Weekly Market Insight

Latest Economic & Market Update 12th June 2020

12th June 2020

Good afternoon, it is 12th June 2020 and here is your economic and market update from BlackBee. 

GRAPH OF THE WEEK:

This week’s graph focuses on retail investors speculative trading on worst hit companies. 

Speculative trading is making waves through the US markets. The rally in the stock market has left many young investors wanting a piece and believing that the most hit stocks will recover to pre-crisis levels as economies reopen.

Robintrack which provides data from the retail investor app Robinhood shows that young retail investors have been piling into trades such as investing in bankrupt companies and trying to predict the bottom of oil prices during April when they went into negative territory.  The number of users has increased to over 13 million in May, up from 10 million at the end of last year.

After Warren Buffet announced he was liquidating his airlines position, JETS ETF saw an increase of 1600% in fund flows, heavily influenced by retail investors. The car rental company Hertz applied for Bankruptcy protection on the 22nd May, and since the end of May, the stock price has increased by over 206%. At one point this week, the stock was up over 553%. Nearly 80,000 users are responsible for the drastic increase in price. Whiting Petroleum is an oil and gas company that has also filed for Bankruptcy and is up 227% since the end of May. 47,000 users have invested in Whiting Petroleum stock. 

Despite warnings from regulators and the risk that shareholders are at the end of the list for payment when a company goes bankrupt, young retail investors are ignoring fundamentals and are believing that even the worst hit companies will recover.

At a glance:

  • US Stocks suffer worst one day fall on Thursday since 16th March.
  • The number of new unemployment claims in the US continues to slow as 1.5 million apply last week.

Best & Worst Performers of Large Cap Stocks on Thursday
Click the image to enlarge

BlackBee’s recent maturities

Global Market Update
(as at close of markets 11/06/2020)