Week of Apr 3, 2021 Weekly Recap & The Week Ahead
“But most investors do capitulate eventually. They simply run out of the resolve needed to hold out. Once the asset has doubled or tripled in price on the way up — or halved on the way down — many people feel so stupid and wrong, and are so envious of those who’ve profited from the fad or side-stepped the decline, that they lose the will to resist further. My favorite quote on this subject is from Charles Kindleberger: “There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich” (Manias, Panics, and Crashes: A History of Financial Crises, 1989). Market participants are pained by the money that others have made and they’ve missed out on, and they’re afraid the trend (and the pain) will continue further. They conclude that joining the herd will stop the pain, so they surrender. Eventually they buy the asset well into its rise or sell after it has fallen a great deal. In other words, after failing to do the right thing in stage one, they compound the error by taking that action in stage three, when it has become the wrong thing to do. That’s capitulation. It’s a highly destructive aspect of investor behavior during cycles, and a great example of psychology-induced error at its worst.” ― Howard Marks
1. Credit Suisse, Nomura Warn of Major Losses After Archegos Debacle — Nomura said in a statement over the weekend that “The estimated amount of the claim against the client is approximately $2 billion,” . Credit Suisse said the selloff could be highly significant and material to its first-quarter results. Major banks including Goldman Sachs and Morgan Stanley last week unloaded some $30 billion worth of shares in U.S. media and Chinese tech companies linked to Tiger Asia manager Bill Hwang’s Archegos Capital Management.
2. Biden Will Unveil His Economic Recovery Plan in Two Parts — the president is planning to split his $3 trillion “Build Back Better” recovery plan into two separate bills, starting with a focus on infrastructure.
The biggest beneficiaries should be electric-vehicle makers and clean-energy providers. Biden’s plan includes additional incentives to buy electric vehicles in the form of tax credits and rebates.
The second part of Biden’s plan, which will include healthcare and child care, will be released “later in April,” Press Secretary Jen Psaki said Sunday. Biden proposed a $775 billion “caregiving economy” proposal while campaigning, which would include free prekindergarten, subsidies for after-school programs and increased pay for child-care workers.
This second part is expected to meet the most resistance from Republicans, who would rather use tax incentives for things like paid family leave and let states make changes instead of authorizing additional federal spending, The Wall Street Journal reported.
3. Universal Studios Hollywood Is the Latest Theme Park to Announce Its Reopening — Universal Studios Hollywood announced its official reopening date later this month, along with a new ride called “The Secret Life of Pets.”
The Southern California theme park will open its gates on April 16 at an expected reduced capacity of 25% of its 40,000 person maximum. It will require visitors to wear face coverings and prohibit anyone with a temperature above 100.4 degrees from entering. Tickets go on sale April 8.
The restrictions are part of California’s new health guidelines, issued over the weekend, which also limit park visitors to in-state residents only.
4. Pfizer Trials Show Vaccine Is Effective for At Least Six Months — Pfizer and BioNTech’s Covid-19 vaccine remains highly effective against coronavirus for at least six months after recipients get their second dose and may work just as well against the variant first identified in South Africa, the companies said Thursday. The vaccine was found 91.3% effective among 46,307 people in a Phase 3 trial, with consistent protection across age, gender, race and ethnicity, as well as among individuals with underlying health conditions. On Wednesday, the companies reported the vaccine was 100% effective at preventing Covid-19 among children ages 12 to 15, which could pave the way for its authorization for use in that age group as early as May. Pfizer’s vaccine, currently approved for use in those 16 and older, has distributed more than 200 million doses around the world and expects to produce 2.5 billion doses this year.
The week ahead — Economic data from Econoday.com:
