Weekend Edition
Plenty going on this weekend, many of us are snowbound and/or COVID bound, so enjoy the read.
GAS GUZZLERS NO MORE - General Motors has set a 2035 target date for phasing out gasoline- and diesel-powered vehicles from its showrooms globally, among the first major auto makers to put a timeline on transitioning to a fully electric lineup.
GM’s goal, disclosed in a social-media post last Thursday from Chief Executive Mary Barra, would mark a striking transition from its current business model. Vehicles that run on fossil fuels and emit pollution account for roughly 98% of GM’s sales today and all of its profit. The large pickup trucks and sport-utility vehicles that are the company’s biggest money makers are also among its least fuel-efficient vehicles.
The nation’s largest auto maker by sales called the 2035 date to eliminate all tailpipe pollution an aspiration. Even so, many governments around the world, from California to Japan and the U.K., have pledged to ban gas- and diesel-powered cars by then.
GM previously had said it expects its own portfolio and the broader car market to go all-electric eventually, but company executives hadn’t discussed a time frame.
GM executives said Thursday that the goal of going all-electric within 15 years hinges partly on government incentives and other support to nudge consumers toward plug-in cars. The federal government and many states offer tax credits to buyers to help offset the higher cost of plug-in cars.
DEFINITIONS - "Cyberbulling": Being “bullish” on a stock = thinking it'll go up. Some "cyberbulls" on Reddit sparked massive GameStop buying campaigns. That drove up the price of shares, as well as call options — which give buyers the right to purchase stock at a set price up until a certain date.
Short squeezing: "Short" sellers, people who borrow stock betting it'll fall, started buying GameStop shares back sooner to reduce more losses as the stock soared.
Hedging: Institutional investors also started nabbing shares to hedge against the call options people were buying.
Cyberbulling is based on momentum... And while all investing carries risk, investments driven by cyberbulling can be dangerous. People riding the community-driven momentum could make significant gains, but as soon as the surge ends their investments could plunge very quickly. And unless the companies being "cyberbulled" eventually show strong fundamentals, it's likely that their shares will fall back down to earth.
MARKET WEEK - Shares in GameStop, AMC and other stocks at the heart of a Reddit-fueled trading frenzy have plunged for two days, presenting those who piled in with a difficult question: Is it time to quit?
Shares in GameStop are down 81 percent from their peak last week, vaporizing $27 billion in market cap. Dave Portnoy, the Barstool Sports founder and icon among day traders, admitted on Twitter that he had lost around $700,000 on meme-stock bets. (Not everyone’s losing: A prominent Reddit user who has promoted the GameStop trade for more than a year is still up $7.5 million, and firms that execute trades for online brokerages also profited.) What changed?
One explanation is that hedge funds have abandoned their bets against these stocks, eliminating one source of demand — their need to cover the bets.
Another popular target for blame: Robinhood and its co-founder and C.E.O., Vlad Tenev, after the company limited the buying of meme stocks because of daunting collateral demands from its clearing partners.
here’s pressure to keep the trade going. “If you can afford to hold the stock, you hold,” the billionaire investor Mark Cuban urged the WallStreetBets forum on Reddit. Posters on the message board exhorted each other to stay strong — have “diamond hands,” in their lingo — in hopes of a rebound. Mr. Cuban, among others, argued that shares would rise again once brokerages lifted trading limits.
Some traders said they saw themselves in a crusade against Wall Street, no matter the cost: “If my entire position in GameStop went to zero, I’d be OK with it,” a law student told The Times.
Regulators are weighing their response. Treasury Secretary Janet Yellen will convene officials from the S.E.C., the Commodity Futures Trading Commission and the Fed this week to discuss the recent market volatility and a review of the role of trade-execution firms like Citadel Securities.
Mr. Tenev of Robinhood had another suggestion: eliminating the two-day delay between executing a stock trade and settling it. That period requires brokerages to post collateral to back customers’ trades, and was a factor in Robinhood needing to raise $3.4 billion last week. Left unsaid: Would same-day settlement be that much easier during a frenzy?
Why recent manias have Wall Street freaked out — the giant surges in stocks like GameStop and AMC — and now commodities like silver — and how they are ringing giant alarm bells from Wall Street to Washington.
None of the moves had much to do with underlying economic fundamentals. Instead, the fevered trading of the last week shows all the markings of a market mania that historically ends in big losses for small traders, sharp pull-backs by big investors and regulatory investigations paired with hand-wringing congressional hearings that drag on for years long after the damage is done.
And Wall Street has already been defying gravity for the last year, soaring to record highs and lofty valuations in the face of a brutal global pandemic that still poses considerable economic risks as virus variants spread before vaccines can take hold.
And now it’s social media — which has driven politics in bewildering directions over the last several years — pumping up what look like multiple bubbles that could burst in painful ways.
One Wall Street CEO said: “There is a huge question about the role of social media here and there are just no regulations around it … Anyone can go on these platforms and tout a stock or a commodity they own and get a big following and then dump it. It’s pump and dump in a totally new, viral format and there are huge risks that need to be looked at right now or we could be in very serious trouble.”
The bigger picture — Individual investors should of course have to right to buy and sell whatever they want without regard to how it might slam hedge funds or big Wall Street firms. The larger question is whether bubbles are forming all over the place that could end in widespread pain.
Mohamed A. El-Erian, president of Queens College Cambridge and chief economic adviser to German investment giant Allianz said this week: “We are now living through the greatest disconnect between financial markets and the real economy that we have ever seen … And we now have younger retail investors who have disposable cash, are savvy at social media and have cost-free platforms.”
ROBINHOOD - Never has a company been so popular, and also so hated.
We're at a key inflection point in the Robinhood saga that's likely to determine whether having a snazzy app with name recognition is all you really need to overcome internal weaknesses.
Robinhood is loved not only by the trading newbies who are downloading the app at a record pace, but also by Wall Street investors who have recently sunk $3.4 billion into the company.
But the online brokerage has been relentlessly attacked by everybody from Rep. Alexandria Ocasio-Cortez to Sen. Ted Cruz and Mark Cuban.
"If you're not paying for it, you're not the customer — you're the product." Robinhood makes its money by directing its customers' trades to high-frequency traders on Wall Street.
The overwhelming majority of Robinhood's revenue comes from options trades — ultra-risky trading where individual investors almost never make money.
The bottom line: Expect Robinhood CEO Vlad Tenev to face tough questions when he appears on Capitol Hill for hearings into stock volatility later this month. But don't expect Robinhood's investors to care.
So far, none of Robinhood's scandals have curtailed its growth.
Transparency Rink Rats has a trading account with Robinhood.
POT IS HOT - Yesterday, Jazz Pharmaceuticals announced a $7.2 billion acquisition of GW Pharmaceuticals, a company whose product Epidiolex (a treatment for children with severe epilepsy) was the first cannabinoid to secure FDA approval. Cannabinoid = drug derived from cannabis.
The tie-up is especially notable because pharmaceutical-grade cannabis products tend to have an easier time with regulators than recreational products like the cannabis-laced stroopwafels and cotton candy you can get in states where pot is legal.
It’s one sign of broader momentum in cannabis
Cannabis stocks have been on a roll since President Biden’s election, and bulls have high hopes that his administration will soften the US’ harsh cannabis laws. Pot stocks surged even further this week after three Democratic senators, including Majority Leader Chuck Schumer, pledged to prioritize marijuana reform in the current Congress.
The ETFMG Alternative Harvest exchange-traded fund, which tracks cannabis companies, gained almost 10% yesterday alone.
Biden himself has opposed complete legalization, and that’s key because, without federal legalization, pot businesses will stay barred from accessing the federally insured banking system.
The Beltway scoop: Senator Schumer has favored legalization in the past, but the cause could gain momentum now that his party holds a majority in the Senate. Owen Bennett, an analyst at financial services firm Jefferies, wrote in a note to clients that he expects legislation in the not-too-distant future that allows pot businesses to 1) use federally insured banks 2) list on US exchanges and 3) access capital markets.
GAMESHOP SAGA - MIT graduate student Anubhav Guha turned $500 into more than $200,000 in less than three weeks trading options on GameStop. Other amateur traders paid off their student loans with their $GME earnings.
But as the biggest finance story of 2021 continues to shake out, we’re starting to learn that many bigger, institutional players also cleaned up on the epic rally in meme stocks.
While Reddit forums were murmuring about GameStop, asset manager Fidelity was snapping up 10% of the retailer's total outstanding shares. Those holdings would have been worth over $2 billion at the end of January had it not sold off portions during GameStop’s rise.
Private equity group Silver Lake and hedge fund Mudrick Capital also both notched $100+ million gains on AMC, another Reddit favorite.
But the real winners have been market makers
Market makers provide the plumbing for US financial markets, carrying out trades on behalf of online brokerages like Robinhood. And the more people trade, the more money they make. More than 93 billion shares changed hands last week, including a daily record 24.4 billion on Wednesday, per the FT.
Reddit traders were rewarded for their early faith in GameStop...but so were many of the pros.
THAT’S ENTERTAINMENT - Both Sacha Baron Cohen and Netflix had a Wednesday morning for the ages—Netflix nabbed a jaw-dropping 42 Golden Globe nominations, while SBC picked up noms for his roles in both Amazon Studios’s Borat: Subsequent Moviefilm and Netflix’s The Trial of the Chicago 7.
To put Netflix’s haul in a deep focus shot, 42 nominations = 35% of the total, and 3x more than any other studio or network in either the TV or film categories.
David Fincher’s Mank and The Crown, both released on Netflix, earned the most nominations in either category, with six each.
Netflix’s recognition reflects 1) its evolution in original content since the 2013 release of House of Cards, its first original series, and 2) a new Hollywood landscape dominated by streaming. Amazon and Hulu tied for the second-most nominations.
Wondering how Succession got snubbed? The pandemic threw a wrench in many shows’ production schedules, so TV favorites including the Roy family and The Marvelous Mrs. Maisel didn’t have an eligible season.
A GOOD READ - Super Bowl parties are a fantastic tradition—you get showered with compliments on your eggplant dip, everyone gives their hot take on the halftime show, and, if we’re lucky, there’s a thrilling football game to top it all off.
This year, the pandemic pretty much sacked Super Bowl parties. Many of us will be watching the big game solo, or with our relatively small pod crews, who we love...but it’s not the same as the typical queso-soaked bash. So to make a distanced Super Bowl a bit more fun, we’ve spun up some articles and guides to help get you through Game Day feeling a bit less lonely (click the link below).
BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Geoff Ball …famous U.S. Marine Captain, Bernice Dougherty … famous financial manager, John Grisham (66), Damian Lewis (50), Gail Tang …famous mathematician.
THREE HEADLINES AND A LIE -
Three Headlines and a Lie
The stock market has been a little less crazy this week...but not the news cycle. Three of these headlines are real, and one we made up. Can you spot the fake?
a. "Nissan Altima makes a prominent appearance in Volkswagen Super Bowl commercial after creative agency mixup"
b. "Six arrested after changing Hollywood sign to 'Hollyboob'"
c. "US toddler to release debut album recorded in the womb"
d. "Scientists have taught spinach to send emails and it could warn us about climate change"
Answer at the end of Rink Rats.
MICHIGAN BLUE - As the dreary year unfolded, it was fair to wonder whether Jim Harbaugh had much left. His team was battered, his coaching staff was scattered, his own future was uncertain. He didn’t talk about it much, and even after accepting a contract extension that sliced his pay by 50%, Harbaugh said little.
But now, he seems determined to do plenty. Since inking his lighter deal, he has shown signs of renewed engagement, completely overhauling his staff with younger, touted, more diverse coaches. He altered his own recruiting philosophy and returned to the basics, landing six of the state’s top recruits. And then, just for good biting measure Wednesday, Michigan swiped four-star Oak Park defensive lineman Rayshaun Benny, who was verbally committed to Michigan State.
That wrapped up a top-10 class nationally for Michigan, second in the Big Ten.
COLLEGE CHRONICLES - The St. Lawrence University Board of Trustees announced on Thursday, February 4, that Kathryn A. Morris, Provost and Vice President for Academic Affairs at Butler University in Indianapolis, Indiana, has been selected as the University’s 19th President.
“On behalf of the Laurentian network across the country and around the world, I want to welcome Kathryn Morris to our community,” said Michael Ranger ’80, P’17, chair of the University’s Board of Trustees. “She brings a wealth of knowledge and experience, an authentic down-to-earth style, and an inspiring innovative spirit that will serve St. Lawrence well during this extraordinary time in higher education.”
Morris will move to Canton this summer with her husband, Brian Giesler, who is a member of the psychology department at Butler University. They have two children: a son, Logan, who is a senior at Augustana College, and a daughter, Erin, who is a sophomore at Butler University. They will be joined in Canton by their dog, Comet, who is a black lab mix rescue.
The search committee was unanimous in its support of Morris, as was the University’s Board of Trustees. Morris will begin her tenure on July 1, 2021. She will succeed President William L. Fox ’75, who announced his retirement in August 2020 and has served as St. Lawrence’s president since 2009.
If Marion Roach Smith ’77, chair of the Presidential Search Committee approves of this candidate, we approve. Now more importantly, is President Morris a hockey fan????
ON THIS DATE - 89 years ago today, the 1932 Winter Olympics opened in Lake Placid, New York.
Medal count: USA won 12 medals, marking the only time the U.S. topped the medal tally at the Winter Olympics until the 2010 Vancouver Games.
The Games were opened by Franklin D. Roosevelt, then the governor of New York. He was elected president nine months later.
American speed skater Jack Shea became the first Olympian to receive a gold medal on the victory podium, which debuted that year.
This was the first of four Winter Olympics — and eight Olympics total — to be held in the U.S.
1904 Summer (St. Louis)
1932 Summer (Los Angeles)
1932 Winter (Lake Placid)
1960 Winter (Squaw Valley)
1980 Winter (Lake Placid)
1984 Summer (Los Angeles)
1996 Summer (Atlanta)
2002 Winter (Salt Lake City)
What's next: The 2028 Summer Olympics will be held in Los Angeles.
ON THIS DATE II - On February 4, 2004, a Harvard sophomore named Mark Zuckerberg launches The Facebook, a social media website he had built in order to connect Harvard students with one another. By the next day, over a thousand people had registered, and that was only the beginning.
ON THIS DATE III - February 4, 1789, George Washington, the commander of the Continental Army during the Revolutionary War, is unanimously elected the first president of the United States by all 69 presidential electors who cast their votes. John Adams of Massachusetts, who received 34 votes, was elected vice president.
NHL SCHEDULING - NHL postponements are beginning to pile up as teams manage outbreaks, and the league could be headed toward a scheduling crunch.
The state of play: The Stars and Hurricanes already weathered lengthy postponements, and four teams are currently in the midst of their own.
The Golden Knights, who had their GM coach the team last week because the entire coaching staff was quarantined, haven't played since Jan. 26.
The Devils have 17 players on the COVID list and postponed games through Saturday.
The Wild have six players on the list and postponed games through Tuesday.
The Sabres have four players on the list and postponed games through Monday.
The NHL's regional structure this season has illuminated the difference between playing sports in Canada (2,113 cases per 100,000 people) and the U.S. (8,091 cases per 100,000 people) amid the pandemic.
Over half of the NHL's American teams have faced a postponement.
Every game in the Canadian Division has gone off without a hitch.
NHL DEBT - NHL commissioner Gary Bettman announced a new plan to survive the shortened season.
The league is borrowing approximately $1 billion. The money will be divided among all 31 teams to curtail cash-flow issues, payroll costs, and other operational expenses, according to Sports Business Journal.
The NHL is in the beginning stages of its 56-game season. The commissioner had announced on Jan. 11 that the league could lose billions in potential revenue.
The league has already implemented other measures to make up for lost revenue from the 2019-20 season:
Helmet ads are expected to generate $15 million across all teams.
New division sponsors — Discover, Honda, MassMutual, and Scotiabank — are viewed as a “one-year-only” campaign.”
The NBA issued a similar plan by acquiring $900 million in debt and giving each of its franchises $30 million to help teams navigate financial losses.
Months away from the postseason, chances are Bettman’s billion-dollar announcement won’t be the last major adjustment.
ORDER OF CANADA - The president and co-owner of the Montreal Canadiens, Geoff Molson, (St. Lawrence ’92) will be made a Member of the Order of Canada by Governor General Julie Payette.
Mr. Molson, a businessman originally from Montreal, is named “For his leadership as a business leader and for his philanthropic contribution, notably through the family foundation and other local organizations”.
In 2009, Geoff Molson acquired the Montreal Canadiens and the Bell Center, before being named team president in 2011. He has also been a member of the executive committee of the National Hockey League since 2016.
Rink Rats hopes to receive two tickets to a Montreal Canadiens game or a couple of cases of Molson Export Ale, as a thank you for the PR in this blog. Molson Export beer is a Canadian ale brewed by Molson at a strength of 5% alcohol by volume. First brewed in 1903, Molson Export is the oldest surviving of the Molson beer brands.
Speaking of Molson Export, I wonder if the Daniel’s Hotel is still in Prescott Ontario???
STAT OF THE DAY - There are 400 million privately owned guns in America.
POTUS AND SPORTS - The Biden administration is unlikely to leverage sports as a culture war in the same way that President Trump's did.
The longstanding tradition of champions visiting the White House — dating back to the 1860s but becoming a more regular practice in the past half century — changed significantly in the past four years.
Just one of the 14 major basketball champions under Trump visited the White House, and most weren't even invited.
Across other sports, champions who did accept their invitations were put under a cultural and political microscope. Which players opted out of the visit, and why, tended to dominate the storyline.
Moreover, some teams used their snubs as an opportunity to make not-so-subtle statements. The 2018 Warriors, for example, toured the National Museum of African American History and Culture before hanging out with President Obama at his D.C. office.
We don't know how Biden will proceed, but the two presidents' vastly different relationship to sports offers interesting insight.
Trump has long used sports for professional and political gain. He owned a team in the fledgling USFL and has 17 golf courses around the world; 14 of 24 Medals of Freedom he awarded went to sports figures; his vitriol toward Colin Kaepernick and the NFL spanned his entire term.
Biden has a more sentimental view of athletics. He's long used sports for personal growth, crediting them with instilling the confidence to overcome his stutter and delivering his family a sense of healing over the years.
The sports headlines these men choose to engage with, and the manner in which they do so, speaks volumes.
Trump referred to a hypothetical kneeling NFL player as "a son of a bitch."
Biden congratulated Sue Bird and Megan Rapinoe on their engagement and publicly supported USWNT in their fight for equal pay.
After the election was called for Biden in November, Draymond Green and LeBron James traded tweets to celebrate the White House's pending return as a champions' destination. The tide, it seems, is turning.
RINK RATS SUPER BOWL 55 CONTEST - Time for the RR Super Bowl contest. Send me your predictions for the winner, final score and MVP. Whoever gets closest to nailing it all will have their name in RR lights as well as a Starbucks gift card ($20), a one-year subscription to Rink Rats Quarterly (to be announced soon), and a Rink Rats t-shirt. Email me on rick@rinkratshass.net and follow me on Twitter @SLU25.
THREE HEADLINES AND A LIE ANSWER -
a. Nissan Altima didn't actually sneak into a VW commercial.
SWAMI’S WEEKEND TOP PICKS –
NFL Football Pick of the Week – Sunday 2/7, 3:30 PM (PDT), CBS: Super Bowl 55, Kansas City Chiefs (16-2) vs. Tampa Bay Buccaneers (14-5). The key to this game is the play of Tampa Bay’s defensive line. If they can keep Patrick Mahomes in check, the Bucs will win. We like Tampa 31 – 27. (Season to date 14-6)
NBA Pick of the Week – Saturday 2/6, 8:00 PM (EDT), NBA TV: Brooklyn Nets (14-9) vs. Philadelphia 76’ers (16-7). Nets on a roll win this key Atlantic division matchup, 101 – 94. (Season to date 1-4)
NHL Pick of the Week – Saturday 2/6, 8:00 PM (Barley Sandwich Time), HNIC: Edmonton Oilers (6-6) vs. Calgary Flames (4-5-1). Edmonton has the best player in hockey, Connor McDavid, a pleasure to watch. Oilers win 4 – 3. (Season to date 3-0)
NCAA College Hockey Pick of the Week – Friday 2/5, 7:00 PM (EDT), ESPN+: #15 Boston University Terriers (5-1-0) vs. #1 Boston College Eagles (9-2-1). Jerry York’s boys are at it again, chasing another national title. BU will give them a go but not enough, BC wins 5 – 4. (Season to Date 3-1)
Season to Date (10-6)
Next Blog: Jack Ass of the Month, Dear Rink Rats
Until Monday February 15, 2021 Adios.
Claremont, California
February 4, 2021
#XI-25-431
4,070 words, eight-minute read
CARTOON OF THE WEEKEND – The Stages of Winter, Ellis Rosen
RINK RATS WEEKEND POLL – Do you plan on watching the Super Bowl?
_____ Yes
_____ No
_____ What is the Super Bowl?
QUOTE OF THE WEEKEND: "WINNING is not everything--but making the EFFORT to win is." - Vince Lombardi, Green Bay Packers
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.
www.rhasserinkrats.blogspot.com
No comments:
Post a Comment