The New King of Meme Stocks
More Jobs, Fewer Unemployed & Why That Could Be Bad News
Quick Facts From Around The Market
🐦⎌ Twitter announced this week that they will not be caving into requests for the feature to edit a tweet. However, they are launching an undo tweet feature — at a price, of course.
🤯🏡 The real estate craze is real right now with homes selling faster than ever. There are 21% fewer homes on the market since last year, which is pushing prices to record highs.
♻️💰 Big tech is teaming up to fight climate change. Amazon, Disney, Google, Microsoft, Netflix, Salesforce, Unilever, and Workday launched a monstrous alliance to boost the impact & scale of their businesses’ investments into climate change solutions.
🦠💻 Norton Antivirus announced this week that they will be creating a crypto mining feature in their LifeLock security software. This will allow anyone with the software to mine crypto with no need for additional programs or hardware.
👻🛢 ExxonMobil’s Board finally is feeling the heat. As the dust has settled from last week’s store, Engine №1 won 3 board seats, making up 25% of the board and surely pushing the company towards a more environmentally-sustainable growth plan.
🍴🍻 A majority of restaurant owners surveyed said that they were seeing a dramatic increase in the percentage of revenue derived from alcohol versus food sales, as Covid restrictions relax and summer begins.
AMC’s Rise & Fall
The new king of meme stocks, AMC Entertainment, saw their stock price bounce between gains and the red, closing 6.7% lower at $47.91 on Friday. The stock is still up 83% on the week, only adding to May’s 160% surge.
After the jump Wednesday, AMC announced the following day that they plan to issue more than 11 million shares (~$660 million) to raise capital for the company with the stock trading at such meteoric valuations.
On news of the issuance, AMC’s shares dropped 30%. That triggered a mandatory halt in trading for concerns of volatility. The stock was up 20% premarket before the news was announced.
AMC has been riding the wave of being a meme stock recently and launched a program to provide free popcorn to shareholders when visiting the theater. They’re not the first company to come up with the idea… Multiple companies including Ford, Carnival Cruises, and IBM offer discounts to shareholders.
AMC’S STOCK PRICE OVER THE PAST WEEK
Jobless Claims Continue To Decline
Over 50% of Americans are fully vaccinated, the pandemic is beginning to feel in the past as Summer emerges, and jobs seem to be coming back. In fact, jobless claims were the lowest they have been since the beginning of COVID with a total of 385,000 reported by the Labor Department this week. Experts predicted that there would be 393,000 claims this week, and the positive surprise was well received by the market.s
The last time that the jobless claims report was this low was on March 14, 2020 with 256,000. If that date sounds familiar, it should… The following next week, the jobless claims in the US spiked to 3 million — the highest since the 2008 financial crisis — as pandemic lockdowns went into place nationwide.
Such a decline in jobless claims is a great sign of a healthy recovery, however, we are not out of the woods yet. The Fed is still pushing for full employment and with that comes a fickle beast: inflation.
UNEMPLOYMENT CLAIMS (THOUSANDS)
Inflation Is Soaring, But Don’t Panic Yet
Inflation is skyrocketing as economies open up and more money is being spent. However, prices are jumping even with this influx of spending. Prices on all items are up 3.3% in the OECD countries, which is the highest rate since October 2008.
These countries comprise around 60% of the global economy and could be an indicator of severe inflation to come. However, many economists believe that this is short term inflation from businesses reopening. These businesses, including restaurants, hotels, and airlines, are still dealing with pandemic-related hardships and it’s unsurprising that they’re passing those costs down to the consumer.
ANNUALIZED INFLATION RATE (AS A %)
The worry, is what happens if the trend continues. According to a report published by the Federal Reserve this past Wednesday, prices of restaurant meals, cars, and airline tickets could keep rising, thanks to soaring demand and a shortage of workers. The Fed said that transitory inflation and shortage could last months, and that it was already causing some companies to limit production and slash operating hours. This in turn, has pushed prices even higher and has investors skittish.
For now, it appears that all we can do is wait. The OECD and Federal Reserve are in agreement that the jump in inflation is a short-term event and will return to normal by the end of the year. Let’s hope they’re right.
