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The market’s comeback from coronavirus lows caused two Wall Street greats to change their minds

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Few traders have had careers as long and stellar as Stanley Druckenmiller and Paul Tudor Jones.

Rarer still, however, is for both of those investors in the same week to describe themselves as “humbled” by what they’re seeing in the stock market.

But both Druckenmiller and Jones said the S&P 500’s robust rally since March left them perplexed and wondering how, amid a global pandemic and civil unrest, the index could have rebounded with such strength.

After all, even with Thursday’s steep losses, the index is up 37% since its March low.

They and others now say that a combination of unprecedented monetary and fiscal stimulus appears to have pacified the market in a way they’ve never seen before.

“Let me tell you, if there was a franchise for humble pie, oh my lord there’d be a mile long to own that because we’ve all had huge gulps of it — me included,” Jones told the New York Economic Club on Wednesday. “You just had unprecedented times in every way, shape or form.”

Druckenmiller, who joined CNBC’s “Squawk Box” on Monday, expressed a similar view.

“I’ve been humbled many times in my career, and I’m sure I’ll be many times in the future. And the last three weeks certainly fits that category,” he said.

For those unfamiliar with the two investors, Druckenmiller — who said as recently as mid-May that he thought the market was overvalued — and Jones aren’t the type to change their minds on a whim.

Jones, whose Wall Street fame can be tied back to his brazen and accurate prediction of the October 1987 crash known as “Black Monday,” has made much of his fortune by standing by his convictions.

Bets designed to pay off in times of market duress like Black Monday, when the stock market fell 22% in one day, or ahead of the Great Recession have solidified Jones’ prowess.

Fellow billionaire investor Druckenmiller also isn’t one afraid of taking a contrarian bet if he’s convinced of a good trade. His famous short bet against the British pound in 1992 netted George Soros’ Quantum Fund some $1 billion in profits.   

So when Druckenmiller said Monday that he’s been humbled by the market’s rebound and has only returned 3% since the March bottom, others tend to pay attention.

The Fed: They’re ‘everywhere’

Explaining the S&P 500’s climb since March is a tricky business with many possible answers, but Jones and Druckenmiller say the gains almost certainly have something to do with Washington.

Congress passed in March the $2.2 trillion CARES Act, a mammoth piece of emergency legislation that sought to inject the U.S. economy with a much-needed cash infusion. The law, unrivaled in American history for its scope and size, came as businesses closed and people sheltered at home to slow the spread of Covid-19.

It provided funding for hospitals and research labs, direct payments of $1,200 to individuals earning up to $75,000 and dramatically expanded jobless benefits for those the millions of Americans who’d find themselves without work in the weeks to come. It also established the Paycheck Protection Program (PPP) and sought to provide support to many of the smallest businesses in the U.S.

An additional piece of stimulus legislation, the $3.5 trillion HEROES Act passed by House Democrats last month, is stalled in the Senate, where Republicans thus far favor a wait-and-see approach to further fiscal stimulus.

But as helpful as the CARES Act was for individuals and commerce, investors have applauded perhaps even louder for the Federal Reserve. The Fed, led by Chairman Jerome Powell, announced throughout March and April a torrent of new lending powers designed to provide as much liquidity to the credit markets as possible.

This unparalleled response from the Fed has in effect drowned the market in cash and provided business owners with one of the most powerful safety nets in U.S. history, said Prudential Financial market strategist Quincy Krosby.

“Let me put it this way: The Fed’s balance sheet in December 2008 was approximately $880 billion. And then when they finished [with Great Recession stimulus] it was about $4.5 trillion,” she said in a phone interview on Tuesday. “Now this time around, in very, very short order, they’re above $7 trillion.”

But in addition to expanding its balance sheet and asset purchases, the central bank announced its own $2.3 trillion lending program that will extend credit to banks that issue PPP loans and purchase up to $600 billion in loans issued via the Main Street program to mid-sized businesses.

It also said it would expand plans to backstop lending to some of the country’s largest companies by supporting riskier bonds issued by firms that have lost their investment-grade status.

“Think about how fast they moved. And how quickly they moved into every nook and cranny in the market to stabilize financial conditions,” Krosby said of the central bank. “They’re everywhere, they’re everywhere. And they have made it clear they’re not going to stop.”

Not out of the woods yet?

But Krosby noted that while markets have been buoyant about the Fed’s monetary “bazooka,” recent economic data is beginning to show signs of improvement. She highlighted strength in the housing market — and specifically mortgage applications for home purchases — as evidence Americans are feeling at least somewhat optimistic about their year ahead.

Applications for mortgages for the week ended June 6 were up 13% from a year ago despite higher interest rates, the Mortgage Bankers Association said Wednesday. Last week’s far-better-than-expected May jobs report also lifted equities and the economic outlook for 2020.

But while a downtick in double-digit unemployment may have surprised investors to the upside, economists and politicians alike caution that coronavirus-related turbulence isn’t likely to go away so soon.

U.S. Senator Bob Menendez said that while he’s glad to see any signs of improvement in the labor market, more needs to be done to ensure those successes aren’t lost in the months ahead.

“I’m always happy when we get a good jobs report … but I think it’s way too early to claim victory” the New Jersey Democrat said when reached via phone on Wednesday.

Sen. Bob Menendez (D-NJ).

Adam Jeffery | CNBC

Those jitters were evident Thursday, when the Dow Jones Industrial Average sank 1,800 points and the S&P 500 lost 5.89% as new Covid cases in southern U.S. states sent investors running to take profits.

“I understand why people feel different than the last time,” Menendez said. “In 2009, the stimulus bill was less than $1 trillion. That’s a third of the size of what we’ve pumped into the economy since March.”

But, the senator argued, even more federal support is needed to help states like New Jersey that have borne an outsized proportion of U.S. Covid-19 cases and had to implement strict business closures to help slow its spread.

Menendez on May 18 introduced a piece of bipartisan legislation known as the SMART Act that would appropriate $500 billion to state and local governments based on infection rates and tax revenue losses.

“I have enough data to know that there are things that are coming at us that we need to resolve,” he said. “I would hope that there’s a sense of urgency of now. July’s going to be pivotal as to whether or not these things happen.”

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Source: https://www.cnbc.com/2020/06/13/top-investors-cite-historic-policy-after-markets-return.html

Publications

Security and Sustainability Forum-With Hazel Henderson and Claudine Schneider. 10/22/2020

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Steering Societies Beyond GDP to the SDGs

With Hazel Henderson and Claudine Schneider

October 22, 2020

1:15 pm to 2:15 pm EDT

The next webinar in the SSF series, with ecological economist and futurist Hazel Henderson, will address how the UN SDGs can and should replace GDP as the basis for valuing society leading to an economy based on planet protection and human wellbeing. Claudine Schneider is Hazel’s guest.

GDP accounts for all the public expenditures as “debt” while ignoring the value of the assets they created. If GDP were to be corrected by including the missing asset account, these debt-to-GDP ratios would be cut by up to 50% — with a few keystrokes! Learn why money isn’t what you think it is and why that matters to life on Earth in the next two webinars with Hazel and guests.

Register

Claudine Schneider is a former Republican U.S. representative from Rhode Island. She was the first, and to date only, woman elected to Congress from Rhode Island. She is founder of Republicans for Integrity, which describes itself as a network of “Republican former Members of Congress who feel compelled to remind Republican voters about the fundamentals of our party and to provide the facts about incumbents’ voting records.”

October 22nd webinar with Claudine Schneider and Hazel

Sincerely,

Ed.

Edward Saltzberg, PhD

Executive Director

Security and Sustainability Forum

www.ssfonline.org

[email protected]

Sincerely,

Ed.

Edward Saltzberg, PhD

Executive Director

Security and Sustainability Forum

www.ssfonline.org

Source: https://www.ethicalmarkets.com/63564-2/

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The Briefing: RVShare raises over $100M, Google disputes charges, and more

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

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RVShare raises over $100M for RV rentals

RVShare, an online marketplace for RV rentals, reportedly raised over $100 million in a financing led by private equity firms KKR and Tritium Partners.

Akron, Ohio-based RVShare has seen sharp growth in demand amid the pandemic, as more would-be travelers seek socially distanced options for hitting the road. Founded in 2013, the company matches RV owners with prospective renters, filtering by location, price and vehicle types.

Previously, RVShare had raised $50 million in known funding, per Crunchbase data, from Tritium Partners. The company is one of several players in the RV rental space, and competes alongside Outdoorsy, a peer-to-peer RV marketplace that has raised $75 million in venture funding.

Funding news

  • BrightFarms closes on $100M: Indoor farming company BrightFarms said it secured more than $100 million in debt and new equity capital to support expansion plans. The Series E round of funding was led by Cox Enterprises, which now owns a majority stake in the company, and includes a follow-on investment from growth equity firm Catalyst Investors.
  • Anyscale inks $40MAnyscale, the Berkeley-based company behind the Ray open source project for building applications, announced $40 million in an oversubscribed Series B funding round. Existing investor NEA led the round and was joined by Andreessen Horowitz, Intel Capital and Foundation Capital. The new funding brings Anyscale’s total funding to more than $60 million.
  • Klar deposits $15M: Mexican fintech Klar closed on $15 million in Series A funding, led by Prosus Ventures, with participation from new investor International Finance Corporation and existing investors Quona Capital, Mouro Capital and Acrew. The round brings total funding raised to approximately $72 million since the company was founded in 2019. The funds are intended to grow Klar’s engineering capabilities in both its Berlin and Mexico hubs.
  • O(1) Labs rakes in $10.9M: O(1) Labs, the team behind the cryptocurrency Mina, announced $10.9 million in a strategic investment round. Co-leading the round are Bixin Ventures and Three Arrows Capital with participation from SNZ, HashKey Capital, Signum Capital, NGC Ventures, Fenbushi Capital and IOSG Ventures.
  • Blustream bags $3M: After-sale customer engagement company Blustream said it raised $3 million in seed funding for product usage data and digital transformation efforts for physical goods companies via the Blustream Product Experience Platform. York IE led the round of funding for the Worcester, Massachusetts-based company with additional support from existing investors.Pillar secures another $1.5M: Pillar, a startup that helps families protect and care for their loved ones, raised $1.5 million in a seed extension to close at $7 million, The round was led by Kleiner Perkins.

Other news

  • Google rejects DOJ antitrust arguments: In the wake of a widely anticipated U.S. Justice Department antitrust suit against Google, the search giant disputed the charges in a statement, maintaining that: “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”
  • Facebook said to test Nextdoor rival: Facebook is reportedly testing a service similar to popular neighborhood-focused social Nextdoor. Called Neighborhoods, the feature reportedly suggests local neighborhood groups to join on Facebook.

Illustration: Dom Guzman

Venture investors and leaders in the fintech space can visualize a future where such startups will move toward again rebundling services.

Root Inc., the parent company of Root Insurance, launched its initial public offering and is looking at a valuation of as much as $6.34 billion.

Clover Health posted rising revenues and a narrower loss in its most recent financial results, published in advance of a planned public market debut.

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

Source: https://news.crunchbase.com/news/briefing-10-21-20/

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Syte Sees $30M Series C For Product Discovery

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Online shopping has become the norm for most people in 2020, even coaxing traditional retail brands to up their presence to stay competitive. However, now that shoppers can’t see and touch products like they used to, e-commerce discovery has become a crucial element for customer acquisition and retention.

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Enter Syte, an Israel-based company that touts creating the world’s first product discovery platform that utilizes the senses, such as visual, text and voice, and then leverages visual artificial intelligence and next-generation personalization to create individualized and memorable customer experiences, Syte co-founder and CEO Ofer Fryman told Crunchbase News.

To execute on this, the company raised $30 million in Series C funding and an additional $10 million in debt. Viola Ventures led the round and was joined by LG Technology Ventures, La Maison, MizMaa Ventures and Kreos Capital, as well as existing investors Magma, Naver Corporation, Commerce Ventures, Storm Ventures, Axess Ventures, Remagine Media Ventures and KDS Media Fund.

This brings the company’s total fundraising to $71 million since its inception in 2015. That includes a $21.5 million Series B, also led by Viola, in 2019, according to Crunchbase data.

Fryman intends for the new funding to be put to work on product enhancements and geographic expansion. Syte already has an established customer base in Europe, the Middle East and Africa, and will now focus expansion in the U.S. and Asia-Pacific.

Meanwhile, Syte has grown 22 percent quarter over quarter, as well as experienced a 38 percent expansion of its customer base since the beginning of 2020.

“Since we crossed $1 million annual recurring revenue, we have been tripling revenue while also becoming more efficient,” Fryman said. “We can accelerate growth as well as build an amazing technology and solution for a business that needs it right now. We plan to grow further, and even though our SaaS metrics are excellent right now, our goal is to improve them.”

Anshul Agarwal, managing director at LG Technology Ventures, said Syte was an attractive investment due in part to its unique technology.

“They have a deep-learning system and have created a new category, product discovery that will enable online shopping in a way we never had the ability to do before,” Agarwal said. “The product market fit was also unique. We believe in the strong execution by the team and the rapid growth in SaaS. We looked at many different companies, and the SaaS metrics that Syte showed are the strongest we’ve seen in a while.”

Illustration: Li-Anne Dias

Venture investors and leaders in the fintech space can visualize a future where such startups will move toward again rebundling services.

Root Inc., the parent company of Root Insurance, launched its initial public offering and is looking at a valuation of as much as $6.34 billion.

Clover Health posted rising revenues and a narrower loss in its most recent financial results, published in advance of a planned public market debut.

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

Source: https://news.crunchbase.com/news/syte-sees-30m-series-c-for-product-discovery/

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