Stock Market News 4/2

Biden’s Infrastructure Plan

On Wednesday, Biden announced his plans to spend $2.25 trillion in his new infrastructure plan. This includes $100 billion in expanding fast broadband across the country and $400 billion towards access to home and community based care for elderly and those with disabilities.

Also the plan includes building a network of 500,000 charging stations across the country by 2030.

This entire plan will be paid overtime by increasing the corporate tax to 28% to offset all this spending. Luckily this new plan had already been priced in to stock prices, so instead of declining stock prices, we saw green days to end the week.

Suez Canal Open

The Ever Given, once stuck in the Suez Canal for almost a week, has now been freed. The backup put shipping delays into question, with everyone holding their breath wondering how bad the damage will be.

The ship is finally freed from the waterway, but there is a massive buildup in global shipping. Some professionals predict it could take months for everything to go back to normal. While these delays are slowly trickling into normalcy, fears of inflation and scarcity are starting to creep into discussions.

Archegos Capital Management Margin Call

Last Friday we saw a massive dump in the market, particularly Discovery and Viacom stocks. On Monday it was discovered to be caused by Bill Hwang, Hedge Fund Manager of Archegos Capital Management, and his over leveraging his investments.

It turns out they had defaulted on margin calls and now putting investors on edge wondering who’s next? The market’s insane growth was put into question. Many are wondering if other stocks were incorrectly bet during the stock market recovery.

The losses were significant, estimated to be around $6 Billion in losses. But the stock market wasn’t the only one taking hits. Banks such as Credit Suisse and Goldman Sachs were reportedly hit with losses in the Billions.

Deliveroo Drops 30% at IPO Opening Day

The London food delivery service, Deliveroo went public on Wednesday, only to plunge 30% the very first day. That decreased the valuation of the company by more than $2 billion pounds.

This was a highly anticipated listing and the biggest on the London market in over a decade. But the listing was hit with resistance by investment companies over growing concerns about gig-economy working conditions.

But many believe it to be a sector problem, not an actual problem with the company itself. As the economy slowly returns to normal, investors are starting to turn away from “pandemic stocks’ and more towards recovery stocks. Deliveroo unfortunately got caught in the middle of this transition.

It will interesting to see how the economic recovery will affect other delivery stocks, like Doordash.

Coinbase Set to Go Public April 14^th

The largest cryptocurrency exchange is ready to go live on April 14^th. It is one of the most anticipated listings of 2021. Many people are holding their breath, waiting to see how it actually performs in the markets.

The company employs 1,200 people and has 43 million customers in over 100 countries. Last year (2020), it raked in over $1.3 Billion in revenue and even returned a profit of $322 Million.

The question is how will the company hold up when crypto enters a bear market? 96% of Coinbase’s revenue came from transaction fees. In 2019, they had a down year, losing $31 Million.

We’ll have to see how the stock market reacts to this first crypto company. I’m personally staying on the sidelines for now. I see more value in investing directly into bitcoin or other coins.