MarketBites Daily Investment Commentary: White House Shakes Up Stock Market I Earnings Roundup #2

Stock Market Commentary for 4/23/2021:
  • +Investors digested a better-than-expected reading on weekly jobless claims. First-time claims for unemployment insurance totaled 547,000 vs. 603,000 expected.Barclays raised its year-end S&P 500 target to 4,400, which would translate into a 6% gain from now. Barclays cautioned that the upside beyond its target is unlikely.

  • Stocks sold off on reports that President Biden is considering nearly doubling capital-gains taxes on the wealthy. The proposal would particularly hurt growth stocks.


  • Stock Talk:


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Top Investment Story #1: Government Moves
What is Happening?

The White House is ready to shake up the stock market. President Biden’s rumored capital gains tax increase would hurt growth stocks, while his greenhouse gas emissions goals have multiple beneficiaries. Let’s look at the proposals and their impacts on stocks!

Why does this Matter?

1. Capital Gains Tax: Increase from 20% to 39.6%
– The tax hike is slated to come out next week, as a way to fund President Biden’s $1 trillion “American Families Plan.” The proposal would hike taxes for those earning $1 million or more.
– Impact: Stock selling can intensify prior to the tax becoming law (potentially 2022), to capture gains at the current tax rate. The selling could adversely impact growth stocks that derive most of their value from price appreciation, as opposed to value stocks that rely more on dividend income.

2. Greenhouse Gas Emission Goals: Cutting emissions by 50% by 2030
Under President Biden’s goals, power generation would produce net-zero emissions by 2035. To get there, wind and solar adoption will have to ramp up at unprecedented rates. New transmission networks and energy storage facilities will be required to transfer and store power.
– Impact: Utilities such as NextEra (Ticker: NEE) already trade at a 2x multiple to their peers, because of the company’s exposure to renewable energy. Analysts predict that other utilities such as American Electric Power (Ticker: AEP) could emulate that by turning “green” on the government’s dime. Shares of solar, wind, and energy storage stocks (FSLR, RUN, TSLA, GE) could also benefit.

The Takeaway:

Taxes and government spending can materially impact stocks. Renewable energy stocks plummeted at the beginning of the year, but the government’s plethora of “green initiatives” could reignite investor optimism in the space.

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– By Raymond Kanyo

– Published in MarketBites Daily Newsletter


Meet the Authors
Top Investment Story #2: Earnings Roundup #2
What is Happening?

We have our second earnings roundup of the week! This time around, we’ll be looking at Intel, Snap, Boston Beer, and Blackstone.

Why Does This Matter?

Intel:
– Intel slid around 1.7% after hours, after failing to meet expectations.
– The firm remains hopeful in its 2021 outlook, especially given the current climate for chip demand.
– New CEO Pat Gelsinger, stated that 2021 was a pivotal year for Intel, after its massive investments in chip production.
– Read more here

Snap:
– Snap gained a significant 4.9% after hours, as results impressed analysts.
– Snap expects up to an 85% year-over-year revenue growth for 2021. The firm has become a growth stock darling and shows no signs of slowing down.
– The firm’s Android userbase is now larger than its iOS userbase.
– Read more here

Boston Beer:
– The Sam Adams, Truly, and Twisted Tea maker was up 7% after-hours, as the firm crushed Q1 expectations.
-Twisted Tea continues to drive double-digit growth for the firm. It also announced new flavors for Truly, in advance of Summer 2021.
– The theme has showed that hard seltzer and other beer alternatives continue to be an engine for growth.
– Read more here

Blackstone:
– Blackstone posted a remarkable $1.75B Q1 profit, sending the stock 3.3% higher after-hours.
– The firm’s private equity portfolio returned 15.3% during the first quarter. This vastly outpaced the S&P’s 5.8% return.
– The firm announced an 82 cent dividend for the quarter, up from 39 cents per share a year earlier.
– Read more here

The Takeaway:

Busy earnings days will cause big spikes in various household names over the next few weeks. Keep an eye out on our earnings calendar to make sure you don’t miss any!

 

By Jack Dunne

– 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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