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TINA, Macro, Bond Yields, Stocks


#377
End Of TINA

Published:

Mar 06, 2021


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Posted In:

TINA, Macro, Bond Yields, Stocks

Published:

Mar 06, 2021


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Interest rates are up. Tech stocks are down. The U.S. dollar is strengthening. The macro backdrop is changing as we speak, but Fed Chairman Powell urges caution, stating this week that, “we’re still a long way from our goals of maximum employment and inflation averaging 2% over time.”

The global economy is emerging from the pandemic and that has bond yields moving upwards. Higher yields are in turn helping fortify the U.S. dollar, driving global demand for U.S. assets. This is “notable” (in Powell’s words), as the market has become used to equities producing higher multiples in what has been a historically low-interest rate environment. As of this writing, the forward P/E ratio on the S&P 500 is 21.8x (25-year avg. 16.6x) with the ten-year yield at 1.4% (25-year avg. 3.6%).

With interest rates pointing higher (and everyone fed up with Zoom meetings) the sell off in tech stocks might mark the end of the TINA trade (There Is No Alternative). This had become the mantra of bull traders, who argued that yields have been so low that bonds were hardly worth owning as an asset class.

While the Fed has clearly stated that monetary policy will stay as is for the foreseeable future, the market can’t help but start to get nervous with signs of reflation on the horizon. In fact, it is precisely the Fed that will need to keep a steady hand, as an overreaction could provoke an unnecessary amount of volatility. Let's hope that Mr. Powell is a master in the art of communication and can be a little more convincing to the market than Napoleon...

Portfolio News


Minu, a Mexico City-based, pay-on-demand startup, lands a $14m Series A - Many of the startups raising capital in Mexico are focused on financial inclusion, aiming to level the playing field in a country that is largely unbanked and has a burgeoning middle class. One such company, minu, a Mexico City-based, pay-on-demand startup, announced Wednesday that it has raised $14m in a Series A round of funding led by FinTech Collective. New investors VEF, XYZ Ventures, and FJ Labs, as well as DocuSign founder Tom Gonser and Gusto CFO Mike Dinsdale also participated in the financing. Existing backers QED, Next Billion Ventures, and Village Global also put more money in the company. Read more

Income verification is white-hot right now, and Plaid wants in - Plaid recently announced a new income verification product, which it said is aimed at “improving the lending lifecycle” with payroll data. Dubbed simply Income, the new product — which is currently in beta — is designed to make it easier for people to verify their income in order to do things like secure loans, qualify for mortgages, rent apartments and lease cars, among other things. Read more

MoneyLion unlocks the exclusivity of a private banking experience for all with acquisition of Wealth Technologies Inc. - The acquisition of WTI is designed to improve members' experience and engagement with MoneyLion, a digital platform where Americans can easily bank, borrow, save and invest – all in one place. The MoneyLion platform will be powered by WTI's fGPS® Financial Goals Positioning System, the industry's first dynamic course-correcting, comprehensive financial planning and advice system. With this addition, MoneyLion's new analytical framework will provide the intelligent turn-by-turn guidance its members need to confidently manage today, plan for tomorrow and invest in their future. Read more

Brazilian fintech companies Geru and Rebel merge to manage a BRL 1.5b credit portfolio - Portfolio company Rebel will now be a part of Holding Open Co, which assumes a BRL 1.5b loans portfolio and a customer base of 100,000 people. It expects to generate BRL 1b in credit in 2021. Read more

Fintech Collective’s Brooks Gibbins & Gareth Jones — partnering with persistent visionaries - Brooks Gibbins and Gareth Jones are featured on the Wharton Fintech podcast, discussing how FinTech Collective hopes to create the future of financial services and our investment approach for doing so. Listen here. Read more

End Of TINA


The stock market’s gains for 2021 have nearly been wiped out - Stocks began their slide following comments from Fed Chairman Jerome Powell, who was speaking at a Wall Street Journal event. “Today we’re still a long way from our goals of maximum employment and inflation averaging 2% over time,” Powell said. The Fed chief added that the recent surge in bond yields “was something that was notable and caught my attention.” The 'wait and see' message sent bond yields north and stocks south, underscoring the fact that investors anticipate more robust growth and higher inflation coming out of the pandemic. Read more

Powell confirms Fed to maintain easy-money policies - The yield on the 10-year Treasury note rose above 1.55% after Mr. Powell’s interview—its highest level since before the pandemic—up from 1.46% earlier Thursday and 0.92% at the beginning of the year. Such rates influence many consumer and business borrowing costs. Following the run-up in Treasury yields in recent weeks, the average rate on a 30-year fixed-rate mortgage has risen above 3% for the first time since July, Freddie Mac said Thursday. That has started to weigh on applications to buy or refinance homes. Read more

‘There is no alternative’ — stocks’ long-running ‘TINA’ advantage could be ending, worrying traders - Will March be the death of the “TINA” trade? February started with the reflation trade and ended with a bond market rout that scrambled stock valuations and caused some to wonder whether this is the end to the fabled “there is no alternative” to stocks notion. “TINA” has become a mantra of bulls, arguing that yields have been so low that bonds were hardly worth owning as an asset class. But now there is a new cloud on the horizon — higher bond yields are putting a lid on high-valuation stocks. Read more

Industry News


Britain to ease listing rules to buttress London after Brexit - Britain will modernize its listing rules to attract more high-growth and “blank cheque” SPAC company flotations to London, Finance Minister Rishi Sunak said after a government-backed review said the capital was on the back foot after Brexit. The London Stock Exchange is facing tougher competition from NYSE and Nasdaq in New York, and from Euronext in Amsterdam since Britain fully left the European Union on Dec. 31. Read more

Dallas Mavericks first merchant to accept Dogecoin for tickets and merchandise - With fans in mind, the Mavs use BitPay to process all cryptocurrency purchases including tickets and merchandise with all top cryptocurrencies including BTC, BCH, ETH, USDC, GUSD, PAX and BUSD and now DOGE. The ability to accept crypto expands a business’ sales opportunity into international markets where accepting credit cards is not practical while reducing high fees and increasing payment transparency and efficiency. Read more

Insurer Oscar Health falls in Wall Street debut after $1.4b IPO - Oscar’s IPO came on the heels of several other public market debuts for insurtech groups in the past year, which fueled an already strong run of stock market listings. While Oscar, which bills itself as the first health insurance company “built around a full stack technology platform”, has more than half a million paying members and offers its insurance plans in 18 US states, the company has struggled to become profitable. Read more

Coinbase founder rides crypto boom to Nasdaq listing - Of all the ways to grow rich from the cryptocurrency boom, Brian Armstrong chose perhaps the most conservative. 9 years after founding the most popular destination in the US for cryptocurrency buyers, Coinbase, trades between private investors at about $100b valuation. At those prices, Armstrong’s shares are worth a cool $14.8b. Read more

Square acquires majority of Tidal, Jay-Z’s streaming service, in $297m deal - What did Jay-Z and Jack Dorsey talk about when they went yachting around the Hamptons together last summer? Perhaps only Beyoncé knows. Maybe now we do, too. Square, the mobile payments company led by Mr. Dorsey, announced on Thursday its plan to acquire a “significant majority” of Tidal, the streaming music service owned by Jay-Z and other artists — including Beyoncé, Jay-Z’s wife, and Rihanna, who is a client of Jay-Z’s entertainment management company, Roc Nation. Read more

Watch out, PayPal. Square just launched its own bank - Square launched an in-house bank that it says will allow it to "operate more nimbly" in an increasingly crowded fintech market. The firm announced Monday that the bank has begun operations after completing the charter approval process with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions. It will operate as an independently governed subsidiary of Square Inc (SQ), and will provide business loans and deposit products to sellers who use its card reader and other point-of-sale services. Read more

Insurance startup Hippo to go public in $5b SPAC merger with Reinvent Technology Partners Z - Reinvent’s co-directors are LinkedIn co-founder Reid Hoffman and Mark Pincus, founder of mobile-game maker Zynga Inc. Hippo’s move will provide funding as it continues a transition from being a partner to insurance carriers that provides a digital-sales channel for them to being both a partner and a direct competitor. Read more

Walmart poaches two Goldman Sachs bankers to lead new fintech startup - Walmart’s move -- depriving one of Wall Street’s elite firms of the talent atop its own foray into online banking -- underscores the seriousness of the retailer’s intent to intertwine itself in the financial lives of its customers. The audacious poaching punctuates years of warnings by bank leaders that their industry faces tough new challengers, after regulators smoothed the way for corporate giants and Silicon Valley to expand into payments and other services. Read more

Barstool’s Portnoy touts buzz-focused ETF with team owner, hedge fund manager - Portnoy announced a new ETF focused on stocks with high levels of social media engagement, nicknamed BUZZ, to begin trading Thursday. The ETF, formally named the VanEck Social Sentiment ETF, will trade under the ticker BUZZ. The fund uses algorithms to track social media and news, buying the top 75 large cap stocks viewed as being discussed ‘most favorably’ by the algorithm. Read more

PayPal to buy crypto custody firm Curv - PayPal is said to be in the process of buying Curv, a technology firm that powers the secure storage of cryptocurrency, according to three sources familiar with the situation. Several people in the cryptocurrency space have said PayPal, which made an entrance there last year, turned its attention to Curv after talks to buy crypto custody and trading firm BitGo fell through last year. Read more

LatAm’s wealth techs face regulatory and educational challenges - Digital investment platforms are quickly gaining traction, but industry players say regulatory clarity and greater education for users are key for sustainable growth of LatAm’s nascent wealth tech industry. Read more

Greensill Capital faces possible insolvency after Credit Suisse suspends investment funds - Greensill’s problems came to a head Monday after Credit Suisse’s asset-management arm said it would stop allowing investors to buy into or sell out of four private investment funds that rely exclusively on debt like securities created by Greensill. A part of the funds is “currently subject to considerable uncertainties with respect to their accurate valuation,” according to a notice the bank sent to investors. Read more

Goldman Sachs restarts cryptocurrency desk amid bitcoin boom - The desk, which will begin dealing bitcoin futures and non-deliverable forwards for clients from next week, is part of Goldman’s activities within the fast-growing digital assets sector, which also includes projects involving blockchain technology and central bank digital currencies. As part of this work, the bank is also exploring the potential for a bitcoin exchange traded fund and has issued a request for information to explore digital asset custody. Read more

Italy’s green bond demand smashes peers in debut offering - The rush of demand allowed the nation to knock a few basis points off the pricing, the latest evidence of a so-called greenium for sustainable assets. Countries and companies issuing such debt, where spending is ring-fenced for environmental projects, have often managed to achieve cheaper financing than from conventional bonds. Read more

Oxxo enters the fintech ecosystem with its digital wallet Spin - Oxxo presented Spin, a digital wallet through which it will be possible to manage, send and receive money from a cell phone or a store of this chain. According to ComproPago, in accordance with the provisions of the fintech law, this platform can offer products and services that it will manage through the Spin brand. Read more

KKR moves to ‘democratize’ private equity as SEC signals industry scrutiny - KKR has invested in iCapital, which will offer individual investors access to KKR’s strategies. The iCapital KKR Private Markets Fund gives accredited investors access to private equity funds and co-investments sponsored or advised by KKR. Read more

Select Financings


Beam Dental - Ohio based digital-first dental insurer raised $80m in Series E funding led by Mercato Partners’ growth equity fund, Traverse. Read more

Clari - California based revenue operations platform raised $150m in Series E funding led by Silver Lake. Read more

Countingup - UK based business current account startup raised £9.1m in Series A funding led by Framework Venture Partners. Read more

Eco - San Francisco based digital global cryptocurrency platform raised $26m in Series A funding led by a16z. Read more

Flourish - California based customer engagement platform for banks raised $1.5m in Seed funding led by Canary. Read more

FutureFuel.io - New York based student debt focused fintech company raised $10m in Series A1 funding led by UBS. Read more

Hepster - Germany based insurtech platform raised $10m in Series A funding led by Element Ventures. Read more

Iris Energy - Australia based Bitcoin-focused data center business raised $31m in new funding led by Platinum Asset Management. Read more

Klarna - Sweden based payments platform that lets users buy now and pay later raised $1b in new funding from more than 30 new and existing investors. Read more

OpenComp - San Francisco based compensation platform raised $4.6m in Seed funding led by Time Ventures. Read more

Papaya Global - Israel based workforce management platform raised $100m in Series C funding led by GreenOaks Capital Partners. Read more

TaxBit - Utah based provider of cryptocurrency tax and accounting services raised $100m in Series A funding led by Paradigm and Tiger Global. Read more

Unslashed Finance - UK based provider of insurance products for crypto assets raised $2m in Seed funding from investors including Lemniscap, P2P Capital, Bitscale Capital, and Chainlayer. Read more

Xendit - Indonesia based payments infrastructure startup raised $64.6m in Series B funding led by Accel. Read more


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