JC Weekly Brief – 22nd February, 2021

by Jefferson Capital
February 22, 2021

Global Overview

Rising Rates are After Stocks

Stocks have dropped due to a sudden surge in interest rates, as bonds attractiveness increases for investors. The yield on 10-year Treasury debtjumped to 1.31% which is associated with the White House’s intention of increasing government spending in order to support the economy while risking to create stronger inflation.

Analysts expect the 10-year Treasury yield to reach 2% by the end of 2021, as the higher yield would mostly affect tech firms as rising rates affect future cash flows, an important valuation metrics for growth companies.

Biden’s Extended Mortgage Relief

Government-backed home loans have been extended through June 30, as Biden’s administration is extending a moratorium on foreclosures. The extension plans could help more than 2.7 million homeowners who are active in mortgage forbearance plans. In Q4 2020 Forbearance plans have prevented more than 500,000 foreclosure initiations.

Capital Markets


PX Last 1 Week YTD
United States
S&P 3 906.71 -0.66% 4.01%
NASDAQ 13 874.46 -1.23% 7.65%
Euro Stoxx 50 3 713.46 -0.56% 4.53%
FTSE 100 6 624.02 -1.96% 2.53%
DAX 13 993.23 -0.82% 1.94%

Fixed Income

10 Year Week* YTD*
United States 1.69% 46.34%
United Kingdom 22.40% 270.48%
Germany 19.52% 46.29%
Switzerland 16.03% 52.96%
*Change in sovereign debt Yield

Buffet’s 13F

As quarterly SEC reports, known as 13F, have been published this week, fund managers are disclosing their positions and latest investment strategy amends. Berkshire Hathaway, Warren Buffet’s holding company, has omitted some confidential information in the previous 13F filling which was filed separately with the SEC.

The mystery has been revealed in the current 13F report, as the company added large stakes in Chevron and Verizon Communications. The disclosure news has sent both stocks higher by 3% and 5% outperforming the benchmark index.

Airbus Still in No-Fly Zone

Airbus fourth-quarter earning have not inspired its investors, as the company posted a drop of 35% in its adjusted EBIT and a 19% decrease in revenue. The plummet in the company’s performance is associated with 2021 guidance, as Airbus does not expect to deliver more aircraft this year.

The relatively modest reaction from market participants to Airbus’ announcedresults has resulted in only a 4% decrease in the stock price.

Private Equity & Venture Capital

ESG SPACs on the Rise

Sustainable and socially conscious SPACs have raised more than $5 billion in the past year, while ESG funds have seen a 67% year-over-year increase in total funds reaching over $1.6 trillion.

Investors are looking beyond electric vehicles and seeking even more sustainable options in order to address issues such as climate change. ESG SPACs range from sustainable batteries and carbon capture to agricultural programs.

Nestlé sells Water Companies for $4.3 Billion

Nestlé is set to sell eight of its water brands to private equity funds One Rock Capital and Metropolous & Co for $4.3 Billion. The deal does not include the company’s premium brands such as Perrier and San Pellegrino, but rather its less known brands.

According to Bloomberg, bottled water was the source of almost a tenth of Nestle’s revenue before the pandemic, while the company pledged to make its entire water-portfolio carbon neutral by 2025.

Commodities & Digital Assets

PX Last 1 Week YTD
Brent Crude 62.84 0.66% 22.40%
Gold 1 784.25 -2.19% -5.81%
XBT/USD 55 515 15.78% 92.06%

Polar Vortex Soars Gas Prices

Natural gas prices have seen a surge of around $200 – $300 per MMBtu as the winter storm has hit the U.S. The surge in gas prices have not affected natural gas or renewable stocks all that much, however, energy companies have seen price jumps as crude oil is up about 46% over the past three months.

As the winter havoc has taken place in Texas, the production and power supply of over one million barrels has been halted. Apart from that Texan Gulf Coast refineries, which have capacities of over 3.3 million, have been placed at a standstill.

New Record for Bitcoin

Bitcoin has climbed above $50,000 for the first time breaking yet another price surge record within the last 12 month. The digital currency has doubled in value within just two months amid big announcements of it becoming mainstream. From Tesla announcing its $1.5 Billion Bitcoin investment to Mastercard’s plans if integrating crypto payments into its ecosystem, have affected a sudden price jumps.

This time the surge is associated with MicroStrategy’s announcement, as the company is looking to sell $600 million of convertible bonds to buy crypto.