5-Chart Friday (8/13/21)

By Charlie Bilello

13 Aug 2021

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5 charts from the past week that tell an interesting story in markets and investing

1) A Trillion for Infrastructure

The Senate passed a $1.2 trillion infrastructure bill this week with bipartisan support (19 Republicans joined all 50 Democrats). It now moves over to the House where passage may prove more difficult.

What’s in the bill? Here’s a breakdown of the $550 billion allocated to physical investments…

Infrastructure stocks ($IFRA ETF) have been rallying in anticipation of a deal, outpacing the S&P 500 over the last year (44% vs. 34%).

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How are we paying for this? It’s complicated (partly from reallocated funds from Covid-19 relief bills, partly from user fees and asset sales, and partly from more deficit spending). Notably, the tax increases that were in the original plan are no longer there.

2) Crypto Comeback

Rising national debt and record deficits have been a running billboard for crypto assets over the last year. So too has been the Fed’s extremely easy monetary policy which continues to this day. The Fed’s balance sheet now stands at $8.257 trillion, hitting another record high this week.

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Meanwhile, US inflation is remaining stubbornly high, showing a 5.4% over the last year.

Here’s a breakdown of the price increases in the latest report…

With inflation running hot, debt levels rising, and the Fed maintaining ultra-easy policy, it should come as no surprise that Crypto asset have come roaring back in recent weeks.

The two largest assets, Bitcoin and Ethereum, are up 66% and 96% from their lows in June. Over the last year they’re up 305% and 3,315% respectively.

Coinbase reported earnings this week an the numbers were staggering…

3) IPO Boom

The combination of bullish investor sentiment and record stimulus are the perfect backdrop for raising money.

On cue, US IPOs are having a banner year, with $217 billion in new issuance already trouncing last year’s record high of $167 billion. And there’s still four and half months to go!

Note: Includes SPACs and Traditional IPOs

How have investors in these new issues fared? Not so well thus far in 20201, with both the IPO and SPAC ETFs well off their February highs and underperforming the S&P 500 by a wide margin.

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4) More New Highs (Stocks, Earnings, Profit Margins)

Speaking of the S&P 500, it hit 4 more new all-time highs this week, bringing the total in 2021 up to 48.

With earnings season winding down (89% of companies reported), new record highs are in the books once again.

Sales are up over 21% over the last year, a record increase.

Profit margins of 13.6% are also at a record high.

5) Send in the Boosters

The Delta wave continues to lead to an exponential rise in cases in the US, which are now at their highest levels in six months.

Hospitalizations and deaths are rising as well (the latter with a longer lag).

In response to lower vaccine efficacy against the Delta (39% against infection and 88% against hospitalization), Israel is now recommending booster shots for anyone 50 and above as well as health care workers.

We will likely see the same in the US soon with the CDC paving the way this week in recommending booster shots to those with weak immune systems (estimated 7 million Americans).

And that’s it for this week. Thanks for reading.

Have a great weekend everyone!


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