Equities Pull Back Sharply From Record Highs

Nasdaq: -0.72% | S&P: -0.86% | Bitcoin: -4.65%

Catch Up Quick

• Donald Trump filed lawsuits against Facebook CEO Mark Zuckerberg + Twitter CEO Jack Dorsey

• Of 6 vaccinated countries with continuously high coronavirus infection rates → 5 of them deployed Chinese vaccines

• A record $5.4T was held in funds that passively track the S&P 500 at the end of 2020 (per S&P Dow Jones Indices) → after the 2008 financial crisis, the same figure was less than $1T

• The Olympics once again banned spectators as Tokyo declared a state of emergency due to recent coronavirus variant outbreaks

• 2020 was the worst year for U.S. traffic deaths since 2007, even as pandemic lockdowns meant less driving

• Beijing regulators may close a loophole that allows Chinese companies to list shares overseas

• Credit Suisse upgraded Boston Beer → says stock can ride Truly hard seltzer momentum to a whopping 60% gain

• Levi Strauss & Co (LEVI) earnings crushed estimates → the retailer raised 2021 forecasts amid robust denim sales

• Amtrak invested $7.3B in new fleet of modern trains

• American Airlines (AAL) says it flew 3x as many passengers over 4th of July weekend compared to 2020

• Average viewership for CNN & Fox fell 38% in the first half of 2021

• U.S. jobless claims rose to 373K → economists estimated 350K

• Job openings hit another record high as layoffs fell to a record low

• Two senior Congress members have called the SEC to investigate whether DiDi misled investors ahead of its IPO → shares slid another 6% today

• Robinhood disclosed that 81% of Q1 revenue came from sending stock, option and crypto orders from its customers to high frequency trading firms :(

• Samsung Electronics says Q2 operating earnings jumped a staggering 53% amid soaring chip prices

• JPMorgan named Whirlpool (WHR) a top pick → says the “hated name” can easily top expectations come earnings on July 21st

Thought of the Day

• While most investors focus on technical analysis, short-term fundamentals and economic indicators, it can be easy to lose sight of market landscapes 5 to 10 years down the road (especially during days where stocks sharply fall)

• Even before today, in wake of record highs, many investment firms such as BlackRock began to pull back, citing a peak in economic reopening momentum

• However, a different lens inclusive of longer term narratives relative to pandemic headlines tells a different story

• For example, simultaneously high consumer savings and consumer spending indicates sustained household wealth creation

• More importantly, while coronavirus lockdowns temporarily expedited digitization, there exists early evidence of business-model / acquisition strategy shifts in anticipation of permanent changes in consumer preferences and trends such as eCommerce, collaboration, automation and broader software enablement

  “We anticipate higher spending on digital services, as the economy recovers and companies adjust to a new normal…this imminent spread of technology throughout sectors, such as financials, industrials and health care, will define this cycle” — Lisa Shalett, Morgan Stanley Wealth Management CIO

• Such an encroachment of tech will increase efficiency and global economic output could very well soar

• Additionally, surging retail investor participation, something we identified far before it was evident by monitoring brokerage account openings, bodes well for sustained equity momentum

• Unlike institutions which sell huge amounts of shares, it will take something much bigger (and thus less likely) for individuals to collectively sell to the point of large negative price impacts

• And since individuals tend to invest more actively than institutions, sell offs might not even be able to cut very deep given more liquid retail profit seekers will be quick to “buy the dip” (today’s selling action may test this hypothesis)

• While stocks could crash again soon to an unforeseen delta variant outbreak (or something else), it’s always important to have a longer term investment plan irrespective of the short term, supported by more concrete themes such as sustained household wealth, irreversible digital expansion, and a younger investor base!

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