FINSUM + Magnifi: Walmart is Stretching its Legs in Fintech
(March 2021)
Walmart (WMT) is synonymous with most consumers for their household products, but the retail giant is expanding its frontier of offerings. Walmart hired Omer Ismail and David Stark from Goldman Sachs as part of their new Fintech subsidiary. Ismail and Stark worked for Goldman in their consumer banking business platform called Marcus which brought retail customers higher interest rates on deposits. Walmart plans to launch the retail company with Ribbit Capital. Ribbit is the venture capital firm that helped fund Robinhood, which has brought many retail investors to the stock market and was a major figure in the GameStock frenzy. Walmart believes it leverages its retail investor knowledge with Ribbit’s fintech expertise to make a major statement. Walmart already offers a variety of fintech and banking services: credit cards, cashing checks, money transfers, and financed installments. Walmart's retail customer base is enormous and could be a game-changer in fintech.
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FINSUM + Magnifi: Goldman Sachs Bullish on Commodities Market
(March 2021)
Jeffrey Currie, head of Commodities Research at Goldman Sachs, said there is the beginning of a structural bull market in raw materials. The main reason behind this push is a variety of policies that are driving demand. The U.S. and Europe’s supply chains have been in a rut due to the pandemic, but governments are looking to change how they interact with the economy post-pandemic. The U.S. and China are looking to retool their supply chains in a variety of industries. This policy-focused push is creating micro-price pressures in industries. The supply can’t keep up currently, so as the dollar continues to weaken amid inflationary pressures commodities like oil offer an outlet to hedge the macro factors. Crude oil, copper, and Natural Gas are all up in 2021.
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FINSUM + Magnifi: Big Changes to Reg BI Likely Delayed by SEC
(March 2021)
One big anxiety that has been on every broker’s mind since mid-January is: is the SEC going to make Reg BI compliance tougher, or introduce something even worse? A lose-lose. Accordingly, there has been a lot of focus on what newly nominated SEC chief Gary Gensler might do to the rule. The Biden administration and the Democratic party have been quite vocal in their desire to replace the rule with a full fiduciary rule, but will that happen, and when? Well, the reality is that the meme stock craziness is likely one of the best things that could have happened to brokers. You may be asking why: because it likely just distracted the new leadership of the SEC for about a year. The meme stock frenzy has dominated headlines and become a Democratic cause, which means newly nominated SEC chief Gensler will likely be focusing on that immediately upon taking over. Bitcoin is another emerging issue given the huge run-up in prices and public focus. Reg BI is obviously very important, but may become second fiddle because of the other, more newsworthy issues.
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FINSUM + Magnifi: Why eSports and Gambling are a Great Buy Right Now
(March 2021)
Investors have had to recalibrate over the last couple of weeks as Reddit users and memes positioned themselves as players on the real-world financial stage. Related byproducts to the internet culture are growth in online gambling and Esports. In a tweet this week, the Citron research group suggested GameStop should purchase the Esports betting company Esports Entertainment Group Inc. (GMBL). Citron, which had been an advocate of short-selling GME early has switched its position and now thinks that the marriage of these two companies could provide investors a new opportunity. GMBL was up 18.9% after the tweet. Citron has placed a price target of $50 on GMBL and believes this acquisition is the hybrid play to turn GameStop into a one-stop-shop for all things video gaming. GME is in another frenzy of its own rallied on open Thursday despite the S&P 500 slipping yet again.
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FINSUM + Magnifi: Why Gold is Positioned for a Bull Run
(March 2021)
The price of gold has been in a slump after it reached all-time highs mid pandemic. A variety of micro and macro factors are melding to put this commodity in a major second rally. The macro factors are as present as ever. The Fed is still expanding its balance sheet to pump up inflation. On the Fiscal side, the Biden admin is pushing its $1.9 trillion stimulus package. Inflation is on every investor's mind as treasury yields rise and TIPS spreads see it right around the corner. This precious metal is the classic asset to hold as cash loses its value, but for those who don’t want to own the commodity directly a Canadian mining company Starr Peak Exploration (STRPF) is poised to rally. It has expanded nearby mining territory and investors see it as a value play in the next bull run. Berkshire Hathaway has positioned itself behind Barrick Gold this last summer.
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FINSUM + Magnifi: Here's How ESG Flows Really Work
(February 2021)
When the average investor conceptualizes an ESG investment they are picturing diverting funds to a growing new wind energy company or a carbon-neutral delivery service. The reality is that technology companies comprise a bulk of ESG investment, and not because they are green in an intuitive sense but because they have little need to pollute. Here is an example of how that plays out: Asia captured 83.33% of emerging market ESG investment because of its heavy tech weighting. Taiwan Semiconductor Manufacturing, Tencent, and Samsung are the big tech companies generating returns for Asian EM ETFs over other regions.
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FINSUM + Magnifi: How to Capitalize on the US Energy Crisis
(February 2021)
The polar vortex sweeping across the south has left many American’s without energy, but investors are not as powerless in their response to this weather phenomenon. For those who were scared of the volatility in oil prices, electrical equipment suppliers may be on the move. The vortex has exposed electrical grids in deep need of investment. This market was already in a relatively good position as the economy picked back up boosting demand for electrical services. The nation’s expanding alternative energy sector also amplifies electrical suppliers as the intricacies of renewables complement their growth. John Inch, an analyst for Gordon Haskett looks to Eaton (ETN) to capitalize on the older U.S. electrical Grid. Other investors are turning to Quanta Services (PWR) and MasTec (MTZ) to capitalize on the energy crisis. Both stocks exceeded early-week price targets.
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FINSUM + Magnifi: The Nasdaq Correction May Be Signaling a Bear Market
(February 2021)
The market had eagerly awaited Fed Testimony before Congress on Tuesday as investors wanted clarity on rising inflation concerns, but it appears investors didn’t take the ‘sit and wait’ approach. A bearish surge in overnight trading and on open primarily in tech stocks weighed the market down. Inflation concerns are driving this slump as many tech companies are dependent on cash flows. Tech concentrated index NASDAQ already had a hard Monday down 2.5% but fell off another 1.8% on Tuesday. What would normally be a bullish sign for markets appears very bearish as Powell tells congress inflation is soft and the Fed remains on track to hit its target. Treasury yields have been on the rise as the markets are in lockstep with the Fed, hitting an annual high of 1.39%. Powell says that it will move patiently and slowly telegraphing its moves amid inflation pressures.
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FINSUM + Magnifi: Fear rising inflation? Here’s How to Play It
(February 2021)
Inflation concerns are on the rise. The Fed has reacted with large unprecedented moves to the Covid-19 recession. The Biden administration is coming out of the gates swinging with a proposed $1.9 trillion stimulus package, that even has debt dove Larry Summers, former secretary of the Treasury for Democrat Bill Clinton, voicing fears of inflation's return. It’s not just talking heads either, the data can speak for itself. Treasury yields are on the rise and the 10-year-break even inflation rate reached a 6-year peak. Generally speaking, the banking sector is speaking to the same tune as the Fed, and given the Fed isn’t stepping off the gas pedal the SPDR regional banking ETF (KRE) is a way investors can align themselves with Fed’s zeitgeist. The regional banks are in tune with the local loan markets and are more responsive to policy than the day-to-day financial news cycle. KRE is trading at $61.83, by buying a $61 put option for $4.40 and a $65 call option for $3.90 in June, investors can bet that the Fed and the Biden administration are going to hold steadfast until they “see the whites of the eyes of inflation”.
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FINSUM + Magnifi: Top Asset Manager Makes All Funds ESG
(February 2021)
ESG has been getting more and more mainstream, and yesterday it likely took the final hurdle to major acceptance. A top asset manager with almost $1 tn in AUM announced that from here forward, all its new funds would be ESG. The manager is DWS group, which is majority owned by Deutsche Bank. According to DWS, “Sustainability is more than a corporate topic, it’s a society topic and an industry topic”. The move follows UBS’ recommendation last year that investors choose sustainable investing over traditional investing. However, according to some US financial advisors, these kind of moves will come slowly in the US. “There is too much assets tied up in old money and not enough advisor support,” says Jeff Glitterman of Glitterman Wealth Management.
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