MarketBites Daily Investment Commentary: Amazon vs Unions I Chinese Exports Become More Expensive

Stock Market Commentary for 3/30/2021:
  • The cargo ship blocking the Suez Canal has been successfully freed, easing worldwide supply chain concerns.
    President Biden is expected to reveal his $3 trillion infrastructure plan on Wednesday.

    – Major banks pulled the financial sector down, as losses continue to mount from Achegos Capital’s margin call (yesterday’s top story).
    – The energy sector declined along with oil prices.
    – Trading could remain volatile in the first half of the week, as fund managers adjust their positions at the end of the first quarter.


  • Stock Talk:
    The Winner of the Day: Airbnb
    Airbnb has seen some positive tailwinds from its new “flexible stays” feature. While some are concerned that weekend pricing hikes may no longer be as desirable for rental owners, the strategy ought to fill less desirable vacancies, and extend stays for weeks or months at a time.What’s Moving Pre-Market: Anthem Inc.
    Anthem rallied after-hours on the back of its “myNEXUS” acquisition. The acquisition is thought to greatly improve the firm’s healthy-home portfolio. $ANTM was up as high as 3% after-hours.The Loser of the Day: Plug Power
    Plug Power suffered heavy losses Monday after a lackluster past week. The stock continues to plunge after reports of its stock offerings to clients, and negative revenue for last year.

  • The Data Room:
    – Per the CDC, 95 million Americans have received their first round of vaccinations.

– By Raymond Kanyo

 


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Top Investment Story #1: Amazon’s Union Battle

What is Happening?

Today is the last day for Amazon warehouse workers in Bessemer, Alabama, to vote on unionizing. Progressive Democrats such as Bernie Sanders have been supporting unionization efforts, while Amazon remains firmly against them.

Why does this Matter?

If the unionization effort is successful in Bessemer, Amazon could potentially be facing a worldwide unionization effort. Unions could disrupt the level of control that Amazon has over its warehouse and delivery workers, such as its ability to unilaterally set the pace of work and hourly wages (i.e., no more 2-hour chips delivery for you at 2 am).

Progressive Democrats have been big supporters of the unionization effort. Bernie Sanders is even planning to meet with the workers in Bessemer before the final vote.

Amazon has staunchly opposed unionization. In its tweets and messages to workers, Amazon has highlighted that it already offers great health care, a starting wage of $15/hour, and a safe working environment. Some speculate that the company’s efforts to counter the union and progressive politicians, are direct orders from Chairman Jeff Bezos- highlighting the weight of this vote.

The Takeaway:

No matter the outcome for Amazon, labor leaders and lawmakers have seized the election for its potential to kick-start similar movements at other companies.

Liked this story? Forward it to your friends 

– By Raymond Kanyo

– Published in MarketBites Daily Newsletter


Meet the Authors
Top Investment Story #2: Chinese Exports Get More Expensive
What is Happening?

Inflation has been a hot topic lately. Federal stimulus packages, along with inflationary guidance and interest rate policy from the Federal Reserve, have caused investors to be somewhat hyper-focused. What some may not have realized though, is how Chinese exporters could impact our daily consumption.

Why Does This Matter?

Commodity prices and supply chain frictions are causing Chinese manufacturers to raise prices on many of the country’s standard exports. A global shift from consumer discretionary spending on experiences, back to material goods, has put an enormous strain on everything from chemical prices to freight fares.

Much of the price increases we’ll be seeing as consumers stem from commodity prices. Manufacturing industry standards indicate that approximately 70%-80% of total production costs stem from input materials. Additionally, shipping prices have increased roughly 90% since June of 2020. It is expected that these costs are passed onto the consumer.

Imports from China into the United States underwent a 1.2% inflation rate over the last 12 months. This is the highest we’ve seen since 2012. Some are blaming commodities traders for hoarding raw material contracts in aluminum, polyurethane, steel, and paper. Not only will these hoarders benefit from the rise in inflation, but they will likely accelerate the rate of inflation, should these trading patterns continue.

For more on the matter, read here.

The Takeaway:

You may notice that certain staple goods and discretionary products are getting more expensive rather quickly. With shipping capacities operating at all-time highs, commodity spikes, and other general supply chain bottlenecks taking shape for the long run, this will be an issue worth taking note of.

– Published in MarketBites Daily Newsletter


Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
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