellers. (9 comments)

What else is happening...

Another hearing on GameStop (GME), Robinhood (RBNHD) and retail investing.

Zoom (ZM) CEO Eric Yuan transfers stock worth over $6B.

Cathie Wood says underlying bull market is strengthening.

Tesla (TSLA) aims to plug in gigantic battery to Texas grid.

House Democrats to push electric vehicle legislation.

Apollo (APO) reabsorbs Athene (ATH) in $11B all-stock deal.

Disney (DIS) rises to new record as California begins to ease park restrictions.

Pfizer-BioNTech (PFEBNTX) COVID-19 jab neutralizes Brazilian strain.

MoneyGram (MGI) falls after partnership with Ripple breaks up.

Today's Markets

In Asia, Japan +1%. Hong Kong +0.8%. China -1.8%. India +1.2%.
In Europe, at midday, London +0.7%. Paris +0.3%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.6%. S&P +1.2%. Nasdaq +2.5%. Crude +1.2% to $65.81. Gold +1.7% at $1706.80. Bitcoin +8% to $54158.
Ten-year Treasury Yield -6 bps to 1.53%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
1:00 PM Results of $58B, 3-Year Note Auction
6:05 PM Fed's Kaplan Speech


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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