The SPAC Ship is Sinking. Investors Want Their Money Back. [WSJ]
Shares of half of the companies that finished SPAC deals in the last two years are down 40% or more from the $10 price where SPACs typically begin trading, erasing tens of billions of dollars in startup market value. Losses top 60% from the peak about a year ago for many once-hot names like the sports-betting company DraftKings Inc. and space-tourism firm Virgin Galactic Holdings Inc., founded by British billionaire Richard Branson….
A number of companies are now withdrawing from previously announced SPAC deals, even though they sometimes have to pay millions of dollars to the SPAC for backing out. Savings and investing app Acorns Grow Inc. was the latest to do so, ending its roughly $2.2 billion SPAC agreement on Tuesday and becoming the 10th company to terminate a SPAC deal since early November, according to Dealogic.
How Robinhood Investors Robbed Themselves [WSJ]
In what some contend is part of its psychological toolbox that induces people to trade excessively—stoking FOMO, the fear of missing out—Robinhood tells customers what others are doing on the platform. The results aren’t pretty.
Many stocks that joined the top-100 list after strong performances at some point in 2021, such as Clover Health Investments, Coinbase and even Robinhood itself, which went public last summer, have since faded sharply. The broker’s shares have lost more than three-quarters of their value since peaking shortly after the IPO. On average, those 27 stocks are down by 16% just this month.
Fed releases long-awaited study on a digital dollar but doesn’t take a position yet on creating one [CNBC]
“A CBDC could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank,” the report says…. The paper lists a checklist of 22 different items for which it is soliciting public feedback. There will be a 120-day comment period. Fed officials say the report is the first step in an extensive process but there is no timetable on when it will be wrapped up.
Crypto Selloff Pushes Bitcoin to a Six-Month Low of $38,000 [Bloomberg via Yahoo!]
Bitcoin has suffered a rocky start to the year and prices are down roughly 40% from the early November peak. Digital assets suffered especially in recent days against a wider tech selloff, rising regulatory threats and concerns around tightening U.S. monetary policy…. A technical pattern based on a momentum indicator known as the weekly relative strength index hinted at the possibility that Bitcoin’s slump might be due a breather. The indicator on Friday fell into a region that in the past accompanied floors in Bitcoin selloffs.
Credit Suisse is fined $9 mln in U.S. over research conflicts, customer safeguards [Reuters]
The Financial Industry Regulatory Authority said the Swiss bank published more than 20,000 research reports between 2006 and 2017 that contained inaccurate disclosures about potential conflicts.
It said about 6,400 reports omitted required disclosures, including that the companies had been clients in the last year or were expected to hire Credit Suisse for investment banking in the next three months.
‘Good luck! We’ll all need it’: U.S. market approaches end of ‘superbubble,’ says Jeremy Grantham [MarketWatch via MSN]
“For the first time in the U.S. we have simultaneous bubbles across all major asset classes,” said Grantham, co-founder of investment firm GMO, in a paper Thursday. He estimated wealth losses could total $35 trillion in the U.S. should valuations across major asset classes return two-thirds of the way to historical norms…. The Federal Reserve doesn’t seem to “get” asset bubbles, said Grantham, pointing to the “ineffably massive stimulus for COVID” (some of which he said was necessary) that followed stimulus to recover from the bust of the 2006 housing bubble. “The only ‘lesson’ that the economic establishment appears to have learned from the rubble of 2009 is that we didn’t address it with enough stimulus,” he said.