🍾 There's a new crypto play in town

So many SPAC puns left unused | The dollar's back in action |

Hi Reader, here's what you need to know for April 12th in 3:09 minutes.

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Today's big stories

  1. A crucial source of funding for SPACs is disappearing, which could cause the boom to fizzle out
  2. There's a big new crypto play coming to town next week – Read Now
  3. Analysts were caught off guard after the currency notched its best performance in three years last quarter

Checked Out

Checked Out

What’s Going On Here?

The special-purpose acquisition companies (SPACs) trend is at risk of petering out, as investors stop giving the “blank check companies” the not-so-blank checks they desperately need.

What Does This Mean?

SPACs – listed shell companies that merge with unlisted companies to fast-track their arrival on the stock market – are hugely popular among investors right now. So popular, in fact, that the number of SPACs listing on stock markets last quarter, as well as the amount they raised from investors, topped last year’s grand totals.

But private investors are starting to get overwhelmed by the sheer number of opportunities. SPACs, after all, don’t just raise money from public investors when they first list on the stock market: they typically look to institutions for more money once they’ve identified which company they want to merge with. Now, though, SPACs are reportedly struggling to find those investors, which only want to do so many deals at a time. And it’s showing: there have only been four SPAC launches in the first week of April – down from 41 in the first week of March (tweet this).

Why Should I Care?

For markets: Regulators have made their minds up. 
US regulators probably aren’t helping matters: they’d already advised investors against buying into SPACs based on celebrity endorsements, and shared their concerns about insider trading and lackluster research on the part of SPAC execs. And they really kicked the boot in last week, arguing that the lofty growth projections of SPAC-targeted businesses are “overstated at best, and potentially seriously misleading at worst”.

Zooming out: There’s life in the old SPAC yet.
Easy there, squirt: let’s not call time on the SPAC craze too soon. According to the Financial Times, ride-hailing and payment services company Grab is set to list via a SPAC that would value south-east Asia’s most valuable startup at $35 billion – making it the biggest SPAC merger ever.

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2. Analyst Take

Forget About Bitcoin: Coinbase Is The Next Big Crypto Play

What’s Going On Here?

Coinbase is one of the biggest hitters in the “cryptoeconomy”, and the crypto exchange is set to start offering shares publicly next Thursday via direct listing.

There’s a strong case for Coinbase being the hottest stock of 2021: it’s a fast-growing and already highly profitable company exposed to an enormous market in a disruptive industry.

Its revenue rose over 800% in the first quarter of 2021 compared to a year before, and its untapped market – not to mention its profit margin – is enormous.

But Coinbase’s reliance on crypto price movements makes it hard to forecast future revenue for the firm, and even harder to put a price on its own shares.

To evaluate the potential of Coinbase, you probably need to think more like an early-stage venture capital investor than a traditional stock market analyst.

So that’s today’s Insight: how to think about Coinbase, and whether the crypto exchange is worth your money.

Read or listen to the Insight here

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What The Buck?

What The Buck?

What’s Going On Here?

The dollar chalked up its best performance in three years last quarter – much to the surprise of skeptical analysts and contrarian investors alike.

What Does This Mean?

The dollar’s safe-haven status saw the currency become an investing go-to during last spring’s coronavirus-induced meltdown, and its value shot up accordingly. But with economic growth on the rise and market volatility on the decline over the past six months, plenty of investors came into 2021 betting that the dollar would give up those gains – and then some.

Instead, a popular index tracking the dollar’s value versus six other major currencies jumped 3.6% last quarter. That could be because investors increasingly expect the US economy to outperform its rivals, thanks to a successful vaccination campaign and a $1.9 trillion infrastructure proposal. Alternatively, it could be because US government bond yields have risen lately, making dollar-denominated bonds look a lot more attractive than other countries’ debt.

Why Should I Care?

For markets: When in doubt, invest in the dollar.
The dollar’s recent performance calls to mind the so-called “dollar smile theory”. That is, when the US economy is expanding relatively rapidly compared to the rest of the world, overseas investors tend to buy American investments – priced in dollars – in hopes of getting in on the action. The smiles keep coming when the world’s in crisis too, which is when the dollar looks like a particularly safe bet...

The bigger picture: If you’re invested in the dollar, have your doubts.
Investment banks might be backtracking on their predictions of a weaker dollar in the near future, but they’re sticking with them in the long run. A widening trade deficit means the US is buying more goods overseas than it exports, which means it has to sell the dollar to buy overseas currencies. A widening budget deficit, meanwhile, suggests the US government’s spending is exceeding its revenue – making its debt riskier and, in turn, less appealing.

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🌍 Finimize Events

📈 Wait for it… wait for it…

Trading signals are any investor’s bread and butter – the difference between the ones who sell right on time and the ones who HODL on for a better tomorrow. And Stratiphy CEO Daniel Gold has a few he’s particularly keen on: they’re The Three Most Important Trading Signals, and they’re all yours if you join Daniel at our event next week.

💆 Control Your Emotions, Control Your Trading: 6pm NZ time, April 12th
😎 How To Become An Impact Investor: 4pm UK time, April 15th
🔥 The Three Most Important Trading Signals: 6pm UK time, April 20th
👩‍🎨 Are NFTs A Digital Bargain Or Bubble?: 2pm UK time, April 21st
💡 Investing In Small Stocks: 6pm UK time, April 21st
🏡 The Pros and Cons Of REITs And Real Estate: 1pm UK time, April 22nd
📈 How To Inflation-Proof Your Portfolio: 6pm UK time, April 22nd
🚀 Space: The Final Investment Frontier: 6pm UK time, April 27th
💰 Crowdfunding Club: 1pm NYC time, April 28th
🛢 The Energy Sector’s New Direction: 4pm UK time, April 29th
🔪 How To Cut Through The Spin: 6pm UK time, April 29th
👋 Live Q&A With CEO Max Rofagha: 1.30pm UK time, April 30th

📚 What we're reading

  • Hospitals are fighting pandemic waste (The Guardian)
  • Rainbows on Mars. Whatever next! (Futurism)
  • Herd immunity by force? (Slate)
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