☕️ Amazon's apology

How to lose $8 billion in 10 days...
April 05, 2021 View Online | Sign Up

Daily Brew

The Motley Fool

Good morning. It's a great day to eat a whole chocolate bunny for breakfast and then regret it instantly.

MARKETS YTD PERFORMANCE

 
NASDAQ
+4.59%
13,480.11
S&P
+7.02%
4,019.87
Dow
+8.32%
33,153.21
Bitcoin
+101.42%
$58,415.94
10-Year
+80.1 bps
1.720%
Russell 2000
+14.13%
2,253.90
 

*Stock data as of market close, cryptocurrency data as of 4:00pm ET. Here's what these numbers mean.

  • Markets: On Mondays, we take the long-term view and show you different indicators' performance from the beginning of the year, including the small cap index Russell 2000. If history is any indication, the momentum for stocks could continue—April has been the S&P's strongest month on average over the last 20 years.
  • Covid: France lowered its economic growth projections as it entered its third national lockdown. India put more curbs on its biggest cities with cases rising. In the US, infectious disease experts warn we might be entering a fourth wave, although it'll be less deadly than past ones.

INVESTING

Markets Revert to the Meme

Nyan Cat

Giphy

Just a few weeks ago, we wrote about all the different "crazes" that have defined markets during the pandemic. Now, it seems like some of the more speculative corners of the investing world may be trending less Beeple, more Buffett. 

Let's start with NFTs, those non-fungible tokens that allow you to own an "original copy" of something on the internet, from an NBA highlight to a virtual house. 

  • How it started…in February, 20,000+ buyers spent more than $45 million on basketball clips in a single day.
  • How it's going...average prices for NFTs have tumbled 70% since their February high, per the NFT marketplace tracker nonfungible.com. 

Let's kick it to meme stocks, heavily shorted companies that are popular among many social media users.

  • How it started…GameStop began January around $17 a share, and at one point later that month closed at $347.51.
  • How it's going…after gaining almost 150% in January, an index that tracks meme stocks hasn't budged during the past two months, according to Bloomberg. 

Finally, we turn to SPACs. Special purpose acquisition companies have become an extremely popular way for companies to go public while avoiding the formal IPO process. 

  • How it started…last quarter, SPACs accounted for more than 25% of the total value of all deals in the US.
  • How it's going...one index that measures SPAC performance has entered a bear market, and SPAC pioneer Chamath Palihapitiya recently admitted, "The SPAC market has taken a real beating."

What's popping the bubbles? 

Seems like a collection of sharp objects: higher bond yields (and the threat of inflation), increased regulatory scrutiny (especially in the SPAC market), and simply that the novelty of these investments is wearing off.  

Others think the waning of the pandemic has a lot to do with it. As more people get vaccinated, they'll have other things to do besides sit at home and buy an NFT or trade on Robinhood. Google Trends shows that searches for "flights" are spiking while searches for "stock trading" are bottoming out.

Looking ahead...as we've seen with the resurgence of bitcoin following its 2018 collapse, just because interest in an investment class dies down now doesn't mean its star won't shine again. 

        

DELIVERY

Sorry, We Have to Talk About the Pee Bottles

A sign at the Amazon.com, Inc. BHM1 fulfillment center is seen before su...

Patrick T. Fallon/Getty Images

In a blog post on Friday, Amazon admitted to scoring an "own-goal" on itself and apologized to US Rep. Mark Pocan after initially denying that the company's delivery drivers had to pee in bottles due to being overworked. 

The backstory: A little over a week ago, Pocan tweeted that Amazon wasn't a "progressive workplace" because its workers had to urinate in bottles. Amazon News's Twitter account denied the claim, responding, "You don't really believe the peeing in bottles thing, do you?" Turns out, Pocan did. And he was right.

Not everyone can be Wendy's. Amazon's snarky Twitter replies are part of a broader effort from outgoing CEO Jeff Bezos, who encouraged company officials to push back against criticism of the company, reports Recode. In the last few weeks, Amazon execs have sparred with Senators Bernie Sanders and Elizabeth Warren, two of Amazon's biggest bashers.

Zoom out: Things might be a little tense in the Amazon boardroom right now as it awaits the results of ~6,000 votes that'll determine whether warehouse workers in Alabama will unionize.

        

WEALTH

How to Lose a Fortune in 10 Days

How to lose a guy in 10 days GIF

Giphy

Following last month's collapse of Archegos Capital Management, we're learning more about the epic rise and even epic-er collapse of Bill Hwang, the man behind the fund. According to Fox Business, the story of Archegos "may be one of the fastest creations and destructions of wealth in recent history." 

Who is he? Hwang moved to the US from South Korea as a teenager. Despite initially knowing little English, he got degrees at UCLA and Carnegie Mellon and landed a job on Wall Street under Julian Robertson, an investor who founded the pioneering hedge fund Tiger Management.

  • Hwang stayed under the radar, though in 2013 he was barred from managing public money for five years following an SEC investigation into insider trading and stock manipulation. 

But he was still able to manage his own money, and manage it well he did. Hwang grew his own business 900% over seven years using complex financial tools called swaps. He amassed a portfolio worth over $10 billion, per estimates.

Then, when Hwang's bets on companies like ViacomCBS started to sour, his lenders had to cover their obligations and he lost $8 billion in 10 days. It was the "biggest single-firm meltdown since the financial crisis," per the WSJ, and it's causing introspection in finance about the ability of private family offices to cause market havoc. 

        

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GRAB BAG

Key Performance Indicators

Japanese cherry blossoms

Yuichi Yamazaki/Getty Images

Stat: The cherry blossoms in Kyoto, Japan, had their earliest peak in more than 1,200 years of record-keeping this year. That's notable for two reasons: 1) They've been keeping records for 1,200 years and 2) experts say earlier flowering is a sign of a warming climate.

Quote: "You now have permanent capital competing with a young couple trying to buy a house. That's going to make US housing permanently more expensive."

Real estate consultant John Burns explained to the WSJ that institutional investors like pension funds are swooping in to buy single-family homes in the US, driving up prices and potentially creating another housing bubble. About 20% of buyers of new houses never move in. 

Read: The real reason humans are the dominant species. (BBC)

        

CALENDAR

The Week Ahead

ATLANTA, GEORGIA - MARCH 26:  A general view of The Battery Atlanta conn...

Kevin C. Cox/Getty Images

Georgia bill: After MLB said it's moving the All-Star Game out of Atlanta due to the state's new voting rights bill, everyone's wondering...what comes next? Will other companies make similar moves? GA Gov. Brian Kemp said he "will not be backing down from this fight," and a GOP representative is drafting a bill to remove the league's antitrust exemption.

Sports: After that thrilling Final Four game Saturday, the men's college basketball championship is tonight between heavyweights Baylor and Gonzaga. Stanford won the women's title in another wild game last night. And in the world of golf, the Masters tees off on Thursday after just a five-month wait since the last one.

PBS documentaries: Okay, we know PBS doesn't typically get a lot of play in the Brew, but there are some great docs you should know about. Ken Burns's documentary on Ernest Hemingway begins tonight, and the iconic series on race in America, Eyes on the Prize, is returning on Saturday.

        

WHAT ELSE IS BREWING

  • A hacker posted the personal info of 533 million Facebook users for free online. Facebook said it was old data from a vulnerability it patched in 2019.
  • Pinterest has reportedly been in talks to acquire the photo app VSCO.
  • GMC unveiled its new electric Hummer SUV. When it goes on sale in 2023, it'll cost more than $110,000.
  • Godzilla vs. Kong is the new pandemic box office king, earning $32.2 million this weekend in North America.

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Dive back into the week:

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GAMES

Satellite View

Which famous US landmark is being covered by the yellow rectangle? 

 

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ANSWER

Fenway Park. No one besides the Orioles had much fun there this weekend.

              

Written by Matty Merritt and Neal Freyman

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