🍪 The Midyear Review

Monday, June 28, 2021 by Robinhood Snacks | Disclosures
_Inflation has been #trending — here's where some of the price jumps happened (source: BLS)_

Inflation has been #trending — here's where some of the price jumps happened (source: BLS)

Last Week’s Market Moves
Dow Jones
34,434 (+3.44%)
S&P 500
4,281 (+2.74%)
Nasdaq
14,360 (+2.35%)
Bitcoin
$32,970 (-7.63%)

Hey Snackers,

When we did our End-of-Quarter Review back in March, we opened with "2021 has moved fast" — since then, the news cycle has only ramped up.

Here at Robinhood Snacks, we’re dedicated to making financial news and the markets digestible (aka: snacky). Today, we’re rounding up the biggest business news of the first half, and looking forward to what the rest of the year could hold.

Themes
1. The Big Picture: three key themes that defined the first half
  1. America's booming recovery... Cue the "revenge spending." The US economy is roaring back to life and is expected to grow 6.5% this year, its highest rate since the '80s. Thank the US' massive stockpile of Covid vaccines for the glow-up — oh, and $5.3T worth of gov't stimulus. This year, Americans are spending more on restaurants, flights, and non-stretchy clothes (pajamas are about to enter a recession). US plane traveler volume is back to three-quarters of 2019 levels, up from 25% a year ago. But the reopening economy has also been driving inflation and shortages. And while the US recovers, poorer nations are falling further behind.

  2. The rise of alt-coins... This year, crypto mainstreamification is going far beyond Bitcoin: we call it "coin crowding." In January, BTC made up 70% of total crypto value — now, it makes up 45%. Alt-coins like Ethereum and Doge have picked up crypto market share, dimming BTC's spotlight. Smaller coins like DigiByte, VeChain and SafeMoon have also gained traction – and then there's influencer coins. As BTC's environmental impact comes under scrutiny, "green" alternatives like Chia are getting attention, too. Coin crowding is a new phenomenon with high volatility risk, and the long-term outcomes are still unclear.

  3. Big Tech's antitrust problems... have gotten a whole lot anti-er. This year, regulators are bringing real heat. Since the Apple-Epic trial in May, the temp has gone from steam room to sauna. Just last week, a House committee advanced major legislation to curb Big Tech's dominance. The headliner: a bill that would prohibit tech companies from playing favorites with their own products (think: Apple apps on App Store, Basics on Amazon). Meanwhile, newly confirmed FTC leader Lina Khan is a Big Tech critic who could expand the scope of antitrust enforcement. Blocked acquisition and even tech breakups seem more plausible.

Numbers
  • 1.9M: Global Covid deaths from January to June, already higher than 2020's toll.
  • 57%: Percentage of US adults who have been fully vaccinated.
  • ~$2.5K: The average monthly unemployment payout with boosted benefits, extended until September.
  • -20%: Fall in the stock price of the 50 biggest SPACs this year.
  • 5,000%: Surge in the price of Dogecoin this year so far.
Future
  1. Inflation's effect on stocks... Will it have one? If the first half of the year were a hashtag, it would be #flated. For most of the year, investors worried that the Fed would raise interest rates sooner than expected to tamp down rising prices as the economy revved up (see: our chart above). This month, the Fed suggested it would do just that (ETA: 2023). Higher interest rates can make stocks less attractive compared to less risky assets like bonds and savings accounts. Despite the #flated sitch, stocks are at records highs. But if inflation starts to look like a trend rather than a one-time reopening blip, that could change.

  2. Big tax hikes for corporations... Will they actually happen? This month, G7 countries came to a historic agreement: multinational companies should pay a minimum tax rate of at least 15% in each country in which they operate. That could hurt Big Tech companies like Google and Amazon, who've been plopping their international HQs in countries with low corporate tax rates. Meanwhile, President Biden wants to raise the corporate tax rate in the US to 28% from 21% to fund trillions worth of proposals. Neither of these tax hikes have passed yet, and they'll likely get pushback — but they've become more likely.

  3. Economic competition with China... Can the US stay #1? With its tech power and growing international influence, China’s becoming a bigger economic threat to the US economy. This month, the Senate approved a $250B bill to subsidize Made In USA R&D for key industries of the future (think: tech, chips). The bipartisan goal: keep the US competitive against China. Then, G7 countries announced “Build Back Better World”: a Biden-inspired partnership to rival China's "Belt and Road" initiative by financing infrastructure projects in developing countries.

What else we’re Snackin’

ICYMI: Some of our biggest stories from this half...

  • Jobs: The Hiring Dilemma: Corporate America is raising wages to bring reluctant workers back.
  • Ransomware: Cyber attacks have been increasingly targeting critical infrastructure (including your gas), with ransoms often paid in Bitcoin.
  • Juneteenth: As Juneteenth became a national holiday, we looked at the future of reparations and what form they could take.
  • China: China's been cracking down hard on its tech giants (RIP, Ant Financial IPO). It seems there is such thing as too successful for the CCP’s liking.
  • Movies: The future of entertainment: the new normal for studios, theaters, and streamers.
Snacks Daily Podcast

Chewy has a plan to turn you and your puppy into profit puppys.

Tune in to our 15-minute pod to hear why the online pet supplier is getting into adoptions.

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This Week
  • Monday: Earnings expected from Herman Miller
  • Tuesday: Earnings expected from FactSet
  • Wednesday: Earnings expected from General Mills, Svedka-owner Constellation Brands, Bed Bath & Beyond, and Micron
  • Thursday: Weekly jobless claims. Earnings expected from Walgreens
  • Friday: The June unemployment rate drops

Authors of this Snacks own: Bitcoin and shares of Apple

ID: 1700837