Another Confusing Day

Welcome back to a five-day workweek. Also, apparently you can watch hockey from a boat now.

As we head into the second year of the coronavirus experience, the days still are confusing.

It seems every day the last year has been confusing: Zoom classrooms, empty streets, mask or no mask, stock market records with high unemployment and cheap money, no friend visits, take-out dinners, I could go on and on.

Well, another one occurred this past Saturday. It was a beautiful day in California, 70 degrees and cloudless skies. I did my necessary school and financial work early in the day for a free afternoon of television viewing of my two favorite sports hockey and golf.

The National Hockey League was playing the winter classic series in Lake Tahoe, Nevada in an unbelievably picturesque setting. Additionally, the Los Angeles Open golf tournament was playing the annual event at Rivera Country Club near Malibu, another picturesque venue.

I turn on the television to view these events, with perfect weather (perhaps too perfect in the case of Lake Tahoe), yet to find weather delays, very confusing. Evidently, golf and hockey have more in common than just similar motions in the golf swing and slap shot.

The NHL outdoor game, between Vegas Golden Knights (sorry Clarkson) and Colorado Avalanche, was halted after one period, to resume Saturday night at 9:00 p.m. because the sun was shining too brightly, and the ice quality was suffering.

Meanwhile at Riviera, a breeze developed in the early morning. Winds reached 35 mph at times, blowing hats off and moving balls on the greens, forcing the PGA tour to suspend play for four hours.

Thus, my Saturday afternoon was ruined. I did laundry! Very confusing times indeed.

CYBERBULLING – Speaking of confusing, how about this investing tool, cyberbulling.

Cyberbulling: when people who are "bullish" on a stock stoke massive buying campaigns of that stock on social media (especially: Reddit, Discord, TikTok). One of the earliest cyberbulling episodes happened back in June, when bankruptcy-bound Hertz saw its shares inexplicably soar 900%. But...

Cyberbulling has never been as prominent as it has been these past few weeks: While the broader market plunged, throwback stocks like GameStop, AMC, Nokia, and even Tootsie Roll, soared thanks to cyberbulls.

“Little guy vs. big guy” mentality: Some cyberbulls feel they're shifting the power dynamic by betting against Wall Street — after feeling historically wronged by big shots like banks and hedge funds. Funds that were betting GameStock would fall — like Melvin Capital and Maplelane — lost billions after cyberbulls pumped up the stock.

Cyberbulling is also fueled by a strong sense of (cyber) community. Like: people posting screenshots of gains, thanking the "community" for helping pay off student loans and hospital bills.

There’s a general feeling that the GameStop saga speaks to something larger about the nature of financial markets, and even our culture. To try to make sense of it all, we’ve distilled some of the most popular theories that...try to make sense of it all.

1. The “stick it to the man” theory: This theory suggests that these traders are motivated primarily by their disdain for “suits,” the longtime wardens of Wall Street, who, Redditors argue, exploited the little guy to get filthy rich.

As Bloomberg’s John Authers writes, “The people investing today are driven by righteous anger, about generational injustice, about what they see as the corruption and unfairness of the way banks were bailed out in 2008 without having to pay legal penalties later, and about lacerating poverty and inequality.”

2. The “everyone’s super bored” theory: Without much else to do during the pandemic, people have turned to the stock market as a form of entertainment...and to make a lot of money. Last summer, individual investors accounted for roughly 20% of stock market activity on average, up from 10% in 2019. 

3. The “Robinhood” theory: The rise of the amateur investor can be traced back to Robinhood, the app that pioneered no-fee trading and empowered individuals to influence the stock market like never before.

4. The “memeification of society” theory: Some observers have linked the behavior of Reddit’s trading army to other online communities like 4chan that engage in “astroturfing” campaigns. “If you can create enough hype around something, through memes, conspiracy theories, and harassment campaigns, you can manifest it into reality via capital,” Ryan Broderick writes.

 

MARKET WEEK - Barely five months after unveiling its first 5G phone, Apple is already hiring engineers to work on 6G. Knowing Apple, "10G Plus Max Pro" job postings are probably next.

Stocks fell for the week on rising unemployment claims and inflation worries. The US 10-year Treasury yield crossed 1.3% for the first time since February 2020. Meanwhile: Bitcoin hit a $1T market cap for the first time ever.

Walmart posted record sales of $152B last quarter, as we stocked up on groceries and #selfcare goodies. In 2020, Walmart filled 7X more online orders than in 2019 (curbside pickup FTW). But it's projecting slower growth this year, so the stock dipped after last week's earnings. What didn't dip: wages.

Walmart is raising wages for 425K workers, bumping its employee average to ~$15/hour (up from $14). But it's keeping its starting wage at $11.

Walmart = America's largest private employer. With the raises, about half of its 1.5M US workers will earn at least $15/hour.

The Biden admin is trying to raise the federal minimum wage to $15/hour by 2025 (from $7.25/hour). It's questionable whether that'll get through lawmakers. A Congressional study found that a $15 minimum wage would lift 1.3M Americans out of poverty. The same study found it may also leave 1.3M jobless because of higher labor costs. This month, Walmart CEO Doug McMillon met with Biden: McMillon supports raising the federal minimum wage, but hasn't yet endorsed a $15/hour minimum. Still...

Walmart has to compete with its peers for essential workers, especially in online-order fulfillment roles. That's why the raises are only for frontline associates.

Amazon (aka: Walmart's biggest rival) raised its US starting wage to $15 back in 2018, and has lobbied Congress for a $15 federal minimum. Target made $15 its starting wage for all workers in 2020. Why isn't Walmart doing the same?

Profit margin could be a factor... explaining Amazon's and Walmart's different stances on wages. Amazon's biz is mainly online, making it more cost-friendly than Walmart's (which includes 11K+ physical stores). Also: groceries make up more than half of Walmart's sales, and they're harder to profit from than tech. While broccoli has a slim profit margin, Amazon's AWS cloud is its biggest profit puppy. Walmart did more sales in 2020 than Amazon, but its profit was much smaller than Amazon's: on $520B in sales, Walmart made $15.2B in profit — on $386B in sales, Amazon made $21B in profit. Walmart's biz is more sensitive to wage increases, but it needs them to compete with the 'Zon.

US jobless claims hit a four-week high of 861K for the week ended February 13th, rising for the second week straight. Despite a steady drop in Covid cases as vaccines roll out, ~10M Americans are still unemployed. And the pace of recovery is slowing: in January, the US economy added just 49K jobs. Investors are looking forward to more help from Uncle Sam. Dems are on track to (narrowly) pass President Biden’s $1.9T stimulus package, which includes boosted unemployment aid and $1.4K payments to most Americans.

 

COVID-19 UPDATE - More people have now died from COVID-19 in the U.S. — 500,000 — than American troops were killed in action for WWI, WWII and Vietnam combined.

Many of our co-workers, friends and family have just experienced the worst year of their lives.

"Each death has left an empty space in communities across America: a bar stool where a regular used to sit, one side of a bed unslept in, a home kitchen without its cook," the New York Times' Julie Bosman writes.

Case counts are falling as the weather warms.

The FDA meets Friday to evaluate the single-dose Johnson & Johnson vaccine, and an emergency use authorization could help accelerate the vaccination pace.

Hospitals are getting a crucial respite, and many hospital staffers are now fully vaccinated.

Flags will be lowered to half-staff on federal properties for five days, White House press secretary Jen Psaki told reporters today.

The United States has more COVID-19 deaths than any other country in the world.

One word: Leadership

 

MARCH A LAGO - The Thing has said he will be emerging from his Mar-a-Lago shell next weekend to attend the Conservative Political Action Conference in Orlando, Fla. Maybe it is the start of something bigger… or maybe not.

In his first post-presidential appearance, Donald Trump plans to send the message next weekend that he is Republicans' "presumptive 2024 nominee" with a vise grip on the party's base.

A longtime adviser called Trump's speech a "show of force," and said the message will be: "I may not have Twitter or the Oval Office, but I'm still in charge." Payback is his chief obsession.

The few Republicans who have spoken ill of Trump since the election — including House members who voted to impeach him, and senators who voted to convict — have found themselves censured, challenged and vilified by the parties in their home states.

Many Trump confidants think he'll pretend to run but ultimately pass. He knows the possibility — or threat — gives him leverage and attention.

Trump's leadership PAC, Save America, has $75 million on hand, and he has a database of tens of millions of names.

FEBRUARY 16, 2021 - JOE BIDEN has been president for 26 days, but today is the unofficial start of his presidency.

It’s the first day of the post-Trump era.

Biden’s November and December transition period was dominated by DONALD TRUMP, who refused to concede the election, delayed the formal transition process and instructed non-cooperation from his aides.

Biden’s pre-inaugural January was dominated by Trump, who incited a mob of supporters to sack the Capitol and was impeached by the House.

Biden’s first weeks in office in late January and February were dominated by Trump, who at the White House was the target of dozens of Biden executive actions meant to reverse his policies on immigration, climate, health care and several other areas, and in Congress was the subject of the Senate trial.

Trump was kicked off social media but continued to drive an attention-hogging debate within the Republican Party that dragged on for weeks.

Even the general election, a referendum on Trump’s failed response to the pandemic, was also dominated by Trump rather than the more low-key Biden.

Fittingly, on Presidents Day, Biden, who returns to the White House from Camp David this afternoon, finally gets to be president. On Tuesday he’ll be in Wisconsin for a CNN town hall, where he will no doubt make the case for his Covid relief bill. On Thursday he’ll do the same in Michigan while touring one of Pfizer’s vaccine manufacturing plants. On Friday, Biden will Zoom into a virtual meeting of the G-7 and the Munich Security Conference, where he has been a regular guest for years. (The conference is to Biden what Burning Man is to tech moguls.)

There are three dynamics to watch as they navigate this new political-media era:

The GOP: Does the party become less defined by its divisions over Trump and unify around opposition to Biden’s agenda? (The political dynamics of Biden’s Covid bill, which has no Republican support in Congress, suggest the answer is yes.)

The media: Does the Biden White House encounter a much more aggressive press corps than it was accustomed to during the Trump-dominated campaign that catches them off-guard? (The TJ Ducklo episode suggests the answer is yes.)

Biden: Does a solo-act Biden retain his relatively high approval rating (54%) and leverage it to pass his agenda now that the deeply unpopular Trump is off center stage? (Only time will tell!)

 

DRIVING THE WEEK - On Tuesday President Biden will virtually meet with Canadian PM Justin Trudeau. … He has another economy executive order planned for Wednesday … Index of leading indicators on Monday at 10:00 a.m. expected to rise 0.4 percent.

Fed Chair Jerome Powell testifies on Tuesday at 10 a.m. before Senate Banking and Wednesday at 10 a.m. before House Financial Services on the state of the economy and monetary policy. Powell is likely to stand firmly behind the Biden push for big new stimulus soon and reject any idea that the central bank can pump the brakes any time soon.

As it stands, the Democrats’ de facto deadline for getting a package passed — the March 14 expiration of expanded unemployment benefits — is now less than three weeks away, and Senate Democrats say they’re ready to run with the baton once it’s passed on by the House.

GOP lawmakers are prepared to make their case against several elements of the coronavirus measure, including the further aid for state and local governments. But Democrats don’t seem too afraid, noting that the measure is polling quite well these days.

The House of Representatives plans to hold its first floor vote on the Biden administration’s $1.9 trillion pandemic rescue package this coming Friday. Democrats hope to pass the measure before March 14, when additional federal unemployment benefits ($300 a week, provided on top of existing state unemployment benefits) are set to expire. Through a legislative loophole, the stimulus bill could be approved with a simple Congressional majority and no Republican support. What happened to the working together spin?

Retail sales jumped 5.3 percent in January, indicating that Americans spent the stimulus checks they received at the end of the year instead of saving them. Parler, the social network that was forced offline after it drew millions of Trump supporters calling for violence around the time of the Capitol riot, is back up and running. And New York’s attorney general has sued Amazon, accusing the company of providing inadequate safety protection for workers in New York City during the pandemic and retaliating against employees who raised concerns.

I know what you did last summer. Nothing. I'm less sure about what you're gonna be doing next summer. But it's looking increasingly likely that 'something' is a distinct possibility. Rather than an abrupt end to the pandemic, the coming months will be more like the beginning of an extended and still-volatile tail of the outbreak globally. What that will look like, and how long it will last, depends on how nations cooperate and coordinate—or fail to. Regardless of how quickly the immediate threat of viral illness subsides in the U.S., America's choices in the coming weeks and months could mean the difference between a pandemic that ends this year and one that haunts everyone indefinitely. The one thing I've enjoyed during the pandemic is being able to avoid so many social events. Five years from now when someone invites me somewhere, I'll respond that I still don't feel quite safe.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Drew Barrymore (46), Cindy Crawford (55), Michelle Graves ….famous gymnast and financial manager, Maria Suffredini … famous niece Purdue University bound, George Thorogood (71).

 

WHITEOUT – As of this weekend 73% of the continental United States was covered in snow, the highest since 2003.

 

LIFETIME - Deaths from COVID-19 are the main factor in the overall drop in U.S. life expectancy by one year between January and June 2020, the CDC says. But it's not the only one: A surge in drug overdose deaths is a part of the decline, too.

COLLEGE CHRONICLES - The spring semester is well underway at America’s universities and sure enough, college town Covid-19 scares are generating fresh headlines. Now, some experts are suggesting new strategies to protect students and the communities they live in.

— Dorm residents at the University of California-Berkeley just emerged from a two-week lockdown, after a surge of cases in residence halls and off-campus housing that had suspected links to small off-campus gatherings. The University of North Carolina at Chapel Hill is urging students not to travel during two scheduled days off this week. Campus leaders already had to adjust UNC's plans for limited face-to-face classes after crowds flooded a city bar district following a dramatic basketball game.

— Students at the University of Massachusetts Amherst also have orders to largely stay indoors and refrain from travel to tamp down outbreaks. “To many of you these may seem like drastic measures,” Chancellor Kumble Subbaswamy wrote to campus . “But faced with the surge in cases we are experiencing in our campus community, we have no choice but to take these steps.”

— The higher education industry has learned an abundance of lessons on how to press through a plague year. That includes constant virus testing and an unrelenting approach to masking and social distancing. But the latest spate of infections is enough to raise an intriguing and thorny question: Should college students get higher priority to receive vaccines?

Stanford athletes have raised $40 million to save the university’s athletics department after the school decided to discontinue 11 varsity sports programs last summer.

What's the Difference Between U-Minnesota and Harvard?

The first has a top-20 global MBA program, the second is unranked.

A handful of business schools, including Stanford, Harvard, Penn, and Columbia, skipped the 2020 rankings by the Economist and Financial Times. And Bloomberg Businessweek is taking the year off from publishing its MBA program rankings.

Don't worry, the Ivies will be fine

Imperfect measurements though they may be, rankings are an influential factor for student and employer interest, alumni donations, and faculty recruitment. To get ranked, schools submit data including recent grads' salaries and student and faculty diversity.

Some programs said the pandemic made it difficult to compile that info, especially as they were transitioning to ZooMBA.

The Graduate Management Admissions Council, the leading MBA association, called for all rankings to be postponed because Covid could skew stats like job placement.

Even with some programs holding out, the Financial Times found that MBA demand for the current academic year remained strong across the globe (that's typical during a recession). Average tuition fees rose 3%.

Looking ahead...applications for the upcoming academic year are booming. MBA programs at MIT, Columbia, and Penn have reported double-digit growth in applications. More in the next RR Blog.

 

BITCOIN - Twelve years ago, bitcoin was just an idea. Now, it’s worth as much as a tiny house.

On February 16, the world’s largest cryptocurrency briefly surpassed $50,000 for the first time ever, extending a run that’s mesmerized the business world and frustrated your friend who sold all their bitcoin in 2019.

How we got here ---

A brief timeline of bitcoin’s rise, fall, and even bigger rise.

2008: Satoshi Nakamoto published the bitcoin white paper that laid out the principles of a "new electronic cash system that's fully peer-to-peer, with no trusted third party." To this day, one knows who (or what group of people) Satoshi is.

2010: A programmer bought two pizzas for 10,000 bitcoin in what will go down as the most expensive pizza transaction ever. Let's just assume there were 16 slices between the two pies and you take 15 bites per slice—at today's bitcoin price, that's about $2 million per bite.

2017: JPMorgan CEO Jamie Dimon called bitcoin a "fraud" (a comment he later walked back).

2018: The NYT ran an article with the headline, "Everyone is getting hilariously rich and you're not" after bitcoin jumped from $830 to $19,300 in the span of one year. Things stopped being quite so hilarious later in 2018, when bitcoin crashed to $3,200.

2020–2021: After hovering below $10,000 for months, bitcoin refueled its rocket ship. It's already up about 200% this year alone, closing Monday at $50,376.42 per coin. Really?

What's next? Next week dogecoin, huh?

Initially conceived as a way of sidestepping traditional financial institutions, bitcoin is now being smothered by them. BNY Mellon, the oldest bank in the US, said it would handle bitcoin for its clients. Mastercard pledged to support cryptos later this year. And a vaunted Morgan Stanley investing unit is reportedly considering placing bets on bitcoin.

Plus, Tesla poured $1.5 billion of its cash into bitcoin and said it would accept payment for its products in bitcoin on a limited basis.

Bitcoin has been increasingly legitimized by the business community, but it still faces existential questions, including 1) how should it be regulated? 2) what is it actually useful for? and 3) when will Rink Rats invest in bitcoin? 

 

STOCKX - Business is booming at the Detroit-based retail site, which has a potential IPO on the horizon.

StockX is known for sneaker and apparel resales, but the marketplace has leveled up through the popularity of gaming consoles. StockX brought in over $400 million in revenue last year, with PlayStation and Xbox hardware emerging as the site’s top grossing products.

The figure is likely to please investors, who bought in on a $275 million Series E funding round in December at a $2.8 billion valuation.

At the time, the company — which was co-founded by Cleveland Cavaliers owner Dan Gilbert — predicted $141 million in profit on $350 million in revenue, expectations that now look modest. StockX previously had $239 million in revenue in 2019.

Competitor Goat Group raised $100 million in September on a Series E round at a $1.75 billion valuation.

Around 7% of PS5s sold in the U.S. have been resold on eBay and StockX, often for double the retail price.

Scalpers have taken advantage of resale markets, buying an estimated 10-15% of all Xbox Series X|S consoles and PS5s since the products launched.

StockX is rumored to be considering going public this year. E-commerce sites Poshmark, Mytheresa and Wish have all gone public or filed to do so in recent months.

Rink Rats investors keep an eye on this one.

PETROBRAS TROUBLES - Brazil's oil reserves are tiny in comparison to Venezuela, which sits on the largest reserves in the world.

But Brazil is producing far more oil, about 3 million barrels per day.

Brazil's state oil company Petrobras lost 19% of its value Monday after President Jair Bolsonaro announced he was firing the company's CEO and replacing him with a former general.

Bolsonaro pledged to "put a finger on electricity" — to keep prices at artificially low levels, worrying investors who had previously been counting on him to have more of a laissez-faire approach to industry.

 

TEXAS COLD ‘EM - If you haven't been at the South Pole you've heard that it got quite chilly this week in Texas. In fact, Dallas briefly had a lower temperature than McMurdo, the main U.S. base in Antarctica. The upshot of all this has been some unpleasant and even dangerous conditions for millions of residents of the state.

Texas is recovering from a freakish cold snap that left millions without power and running water for days, but its economy remains stricken. Its agriculture industry has been literally frozen, and livestock are dying. Several semiconductor companies had to idle production, compounding a global shortage of computer chips that has already slowed car manufacturing at plants worldwide. But devastating incidents like this one may become the new normal. Economists — including one top Federal Reserve official — are warning that banks need to be better prepared for more climate-change-related disruptions to manufacturing, power, and other industries.

 

PLAY BALL – Major League Baseball Season schedule:

Feb. 26: Mandatory reporting spring training

Feb. 28: Exhibition games begin

Apr. 1: Opening Day

July 13: All-Star Game (Atlanta)

Oct. 3: Regular season end

Oct. 26: World Series, Game 1

MLB's health and safety protocols will give spring training a slightly different look.

Mandatory, five-day quarantine for all players prior to reporting.

Altered schedules in Florida's Grapefruit League to cut down on travel.

Camps are capped at 75 players to limit crowding, and most minor leaguers won't report until the big leaguers have decamped.

Attendance will be limited to about 25% capacity in the municipalities where laws allow for even that many fans.

What they're saying: Spring training will still have some magical elements, but the experience will be far from normal — something players and coaches are acutely aware of, and familiar with, following last season's fanless campaign.

MINOR LEAGUES - When Minor League Baseball begins its 2021 season, there will be 25% fewer teams than there were at this time last year.

The realignment removes a net of 40 teams from 2020, for a total of 120 teams across 39 states.

43 teams lost MLB affiliation. Two were Double-A clubs, while the other 41 were Single-A or lower.

Three independent teams — the Somerset Patriots, St. Paul Saints and Sugar Land Skeeters — gained MLB affiliation.

The reshaping of the minors is a push towards modernizing MLB's development pipeline, but the changes will leave pockets of the country without access to high level baseball.

In a letter sent to Congress in 2019, MLB cited poor facilities, geographic inefficiency, and "too many players" among the minor league system's key problems. So that's what this restructuring plan addresses.

Due in part to fewer roster spots, player salaries will increase between 38 and 72%.

Big league teams will be an average of 200 miles closer to their Triple-A affiliates, and most will be within driving distance.

Under the new structure, MLB will modernize facility standards and improve amenities and working conditions.

Sen. Bernie Sanders (I-Vt.) has vocally opposed MLB's plan since 2019, suggesting that it has "nothing to do with what is good for baseball" and "everything to do with greed."

Sanders' local team, the Vermont Lake Monsters, were eliminated, leaving them without a big league club after 27 seasons with the Athletics (2011–2020), Nationals (2005–2010) and Expos (1994–2004).

"Closing down Minor League teams ... is a disaster for baseball fans, workers, and communities across the country. I will do all I can to fight it," Sanders tweeted last week.

The 40 eliminated teams aren't all going away. Some will join independent leagues, while others will join the newly formed MLB Draft League, which focuses on draft-eligible prospects.

 

LENT LINEUP – Here is what we have on hiatus during the Lent season:

-           Soft drinks out

-           Fast food out

-           Double bogeys out

-           Reply all email out (I hope)

See you on Holy Thursday April 1.

 

SWAMI’S WEEK TOP PICKS –

NBA Pick of the Week – Sunday 2/28, 3:30 PM (EDT), ABC:  Los Angeles Clippers (22-10) vs. Milwaukee Bucks (18-13). Two top teams fighting the COVID quarantine, Bucks win this one 105 – 100. (Season to date 1-6)

NHL Pick of the Week – Saturday 2/27, 7:00 PM (EDT), CBC:  Toronto Maple Leafs (14-3-2) vs. Edmonton Oilers (12-8-0). One of the positives of this 2020-2021 NHL season is the North “All Canadian” Division, fun to watch. Leafs win a high-scoring affair, 6 - 5.   (Season to date 4-1)

NCAA College Hockey Pick of the Week – Friday 2/26, 7:00 PM (EDT), ESPN+: #12 Quinnipiac Bobcats (13-4-4) vs. St. Lawrence Saints (4-6-3). Could be a possible preview of the ECAC semi-finals, big game for the Saints. Also, time for St. Lawrence to get a new play-by-play announcer, this guy is clueless. Saints win 4 – 3. (Season to Date 5-1)

Season to Date (14-9)

 

Next Blog:  Dear Rink Rats, I miss movie theatres, earnings season.

 

Until Thursday March 4, 2021 Adios.

Claremont, California

February 23, 2021

#XI-27-433

 

4,661 words, ten-minute read

 

CARTOON OF THE WEEKEND – Another example of my confusing pandemic times

 

 

 

 

RINK RATS POLL – Have you exercised more or less over the last 3 months?

___ More

___ Less

___ Same

 

QUOTE OF THE MONTH: “Sometimes it takes a wrong turn to get you to the right place.” -Mandy Hale

 

 

Rink Rats is a blog of weekly observations, predictions and commentary. We welcome your comments and questions. Also participate in our monthly poll. Rink Rats is now viewed in Europe, Canada, South America and the United States.

Posted at Rink Rats The Blog: First Published – May 3, 2010

Our Eleventh Year.

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