JC Weekly Brief – 29th March, 2021

by Jefferson Capital
March 29, 2021

Global Overview

Sino-American Tensions

Tensions between the U.S. and China are on the rise — and the sometimes impenetrable geopolitical issues are getting real for investors. The S&P 500 has dropped about 0.6%. The Shanghai Composite is down about 1.1%, and it’s hard to pin the move on geopolitical fears.

The tensions are having an impact on individual stocks, according to Barrons. Nike shares are down almost 4% in premarket trading after human rights activists scoffed at a statement by the company saying it was “concerned about reports of forced labour” in the Uyghur Autonomous Region, while Chinese consumers took to social media to call for a boycott of the company.

Drama at Suez

The 120-mile canal, which connects the Mediterranean to the Red Sea and narrows to 300 feet wide in some spots, remains blocked by a 1,312- ft. ship called the Ever Given operated by Taiwan’s Evergreen Group.

The canal accounts for 10% of global maritime trade and is used by ships carrying oil and natural gas as well as those transporting goods between Europe and Asia. An alternate route around Africa can add $450,000 per voyage.

Capital Markets


PX Last 1W YTD
United States
S&P 3 974.54 1.57% 7.39%
NASDAQ 13 455.64 1.82% 5.08%
Euro Stoxx 50 3 866.68 0.77% 7.31%
FTSE 100 6 740.59 0.48% 3.67%
DAX 15 231.25 1.06% 6.28%

New Lockdowns Drag the Market

Germany will lock down its economy during the coming Easter holiday as it tries to control another surge in coronavirus cases. Stocks are weaker because of it, just not as weak as you might expect.

Germany’s DAX is down 0.1%, and S&P 500 futures are down as well. What’s more, yields are falling as investors look to bonds for safety. The 10-year U.S. Treasury yield has slipped to 1.63% Tuesday, down more than a full percentage point from last week’s high. Rising bonds, falling stocks, and talk of restrictions all feel eerily familiar. But things are not as bad as they once were, despite the new lockdowns.

Game Stop Earnings

GameStop stock’s parabolic run has featured Reddit traders, short-selling hedge funds, and a wild amount of options activity. What it hasn’t included is an update from the company on its business prospects. Though the company announced three e-commerce hires, a new board committee chaired by Chewy co-founder Ryan Cohen. GameStop’s last update on sales was for the nine-week holiday period, released on Jan. 11.

Analysts expect same-store sales grew by 4.7% year-over-year during the fiscal fourth quarter, according to FactSet. Foot traffic data from Placer.Ai indicates visitor trends have been improving since the week of Feb. 22, which could be a good sign for the current quarter.

Private Equity & Venture Capital

WeWork Come Up With a SPAC

WeWork announced it has agreed to merge with special purpose acquisition company BowX. The deal values WeWork at about $9 billion, including debt. WeWork has roughly $2.2 billion in net debt, according to a March 2021 investor presentation.

Bow Capital Management, the SPAC’s sponsor, is run by Vivek Ranadivé, owner of the NBA’s Sacramento Kings. Adam Neumann, the founder of WeWork, is no longer on the scene. He left WeWork in 2019 after the IPO fell apart.

Large Sports Apparel Bet

Fanatics, a licensed sports apparel giant led by billionaire Michael Rubin, has more than doubled its valuation in just a few months after another funding round led by a Silicon Valley stalwart. A consortium led by Silver Lake has reportedly invested $320 million in Fanatics in a deal that values the online seller of sports apparel at $12.8 billion, according to a PitchBook estimate.

Existing backers like Fidelity Investments, Neuberger Berman, Thrive Capital and Major League Baseball also participated in the round, which will support international expansion, possible acquisitions and Fanatics’ e-commerce division.

Commodities & Digital Assets

PX Last 1 Week YTD
Brent Crude 64.57 -4.40% 24.65%
Gold 1 745.60 -0.49% -8.40%
BTC/USD 59 859.94 0.11% 98.85%

First U.S. Bitcoin ETF is On the Way

Fidelity has plans for a Bitcoin exchange-traded fund, expanding on the firm’s push into cryptocurrencies. The money manager is known for being one of the first high-profile names to take an early interest in the asset class. The fund’s sponsor is FD Funds Management, The ETF would be tracked by Fidelity’s own Bitcoin price-index, and Fidelity would be the custodian.

At least six companies have attempted to win approval from the Securities and Exchange Commission for a Bitcoin ETF in the U.S. in the past few years but were either rejected or withdrew their proposals.