Five interesting things that Hodges Capital research analysts discovered this week...
#1 FALLEN EMPIRE: China sentenced Hui Ka Yan, founder of property empire Evergrande, to life in prison for “multiple combined crimes,” including multiple counts of fraud and misuse of funds. The court also ordered the liquidation of Evergrande, which currently has $300 billion in liabilities on its balance sheet. This ruling may mark the climax of a woeful saga for Chinese property developers and is expected to send shockwaves through the Chinese economy as creditors and investors suffer major losses.
#2 DELAYED THAW: Stocks in the cryptocurrency ecosystem have had a strong week as the White House ramps up its efforts to pass the CLARITY Act. The Act is generally viewed as a positive for members of the crypto industry, as it would separate crypto trading from standard securities laws. The bill will require 60 votes to overcome a filibuster, and with two Republican senators expected to vote no, nine Democratic senators will need to vote yes.
#3 LEARNING CURVE: Global long-term bond yields have reached decade-long peaks over the past week. Bond investors are seemingly warier than equity investors regarding global conflicts, inflation, and softening consumer sentiment. The U.S. Treasury committed to purchasing long-term U.S. debt in an effort to buoy prices and dampen yields, which briefly brought some relief to the market. The situation has resurfaced concerns surrounding America’s ballooning national debt and persistent fiscal deficits.
#4 mRNA BREAKTHROUGH: A cancer vaccine developed by Moderna and Merck recently succeeded in reducing cancer recurrence and preventing the spread of cancer throughout the body in late-stage trial testing. The cancer treatment combines Keytruda with a made-to-order mRNA vaccine based on an analysis of mutations found in patients’ own tumors. Wednesday’s announcement sent Moderna’s shares surging 160%.
#5 MAPLE STEEL: Steel stocks opened higher Wednesday after NUE increased hot-rolled coil prices by $10 per ton on Tuesday. However, the group sold off in the afternoon following news that an emerging U.S.-Canada trade deal may reduce tariffs on Canadian steel from 50% to 25%. Canada represents roughly half of the steel imported into the United States.
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