Tuesday,
February 2, 2021

Market recap

Dow Jones

30211.91

229.29 (0.76%)

S&P 500

3773.86

59.62 (1.61%)

Nasdaq

13403.39

332.70 (2.55%)

Coeur Mining

$11.13

$2.08 (22.98%)

GameStop

$225.01

-$99.99 (-30.77%)

CVS

$71.42

-$0.23 (-0.32%)

Amid evolving news + uncertainty surrounding COVID-19, your financial needs are our top priority. For more information on COVID-19 and your finances click here.

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Top Story

Reddit Traders’ Next Target: Silver

The Next Retail Trading Trends

Retail traders have had a powerful impact on markets in recent weeks. The world has watched as shares of heavily shorted stocks like GameStop (GME) and AMC Entertainment (AMC) have soared while traders have encouraged one another to pile into these stocks through discussions on Reddit and other social media platforms.

Now these traders are making other investments which are causing new market trends. For example, the price of silver surged Monday as the metal gained attention from new investors. Special-purpose acquisition companies, known as SPACs, are also getting a boost as a result of new interest from retail investors.

The Silver Squeeze

The price of silver surged 11% hitting an eight-year high yesterday. The price of the metal fell slightly after this spike, but on the whole, silver and silver-related equities experienced a significant rally. iShares Silver Trust (SLV), an exchange-traded fund which follows the price of silver, surged yesterday, as did shares of silver mining companies like Coeur Mining (CDE) and Pan American Silver Corp (PAAS).

On the Reddit forum WallStreetBets, there were multiple threads discussing silver over the weekend and the hashtag “#silversqueeze” was trending on Twitter (TWTR). Analysts have pointed out that the silver market is larger and more liquid than the market for shares of GameStop or AMC, so retail traders may not be able to impact it as dramatically. But at the moment these traders are driving changes in the silver market.

As Mohamed El-Erian, Chief Economic Advisor at Allianz said, “It’s a very different target, but the fact that you can move silver, such a large market, is an indication to everybody that they have to take these new technicals seriously.”

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Retail Pharmacies Prepare to Help With Vaccine Distribution

Relieving Pressure on Hospitals

Retail companies across the US are gearing up to play a large role in distributing COVID-19 vaccines. Hospitals and healthcare systems, which have already been under enormous pressure treating COVID-19 patients, will not be able to handle vaccine rollout on their own. So pharmacies are stepping in to help.

Beginning next month, the CDC plans to make shots available at pharmacies like Walgreens (WBA), CVS (CVS), Walmart (WMT) and Kroger (KR). These retailers say they will be ready to administer tens of millions of shots per month.

Pharmacies’ Advantages

These pharmacies will be helpful with vaccine rollout efforts for several reasons. They have experience distributing vaccines for the flu, shingles, and other diseases. Many pharmacies also already have online scheduling tools and physical space to handle a large amount of vaccine appointments. These companies are in the process of hiring tens of thousands of pharmacists and technicians to help administer shots. CVS has said that it will have the capacity to vaccinate between 20 million and 25 million people per month once enough shots are available.

Retail pharmacies are also accessible to a large percentage of the population, which will hopefully help vaccines reach citizens efficiently. CVS and Walgreens together have about 19,000 locations in the US. Dozens of other regional pharmacies and grocery stores will also join in the effort.

A Step in the Right Direction

The first months of vaccine rollout in the US have been rocky. Supply chain difficulties, confusion surrounding eligibility and appointments, as well as other challenges have caused the process to be slower than many had hoped.

However, the Biden administration has said it will purchase enough doses of the COVID-19 vaccine to inoculate most of the US population by the end of the summer. Retail pharmacies will be a key part of distributing these shots in the upcoming months.

Spirits Sales Climb During Pandemic

Americans Are Splurging on High-End Liquor

As the pandemic drags on, changing consumer habits are impacting the alcohol industry. Recently released data shows that revenue for US distilleries climbed 7.7% last year to hit $31.2 billion. This marked the fastest growth and the highest sales the spirits industry has seen in at least 40 years.

Americans seem to be splurging on higher-priced whiskey, tequila, and other spirits during the pandemic since they are unable to spend money on travel, entertainment, and other activities. Alcohol costing more than $40 per 750 milliliters was responsible for 40% of growth for the US spirits industry last year. The liquor company Diageo (DEO) reported that sales of its higher-end tequila brands, Don Julio and Casamigos, spiked by 55% and 137% during the second half of 2020.

New Products and Delivery Offerings

Americans typically buy more at-home drinks than consumers in Europe and other parts of the world. Even pre-pandemic, four out of every five alcoholic drinks were purchased at a grocery store or liquor store rather than at a bar or restaurant in the US.

Now that trend has been significantly accelerated. Companies have launched new products like ready-to-drink cocktails for consumers at home. Alcohol home delivery companies have also gained popularity. For example, online alcohol retailer Drizly said in January its annual sales were up 350% compared to a year earlier.

Looking Ahead

As demand for spirits has climbed during the pandemic, sales of wine and beer have dropped. Restaurant closures have put a damper on wine sales in particular. Beer sales have been hurt by bar closures as well as a shortage of aluminum cans and other supply chain challenges during the pandemic.

Analysts in the alcohol industry are eager to see how consumer behavior will change when bars and restaurants are able to open, and when people have more options for how to spend their money. It is possible that habits like making cocktails at home and ordering alcohol online will stick around. Alternatively, people may be more eager than ever to socialize and drink outside of their homes.

Not-So-Breaking News

  • Multiple outlets reported that the CEOs of Chevron (CVX) and ExxonMobil (XOM) talked about merging the two oil giants early in the pandemic as oil prices tumbled. According to the Wall Street Journal, these talks are not ongoing. If the merger had taken place, the combined company would have been worth over $350 billion.
  • Virgin Galactic (SPCE) announced yesterday that its next spaceflight test could take off as soon as February 13, causing its shares to rise as much as 17%. In December, Virgin Galactic canceled a scheduled test flight because of COVID-19 restrictions.
  • Virgin Galactic (SPCE) announced yesterday that its next spaceflight test could take off as soon as February 13, causing its shares to rise as much as 17%. In December, Virgin Galactic canceled a scheduled test flight because of COVID-19 restrictions.
  • Ryanair (RYAAY), the Ireland-based budget airline, expects to lose over $1 billion this year. Travel restrictions in Europe have recently become more strict as governments work to keep people safe from new variants of COVID-19. This has caused a sharp drop in demand for air travel.
  • Ford (F) and Google (GOOGL) have entered a six-year partnership. The tech giant will help with Ford’s in-vehicle connectivity and will provide cloud computing and other services.
  • Decentralized Finance, or DeFi, is a new financial paradigm that lets users control their money through blockchain technology. Visit SoFi Learn for The Beginner’s Guide to DeFi.

Financial Planner Tip of the Day

"ETFs are very similar to mutual funds and offer investors easy diversification since buying into an ETF is also buying into a collection of different assets. ETFs are generally passively managed. ETFs generally have lower fees than mutual funds. There are also differences in how ETFs and mutual funds are traded. ETFs can be traded like stocks, while mutual funds trade once per day. For more information on the differences between ETFs and mutual funds, take a look at this SoFi resource."

Brian Walsh, CFP® at SoFi

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