Bazooka Bubble or No?
Peloton and Tesla, two of the most popular stocks among retail investors over the past two years, have had different fates recently. Peloton dropped over 35% on Friday, which reduced its market valuation by $9.2 billion. Meanwhile, Tesla added $302 billion to its market value in a mere six days of trading. That is the equivalent of adding the entire value of Walt Disney.
The Labor shortage and rising wages may lead to an acceleration in the amount of automation companies pursue. Over the past decade the number of industrial robots in factories has more than doubled. However this trend has now expanded to other sectors with spending on professional service robots rising 12% from 2019 to 2020.
During the pandemic American households increased their savings by over $2 trillion. This has led to more consumer confidence and spending. In fact, data from Bank of America shows that card spending increased by around 20% from 2019. However, this spending was disproportionately seen among wealthier households. Families earning less than $50K annually reduced spending significantly when the emergency unemployment benefits ended in September.
Many analysts are starting to worry that the stock market is hitting “bubble-like” territory. Although the S&P500 currently trades at 21.6x forward earnings, it is closer to 33x if calculated based on market cap. Additionally, the Nasdaq 100 has been up in 16 of the last 18 days and has risen for two weeks straight, which has only happened once before (in 2017).
Reuters – Peloton’s value drops $9.2 billion as Wall Street predicts tough road ahead, Barrons – Tesla and Other Pricey Stocks Rallied Hugely This Week. How to Play a Market Bubble
Bloomberg – Rise of the Robots Speeds Up in Pandemic With U.S. Labor Scarce
Bloomberg – Turbocharged U.S. Consumer Plays Key Role in Supply-Chain Snarls
Barrons – Tesla and Other Pricey Stocks Rallied Hugely This Week. How to Play a Market Bubble, Bloomberg – As Stock Markets Set News Records, Hedge-Fund Managers Aren’t Buying the Frenzy
Tuesday: NFIB small-business index (Oct), PPI final demand (Oct)
Wednesday: CPI (Oct), Core CPI Q3, Wholesale inventories (Sept), Federal budget (Oct)
Friday: Job openings (Sept), UMich consumer sentiment index (Nov), Five-year inflation expectations (Nov)
NIKKEI 29,507 -0.35%
Yen $113.442
Monday - COTY, CLOV, REAL, LMND, RBLX, PYPL, SPCE, TRIP, SDC, AMC, ZNGA
Tuesday - APRN, WKHS, PLTR, DASH, POSH, COIN, VRM, FUBO, PLUG, WYNN, NIO
Wednesday - DIS, OPEN, COMP, BMBL, WISH, AFRM, GTII, SOFI, BYND, FIGS, ME
Thursday- TPP, YETI, OGN, BLNK
Friday - BKKT, WRBY