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Today's big stories

Spanish banks BBVA and Sabadell shut down merger talks
We've found three reasons British stocks could do better than most from the global economic recovery – Read Now
Bitcoin’s price took a tumble after hitting new highs just days before

1.

Merger Counselling

What’s Going On Here?

BBVA and Sabadell just can’t see eye to eye: the two Spanish banks ended merger talks after struggling to come to a compromise on price.

What Does This Mean?

Sabadell’s been keen to merge with another Spanish bank for a while now, and it managed to catch the attention of heavy-hitter BBVA – worth $30 billion to Sabadell’s $2.5 billion. But when they actually sat round a table to work out details, BBVA’s proposed price didn’t go down too well – and now it looks like Sabadell’s rejected it outright.

Not that BBVA’s losing much sleep over it: the bank – which has plenty of cash to spend after selling its US operations – saw its share price rise when it mentioned the deal was just one of several options. Sabadell, meanwhile, is under increasing pressure to boost profitability. And while it did say it’ll release a new business plan in 2021, it wasn’t enough to convince its investors, and its shares plummeted.

Why Should I Care?

Zooming in: Finding “the one”.
There’s been a lot of deal talk among Spanish banks lately, mostly because of the tough time they’ve been going through as their recession-squeezed customers miss loan repayments. And even the loans that are being repaid aren’t as profitable as they were, hobbled as they are by ultra-low interest rates. A deal, then, would allow banks to combine their revenues and cut duplicate costs (i.e. synergies), which is why this might not be the last you hear of a Saba-deal.

The bigger picture: The problem of too much cash.
BBVA isn’t the only one with cash to burn right now: investment firm 3G capital is sitting on $10 billion, but it’s reportedly holding off from making deals amid all the coronavirus uncertainty and all-time high valuations. Investing legend Warren Buffett isn’t having much luck either, which might be why his company, Berkshire Hathaway, has resorted to buying record amounts of its own shares.

You might also like: How to profit when one firm buys another.

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2. Analyst Take

Three Reasons To Buy British

What’s Going On Here?

With the global recovery expected to kick off in earnest next year, there’s good reason to think Britain’s stocks are set to bounce back better than most.

For one, the FTSE 100 – the UK’s main stock market index – is still almost 20% below pre-pandemic levels, making it particularly cheap by one popular measure.

For another, the index includes a lot of economically sensitive companies, like energy firms. So if the wider economy starts doing better, so should they.

There’s one other major factor working in their favor, and we explore them all in more depth in today’s Insight: just head here to check out the three reasons UK stocks could do well out of the recovery.

Get the full Insight here

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3.

Fool’s Bitcoin

What’s Going On Here?

Bitcoin’s suddenly looking a bit less convincing: the cryptocurrency dropped 10% late last week, even after having hit new highs a few days before.

What Does This Mean?

Bitcoin’s been on a tear this year: its price has risen 130% versus the US stock market’s 14%, and just last Wednesday it hit the $19,600 mark – its highest since December 2017. That might be because mainstream investors seem to be coming around to digital currencies: PayPal announced last month it’d let its users buy and sell cryptocurrencies using their PayPal accounts, and last week a bitcoin exchange-traded note – an easy way for stock and bond market investors to buy into crypto – launched in Germany.

But not long after bitcoin peaked, its price fell by the biggest amount in a single day since March. And that could be because investors wanted to lock in their profits: analysis by crypto firm Intotheblock showed several big traders effectively moving their coins onto exchanges – suggesting they were gearing up to sell.

Why Should I Care?

The bigger picture: Profits don’t come easy.
Investors might be worried that 2017 – when bitcoin’s price skyrocketed, only to collapse shortly after – is happening all over again. This time around, though, crypto enthusiasts could argue that bitcoin’s reputation as a “safe haven” in volatile times makes its price more sustainable. Kansas City Federal Reserve probably disagrees: the reserve bank concluded in April that bitcoin behaves exactly like a risky asset – which means investors are essentially betting on supply and demand to work in their favor (tweet this).

For you personally: Always use protection.
When you own a cryptocurrency, what you actually own is a private key that lets you make transactions from a given “address”. That means keeping your key out of hackers’ grubby little hands is your number one priority. It can be expensive, though, so be sure to account for the additional cost if you’re thinking of taking the plunge.

You might also like: How you can profit from bitcoin’s price swings.

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💬 Quote of the day

“Everywhere is walking distance if you have the time.”

– Steven Wright (an American stand-up comedian, actor, writer, and film producer)

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🌍 Finimize Community

🚨 The Next Gen Summit is almost here

The news has been on about it for weeks, the fans have been going wild, and the scalpers are out in full force (which is odd, because it’s free). Yep, the best and brightest from the financial and business worlds are coming together tomorrow to share their best and brightest ideas, and you can join them for free.

Sign up for the whole thing, or reserve your spot to each discussion below…

👷 12pm UK Time: Tools for the DIY Investor
🚀 1.30pm UK Time: Re-imagining Platforms for the Future
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🤳 4pm UK Time: Community Conversations: Financial Tools for Casual Investors
👜 5pm UK Time: Community Conversations: 2020 Investing Trends
😎 6pm UK Time: Defining a New Culture for Investors

📚 What we're reading

Byron Bay is disappearing (The Conversation)
The children of quarantine (The Cut)
Is Amazon going to destroy us all? (The Guardian)

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Finimize - 📈 Blimey, British stocks

Today's big stories

Merger Counselling

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Three Reasons To Buy British

🍷 Cheers to Bright Cellars

Fool’s Bitcoin

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🎨 Masterworks just returned 32% to its investors

🚨 The Next Gen Summit is almost here

Older messages

💸 The dollar's flying high

😨 SPACs aren't worth the fuss

😭 Stocks ruin Christmas

🎄 Best Buy brings tidings of despair

🎉 Meet our Next Gen Investor Summit speakers

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