From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
K-SHAPED RECOVERY
In a shortened trading week that saw the ushering in of a new administration, all the major indices hit fresh all-time highs, before ending mixed for the week. There was more evidence everywhere that the proverbial K-shaped recovery continues. Despite those record highs, more than 900,000 Americans filed for unemployment benefits last week. While slightly short of estimates, jobless claims have been at record-high levels now for going on almost a year. A survey from Alignable showed that a full third of small businesses in the U.S. couldn’t afford their rent this month (the figure was even higher for minority-owned businesses.) The Biden administration plans to move quickly on its $1.9 trillion relief bill, though there are already signs that it will face roadblocks in the Senate. All told the market under President Trump had annualized returns just shy of those under President Obama. Some investors had worried that Democratic control of Washington would put the brakes on the bull market, but that has not happened; instead, stocks were up 13 percent between Election Day and Inauguration Day for the best post-election return in modern history.
BOOMTOWN, USA
One of the ways that K-shaped recovery is manifesting is in the housing market. Simply put, there are way more people in the U.S. looking to buy a new home than there are owners looking to sell, which has led to extremely tight inventories across many cities and suburbs. Homebuilders are racing to catch up with demand. Measures of new-home construction ended 2020 at their highest levels since 2006, though labor and lumber shortages could threaten to put a stop to that momentum. The tight market is being driven by several factors: extremely low mortgage rates, out-of-towners fleeing cities and coming in with more money than locals, therefore driving up prices, and a broader trend of people staying in their homes for longer. Homebuilder stocks like KB Home, Toll Brothers, and Pulte all ended the week on a high note as housing starts and building permits continue to exceed expectations. CHECK THIS.
VACCINATIONS ACCELERATE
On the pandemic front, the U.S. is now approaching an average of one million vaccine doses a day — the number that President Biden said he was shooting for in his first 100 days. That plan is now considered by many to be not ambitious enough, especially given the speed at which new, more infectious mutated variants of the virus are spreading around the world. Amazon has offered its services to the White House to help with vaccine distribution, and the company is opening a pop-up vaccination center for the public at its Seattle HQ this weekend. Eli Lilly said that its monoclonal antibody treatment prevented COVID infections in nursing home residents and staff in a clinical trial — the first time that drug, known as bamlanivimab, has been shown to actually prevent infection. And Dr. Fauci said that Johnson & Johnson’s vaccine trial data could be made public in the next couple of weeks. That shot is sorely needed, as it only requires a single dose and does not depend on complicated, ultra-cold chain logistics. J&J has said it plans to have 100 million doses available by the spring.
NETFLIX ROCKETSHIP
Netflix shares exploded higher by 17 percent the day after the streamer reported an increase in revenue and subscribers. Even though Netflix missed its earnings projections, investors loved two nuggets in the earnings report: the company now has more than 200 million global subscribers — adding eight million in the quarter against six million expected and showing that it can continue to add paid users even as it increases prices — and it no longer has to take on debt to produce all that content. And it’s a lot of content: new shows and movies every week this year, plus more than 500 titles in production. Shares of Netflix are up close to 80 percent in the last year.
NEW APPLE GEAR
The iPhone is the most profitable consumer product in history, and Apple’s already at work on its replacement. The company is reportedly in the process of developing a VR/AR headset that analysts believe could pave the way for an eventual pair of sleek smartglasses that would have all the functionality of the iPhone, and more. The first iteration of the headset won’t arrive until next year at the earliest and would be Apple’s first major new product launch since the Apple Watch. And as Steve Jobs would have said: “One more thing.” According to Bloomberg, Apple is also at work on a thinner, lighter version of its mass-market MacBook Air line, with a release likely late this year or early next. The new MacBooks will almost certainly feature Apple’s new in-house silicon, and a return to the popular MagSafe charging port is also expected. Apple releases earnings on Wednesday, the first report since the new iPhone 12 line went on sale.
