Kitty Time

Global equity markets are mostly lower ahead of U.S. weekly jobless claims, but all eyes will be on Roaring Kitty and his day trading testimony.

To view this email as a web page, click here. By Caleb Silver, Editor in Chief & Deborah D'Souza, News Editor By Caleb Silver, Editor in Chief & Deborah D'Souza, News Editor     FEBRUARY 18, 2021 1/ What's Happening 2/ Today's Headlines 3/ The Big Story: 'Roaring Kitty' Takes the Stand 4/ The Big Number: Global Debt at Record Levels 5/ World Market Indices 1/ FROM THE EDITOR'S DESK What's Happening Global equity markets are almost all in the red except for the Shanghai Composite, as mainland China's markets reopened after the Lunar New Year celebration. European markets are slightly lower following mixed earnings results from Airbus, Credit Suisse, Barclays and Daimler. U.S. futures look to open lower as Walmart reported mixed earnings results, and U.S. weekly jobless claims are set to be released. Layoffs are slowly slowing, and retail sales are growing, but so is household debt. Consumers and nations are on a historic borrowing spree (more below).   Bitcoin smashed through $52,000 yesterday as BlackRock, the world's largest asset manager with a mere $8.5 trillion under management, said it is "dabbling" in the cryptocurrency. BlackRock doesn't dabble... it dominates. Ethereum and other altcoins have been rallying along with Bitcoin, but Satoshi's original creation gets all the attention.   Oil prices continue to climb as the U.S. Midwest and Texas begin to thaw from a deep freeze that shut in energy production and caused natural gas and electricity prices to spike to unprecedented heights. It usually takes a couple of weeks for rising oil prices to translate into higher gasoline prices at the pump. That's starting to happen, and that's the kind of inflation that consumers feel the most.     Chart courtesy: GasBuddy.com 2/ QUICK HITS Today's Headlines Walmart announced mixed results for Q4 and a 2% annual dividend hike. Revenue reached a record $152.1 billion as U.S. comp sales increased 8.6%. Adjusted EPS fell short of forecasts at $1.39. COVID-related costs were $1.1 billion, and the retailer's decision to repay U.K. property tax relief lowered EPS by $0.07. Palantir Technologies stock is falling this morning ahead of its IPO share lock-up period expiring today. According to Bloomberg, four-fifths of shares will become eligible to trade when the market opens. The big data surveillance company recently disappointed investors with its fourth quarter results. U.S. job postings on Indeed.com were 3.9% above the pre-pandemic baseline of February 1, 2020 as of last week. It marks the second week in a row where postings improved at a rate similar to last summer's bounce back. Postings were especially strong for pharmacy, nursing, and medical technician jobs thanks to the vaccine rollout. Facebook and Google have chosen two very different paths in Australia as the government mulls forcing social media platforms to pay news publishers. Facebook will prevent users from viewing or sharing news, which makes up less than 4% of the content Australians see in their News Feed. Google, despite threatening earlier to pull its product out the country, has signed a three-year agreement with Rupert Murdoch's News Corp.. Shares in cannabis company Tilray are higher in pre-market trading after it announced a smaller loss and higher revenue than expected for the previous quarter. Sales rose 26% year over year to $210.5 million in the full year 2020. Its deal to acquire rival Aphria will close in Q2 2021 and create the world's largest cannabis company based on pro forma revenue. Ethereum, the world's second-largest cryptocurrency after Bitcoin, hit a new all-time high above $1,900 this morning. It is up 3% in the last 24 hours and has returned close to 160% so far this year, according to CoinDesk. While charitable giving in the U.S. grew by just 2% to $40.7 billion in 2020, online giving surged by 20.7% to $3.2 billion, according to Blackbaud Institute's report tracking 8,833 nonprofit organizations. Fidelity Charitable, the non-profit arm of Fidelity Investments, said its donors gave a record $9.1 billion in 2020, 24% more than 2019, from their charitable accounts. 68% of the contributions to these accounts were non-cash assets, which minimizes capital gains taxes. Crypto contributions doubled to $28 million. The Human Services subsector (food, housing, job training etc.) saw the biggest increase in donations last year.     Image courtesy: BlackBaud Institute 3/ THE BIG STORY GameStop Short Squeeze Lawsuit and Congress Testimony     Image courtesy: Showtime/Giphy Today lawmakers in Congress will hold a virtual hearing to dissect the frenzied stock market activity from a few weeks ago involving "meme" stocks like GameStop, Bed Bath & Beyond and AMC. Testifying will be Robinhood CEO Vlad Tenev, Citadel CEO Kenneth C. Griffin, Melvin Capital Management CEO Gabriel  Plotkin, Reddit CEO Steve Huffman, Cato Institute Director of Financial Regulation Studies Jennifer Schulp, and individual retail investor Keith Gill, who goes by usernames "DeepF***ingValue" and "Roaring Kitty" on Reddit, YouTube and Twitter.   The hearing titled "Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide" can be watched here live starting at 12:00 p.m. ET.    While a lot of the anger from retail traders, politicians and celebrities has been directed towards online brokers and hedge funds, Gill has been included because his GameStop investment made him a multi-millionaire overnight and his large social media presence is believed to have influenced other traders to buy the stock.   "My investment skills had reached a level where I felt sharing them publicly could help others," said the 34-year-old defending his actions in prepared testimony released yesterday. Gill is also being sued for securities fraud in federal court. The class action lawsuit accuses the Chartered Financial Analyst (CFA), who until recently worked for insurance giant MassMutual, of manipulating the market and misleading people online by posing as an amateur investor. "He caused enormous losses not only to those who bought option contracts, but also to those who fell for Gill's act and bought GameStop stock during the market frenzy at greatly inflated prices," says the suit.   Robinhood Has Some Explaining to Do Meanwhile Robinhood, which limited buying activity during the episode, is arguing realtime settlement of securities instead of the T+2 trade settlement period will allow it to meet its clearinghouse financial requirements and prevent such an incident during volatile periods in the future. Its smaller rival Public, which recently stopped participating in the practice of Payment for Order Flow (PFOF), announced yesterday it has crossed one million members and raised an additional $220 million in funding.   If you're looking for an update on the happenings at Reddit forum WallStreetBets, the most mentioned stocks in the last 24 hours are GameStop, Palantir, Riot Blockchain, Tesla, Aphria and Tilray. Here's some of their performances over the last week. Chart courtesy:  YCharts 4/ THE BIG NUMBER $281 trillion That's the total global private and public debt at the end of 2020, according to the Institute of International Finance. It's at a record high, and last year's increase of $24 trillion makes up over a quarter of the $88 trillion rise over the past decade. More than half of the increase came from government debt as countries announced massive fiscal stimulus packages.   As a result of the historic health crisis, global debt-to-GDP ratio surged by 35 percentage points (%pts) to over 355% of GDP in 2020, dwarfing the 10-15% pts increase during the global financial crisis. The countries with the biggest increases in debt-to-GDP ratios were mainly mature markets, led by France, Spain, and Greece. In fact, Switzerland was the only mature market that avoided an increase. Global government debt has climbed to 105% of GDP, up from 88% in 2019, and non-financial private sector debt (household and corporate) hit 165% of GDP in 2020, up from 124% in 2019. Debt in the financial sector as a percentage of economic output increased for the first since 2016 to 86%.   Zombieland The report's authors also commented on corporate "zombification" as governments perform the delicate balancing act of preventing bankruptcies and protecting their financial sectors from systemic risk. "Although sizeable budget deficits have been essential to tackle the crisis, finding the right exit strategy could be even more challenging than after the 2008/09 financial crisis," they wrote. "Political and social pressure could limit governments' efforts to reduce deficits and debt, jeopardizing their ability to cope with future crises. This could also constrain policy responses to mitigate the adverse impacts of climate change and natural capital loss."     Image courtesy: IIF SPONSORED BY BETTERMENT Safe Harbor vs. Traditional 401(k) Plans Both types of plans can successfully help employees save for retirement, but each has its pros and cons. Learn which type of plan might be better for your organization. Learn More 5/ THURSDAY, FEBRUARY 18, 2021 PODCAST This Week on The Investopedia Express The cannabis sector was overrun by day traders recently, taking several stocks on wild rides with rough endings. Cannabis investor Todd Harrison of CB1 Capital joins the show with what the political and legislative landscape looks like for cannabis and how long-term investors should value its most popular stocks. Plus, what to expect in the week ahead and the investing term the educated investor needs to know to stay ahead. Catch up on one of the following platforms: How can we improve The Express? 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