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🎙 "My saving grace was that I always knew when to leave the party." See who said it and why it matters at the bottom.
Illustration: Aïda Amer/Axios
Having been conditioned for years by financial pundits to see the next recession as their opportunity to get rich after largely missing out on 11 years of a surging bull market, young people are viewing the coronavirus-driven stock market crash as their golden ticket.
What's happening: Thanks to zero fees, easy access afforded by the internet, and an unexpected glut of free time on their hands, millennials and Gen Z are opening online brokerage accounts at a record pace.
"The way we can see that a lot of these people are newer to investing is because they are accessing our educational resources at a rate that is three to four times what we’d normally see," Steven Quirk, EVP of trading and education at TD Ameritrade, tells Axios.
Driving the news: Despite two separate embarrassing outages on critical trading days this year that could have sunk its business, millennial-focused trading app Robinhood has seen its valuation rise to $8.3 billion, while investing platform Stash got a new $112 million infusion that took its valuation to $800 million.
Yes, but: In their thirst for a piece of the expected market rebound, these new investors may be ignoring the economic reality of the moment.
The last word: Those who have used their new accounts to buy the dip since late March have done quite well.
Go deeper: How the stock market can lie to you
Evidence is mounting that after many mistakes in the beginning, and despite a month of extreme social distancing, the U.S. is steamrolling toward a nightmarish failure to control the coronavirus. (Axios)
The coronavirus pandemic is outlasting the government's spending packages, which instead of acting as bridges to reopening, may end up being remembered as bridges to nowhere. (Axios)
Beyond Meat reported a net income of $1.8 million compared with a net loss of $6.6 million a year ago and revenue soared 141%. The company says it plans to temporarily cut prices this summer. (Reuters)
U.S. services businesses saw their steepest drop in activity in April since the Great Recession with the Institute for Supply Management’s non-manufacturing index falling to 41.8, its lowest reading since March 2009.
Why it matters: Despite the destruction in overall demand and waves of job losses, prices are not only holding firm they are rising.
But, but, but: ISM's data show price increases have been largely in the health care sector where the COVID-19 pandemic has increased shipping costs as demand has skyrocketed and the number of flights, largely from China, carrying medical supplies has plunged.
What's next: “When we come out of this lockdown, I don’t project or anticipate a V-type recovery, so I don’t know how prices will correlate to demand levels,” Anthony Nieves, chair for ISM's non-manufacturing business survey committee, said during a call with reporters.
By the end of this year, analysts at Bank of America Global Research estimate the Fed's balance sheet will have risen to nearly $10 trillion and the world's six largest central banks will have taken their holdings from around $15 trillion to $25 trillion worth of assets.
The big picture: The Fed now has the largest balance sheet of all central banks, having surpassed the European Central Bank and Bank of Japan.
State of play: To put the size of Fed asset purchases this year into perspective, BofA analysts note that "a few weeks ago it was buying the same quantity per day as it was per month during the [global financial crisis]."
What they're saying: This is "monetary policymaking on steroids," Michael Arone, chief investment strategist for State Street Global Advisors, says in a note to clients.
Why it matters: We could already be seeing the Fed's impact.
The bottom line: "The disconnect between an investment’s underlying fundamentals and its price make investors uneasy," Arone says.
Deserted Disney resort in Kissimmee, Fla., on May 5. Photo: Daniel Slim/AFP via Getty Images
New CEO Bob Chapek had quite a first earnings call on Tuesday, announcing that Disney had seen its earnings fall by 90% in the first quarter.
Why it matters: Disney is perhaps more representative of the global economy than any other company on earth and its stock has been one of the few that seems to reflect the damage the COVID-19 pandemic has done.
What it means: Roughly half of Disney's revenue is directly tied to industries that have been shut down, like parks and resorts, advertising and film.
The intrigue: Disney beat analysts estimates for revenue, at $18 billion, but fell well short of earnings estimates, which at only 60 cents per share were well below expectations of 91 cents and less than half of what analysts were expecting a month ago.
Yes, but: The one bright spot has been Disney+, which Disney now says has 54.5 million subscribers.
Thanks for reading!
Quote: "My saving grace was that I always knew when to leave the party."
Why it matters: The quote is from Iman, born Zara Mohamed Abdulmajid, the Somali fashion model, actress and entrepreneur who was a muse for designers Gianni Versace, Halston, Calvin Klein, Donna Karan and Yves Saint Laurent.
Editor’s note: This top story was corrected to take out a reference to Robinhood as partnering in a survey from App Annie, which representatives for App Annie had misstated.