Dow Jones: 33,892 (-0.49%)
S&P 500: 4,373 (-0.24%)
Nasdaq: 13,751 (+0.41%)
Russell 2000: 2,048 (+0.35%)
Bitcoin: $41,742 (+12.36%)
Ethereum: $2,825 (+9.87%)
Another day, another volatile ride… U.S. stocks did their best sound wave impression today as the markets continued to react to geopolitical news. The VIX volatility index is hanging right below the 30 level.
The Dow was able to largely rebound from a near-500 point decline and the Nasdaq + Russell actually finished in the green despite struggling to establish a directional move throughout the day.
Earnings: Zoom crashed by over 10% after-hours, despite authorizing a $1 billion share buyback program. Investors were disappointed by the forward guidance.
Industry Moves: Defense stocks like Lockheed Martin and Northrop Grumman surged 6.7% and 7.9%. Cybersecurity stocks like Crowdstrike (CRWD) also surged 7.4%. Banks like JPMorgan (JPM) and Citigroup (C) fell over 4% as the 10-year yield drifted lower to 1.83%.
Welcome back, Bitcoin… BTC reclaimed the $41K level as the broader crypto market surged 7.7% to $1.85 trillion over the last 24 hours. Traders see BTC resistance at $43K and $46K.
Now, for the top stories of the day…
Source: Heat Map & Sector Performance — Finviz.com
Tesla’s Giga Berlin is Just One Step Away From Big Production
Tesla’s Gigafactory news today is making many GigaChads very happy.
The company just announced that it will finally be receiving final approval to start production at Gigafactory Berlin after tons of delays over recent months. Naturally, Tesla stock (TSLA) rose 7.48% on the day despite the broader market selling off.
Here’s the latest:
- The environmental ministry in Brandenburg, Germany is in the final phase of the approval process for Tesla’s factory.
- Once Tesla is able to secure the necessary environmental permits from the German government, the company will be able to start full-scale production… The approval is expected by the end of this week.
The approval process has been nothing short of slow for Tesla, but that doesn’t mean the last few months have been totally unproductive at Giga Berlin. By the end of 2021, Tesla had already built a few Model Ys there, and received approval to build 2,000 more ahead of the final regulatory approval.
- What they haven’t been able to do yet is actually deliver vehicles to customers… but the company hopes to be able to do so by mid-March.
Why does this matter? With a semi-truck, Cybertruck, new car models, and goals to make an affordable $25,000 model, Tesla’s Gigafactories are what will be the main drivers of the company’s production capabilities and growth…
And not just growth with regards to EVs. Of the 4 Gigafactories already operational (Nevada, New York, Shanghai, Austin), Giga New York is focused more specifically on creating solar energy.
- As more of these factories pop up around the globe, Elon Musk and Tesla will have an easier time at developing and distributing more technologies to serve the needs of their customers worldwide.
Other Tesla news: Bernstein is struggling to justify Tesla’s valuation, citing profit margins as an area of concern. But the firm did concede a bit on their bearish price target. Bernstein raised its price target from $300 to $450 today while keeping its “underperform” rating on the stock.
Russia, Ukraine, and Everything That Happened Over the Weekend
The Russian invasion of Ukraine is now 4 days in, and a lot has happened over the weekend. Let’s get caught up to date on the latest developments of this unfolding war.
SWIFT: Over the weekend, Western nations announced the removal of “selected Russian banks” from SWIFT, a critical international banking tool. It’s worth noting not all Russian banks will be hit, but this will limit Russia’s ability to operate globally.
Nuclear: On Sunday, Putin decided to pull the “nuclear card” putting Russia’s nuclear deterrent forces on high alert due to “aggressive statements” by NATO. The situation in Ukraine certainly isn’t going Russia’s way and Putin seems to be running out of options, so many believe this is a major bartering chip Putin is throwing on the table.
Latest Peace Talks: Today, the first round of peace talks between Russia & Ukraine started on the Belarus border. It doesn’t seem as if anything has come from talks yet, but both sides have agreed to keep negotiations going. Ukraine’s President Zelenskyy has said surrender is not an option.
Economy, Market, Currency, and Bank Run: The Russian MOEX is currently down roughly 21%, after dropping 45% Thursday but recovering 20% on Friday. Russia had been stockpiling. The Russian market was closed today, but globally listed shares traded abroad.
The NYSE and Nasdaq halted trading in Russian-based companies but ETFs like the VanEck Russia ETF (RSX) fell 30%. The Russian Ruble is now down 27% since tensions began.
The instability has caused a bank run as Russian citizens look to withdraw cash to protect themselves. Russia also announced it would resume gold buying as it looks to protect its $1.5T economy, along with other actions.
Sanctions: At this point it seems any sanction that could be placed on Russia has been placed. Nato is running out of options at this point, but they are yet to hit Russia where it hurts, energy. Russian oil and gas is still relatively untouched, its unsure what it would take for these actions to happen, but this would certainly be the most economically devastating option.
Happening Back Home: U.S. markets are showing weakness right now, but the U.S. economy is still “super strong” according to TCW Group’s Diane Jaffee. She points to the recent action in the Russell 2000 as being mostly domestic-based vs the bigger global-vulnerable indexes.
Bloomberg released a report on what energy sanctions on Russia could mean for U.S. consumers. Mild scenario “Higher energy prices and tighter financial conditions take most hawkish seven hike path for Fed off the table.” Severe scenario “energy spike combines with unanchored inflation expectations and Fed has to tighten as demand slows.”
Lordstown Motors Just Crashed… Why Investors are Disappointed
Lordstown Motors shareholders are definitely not in the mood for jokes today… but their portfolios are certainly going on a wild RIDE today. Lol. Sorry.
Today, Lordstown announced in its Q4 earnings call that it expects to produce and sell just 3,000 vehicles through next year, including 500 vehicles this year as retail production starts up during the third quarter.
- This production target is coming a full year behind company expectations when it first went public through SPAC in October 2020.
- RIDE shares fell 19.9% today on the news…
Just about no one is happy with this — Back in 2020, Lordstown expected to build 2,000 Endurance EV pickup trucks in its first year and 32,000 units in the next. Obviously, that didn’t end up working out…
And the company’s Q4 earnings call didn’t seem to give investors much more confidence either.
- RIDE’s net loss widened in Q4 to $81.2 million.
- The EV-maker incurred a total of $115 million in expenses during the quarter.
- For business operations, the company said it needs to raise nearly $250 million this year (including tooling and production costs).
A minor change of plans… The Endurance pickup was initially supposed to be produced at Lordstown’s plant in Ohio. But the company decided to sell the plant to iPhone-maker Foxconn in order to raise cash last November.
But the deal isn’t done just yet — and executives have made it pretty clear that finalizing it is imperative to Lordstown’s success. CEO Dan Ninivaggi says that “We need to bring that to a conclusion and I’m hopeful we’ll get there.”
Jamie Dimon is Going All-In on Private Companies
Jamie Dimon and JPMorgan Chase are scratching their VC itch in a big way.
Over the past year, JPM has been hiring tons of programmers and pumping out new products for a new fintech business, with the hopes of bringing services to start-ups and investors around the world.
Sounds a bit vague, right? Well, that’s because no one’s really been talking about it much… So let’s dive in.
- The business is known as “Project Bloom” and was created with the goal of helping early-stage private firms grow.
- Michael Elanjian, the head of digital private markets at JPM, is at the helm of the project.
JPMorgan CEO Jamie Dimon is looking to beat fintech firms to market with a service-oriented business that could really ‘win’ in the private-markets space… and he wants to do it before other start-ups and banks try to capitalize on the opportunity.
- Last month, JPM said that its expenses would be surging this year — the technology budget alone has grown to at least $12 billion and Dimon is committed to investing heavily in this new opportunity.
So what would the business actually look like? (And how would JPM shareholders benefit?)
Imagine a one-stop digital portal for start-ups and venture capital firms, family offices, and institutions. That would be pretty cool and convenient, right? Jamie Dimon thinks so, too.
JPMorgan sees a self-service platform being super successful — namely because it would bring exposure and guidance to earlier-stage companies and entrepreneurs that bankers would usually ignore.
Tapping a booming private market… The number of private company “unicorns” has doubled since the start of the pandemic, now sitting around 1,032 businesses with a total value of $3.4 trillion (according to CB Insights).
- JPMorgan hopes to scale a private company network before anyone else… putting it ahead of the fintechs as well as other bank competitors, which generally cater to public companies.
Bitcoin Just Blew Up… Here’s Why
Bitcoin just blew up! Some people thought that the second infamous “crypto winter” would be starting soon, especially given the current geopolitical landscape causing institutional investors to take an even more aggressive risk-off approach to their portfolios.
But if you look at the price of BTC… whoever went short over the last week is licking their wounds. Bitcoin is trading above $41,000 at the time of writing (up 12% over the past 24 hours).
Here’s one reason why the crypto markets have been blowing up:
- Surging trades: From the Canadian-American border to the Russian-Ukrainian, crypto’s use cases have been shining as banks attempt to block transactions across the globe.
- The Ukrainian government is using millions in crypto aid to purchase critical supplies.
- Russians are trying to secure their funds in crypto as sanctions are set to disrupt the banking system. The Russian ruble currency has been collapsing amid the military conflict.
- The Canadian trucker protest was able to raise nearly $1 million in Bitcoin after GoFundMe blocked donations a few weeks ago.
And it doesn’t seem like institutional interest is going away anytime soon, at least as a longer-term concept. Despite the risk-off trend in the short term, institutions dominated the crypto market in 2021, trading $1.14 trillion worth on Coinbase Global versus retail’s $535 billion total.
- That total is up nearly 10X from 2020, when institutional investors traded just $120 billion worth of crypto.
So… Winter isn’t Coming? BoA analysts say that a true crypto winter is highly unlikely given the level of user adoption and growth in development activity in the space as a whole. Even so, the bank thinks that macro headwinds will still limit cryptocurrency upside.
UpStart (UPST) +16.27% – UpStart was up on no news today, speculation is that investors are jumping into the beaten-down stock for the long run.
PlugPower (PLUG) +11.95% – Clean energy stocks jumped today alongside the oil surge as alternative energy sources take the spotlight amid the Russian crisis.
Nio (NIO) +9.22% – Chinese EV maker Nio announced plans today for a secondary listing on the Hong Kong market.
Citigroup (C) -4.47% – Financials slide today as Treasury yields fall over latest Russian sanctions and SWIFT actions. Citi also disclosed nearly $10 billion in total Russian asset exposure.
Delta (DAL) -3.90% – Delta stock fell today after suspending codeshare agreement with Russia’s Aeroflot.
TSMC (TSM) -3.75% – TSMC continues to fall amid Taiwan-Chinese tensions in the wake of Russia’s invasion alongside a halt in shipments to Russia. The stock is down 8% since the invasion.
Virgin Orbit (VORB) – Canaccord initiated coverage of Virgin Orbit as a buy seeing an “exceptional” market opportunity. “Virgin Orbit is one of just three commercial launch operators that has carried out multiple consecutive orbital missions (three to date). Being in the same exclusive club as Rocket Lab (RKLB) and SpaceX has enabled the company to aggressively take share in the small-launch market, which primarily serves the high-growth satellite-services ecosystem developing in low-Earth orbit.”
Toll Brothers (TOLL) – Bank of America doubles Toll Brothers from underperform to buy seeing a favorable risk/reward. “In our year-ahead report we noted that homebuilders stocks could face a challenging setup with rising interest rates, but valuations are now trading at the low end of the historical range and [the] spike in mortgage rates is now already well known to investors.”
Block (SQ) – BMO upgraded Block from market perform to outperform seeing organic revenue upside. “We also expect SQ will surprise positively on growth and earnings; our SQ model is more bullish than consensus due to out-year forecasts for a softer landing for Cash App (faster user growth and broader product monetization) and Afterpay accretion to revenue growth.”
Quote of the Day: “I don’t need a ride, I need more ammunition” – Ukrainian President Volodymyr Zelenskyy
Fun Fact: Elon Musk did not start Tesla. The company was founded by Martin Eberhard and Marc Tarpenning, although current CEO Elon Musk led the first investment round in February 2004. At that point, he joined the company’s board of directors as Chairman.
- Famous investor Bill Ackman says it’s time for U.S. troops to defend Ukraine
- AMC says it will accept Dogecoin and Shiba Inu next month
- Citi Bank discloses it has a $9.8 billion Russia exposure, one of the highest among US banks
- TD Bank to buy First Horizon Bank in $13 billion deal
- Toyota suspends domestic factory operations amid suspicious cyber attacks