🥑 Biden's $2T makeover plan

Monday, April 5, 2021 by Robinhood Snacks | Disclosures

Extreme makeover, US edition

Last Week’s Market Moves
Dow Jones
33,153 (+0.24%)
S&P 500
4,020 (+1.14%)
Nasdaq
13,480 (+2.60%)
Bitcoin
$59,564 (+13.24%)

Hey Snackers,

If the Monday scaries are hitting you hard after this holiday weekend, consider this: ~8B humans are alive right now, out of the ~108B that have ever been born. Comforting or terrifying? Anyway... happy Monday.

Stocks climbed to record highs last week, and the S&P 500 index closed above 4K for the first time. On Friday, we learned that the US added an expectations-smashing 916K new jobs in March. The unemployment rate fell to 6%.

Build
1. Biden's $2.3T makeover plan: what’s in it, and why it could reshape America's future

The I-90 needs a spa day... More like a spa decade. Last week, Biden unveiled his long-awaited $2.3T infrastructure plan. TLDR: give America's old infrastructure a major facelift. It's currently rated a C- (passable, but not LinkedIn-able). The plan also seeks to make America as green as the inside of a perfectly ripe avo. Some highlights:

  • $621B for transportation projects. Including: repairing 10K bridges, and modernizing roads, airports, and 20K miles of highways. Also: building a network of 500K electric vehicle chargers by 2030.
  • $400B for long-term care facilities for the elderly and disabled.
  • $300B to boost manufacturing and make the US less China-reliant, including strengthening the chip supply chain.
  • $213B to build and update affordable housing, and $100B to modernize schools. Plus: $100B to bring high-speed broadband to all Americans.

Like mink eyelash extensions... this makeover is pricey — $2.3T over eight years. It would be the biggest federal investment program since the '60s Space Race. Biden is trying to get the plan approved by summer. But that could be tough in the narrowly divided Congress...

  • The plan would be paid for over 15 years by raising corporate taxes, including bumping the corporate tax rate to 28% from 21%. Republicans cut it to 21% from 35% in 2017.
  • Pushback: Republicans support infrastructure investments, but aren't fans of tax hikes. While the GOP worries the proposal is too splurge-y, some Progressives say it isn't big enough.
THE TAKEAWAY

The US economy is at a crossroads... No infrastructure pun intended. Covid expanded the government's role in American lives (think: historic spending on the #StimulusTrilogy). One year and $5T+ later, the pandemic is waning... and America is at a crossroads. If Biden's plan passes, it would chart a post-pandemic future in which Uncle Sam plays a major role. These unprecedented investments could spur sustainable economic growth and help reduce inequality. On the flip side, higher taxes could mean lost profits for companies, which could affect wages and growth.

Highs

Call of Duty who?... Microsoft scored a major contract to provide augmented reality headsets to the US Army. It could be worth ~$22B over 10 years — more than double the Pentagon "JEDI" cloud contract it won less than two years ago. The software giant will deliver 120K custom headsets based on its HoloLens AR tech. The headset is a long way away from Office 365: it allows soldiers to fight and train more effectively, overlaying holograms like maps in their field of vision. Microsoft shares jumped 4% on signs it can generate significant $$$ from futuristic products that take years to develop.

If IPOs were graded... online learning platform Coursera would've passed. Coursera stock jumped 17% for the week, after the nine-year-old company went public on Wednesday. It offers online classes and degrees from 150 universities, lowering costs and barriers to education. As we schooled-from-home during the pandemic, Coursera's 2020 sales soared 59% from 2019 (but it's still unprofitable). It now has 77M "Learners," 30M of which joined during Covid times. Off-campus, 25% of Fortune 500 companies use it for employee professional development. As tuition prices soar and tech takes over, e-learning could continue to grow in the post-pandemic world.

Lows

Accio pad thai... Deliveroo is the UK's DoorDash, except most of its "drivers" ride bikes with your tikka masala on their backs. The Amazon-backed food deliverer was one of Europe's most-hyped IPOs of 2021 (key word: was). Shares plunged 26% during their first day on the London Stock Exchange. Deliveroo has been facing pressure over gig workers’ rights. Investors are worried it might have to reclassify its UK gig drivers as "workers" with benefits — like Uber recently did. That could keep Deliveroo from delivering profits anytime soon.

Joined the margin band... Banks had a bad week, thanks to an investment firm that couldn't meet its margin calls. Archegos Capital Management borrowed billions of $$$ to trade with. When the value of its holdings fell below margin requirements, the banks said "put up more money or sell your positions." Archegos said "can't/won't." That left the banks that lent it money exposed to billions in losses. Credit Suisse stock sank 17% for the week, Nomura dropped 19%, and Goldman Sachs and Morgan Stanley fell ~5%. Retail investors were affected, too. Now "family offices" like Archegos might get more oversight.

What else we’re Snackin’
  • Dream: Why focusing too much might prevent you from doing your best work.
  • Listen: The very pressing need for everyone to quiet their egos.
  • Read: The 50 most influential books of all time, from The Bible to The Communist Manifesto.
  • Snooze: Why you stay up late, even when you know you shouldn't (and how to stop).
  • Connect: What you’re saying when you give someone the silent treatment.
  • Chill: The three types of rest you need to really relax after work.
Snacks Daily Podcast

"If your tech company isn't launching a Clubhouse copycat, is it even a tech company?"

We whipped up a list of Spotify, Slack, LinkedIn, Twitter... and all the other companies working on Clubhouse rivals on our 15-minute pod.

This Week
  • Monday: Markets react to March's big jobs report for the first time
  • Tuesday: Earnings expected from Paychex
  • Wednesday: World Health Day... and National Beer Day. Earnings expected from Lamb Weston
  • Thursday: Weekly jobless claims. Earnings expected from Levi Strauss, Constellation Brands, and Conagra Brands
  • Friday: Not much ¯\ _(ツ) _/¯

Authors of this Snacks own shares of: Microsoft, Slack, Uber, and Amazon

ID: 1589276