Hello!
Welcome to week one of Nick Talks Stocks, a weekly newsletter where I cover financial news, stocks, and market trends. Each issue I will be giving a market overview, looking back on the happenings of the week prior, and going over expectations for the week ahead.
This week was quite eventful, with usual suspect Elon Musk playing with crypto markets in between his meetings about the future of humanity. Additionally, meme stocks had yet another resurgence, led by 150% gains for theater chain AMC. Growth stocks continue to see strength following a few months of selling, and weed stocks are poised for a solid month. June is looking promising.
As for next week, Tesla's Plaid event is scheduled for June 10th, which will be unveiling the long awaited Plaid Model S. The upgraded model is said to have broken the 1/4-mile speed record, which would beat the previously fastest Bugatti Chiron Sport—no small feat. CPI data and the federal budget for May are also set to be released on Thursday, which will give further insight into the current state of inflation.
Before we start, a few disclaimers. I am not a financial advisor and this is not financial advice. Do your own DD and always know what you own. Got it? Good.
Let's get started.
The markets remained mostly flat over the shortened week. U.S. indices moved less than 0.1%, yet some tech and growth stocks managed to outperform the market. Many of the previously oversold names have begun to breakout of their downtrend, and I foresee a bullish summer barring any major shock.
I expect renewables, particularly solar, to continue to rebound off their recent lows. The selloff was exaggerated, and with increased focus coming onto the infrastructure bill investors will be moving back into green energy stocks. The EV market also poses an opportunity, with over $100B set to be put towards EV infrastructure. Supply issues continue to plague auto manufacturers, which will hinder their efficiency until a solution is found. Regardless, I'm bullish on EVs and renewables for the foreseeable future.
Another area I'm watching is the SPAC market. SPACs got killed across the board following CCIV's controversial Lucid deal, with most coming close to their $10 PIPE price. This has created a massive opportunity to buy quality SPACs cheap before their merger. Particular tickers of note are VACQ (Rocket Lab) and FRX (Beach Body), which are both planned to merge before the end of Q2 2021.
Week In Review
Mr. Musk managed to turn the entire Bitcoin community against him with one tweet on Friday:
Heartbroken. Bitcoin proceeded to fall 6%.
This led to the usual outcry of crypto traders who apparently buy and sell based on one man's tweets. Musk's influence over crypto prices is certainly concerning for the market, but hey, it's not his fault people are being irrational. Buy the dip, you'll be fine.
In more, "official" news, the May jobs report came in on Friday, which was largely unspectacular. That's good. Unspectacular is good. Payrolls continued to rise, signaling a continued recovery from the COVID shock. The recovery for the bottom half of our economy is happening slower than for the top half, who have largely recovered already. Unemployment is still high despite a labor shortage, but wages appear to be closing the gap so that issue should resolve itself. U.S. Bond yields fell 4% following the report, as investors expect easy-money policy to continue for the time being.
Finance leaders of the G-7 nations met in London on Saturday, agreeing to a universal 15% corporate tax on large corporations. This comes after months of scrutiny over the profitability of our largest companies, such as Amazon and Apple. While the 15% minimum is already lower than most nations current tax rates, the deal certainly sets a precedent for international cooperation regarding the taxation of businesses. Smaller economies that rely on low taxes to attract investment are going to be hurt most by this decision. As for the effect on the stock market, I expect large cap stocks to have a bumpy week or two, but long term effects are going to be minimal.
Looking Ahead
June 10 is going to be exciting one way or the other. To start, Tesla is set to begin deliveries for the Plaid Model S alongside a debut event at the Fremont factory. Musk sure isn't shy about making these events memorable, so you never know what surprises await. The upgraded model starts at $120k, with the $150k Plaid+ being cancelled according to Elon’s recent tweet. The car is said to complete a 1/4-mile in 9.2 seconds which, if true, would be a new world record. One things for sure: these cars are a level up in both price and performance.
Thursday also sees the release of an abundance of economic data with the jobless claims, CPI numbers, and federal budget all coming in on the same day. Most investors will be eyeing the CPI numbers to get a read on the inflation situation. Numbers thus far have been high, but not quite alarming. I'll reserve my judgement for next week, but I'm not too worried.
Not many events of note outside of Thursday. Look for the short squeeze to continue along with the small cap growth plays. Tech markets will likely be stagnant due to the G-7 agreement, but the longer term uptrend is still intact. Markets have cooled off and are ready to rip over the summer. We'll see how Tesla reacts.
Until next week,
Great read! Looking forward to next weeks post, awesome work bro
Job apply pls