6-Chart Saturday (12/26/20)

By Charlie Bilello

26 Dec 2020


6 charts from the past week that tell an interesting story in markets and investing…

1) A Billboard for Bitcoin

Congress had 9 months to figure out the finer details of the second stimulus bill.

So in typical fashion, they rushed a $900 billion bill to the floor last week that was nearly 6,000 pages long, and filled with many legislative spending items wholly unrelated to covid-19.

The bill passed in both the house and senate by large majorities, with little concern over the fact that it was “too big to read.”

Naturally, President Trump has not yet signed the bill, calling for higher amounts of free money ($2,000 per person vs. $600 in the bill).

The entire process and complete disregard for the ballooning National Debt ($27.5 trillion and counting) has become a walking billboard for Bitcoin…

2) SPAC Surge

2020 has been the year of the SPAC, with more than $83 billion in capital raised, a 6x increase over 2019…

Few investors are contemplating anything but exponential gains from these offerings as demand has never been higher.

Meanwhile, one of the most hyped SPACs of this year (Nikola, $NKLA) is providing a friendly reminder that risk still exists.

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3) The Beginning of the End of Covid

More than 1.9 million Americans have already received their first dose of the covid-19 vaccine, setting off the largest vaccination effort in history.

Source

With hospitalizations still rising and daily deaths at a new pandemic peak, the vaccines should start to turn the tide in the coming weeks/months as we approach herd immunity. This is the beginning of the end of this horrible scourge.

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4) Tech Party Like It’s 1999

Technology is leading all S&P 500 sectors for the 2nd year in a row with a 43% gain this year.

Following the 50% gain in 2019 this the 2nd best 2-year performance ever for Tech after 1998-1999.

5) Mortgage Rates and the Endless Bid

Mortgage Rates in the US hit another all-time low this week with the 30-year at 2.66% and the 15-year at 2.19%.

The Fed remains a buyer of mortgages at any price, throwing fuel on a housing market that is already on fire.

6) Be Careful What You Wish For?

While the Fed continues to say there’s no inflation and they must continue their extraordinary efforts to push it higher, the markets aren’t buying it. Expectations for future inflation continue their vertical ascent, now at a 20-month high.

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And that’s it for this week. Thanks for reading.

Wishing everyone a Merry Christmas and Happy Holidays. Have a great weekend!

-Charlie

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About the author

Charlie Bilello

Charlie is the founder and CEO of Compound Capital Advisors.

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