🕵️ Solar eclipse & the market winners

Good morning Investor. As long as I kept my mental focus on destinations that were ahead, destinations that I had the audacity to dream might hold a red Ferrari of my own, I protected myself from despair. The future was uncertain, absolutely, and there were many hurdles, twists, and turns to come, but as long as I kept moving forward, one foot in front of the other, the voices of fear and shame, the messages from those who wanted me to believe that I wasn’t good enough, would be stilled.

— Chris Gardner, “The pursuit of happyness” Film

MARKET UPDATE

TODAY’S BIG HEADLINES

• Solar eclipse & the market winners

• This country is backing their currency with Gold

• Swiss banking crackdown

• TSM expands production outside of Taiwan

WORLD EVENTS

Solar eclipse & the market winners🕵️

Eclipse Alert! On April 8th, a celestial spectacle will grace the skies of the United States. Yes, we’re talking about the Solar Eclipse, a cosmic ballet that’s as rare as a politician’s promise. This astronomical extravaganza will be perfectly visible from Texas to Maine. Current estimates suggest that a whopping 30 million stargazers will be within the eclipse’s visibility belt. So, folks, get your popcorn and eclipse glasses ready!

Follow The Money: As expected, this cosmic event has triggered a mass migration of eclipse chasers, causing a surge in short-term rentals. The clear winners in this scenario are Airbnb (ABNB) and Booking Holdings (BKNG) with their Vrbo app, which is a competitor to Airbnb. It seems the stars have aligned for these companies, both literally and figuratively!

Ride and Shine: The influx of travelers has also revved up the engines of on-demand transportation providers like Uber (UBER) and DoorDash (DASH). With most of these travelers choosing to fly rather than drive, these companies are certainly riding high on the eclipse wave.

Turbulence Ahead? Guess who’s not having a good time? Boeing (BA), that’s who. Yet again, they’re making headlines for all the wrong reasons. A Boeing 737-800 flight operated by Southwest Airlines, flying from Denver, Colorado to Houston, Texas, had its engine cover, or more specifically, its engine “cowling”, come flying off during takeoff, hitting one of the wing flaps of the plane. With dozens of videos posted online, it seems Boeing’s troubles are eclipsing even the eclipse itself!

sources: (Independent), (Sky News), (Independent)

MACROECONOMICS

This country is backing their currency with Gold 💵

Golden Opportunity: Amidst the BRICS nations unveiling their shiny new gold-backed currency for international trade, Zimbabwe has decided to join the gold rush. Yes, you heard it right! Zimbabwe’s new national currency will also be backed by the glittering allure of gold.

Trip Down Memory Lane: Remember the Zimbabwean Dollar? The one that crashed so spectacularly that people were trading with 100 trillion dollar notes? It was a financial catastrophe that made the Weimar Republic look like a minor hiccup. After 2008, when inflation skyrocketed to a mind-boggling 500 billion percent (according to the International Monetary Fund), the currency became as worthless as a chocolate teapot. The collapse was so swift, even Max Verstappen would’ve been eating its dust.

The Nitty-Gritty: Enter the “ZiG”, short for Zimbabwe Gold. This new currency will start trading at an exchange rate of 13.56 to the US Dollar and will be fully backed by $100 million in cash and 2,522 kilograms of gold worth $185 million. These new banknotes will be hitting the streets by the end of the month. And here’s the kicker: to boost demand for the new currency, the government is enforcing a rule that 50% of any company’s tax obligations must be settled in ZiG. Now that’s what we call a golden rule!

sources: (Bloomberg)

FINANCIAL SECTOR

Swiss banking crackdown👨‍⚖️

Curtain Raiser: Picture this - it’s 2023, and Credit Suisse, one of Switzerland’s behemoth investment banks, is teetering on the brink of collapse. But just when it seemed like the banking sector was about to go belly up, in swoops UBS, like a superhero in a pinstripe suit, to contain the situation. Now, regulators are calling for a change in the rules for these financial Goliaths, often dubbed “too big to fail”. If that phrase gives you a sense of déjà vu, it’s because it harks back to the 2008 crisis!

Rulebook Rewrite: With UBS (UBS) now the last man standing in Switzerland’s banking big league, they’re squarely in the crosshairs of these regulatory changes. The upcoming report is expected to put capital requirements under the microscope, aiming to shield UBS from the kind of risks that brought down Credit Suisse. These changes could see UBS digging deep into its pockets, to the tune of tens of billions.

Tick-Tock, Tick-Tock: Swiss regulators have already set a new standard leverage ratio of 15%, a significant hike from UBS’s current 4.7%. This makes the Swiss Alps look like molehills compared to the standards in the US, EU, and UK, which are far more accommodative.

Déjà Vu, 2024?: For now, it seems regulators are pulling out all the stops to prevent a repeat of the 2008 banking crisis. But in true corporate giant style, UBS isn’t taking this lying down. They’ve plunged headfirst into lobbying policymakers, hoping to tip the scales in their favor. Will they succeed, or is it just a fool’s gold rush? Only time will tell!

sources: (The Banker), (Fortune), (CNBC)

MEGA CAPS

TSM expands production outside of Taiwan🛫

Globe-Trotting Chips: On a bright Monday morning, the grapevine was abuzz with news that Taiwan Semiconductor (TSM), the world’s largest chip maker, had struck a golden deal with Uncle Sam (US Government). This comes hot on the heels of factory shutdowns due to Taiwan’s recent earthquake. The deal? $6.6 billion in federal grants. Now that’s what we call a silicon jackpot!

That’s a lot of Cheddar: This hefty sum will be put to good use, continuing the construction of its initial two fabrication facilities in Arizona, and breathing new life into the company’s plans to spend a whopping $25 billion on setting up a third chip fabrication facility within the state. It seems TSM is not just making chips, but also dishing out the cheddar!

Need of the Hour? At present, Asia, primarily Taiwan, is the birthplace of 100% of the world’s advanced chips. These new facilities will shift some of that production to the US, significantly reducing the risk from geopolitical tensions i.e. with China, and Mother Nature’s temper tantrums in the form of earthquakes. It’s like moving your eggs to different baskets, but these baskets are worth billions!

Wall Street Whispers: The market seems to be cheering for TSM, with shares currently up over 1.6% on this news at the time of writing. And let’s not forget, the stock is already up a resounding 41% year-to-date. It seems TSM is not just making chips, but also making it rain on Wall Street!

sources: (Yahoo), (Sharecast)

EARNINGS

This Week’s Earnings Calendar📅

• Delta Air Lines (DAL) will report Wednesday.

  • Analysts estimate $12.55B in revenue (-1.64% YoY)

  • $0.35 in earnings per share (+40.00% YoY).

• Constellation Brands (STZ) will report Thursday.

  • Analysts estimate $2.10B in revenue (+5.11% YoY)

  • $2.09 in earnings per share (+5.56% YoY).

• Fastenal Company (FAST) will report Thursday.

  • Analysts estimate $1.91B in revenue (+2.74% YoY)

  • $0.53 in earnings per share (+1.92% YoY).

• JPMorgan Chase (JPM) will report Friday.

  • Analysts estimate $42.05B in revenue (+6.90% YoY)

  • $4.21 in earnings per share (+2.68% YoY).

• Wells Fargo & Company (WFC) will report Friday.

  • Analysts estimate $20.19B in revenue (-2.60% YoY)

  • $1.09 in earnings per share (-11.38% YoY).

• The Progressive Corporation (PGR) will report Friday.

  • Analysts estimate $17.65B in revenue (+30.42% YoY)

  • $3.11 in earnings per share (+378.46% YoY).

• BlackRock (BLK) will report Friday.

  • Analysts estimate $4.66B in revenue (+9.83% YoY)

  • $9.25 in earnings per share (+16.65% YoY).

• Citigroup (C) will report Friday.

  • Analysts estimate $20.41B in revenue (-4.84% YoY)

  • $1.22 in earnings per share (-44.29% YoY).

MORE NEWS

Additional market-moving events🌎

• Watch out Uber: Over the weekend, Elon Musk announced via twitter/X, that Tesla will be unveiling its Robotaxis on August 8th. (CNN)

• A stablecoin for everyone: Crypto firm Ripple, have announced their version of a brand new stablecoin, operating on the Ethereum network. (CPN)

• Spotify has turned a corner: Streaming giant Spotify have just announced a new CFO following the company’s recent subscription price hikes. (QZ)

• AI comes to the UK: Microsoft have just announced they will be creating an AI “hub” based in London. The U.K. is considered among the top-tier countries globally in terms of AI R&D investment, behind the U.S. and China, and with Google’s DeepMind also based in the U.K. (TC)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500.

Here’s how the two stocks have performed since then:

• Evolution AB: 1,303.00 SEK (📉-0.56%)

• Hims & Hers Health: $15.47 (📈+2.63%)

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