6-Chart Saturday (2/27/21)

By Charlie Bilello

27 Feb 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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1) A Billion a Day

The boom in SPACs continues with over a billion a day in new issuance in the first two months of the year. At this pace we’ll surpass last years record by the end of March.

There are many reasons behind the boom in SPACs (#1: investor risk appetite has never been higher), but Charlie Munger summed up Wall Street’s vested interest nicely this week…

“The investment banking profession will sell s— as long as s— can be sold.”

2) Bonds on Sale

It’s been a difficult year for bonds so far, with interest rates moving higher, particularly at the long end of the curve.

Data via YCharts

10-year (1.52%) and 30-year (2.31%) Treasury yields hit new 52-week highs during the week.

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Driving the move higher in bond yields has been the continued rise in inflation expectations.

3. Booming Incomes

Speaking of inflation, incomes in the US saw another surge higher as the 2nd round of stimulus payments take hold.

In an unexpected twist, the pandemic has been an enormous economic boost for the vast majority of households as more than one hundred million Americans who never lost their job have received free money payments. Real incomes are up over 10% in the last year alone.

Incomes will see another boost higher soon with the House passing another $1.9 trillion stimulus bill this week. While the Senate could still make changes, free money payments in the latest bill are expected to be highest to date ($1,400 per individual for most Americans – family of 4 receiving $5,600).

4) The Road Back to Normal

Covid-19 hospitalizations in the US have now declined 45 days in a row, down over 61% from their peak on January 6. 

More than half of Americans aged 65 and older have now been given at least 1 dose of the Pfizer/Moderna covid-19 vaccine (>80% of deaths have come from this age group). The Johnson & Johnson single dose is coming next week with 20 million doses expected in March and 100 million by June.

With the end of covid finally in sight, the downtrend in Clorox ($CLX) continues, now at its lowest level since last April.

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5) Housing Boom 2.0

The US housing boom continues with US home prices hitting all-time highs again, up 10.4% over the last year.

2020 was one of the best years ever for home prices.

What’s driving the current housing boom? Record incomes (stimulus payments), all-time low mortgage rates, and low inventory.

With building permits at their highest levels since 2006, more supply is coming, but not fast enough to meet the surge in demand.

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6) Coinbase Hits $100 Billion

Ahead of their upcoming direct listing, Coinbase (the largest crypto exchange with $90 billion in assets) shares recently traded at a valuation above $100 billion, nearly doubling from its valuation only a weeks earlier.

With 2020 revenue of $1.27 billion (see recent S-1), that values the company at over 78x sales.

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

Have a great weekend everyone!


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