IT’S FINALLY HERE – STIMULUS
After months of debate congress passes a stimulus bill totalling at the time of this writing totaling $900 billion. $166 billion is intended for direct checks/stimulus checks for Americans. At this moment we expect these stimulus checks to be $600 this is a 50% reduction from the last stimulus check. Additional aid for dependents are not included in the current version of the bill instead the bill as-is opts into giving an additional $600 per child under the age of 18. Retail stocks are currently doing well in anticipation of a strong shopping season due to the holidays previously retail companies such as $TGT saw a sharp uptick last time stimulus was issued. $325 billion of the billion has been appropriated for small business. It is important to note in the past there have been reports of specific loans being difficult to get for smaller businesses due lenders favoring larger/less riskier business. $15 billions have been set aside specifically to help the airlines with issues such as payroll which ideally will ease their cash low and prevent the need of layoff to stay afloat $JETS. $20 billion has been set aside for the purchasing of vaccines from $PFE and $MRNA. Due to the stay at home orders amongst schools and lack of high speed internet in certain portions of the country $7 billion has been allocated to increase high speed internet with the intention of helping students who may not have quality internet from home. $120 billion has been set aside for unemployment benefits. These benefits continue to help money continue to flow thru the economy via the continuing purchase of purchasing goods and services.
FOMC: The Latest
Last week we had our final FOMC meeting of the year, highlighting the unique and difficult position the Fed is with regards to issuing guidance for the future. As they stated “the path of the economy will depend significantly on the course of the virus.” Coronavirus is running rampant across the U.S. as we continue to see our number of cases and deaths continue to skyrocket. Despite that, Pfizer’s vaccine and most recently Modena’s have been approved for emergency distribution by the FDA. The economic horizon appears promising as the ability for life to resume again brightens economic outlook for this coming summer and fall when the public has widespread availability of the coronavirus vaccine.
While they have been hesitant to issue guidance with the uniquely volatile situation the pandemic presents, the Fed stated that they would keep asset purchases “at least at the current pace” with their aggressive asset accrual until substantial further progress has been made in the economy. They have been purchasing large amounts of government debt to aid in keeping our economic outlook feasible for the near future. Despite their efforts, there is still credible doubt as to our path towards recovery with less than half of the 17 officials believing the Fed would be able to raise their rates in the next 3 years to the 2% inflation level we are seeking
BITCOIN EXCHANGE COINBASE FILES FOR IPO
We have the latest in what seems to be a year of monster IPO’s. Coinbase, the premier cryptocurrency exchange platform, has filed their preliminary documents for their IPO with the SEC. The timing of such a revolutionary move is hard to ignore with Bitcoin finally surpassing the $20,000 mark this past Wednesday and even passing $23,000 later in the week. This coupled with a pivot in stance on Bitcoins viability long-term by institutional investors may possibly bolster this IPO to long-term success unlike the flame we experienced with Jack Ma’s Ant Group IPO earlier this year.
Analysis from JP Morgan shows that institutional investors are moving from Gold ETF’s to Bitcoin. A far different tune than the concerns that were raised about their potential for sustainable growth. These concerns are due in large part to the volatility of cryptocurrency making it difficult to determine it’s intrinsic value. Coinbase saw their revenue grow exponentially from $17 million in2016 to $923 million the following year due to the surge in demand for cryptocurrency. Immediately afterwards making less than 60%of that revenue in the year following. This doesn’t inspire confidence but the recent uptick in demand is undeniable. Regardless this be interesting to see whether this is priced into Bitcoin’s value moving forward.
LAST WEEK’S EARNINGS