James GordonAsia stocks fell Monday as jitters returned to the market following the latest signals that the Federal Reserve will soon scale back its bond-buying program.
Investors have been worrying about a lack of economic stimulus measures.
Asian markets fell sharply at the end of last week after the Fed announced it will not pull back on its stimulus measures. The Nikkei 225 and the Hang Seng index were down more than 4 percent each. The Dow Jones industrial average fell more than 600 points on Friday. Tokyo’s Nikkei 225 fell 4.4 percent, while the Hang Seng index lost 4.1 percent. Hong Kong’s Hang Seng index fell 2.4 percent.. Read more about stock market and let us know what you think.
Chairman of the Federal Reserve, Jerome H. Powell. Fed officials were ready to halt massive purchases of government-backed bonds, according to minutes from their most recent meeting, but were divided on when to start. Credit… Associated Press/Jose Luis Magana
Stocks dropped around the world on Thursday, with the S&P 500 set for a third day of losses as traders reacted to minutes from the Federal Reserve’s latest policy meeting showing that officials were getting closer to reducing monetary stimulus.
The Stoxx Europe 600 index was down 1.7 percent, the most in a month. The S&P 500 was set to open 0.8 percent weaker, futures indicated. The index dropped 1.1 percent on Wednesday, the biggest single-day decline since mid July.
Commodities, such as oil and metals, were also in the red.
Policymakers were willing to reduce the central bank’s massive purchases of government-backed bonds, according to Fed meeting minutes released on Wednesday, but they were split on when to start the process.
Concerns about the spread of the coronavirus in the United States, as well as a downturn in the Chinese economy, weighed heavily on the stock market.
China’s government is stepping up efforts to calm the housing boom and limit steel output in order to decrease pollution. The number of individuals hospitalized with the virus in the United Areas is increasing, especially in states with poor vaccination rates. Officials in Alabama said on Wednesday that there were no more critical care unit beds available.
Because many traders are away over the summer and liquidity is scarce, market movements may be magnified.
“With worries about Covid and growth in Asia, oil prices are at their lowest since May, and risk is firmly ‘off,’” said Kit Juckes, a strategist at Société Générale, in a note.
The FTSE 100 index in the United Kingdom dropped 1.7 percent. In Asia, the Nikkei 225 fell 1.1 percent, while Hong Kong’s Hang Seng index fell 2.1 percent.
The U.S. oil benchmark, West Texas Intermediate, sank 3.3 percent to $63.27 a barrel, the lowest level in three months; it has dropped almost 15% this month. Brent oil prices have dropped 2.7 percent to $66.34 per barrel.
Steel rebar, a key component in construction, has decreased almost 4% in price.
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The Securities and Exchange Commission is increasing its examination of blank-check businesses, often known as SPACs. Credit… Reuters/Andrew Kelly
In recent months, regulators have begun examining special purpose acquisition firms, or SPACs, more carefully, as the number of transactions involving private businesses merging with public shell companies has increased. The Securities and Exchange Commission is focused on transparency and accounting standards, while Congress has proposed holding banks accountable for their work on SPACs in the same way that conventional initial public offerings are held accountable.
According to recent study published in the DealBook newsletter by Usha Rodrigues of the University of Georgia School of Law and Mike Stegemoller of Baylor University, there is another pressing problem to be concerned about: “empty voting.”
Investors in SPACs may vote in favor of a merger but then redeem their shares before the transaction is completed. If investors don’t wish to retain the shares after the blank-check business merges with a target company, the SPAC structure enables them to receive their money back at the original public offering price, plus interest. Despite the fact that redemptions are on the rise, with significant majorities of shareholders withdrawing their funds in certain instances, nearly all transactions are still approved.
Why? One explanation may be that redeeming shareholders, who are often institutional investors such as hedge funds, can retain the warrants that come with SPAC listings, which are tradable and provide exposure to the combined business despite having redeemed their shares for cash. While redemptions lose the target firm of the money in the SPAC, outside investment at the time of the transaction (known as a PIPE) is typically greater, making the merger worthwhile.
The capacity to vote “yes” and then “jump ship” is concerning, according to the academics, since it is a kind of “empty voting.” Even as they sell their shares, it gives the appearance that early SPAC investors are in support of the company’s selected merger target. This signal may be misinterpreted by later investors, who are more likely to be retail investors.
The SEC should prevent the transaction from going through if more than 50% of SPAC shareholders seek to redeem their shares, according to the academics.
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Last month, Robinhood’s founders, Vlad Tenev, right, and Baiju Bhatt, met in New York. Credit… The New York Times’ Sasha Maslov
SAN FRANCISCO, Calif. — The stock trading app Robinhood reported higher quarterly sales on Wednesday, but it still lost money, as daily trading become a permanent pastime for many users.
Robinhood’s sales for the second quarter surged to $565 million, up 131 percent over the same time last year, according to its first financial report as a public company.
It also lost $502 million, compared to a $58 million profit the year before. A major portion of the loss was attributable to warrants issued as part of an emergency financing round earlier this year.
The number of individuals trading stock for the first time through Robinhood has “encouraged” Vlad Tenev, the company’s CEO, according to a statement. According to the firm, there are 22.5 million user accounts with funds, up from 9.8 million in the same time last year.
After the price of Bitcoin and other cryptocurrencies reached record highs in the spring, cryptocurrency trading accounted for a major part of Robinhood’s growth in the quarter. Cryptocurrency trading fees brought in $233 million, a roughly 50-fold increase from $5 million a year ago. During the quarter, more than 60% of its clients traded bitcoin, and new customers used the app to trade cryptocurrencies rather than equities, according to the firm.
The initial public offering (IPO) of Robinhood in July was a flop. The stock started trading at $38 per share, which was the low end of a price range suggested by the company’s lenders. The stock subsequently dropped, finishing the first day down 8.4%.
Individual stock traders started pushing the price higher a week later, mostly via option trading, a high-risk type of trading that Robinhood enables. The company’s stock then soared to as high as $70 a share.
The surge transformed Robinhood into a “meme stock” that trades primarily on emotion and momentum rather than business fundamentals. There had been no changes in Robinhood’s business perspective that might have influenced the abrupt increase.
Since then, the stock has stabilized at $50 per share, valuing the business at $41.8 billion. In after-hours trading on Wednesday, the stock dropped more than 7%.
By enabling traders who have regularly pushed up the values of old brick-and-mortar companies like GameStop, the video game retailer, and AMC, the movie theater chain, Robinhood has helped boost meme stocks. Options trading and other hazardous wagers were incorporated in Robinhood’s goal to offer Wall Street-style investing to ordinary people, resulting in some customers experiencing startling losses and angering others who believe in a more conventional “buy and hold” investment approach.
Robinhood’s public market debut reflected this attitude, giving an unusually significant percentage of its initial public offering (I.P.O.) shares to retail investors through its app and enabling consumers to ask questions during investor pitches and earnings calls. Say Technologies, a firm that enables investor question and answer sessions and proxy voting, was purchased for $140 million earlier this month.
However, Robinhood, like many other Silicon Valley firms, has restricted the rights of its shareholders by issuing several classes of stock. Mr. Tenev and Baiju Bhatt, the firm’s founders, have voting power over the company as a result of this arrangement.
One of the most popular shareholder queries, with over 900 votes, was if investors could acquire a Robinhood hat and “hoody jacket” before the firm announced its results on Wednesday afternoon.
Robinhood’s chief financial officer, Jason Warnick, said he’d check into it. He added, “I appreciate the brand’s passion.”
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When Kmart initially opened its doors in 1962, it catered to suburban customers. Getty Images/American Stock/American Stock
Parishioners at the Elevation Church in Concord, N.C., which is housed in a former Kmart. Credit… The New York Times’ Travis Dove
The two-decade decline of Kmart has changed the commercial real estate market in unanticipated ways, bringing churches, truck washes, and self-storage facilities to locations that previously offered Martha Stewart linens and Joe Boxer pajamas. Former Kmarts are being utilized by tenants in cities and towns throughout the nation who would not otherwise have access to such a huge amount of commercial space at such a low cost. READ THE ENTIRE ARTICLE
Investors fearing the end of the federal government’s economic stimulus measures in the U.S. sent stocks tumbling on Tuesday, with the Dow Jones Industrial Average falling more than 150 points at one point as the rebound from Monday’s sharp sell-off showed signs of losing momentum.. Read more about stock market news and let us know what you think.
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James Gordon
