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Today's big stories

The Democrats won control of the US Senate, which could lead to a host of portfolio-impacting reforms
One niche market offers big hints about what's going to happen in the wider economy this year – Read Now
Gaming platform Roblox resumed plans to list on the stock market, but it’s shaking up its strategy

Pay Day

What’s Going On Here?

Democrats won control of the US Senate late on Wednesday, securing them both chambers of Congress and a blank check to support the economy however they like.

What Does This Mean?

One of the main assumptions investors are making is that Democratic control has paved the way for a big economic boost over the next few months – first through another coronavirus aid package, and eventually through more spending on infrastructure, education, and clean energy (tweet this). All this money flowing into the economy should be good news for stocks, which now have more economic and earnings growth to look forward to. And while the money needs to come from somewhere, investors seem optimistic that it won’t be from profit-damaging tax hikes – if only thanks to the Democrats’ razor-thin and precarious majority.

Why Should I Care?

For markets: It’s cyclicals’ time to shine.
The stocks that stand to benefit most from the newfound economic support are those of energy, materials, and industrial companies – that is, “cyclicals” sensitive to economic peaks and troughs. Banks – which have outperformed the US stock market since the presidential election – could keep doing well too: investors reckon the government will borrow more to cover its increased costs, which should in turn push up interest rates. The US Federal Reserve, meanwhile, is keeping its short-term interest rates – the rates at which it lends commercial banks money – low. That allows those banks to lend money at a higher rate than they spend on borrowing it, and should boost their profits.

The bigger picture: Everything in moderation.
The anticipation of more government spending and a boost to economic growth is also raising expectations that the prices of goods and services will increase (i.e. inflation). But if prices climb by too much, too quickly, central banks might hike interest rates to cool things down. And that could discourage companies from taking out loans and spending money – the exact opposite of what the higher-ups are trying to achieve.

You might also like: What the Fed’s interest rate policies could do to your portfolio.

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2. Analyst Take

Snub This Much-Misunderstood Market At Your Peril

What’s Going On Here?

The “Bloomberg Agriculture Subindex of commodities” might not be a name that gets your pulse racing, but this niche market actually offers up key insights into the wider economy.

And now that it’s jumped 50% from June’s all-time lows, it could offer you pretty invaluable clues about what’s next too.

The jump could, for one, tell us a lot about inflation: the price of agricultural goods impacts the price of the food we eat, which has a massive influence over prices as a whole.

It also tells us demand is on the up, meaning governments need to start making stockpiling and export plans. And that could tell you a lot about their strategic priorities.

So while agricultural indexes might not be pulse-racing, today’s Insight sure is: find out what these developments tell you about what lies ahead, and how you can harvest the profits.

Read or listen to the Insight here

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Restarting Price

What’s Going On Here?

Roblox announced late on Wednesday that it’d be resuming postponed plans to list on the stock market – and the gaming platform’s hoping it’ll score big when it does.

What Does This Mean?

Roblox was supposed to “go public” last year, but it delayed the move after Airbnb and DoorDash – whose price surges following their initial public offerings suggested they'd sold their shares too cheap – spooked the company. So to make sure it doesn’t miss out on a lot of cash, Roblox is cutting out the investment banks and planning to sell straight to public investors via a “direct listing”. That means the market – not bankers – will set its share price, and that every investor – retail and institutional alike – will get to buy in at the same time.

Why Should I Care?

For markets: Roblox ain’t no guinea pig.
Companies only used to be able to sell existing shares via a direct listing, but recent regulatory changes now mean they can sell new shares and raise fresh capital. Still, Roblox has opted not to take advantage of those new rules: it might not have needed to, given that it also announced it’s raised cash separately from private investors. For the record, that latest fundraising round valued the company at $30 billion, or around $45 a share – which hints at what investors might pay when Roblox does list.

The bigger picture: Top of its game.
Roblox’s stock market debut will follow a breakneck year: its daily active users and revenue in the third quarter of 2020 were almost double what they were the same time a year before. Video games have been so popular during the pandemic, in fact, that they’re expected to have made more money last year than the global movie and North American sports industries combined. And given the hype around certain recent console releases, analysts reckon this just be the start…

You might also like: How to spot the next successful startup like Roblox.

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📚 What we're reading

Self-help your way out of a pandemic (The Verge)
How to invest in the future of security (Knightscope)*
Open your mind, see God (Popular Science)
Inside Bieber’s favorite megachurch (Jezebel)

*This sponsored content helps us secure our company’s future.

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🤫 This one’s going to be better

Ready to get this year off to a flying start? Us too: join us over the next few weeks to learn more about post-Brexit life, where the biggest autonomous tech opportunities are hiding, and what’s next for fintech in Latin America. See? 2021’s better already.

📈 The Stock Market in a Post-Brexit Economy: 6pm UK Time, January 20th
🤖 The Opportunity for Autonomous Tech: 1pm New York Time, January 27th
🚀 The Future of Fintech in Latin America: 6pm UK Time, February 2nd

😭 In case you missed it…

Here’s some of our most popular stuff this week…

🎉 2021: Three steps to becoming a better investor this year.

🤓 Smart cities: How to invest in the imminent infrastructure boom.

💸 Interest rates: What you’re getting wrong about the world’s most important number.

📉 Social investing: How to build a new kind of portfolio.

💪 Carl Icahn: How to invest like an activist.

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Finimize - 🇺🇸 America gets a reality check

Today's big stories

Pay Day

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Snub This Much-Misunderstood Market At Your Peril

⚾️ Level the playing field with PrimaryBid

Restarting Price

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🤫 This one’s going to be better

😭 In case you missed it…

Older messages

💀 They're coming for you, Amazon

🍾 New year, new something?

😷 Remind me what just happened?

😱 IPOs really are canceled

🚗 Apple runs Google off the road

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