JC Weekly Brief – 4th May, 2021

by Jefferson Capital
May 4, 2021

Global Overview

Strong Spending Rebound

Major stock indices are trading in the red, as there is regular profit- withdrawing at the end of the month. Investors are taking a break after the publication of strong reports for the first quarter of 2021 and positive macroeconomic statistics.

The published data on personal spending of Americans in March has shown an increase by 4.2% month over month, as it has beaten the forecast. As with previous spending hikes, the increase in personal spending was largely due to an increase in government social benefits.

Interest Rate Kept at 0%

The US Fed meeting has once again illustrated the agency’s willingness to stabilize the economy as it has kept the interest rate on federal loan funds in the range from 0% to 0.25% per annum.

This decision is relevant until conditions in the US labour market match the Fed’s notion of full employment and inflation reaches 2% and is on track to be moderately above 2% for a while. This decision coincided with the forecasts of economists and market participants.

Capital Markets


PX Last 1W YTD
United States
S&P 4 192.66 0.03% 11.62%
NASDAQ 13 900.94 -0.39% 7.86%
Euro Stoxx 50 4 000.25 0.12% 12.60%
FTSE 100 6 969.81 0.45% 7.88%
DAX 15 236.47 -0.94% 11.06%

Earning Beats Continue

Alphabet, Amazon, Apple, Facebook and Microsoft have performed better than anyone could have dreamed of in the past year and are still a good buy according to Analysts. While these are not the same furious deals as they were a year ago, there is reason to believe that there are no better stocks that could play the most important changes in technology.

Revenue in the March quarter was up 50% for Microsoft Azure, 46% for Google Cloud, and 32% for market leader Amazon Web Services. These businesses have become the modern data centre. There’s no reason to think growth will slow any time soon. Were they stand-alone businesses, they would be the three largest enterprise-software pure plays on Earth.

Boost for Green Stocks

Wind energy could create 3.3 million jobs in the next five years, according to the industry body of the Global Wind Energy Council. Around the world, governments are setting targets to reduce emissions and increase the use of renewable energy sources.

The US has announced its intention to increase offshore wind turbine capacity to 30 GW by 2030, the UK to 40 GW, and the European Union to 60 GW by 2030 and 300 GW by 2050. The new initiative towards renewable energy shifts could be another potential catalyst that will boost the market’s interest in green energy stocks.

Private Equity & Venture Capital

SPAC Craze Under Control

The SEC is reportedly weighing stricter rules to curb the wild predictions made by SPAC as the blank check craze slows. In a traditional IPO, a company cannot use forward-looking forecasts to support its valuation. But at SPAC, the company could show projected revenue figures and generate its future earnings, which could pose a risk to investors.

Goldman Sachs noted that The Defiance Next Gen SPAC Derived ETF, which consists of more than 200 US-listed SPACs and de-SPACs, has underperformed the S&P 500 year-to-date. As of Wednesday, the ETF is down nearly 9% in 2021, compared to the S&P 500 which is up 11.68%.

Blockchain Startup Partners with PayPal and Credit Suisse

Blockchain startup Paxos has raised $300 million at a $2.4 billion valuation to grow its infrastructure platform for cryptocurrency payments. The haul comes less than five months after the startup raised $142 million. In addition to backing Paxos, PayPal is also among the New York-based company’s prominent customers, which also include Credit Suisse, StoneX and Revolut. Users of PayPal subsidiary Venmo can buy, hold and sell cryptocurrencies using Paxos’ infrastructure.

Last week, the Office of the Comptroller of the Currency gave Paxos preliminary conditional approval for a national trust bank charter. The company has said the charter will add another layer of regulation and make it easier to operate across state lines.

Commodities & Digital Assets

PX Last 1 Week YTD
Brent Crude 67.56 0.98% 28.88%
PX Last 1 Week YTD
Gold 1 793.20 -0.45% -7.37%
BTC/USD 55 719.43 11.63% 91.90%

Recovery for Oil is Still Ahead

Quotes for oil futures are showing a fall largely due to weak macroeconomic statistics in China. The business activity index (PMI) of the manufacturing sector was 51.1 points in April compared to 51.9 points in March and on the expectation of the index growth to 55.9 points.

Data of more than 50 indicate an increase in business activity in the industrial sector, but in this case, the indicator characterizes a slowdown in the growth of the manufacturing sector.