Bringing in 2021
The MStreetX Newsletter
Friday, January 8, 2021
MStreetX's newsletter continues to bring you the top stories and breaking news that impacts business, and the economy.
Dissonance in Wall Street Continues as Stocks Rise Amid Terrorist Attack on Capitol
The stock market closed at a record high even as domestic terrorists violently stormed the capitol on Wednesday. Many large investors and analysts have been hyperfocused on stabilizing the market, as seen last year with the S&P 500 steadily rising over 18 percent, even during the devastation the pandemic caused the economy and also killing over 350,000 Americans.
Isaac Boltansky, an analyst of Compass Point Research & Trading commented on this disconnect saying, “the market over the last few weeks has had an uncanny capacity to look past any near-term disruptions to the more stable environment we should see after Jan. 20, but we have to get to the 20th.” Boltansky feels that investors are trying to negate the risks associated with this tumultuous transfer of power, and if this last year is an indication of their dedication, investors will continue to buy stocks as they have faith policymakers will continue to push the market to grow safely. To quote our CEO David Rixter ”We are hopeful that 2021 is a viable year not only for Wall Street, but for Market Street, and that our nation can find common ground in a display to the world that we are one, united nation.”
MStreetX is Live!
Our fintech company is building a platform to enable small businesses who have been historically locked out of capital markets to get funding, and the technical assistance that they need.
We have relationships with, and the support of, the Economic Development departments of all the US States. We are currently building a COVID 19 Recovery and Resilience tool, as well as a Vaccine Distribution ResourceTool (VDRT).
In order to build a robust, AI-driven production platform, we need help. We are looking for investors. You can do this at http://bit.ly/MSX_TruCrowd. We are also hoping that you can share this opportunity with your network.
Flurry Changes the Financial Outlook
Investors enjoyed record IPOs this year, despite Covid-19. Topping record-breaking, blockbuster IPOs by DoorDash and AirBnB, cloud data company Snowflake was the surprise IPO dark horse, raising $70 billion on its opening day above its $12.4 billion pricing and is now worth $90 billion.
Electric vehicle maker Nikola’s SPAC (Special Purpose Acquisition Company) – a company designed to acquire another company to go public -- reached $34 billion in June, but fell to $6.6 billion after a deal with GM fell through, demonstrating the risks of SPAC offerings. Nevertheless, these massive IPOs have woken up investors, especially ESG (Environmental, Social & Governance) funds that have tens of trillions of capital shifting from fossil fuels to other assets. Special Purpose Acquisition Companies (SPACs) on FireSPACs are now the hottest stick on Wall Street for mergers and acquisitions (M&As). Often with no commercial operations, they are formed to acquire an existing company and raise capital via an IPO. They are also known as “blank check companies” because they raise capital with no idea where they will be investing. As of December 19th, over 45,000 deals with $3.4 trillion had been announced, down 7% by value from the same time last year. The new SPACs are focused on tech and consumer fields where new high-growth start-ups serving emerging markets can excel. There are tradeoffs so analyze them carefully before you invest or work with a SPAC. More at Bloomberg and NYTimes.
Environmental, Social & Governance (ESG) Funds Come of Age
Covid-19 has accelerated the decline of fossil fuels so investors have been moving their money into other asset classes, especially ESG funds, which are showing greater returns than traditional funds. Sustainability is the new hot ticket, with 77% of investors divesting from non-sustainable companies.
To date, sustainable assets account for $17.1 trillion, so there could be as much as $120 trillion up for grabs. CEOs and investors are especially rethinking and reinventing their business models in hard-hit industry sectors: $5 trillion in global transportation, $9 trillion healthcare industry, $850 billion airline industry, $600 billion major league sports industry, and the $26 billion food delivery industry. Startups providing innovative approaches to these sectors are well positioned to raise capital from SPACs, direct listings and other new financial vehicles. Source
SEC Permits Direct Listings of Startups on the New York Stock Exchange
In an historic move, the Securities Exchange Commission (SEC) ruled that tech and other high-growth companies can raise money directly on the New York Stock Exchange (NYSE) without paying big underwriting fees to Wall Streets. These so-called primary direct floor listings will challenge traditional IPOs and open the market to a wider variety of startups, making the NYSE more competitive against NASDAQ. Also, direct listings don't require investors to wait for lockup periods to expire before they can sell their shares, which Silicon Valley and venture capitalists (VC) have been seeking, but was opposed by the Council of Institutional Investors, a group that represents major pension funds and endowments. This ruling is expected to trigger a surge in startup listings in 2021. Source
FinTech Outlook for 2021: Rapid, Continuing Growth in FinTech Businesses
FinTech newsletter writer James Ledbetter predicts 5 trends in 2021 worth watching: 1) FinTech company valuations climb, 2) federal regulation under Biden, 3) Bitcoin price volatility but upward valuation over time, 4) digital currency adoption by private and central banks, 5) China will lead the FinTech world.
For entrepreneurs and small businesses, the boom in FinTech startups and funding will mean a short, thriving window for fundraising, but a future market shakeout, so founders need to raise enough money in 2021 to survive the shakeout. The Biden administration will crack down on “regulation arbitrage” of end runs around banking regulations and discriminatory lending based on demographic data so entrepreneurs need to monitor federal policymaking. Digital currencies are still early in adoption, but Bank of America and Citi have issued digital coins to promote their business clients, which will become adopted by other banks, financial institutions and even cities over time as a way to monetize local businesses. Source