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Hi Everyone, Once again, the issue of hate speech is making headlines. Even while writing that last sentence, the extreme irony has not been lost on me. I will try to explain below. Anyway, here's the headline. ... | |
So far, 160 companies, including Coca Cola, Pepsi, Hershey's, Starbucks, Unilever, Verizon, Honda, Viber, The North Face, and Levi Strauss have decided to refrain from spending money on social media advertising for the time being, in protest of "hate speech" that is being perpetuated on platforms like Facebook and Twitter. It's not exactly a full boycott though, as these companies are still quite active and none of them have yet dared to remove their company profiles entirely. They're just not spending right now during the traditionally lackluster summer months. At any rate, they have managed to dominate the news cycle going into this fine week, as well as share prices. Facebook is down about 8% since Friday, and Twitter has declined 6.5% as of this writing, including after hours trading. The entire story makes me wonder if the companies involved really understand what they're fighting for. In countries such as China, for example, hate speech is defined as speech against the government or law enforcement. Over there, you would never see a headline like "Alibaba is boycotting Weibo," because the government wouldn't allow it. By asking Facebook to start actively censoring white supremacists, American corporations are taking a proactive stance to reduce freedom in the country and hand it over to Facebook. What if Facebook suddenly decides that companies shouldn't be allowed to promote sugary drinks or snacks due to health concerns? Censorship is a slippery slope, and rules need to be applied evenly across the system. One could certainly argue that Coca cola, Pepsi, Hershey's, and Ben & Jerry's kill many more Americans through diabetes than any other institution by far. | |
Mixed Emotions Markets are mixed today. They are not flat, but mixed. There's a lot of uncertainty to deal with at the moment. Global coronavirus-related deaths have now topped half a billion. For those saying that this is just a bad flu (I might be guilty of this myself), this latest statistic confirms that it is not. | |
On the other hand, it's extremely unlikely that we'll see another global lockdown like the last one. Doctors are much better at treating the issue now, and governments are no longer willing to sacrifice the entire economy to stop the spread. They're now getting into the details of which parts of the economy and which specific locations need to be restricted, and at what levels. So the overall damage should be mitigated going forward. Since the charts of various assets aren't going to show us much more than consolidation today, I'd rather show you a chart of the VIX volatility index, which has been trending upwards throughout the month of June. | |
One thing that I think is not being priced in just yet is the rapidly declining prospect of further fiscal stimulus in the U.S. Again, fiscal means from the government, and not the central bank stuff that always flows like water. The Democratic-led House has proposed a new bill to promote civil rights that the Republican Senate will almost certainly shoot down. At the beginning of COVID-19, we saw a great willingness for both parties to work together for the good of the people in order to fight the virus. That same spirit doesn't seem to be present anymore, and so it will be much more difficult to pass any further coronavirus relief aid packages through both houses of Congress. | |
Wirecard Bankruptcy Bump Since the digital currency market is just as volatile and mixed as the rest of them today, let's focus on another phenomenon, one that might be a bit more telling of the current market situation. More specifically, Wirecard is up 200% from the lows of last Friday. | |
Pundits on social media have been quick to draw the comparison to what happened with Hertz earlier this month, where their share price rose astronomically after declaring bankruptcy, mostly driven higher by misguided retail investors looking for a bankruptcy bump. No, this Wirecard move is more of a dead cat bounce. Here, we can see Hertz on the left and Wirecard on the right. Notice that the Wirecard bump is not even noticeable on the long term graph. | |
Now, I might be reading into things a bit too much, but to me this shows that the market is a lot less willing to throw down on hunches or gambles than it was at the beginning of the month. Now that the market looks a lot more stretched, and the influence from the Federal Reserve and the new retail traders is waning, we will likely see markets getting more picky. Thanks for reading. Thanks for your insights. And thanks for sharing. Have an awesome day! Best regards, | |
Mati Greenspan Analysis, Advisory, Money Management | | |
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