5-Chart Friday (2/12/21)

By Charlie Bilello

12 Feb 2021


This week’s post is sponsored by YCharts. Mention Compound to receive 20% off your subscription when you initially sign up for the service.

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1) No Inflation?

The US Federal Reserve says there’s “no inflation,” pointing to metrics like the CPI (consumer price index) which is up only 1.4% in the past year.

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They argue that in order to achieve higher inflation (their stated goal), they must continue holding interest rates down at 0% for a few more years and continue growing their balance sheet to record highs (now at $7.44 trillion, up $3.3 trillion in the past year).

Is the CPI a good measure of overall price increases over the last year, particularly asset prices? You be the judge…

The bond market is placing their vote, with inflation expectations now at their highest level in 8 years.

2) Tesla Buys Bitcoin

Bitcoin took another leg higher this week after Tesla announced that it had bought $1.5 billion of the cryptocurrency and will start accepting it as payment. That brings its year-to-date gains to 63% and adds another positive narrative to its story.

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3) Everyone Gets a SPAC

The SPAC IPO boom continues with more than a billion a day in new issuance since the start of the year. At the current pace, we’ll pass last year’s record total by March.

With free bags of money on the table, celebrities and athletes are joining the party.

What’s driving this trend?

Record demand from investors, who now have the highest appetite for risk that we’ve seen since 2000. The first-day gains of SPACs this year (+6.5%) is reinforcing the belief that this is a “can’t lose” proposition.

What about the can’t lose trade in GameStop (which is now down 90% from its high)? They’ve moved on to greener pastures…

4) Social Media Boom

While everyone was stuck at home in 2020, they turned to social media. All of the major players saw stunning increases in users.

In turn, investors have revalued these companies, with the social media ETF ($SOCL) up 112% in the past year.

5) Covid Decline Continues…

Covid-19 Hospitalizations in the US have now declined 30 days in a row..

The number of new covid-19 cases per day is down 59% from its peak on January 11 (244k –> 101k).

11% of the US population has now received at least 1 dose of the Pfizer/Moderna vaccine, with the pace of vaccinations continuing to trend higher (>1.6 million per day over the last week).


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

Have a great weekend everyone!

-Charlie

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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For our full disclosures, click here.

About the author

Charlie Bilello

Charlie is the founder and CEO of Compound Capital Advisors.

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