Stocks Soar as Market Turmoil Subsides

Dow: +1.57% | Nasdaq: +1.56% | S&P: +1.39%

Catch Up Quick

• Jeff Bezos is reportedly stepping down as the CEO of Amazon ($AMZN)

• IBM has greatly scaled back its blockchain unit (Zack Seward, CoinDesk)

• Silver dealers are racing to find supply for retail buyers as demand skyrockets

• Melvin Capital, the primary hedge fund on the short side of the GameStop ($GME) debacle, reportedly lost ~53% in January

• Robinhood raised an additional $2.4B from shareholders after a $1B cash infusion last week, bringing the company's total cash raised to $3.4B in a week

• Databricks, a San Francisco-based unified data analytics solution, raised $1B in Series G funding at a $28B post-money valuation

• High-end liquor saw its largest sales increase in 40 years

• VanEck Global suggested commodities are positioned for a significant period of outperformance, following recent underperformance

• Following a recent partnership, Ford ($F) will install Google's Android operating system on all new vehicles starting in 2023

• As of Monday afternoon, ~27M Americans had received one or both doses of a COVID-19 vaccine

• Myanmar’s military seized control from its civilian-run government, which President Biden deemed an assault on the country’s transition to democracy

• According to a study by JAMA Neurology, a majority of concussions in college football occur during practice

• Wheels Up, a New York-based private jet subscription service, agreed to go public at a $2.1B valuation

Thought of the Day

• Last week, major indices tumbled, losing 400 bps (4%) at the low point, before recouping losses so far this week 

• Broader market action, however, has been largely overshadowed by the recent GameStop ($GME) saga, which has dominated coverage

• Given the lack of pessimistic data however, it’s reasonable to infer that last week’s selloff was largely correlated with the price frenzy of GameStop [among others such as AMC ($AMC), Blackberry ($BB), and Nokia ($NOK)], in which many systematic investors disliked the notion of apparent price manipulation at the retail level

• With 40% - 1700% runups in shares of aforementioned companies, multi-billion dollar hedge funds who went short were forced to either trim or sell off other positions within their portfolios to either 1) free up enough cash to double down on existing shorts or 2) cover incoming margin calls 

• Meanwhile on the other side, retail investors (hopping on the bandwagon, avoiding FOMO, “rebelling” against Wall Street, etc.) also shifted capital away from existing positions towards so called “meme” stocks

• Given hedge funds and retail traders are two most active (as opposed to passive) market participants, together controlling hundreds of billions of dollars of capital flows, combined efforts easily control enough capital to move markets

Δ∏DRΣW @andrethuo

@litcapital @BagholderQuotes

February 2nd 2021

30 Retweets556 Likes

The Bottom Lines

• Circling back, equities have since started the week off far up in the green, driven by subsiding market chaos, and many positive catalysts on the horizon → additional stimulus, J&J ($JNJ) and Novavax ($NVAX) vaccines, dwindling new coronavirus cases, the CBO forecasting the labor market making a full recovery by 2022, etc

• The temporary nature of last week’s market activity provided an opportune time for investors with cash on the sidelines to buy or add to positions wrongfully influenced by superfluous volatility

• Additionally, with this fresh in mind, and a majority of market participants taking an active investing approach, as mentioned above, equity “dips” might not be able to cut very deep moving forward as profit seekers will be quick to act!

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