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Today's big stories

The US government finally reached a deal on a coronavirus economic aid package
Investors are worried Tesla’s going to cause a stock market selloff, but they’re looking in the wrong direction – Read Now
The US Federal Reserve loosened restrictions on the country’s banks

Thrilled To Pieces

What’s Going On Here?

The US government finally put together a $900 billion coronavirus economic aid package over the weekend.

What Does This Mean?

It’s taken more than half a year and the deterioration of a bunch of economic indicators, but the US government has finally settled on a new support package to help pandemic-bruised Americans and their businesses. If the deal gets signed into law, it’ll become the second-biggest economic rescue measure in the country’s history – second only to the $2 trillion aid package passed in March. But for all the much-needed support it’ll offer, the package might be too little too late for the almost eight million Americans who have fallen into poverty since the last round of benefits expired.

Why Should I Care?

For markets: Economic water wings.
Governments and central banks all over the world have spent this year promising to do whatever it takes to cushion the economic blow of the pandemic. That might’ve given notoriously forward-looking investors more confidence in future company profits and stock prices – hence why financial markets have been rallying. Now, though, those investors are essentially relying on all this extra support to keep the global economy afloat until enough vaccinations have been doled out – a potentially precarious position to be in.

Zooming out: Coronavirus 2: This Time, It’s Personal.
The UK, for its part, might be looking longingly at the extra money the US is now pouring into its economy: parts of Britain were plunged into an even stricter lockdown last week, after its government warned of a new coronavirus strain thought to be 70% more transmissible than the original. Thousands of businesses have been told to shut up shop, while countries across the world have stopped travel from the UK altogether. The UK’s central bank and government might want to be on standby: it could spell disaster for the country’s economy.

You might also like: How to trade on a “$900 Billion Aid Package!” headline.

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2. Analyst Take

Nope, Tesla Isn’t Going To Drive A Stock Market Selloff

What’s Going On Here?

When Tesla joined the S&P 500 on Monday, it made the already-pricey-looking top US stock market index look even pricier.

That’s why some analysts reckon this could be the straw that breaks the camel’s back – or rather, the straw that makes investors sell off stocks across the board.

Here’s the thing, though: Tesla’s going to contribute about 1.5% to the S&P 500’s price level, but only 0.2% to its valuation. It’s a subtle difference, but an important one.

It’s important because understanding this more relevant valuation methodology may just give you an edge over other investors – and not just when it comes to Tesla joining the index.

Tesla is a good way in, but it’s by no means the whole story here. So let’s look at how S&P 500 valuation metrics are actually calculated, and how you can avoid the same mistakes as other investors.

Read or listen to the Insight here

🤖 Investerminator: Rise Of The Machines

You might think robot security guards are the stuff of movies, but Knightscope’s autonomous security robots are already in action across the US.

In fact, the Silicon Valley robotics firm is taking the lead in a market that could be worth $165 billion by 2025.

That’s where you come in: you can join the thousands of investors who have invested in Knightscope through Startengine.

Over a target life of 5 years, Knightscope are projecting a profit of up to $250,000 per robot, in a market that’s growing 10% a year.

Find out more about Knightscope, and get invested from as little as $500.

Find Out More

Disclaimer: You should read the Offering Circular and risks related to this offering before investing. This Reg A+ offering is made available through StartEngine Primary, LLC. This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment.

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Road Trip

What’s Going On Here?

The US Federal Reserve (the Fed) announced late on Friday that it’ll finally let the country’s banks resume share buybacks next quarter, even if they can’t turn off at Dividend Town just yet.

What Does This Mean?

Earlier in the year, the Fed – along with other major central banks – capped how much banks could pay in dividends, while banning them from buying their own stock altogether. That way, they’d have enough money on hand if things got really bad.

Now, though, the Fed’s loosening up those rules. See, the central bank regularly tests how banks perform under doomsday scenarios to make sure they’d be able to keep lending to households and businesses, and in turn keep the economy ticking over. And after these latest so-called “stress tests”, the Fed decided that the country’s banks were robust enough to buy back their own shares again – within limits.

Why Should I Care?

Zooming in: Don’t mind if I do.
When a company buys back its own stock, it reduces the number of shares that are publicly available even as its earnings stay the same. That means its earnings per share will be higher, and its price per share should be too. So just like dividends, the overall aim is to pay shareholders back for their loyalty.

For markets: Play it cool, guys.
To say banks were eager to increase shareholder payouts is an understatement: JPMorgan Chase – the biggest US bank by assets – announced it’d buy back $30 billion of stock next year within minutes of the Fed’s announcement. And to say investors were eager to have them is another understatement: the biggest US banks saw their stocks jump on the Fed announcement. Share buybacks typically make up 70% of the money paid out to shareholders, so the prospect of better returns should lure investors back to a sector that’s underperformed the broader stock market this year (tweet this).

You might also like: As banks figure out what to do with their money, so should you.

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💬 Quote of the day

“Corruption never has been compulsory. When the cities lie at the monster’s feet, there are left the mountains.”

– Robinson Jeffers (an American poet)

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📚 What we're reading

Say yes to Christmas spirit (Inverse)
Shred some pow pow, become a cyborg (Outside Online)
AI is flying our planes now, so… (Popular Mechanics)

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Finimize - 🤫 Don't worry about Tesla

Today's big stories

Thrilled To Pieces

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Nope, Tesla Isn’t Going To Drive A Stock Market Selloff

🤖 Investerminator: Rise Of The Machines

Road Trip

What’s Going On Here?

What Does This Mean?

Why Should I Care?

✈️ Put your crypto on autopilot

Older messages

🎄 SMIC's nightmare before Christmas

🤞 Let's try this again: EU destroys Big Tech

🚫 IPOs are canceled

😏 Disney’s catching Netflix fast

😨 Tesla should be afraid, very afraid

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