Thursday,
April 8, 2021

Market recap

Dow Jones

33,446.26

+16.02 (+0.05%)

S&P 500

4,079.95

+6.01 (+0.15%)

Nasdaq

13,688.84

-9.54 (-0.07%)

UPS

$171.80

-$1.17 (-0.68%)

AstraZeneca

$48.42

-$0.80 (-1.63%)

JPMorgan

$154.93

+$2.39 (+1.57%)

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Top Story

JPMorgan CEO Predicts Economic Growth

Jamie Dimon is Optimistic About US Economy

JPMorgan Chase (JPM) Chairman and CEO Jamie Dimon expressed optimism about the US economy in his annual letter to shareholders. The leader of one of the world's largest banks pointed to government stimulus, COVID-19 vaccinations, and a potential infrastructure bill as reasons to be upbeat.

Over the past year, the US government has approved a series of stimulus packages, which Dimon says will be a big driver of economic growth. “This boom could easily run into 2023 because all the spending could extend well into 2023,” Dimon wrote.

Stock Prices High But Justified

Dimon also weighed in on stock market valuations, which he called "quite high." Nevertheless, the CEO argued a coming economic boom could mean the lofty valuations are justified. Investors are pricing in growth and excess money sitting in consumers' savings accounts, he said.

JPMorgan's Chief did warn it will be difficult to justify US debt prices if the boom he is predicting plays out. “This is because of two factors," wrote Dimon. "First, the huge supply of debt that needs to be absorbed; and second, the not-unreasonable possibility that an increase in inflation will not be just temporary.”

Looking Ahead

While Dimon is optimistic about the US economy in the coming years, he expressed concerns about the longer-term given the current state of US politics. Dimon described the country as "torn and crippled by politics, as well as racial and income inequality—and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals.”

Find Out How Much it Would Cost to Update Your Home

We’ve spent a lot of time in our homes the past year. Do you have a renovation project you’re dreaming of, but don’t know where to start? Our home improvement cost calculator can help give you an idea of how much your project will cost so you can better plan your budget. Simply select your type of project and enter in some specifics to get started.
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UPS Has High Hopes for a New Way to Deliver Packages

The Rise of eVTOLs

United Parcel Service (UPS) is buying 10 electric vertical takeoff and landing aircraft from Beta Technologies. UPS eventually wants to service its small and medium-sized markets with the devices.

The delivery company plans to test Beta Technologies' eVTOLs in its Express Air Delivery network. The aircraft will operate under UPS' Flight Forward unit—a group which is also exploring the use of drones for delivery.

As part of the deal, Beta Technologies will provide UPS with rechargeable batteries and landing pads. UPS has the option to buy 150 additional eVTOLs. Terms of the deal were not disclosed.

Cargo Containers in the Sky

Beta Technologies' eVTOLS can fly at speeds of 170 mph and travel 250 miles on a single charge. The aircraft can hold 1,400 pounds of cargo. The vehicles are best suited for time-sensitive deliveries which typically rely on small fixed-wing aircraft. UPS said the aircraft will take off and land on UPS facilities, reducing the time spent in transit. This will also cut down on emissions and operating costs.

Once the aircraft are delivered, UPS said it can use them for multiple short routes or one large route on one battery charge. "You can see a future where it’s carrying, let’s say 1,000 pounds, 1,500 pounds to rural hospitals,” said Bala Ganesh, Vice President of the UPS Advanced Technology Group.

UPS Bets on Advanced Delivery Tech

UPS' purchase of the electric aircraft marks a further push to use advanced technology to deliver packages. Beta and UPS worked closely on the initiative. “By utilizing vertical takeoffs and landings, we can turn relatively small spaces at existing UPS facilities into a micro air feeder network without the noise or operating emissions of traditional aircraft,” said Kyle Clark, Founder of Beta Technologies.

This isn't UPS' first purchase of electric delivery devices. In January of 2020 it agreed to buy as many as 10,000 electric vehicles from Arrival Group (ARVL).

The recent ecommerce boom has led many companies to look for innovative, sustainable delivery solutions. UPS has been an important player in the delivery market over the past year and wants to make sure to maintain its position.

Grab in Talks to Go Public Via a SPAC

Mega-SPAC Incoming

Grab, a Southeast Asian ride-hailing startup, is in talks to go public via a merger with one of Altimeter Capital's special purpose acquisition companies. The transaction, which could be announced later this week, may value Grab at around $35 billion. Grab's board preliminarily signed off on the deal last month.

Deal-making in the SPAC sphere has been heating up recently as private companies find new ways to tap the capital markets. Singapore-based Grab would list in New York if a deal transpires.

Deal Details

Under the tentative deal, Grab will raise roughly $2.5 billion by selling shares in the public company via private agreements with investors. Nearly $1.2 billion will come from Altimeter, which agreed to backstop any share sales. Grab will merge with the Altimeter Growth 1 (AGC) fund. The fund raised $450 million in 2020 and is up 25%.

Altimeter Capital is a Silicon Valley investment firm which invests in tech companies preparing to go public. It oversees more than $15 billion in investments, including the $850 million it raised for its two SPACs. Cazoo, the UK online car company, and Snowflake (SNOW), the data analytics company are two of its other investments.

Grab Tests the Waters

Grab has a private valuation of around $16 billion. Since its inception in 2012, Grab raised has $12 billion in venture funding and has $5 billion in the bank.

While Grab has not yet turned a profit, its ride hailing business did break even in 2020, with revenue growing 70% year-over-year. The potential merger between Grab and a SPAC is garnering a lot of attention around the world and investors are eager to see how it unfolds.

Not-So-Breaking News

  • Toshiba (TOSYY), a Japanese conglomerate, received a roughly $20 billion buyout offer from CVC Capital Partners, a UK private equity fund. News of the potential deal caused US shares of Toshiba to climb. Toshiba has faced large losses in recent years, which forced it to sell its profitable chip making business.
  • Vaccitech, a UK biotech startup which worked with the University of Oxford and AstraZeneca (AZN) to create a COVID-19 vaccine, has filed to go public in the US. Pricing for the IPO could come as soon as this month.
  • Morgan Stanley (MS) unloaded $5 billion in stocks held by Archegos Capital the night before the investment firm’s decisions prompted a fire sale on Wall Street. Morgan Stanley, which had Archegos’ permission to shop the stocks, sold them to a small group of hedge funds for a discount. The Wall Street firm said it was part of a margin call but failed to alert the buyers to the massive sell-off that ensued the next day.
  • Fox Corp. (FOX) launched a lawsuit against Flutter, the UK owner of FanDuel. Fox is seeking to buy into FanDuel, a gambling company, at its valuation from December. However, Flutter argues the company is worth more now and Fox’s price should be higher.
  • Mortgage applications decreased by 5.1% last week as rising interest rates kept buyers on the sidelines. The average rate for a 30-year fixed-rate mortgage increased to 3.36% from 3.3%.
  • If you need cash today but you don't have enough built up in savings to cover the purchase, a personal loan might make sense for you. Read more about the common uses for a personal loan—from home improvement to debt management—on SoFi Learn.

Financial Planner Tip of the Day

“If you truly want to get better at spending and saving, then you may want to track both your daily spending habits and your long-term progress on your savings goals. This may feel difficult at first, but as with most things, it becomes easier with practice and as you hone the methods that work for you.”

Brian Walsh, CFP® at SoFi

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