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7 charts from the past week that tell an interesting story in markets and investing…
1) The Jobs Comeback
The US Unemployment rate moved down to 5.8% in May, its lowest level since the start of the pandemic.
Filings for unemployment insurance (jobless claims) are also hitting pandemic lows, down 94% from their peak last March. 25 states have now announced an early end to the extra federal benefits ($300/week) that are paying many more money not to work. This shift is expected to encourage more workers to reenter the labor force in the coming months.
That should translate into a continued recovery of jobs that were lost during the pandemic, with total payrolls still 5% below their pre-covid high.
2) The New King of Memes
A new king of meme stocks was crowned this week, with AMC ($AMC) passing GameStop ($GME) in market value after a parabolic surge higher.
At its peak market cap ($33 billion), AMC had a higher value than over half the companies in the S&P 500, a 70x increase from where it started the year. The fundamental comparison with companies like State Street ($STT) is nothing short of remarkable…
With investor demand skyrocketing, AMC continues to issue new shares to raise additional capital. Thus far, investors have largely ignored these dilutive measures, with ebullient sentiment overpowering all else.
3) Crude Oil Surge Continues
Oil prices increases continue, up over 80% in the last year and at their highest levels since October 2018.
The CRB Commodity Index hit a 6-year high this week, more than doubling from its lows last April.
Energy stocks ($XLE) continue to be the primary beneficiaries, leading all sectors in 2021 with a gain of 49%. If the year ended today, this would be the highest annual gain ever for Energy, surpassing the prior high from 2005.
4) Bull Market in CEO Pay
The median pay for CEOs of S&P 500 companies hit a record high for the 5th straight year in 2020, increasing 5% over 2019. CEO pay has increased 56% since 2010, more than doubling the rate of inflation.
The highest paid CEO in 2020? Chad Richison of Paycom ($PAYC) at over $200 million…
The lowest paid? Elon Musk of Tesla ($TSLA) who reported $0 in compensation in a year in which Tesla outperformed every other company in the S&P 500 (with a 743% gain). Musk’s net worth, however, skyrocketed higher with his 170 million shares in Tesla leading to an increase of over $100 billion in wealth.
5) Housing Boom 2.0
The housing boom continues with US Home Prices hitting all-time highs again, up 13% over the past year. This is the highest rate of increase since 2005.
Phoenix led all major metropolitan areas with an increase of 20% in the last year.
Phoenix was one of the hardest hit cities after the last housing bubble, falling 56% from its peak in 2006 to its low in 2011. It has now recovered all of those losses.
6) Sell the News
Pershing Square Tontine Holdings ($PSTH), the largest SPAC ever, announced a deal to buy 10% of Universal Music Group for $4 billion. Shares hit new lows after the news, down over a third from their highs in February.
7) The Herd Immunity Effect
The prevalence of covid-19 the US continues to plummet, with cases hitting a new pandemic low this week, down 95% from their high. In total over the last 2 weeks we’ve seen fewer cases than a single day at the peak of the virus in January.
The number of covid-19 hospitalizations continues to decline, hitting new pandemic lows now on a daily basis.
Here are current vaccination rates (1 or more doses) around the world…
And that’s it for this week. Thanks for reading.
Have a great Sunday!
-Charlie
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