What's Happening

Global equity markets are mixed-to-higher with Hong Kong's Hang Seng index popping more than 1% for the second day in a row. U.S. futures look to open at record highs with small gains in store for the S&P 500 and the Nasdaq. Tech stocks are starting to re-emerge this spring after falling out of favor as investors warmed to recovery stocks.

Emerging markets, which were the hottest area of the global debt market in the fourth quarter of 2020, are also starting to cool. February and March saw the biggest net outflows from emerging-market bonds since the pandemic emerged last spring, as investors withdrew about $3 billion in each month, according to the Institute of International Finance.  South Africa, Indonesia and India saw the biggest outflows, and a lot of that money flowed into U.S. Treasuries, pushing down long-term bond yields. Emerging market equities are also just starting to see outflows, but they are small compared to bond sales.

The U.S. stock market has certainly seen its changing of the guard in 2021. What was down a year ago is now up, and by a lot. Like last year, investors over-sold some sectors like airlines, cruise lines and oil companies. In 2021, they may be over-buying them, as the recovery picks up pace.

Chart courtesy: YCharts

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Today’s Headlines

• 744,000 Americans filed for first-time unemployment claims last week, higher than the 694,000 expected by economists. This comes after last Friday's blockbuster March payrolls report, which showed 916,000 jobs added.
• The U.S. Treasury Department has published details of its plan to raise taxes on companies in order to pay for the $2.3 trillion infrastructure bill over 15 years. Besides raising the corporate income tax rate to 28%, the administration wants to make changes to the GILTI regime and impose a 15% minimum tax on companies with income over $2 billion. The U.S. is also currently pushing for a global taxation deal and wants the OECD to expand its ongoing discussions on a digital tax treaty to include all businesses.
• Uber is spending $250 million in the U.S. on incentives and guarantees for drivers in a bid to attract them back to its platform. It said the market has improved in 2021 and there is a shortage of drivers currently, which means higher earnings for those on the road. Ride-hailing trips globally exceeded 1 billion for the first time since Q1 2020 in Q4 2020, but revenue from the segment was still 52% lower year over year at $1.5 billion.

·         Apple's production of some MacBooks and iPads has been delayed due to supply chain issues, reported Nikkei Asia. MacBook production was postponed due to semiconductor shortages, and some iPad assembly was postponed because of a shortage of displays and display components, sources said.

·         Sneaker reselling marketplace StockX was valued at $3.8 billion in its latest funding round, a 35% increase from its valuation in December 2020. It reported $1.8 billion in gross merchandise value (GMV) and GAAP revenue of over $400 million last year. CEO Scott Cutler said "fundamental shifts in consumer buying and investing behavior provide an immense growth opportunity."

• U.S. consumer credit increased by 7.9% in February (seasonally adjusted, annualized) as the economy recovered, according to the latest Federal Reserve data release. This exceeded economists' expectations and is the biggest jump since 2017. Revolving credit increased 10.1% to $974 billion, a sharp reversal after consecutive declines over the last year. Non-revolving credit rose 7.3% to $3.2 trillion.
• Piper Sandler's semi-annual Generation Z survey with 7,000 teen respondents revealed a female-led spending recovery with upticks in clothing, handbags and skincare in particular. Teen "self-reported" spending improved 1% to $2,165 per year. Nearly 40% of preferred apparel brands are "athletic" with Nike in the No. 1 spot, which it has held for over 10 years. Areas of wallet share contraction are concerts/events and cars. Tapestry, the owner of top ranked handbag brands Kate Spade and Coach (see chart below), is climbing in pre-market trading today.

Image courtesy: Piper Sandler