5-Chart Sunday (7/11/21)

By Charlie Bilello

11 Jul 2021

This week’s post is sponsored by YCharts. Mention Compound to receive 20% off your subscription when you initially sign up for the service.

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

1) Big Trouble, Big China

Chinese internet stocks (ETF: $KWEB) hit a 52-week low this week, down 44% from their high in February.

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A double whammy of concerning developments (China announcing tighter rules for companies listed or looking to list overseas and increased scrutiny into tech companies) has sent the ratio of Chinese tech companies ($CQQQ) to the US-focused Nasdaq 100 ($QQQ) to new all-time lows.

2) DiDi Goes Down

After much fanfare and initial spike higher on its first day of trading in June, the top Chinese ride-sharing firm (DiDi, $DIDI) is now more than 14% below its IPO price. Last week’s drop was attributed to regulators in Beijing putting DiDi under “cybersecurity review” and banning it from accepting new users.

With a valuation of $58 billion, DiDi’s current market cap sits between Uber ($92 billion) and Lyft ($20 billion). Uber still owns roughly 12% of DiDi shares from a sale of Uber China back in 2016.

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3) Rising Inflation, Falling Real Yields

After adjusting for inflation, investors in 10-Year US treasury yields are now being paid -3.4%, the lowest real rate of return since 1980.

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Real yields on US Junk Bonds have turned negative for the first time ever.

4) The Year of the Short Squeeze

2021 is shaping up to be the year of the short squeeze. The latest example is Carver Bancorp ($CARV) which was targeted by message boards this week, with the stock quadrupling at its high on Friday from its close just 2 days before. Mentions on Reddit message boards were once again the catalyst after investors learned that 68% of the company’s float were held short.

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5) Air Out of Airlines

Despite increasing travel numbers, Airline stocks are experiencing their first meaningful correction in over a year, with one popular ETF ($JETS) falling 20% from its high in March.

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And that’s it for this week.

Thanks for reading.

Have a great weekend everyone!


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