🍨 Daily Scoop: Last week’s lightning-round
By Mon, Dec 9, 2019
Hello Scoopers,
We are back with another lightning-round edition of The Daily Scoop. Here are the most important events that shaped the movements of the stock market last week:
- The start of December was a mood-killer for investors, mostly because of lower hopes for a trade deal, and lower-than-expected performance in the manufacturing sector. (Read More)
- By mid-week, the doom and gloom news was widespread. We heard about the possibility of no trade deal until the 2020 election, a new round of steel tariffs, and the introduction of 100% tariffs on French wines. Such tariff-related scares brought down the stock market into the red zone. (Read More)
- While the overall market was busy getting ready for a recession, CEOs of Expedia (EXPE) and Alphabet (GOOG / GOOGL) were either shown the door or decided to leave the building.
- Finally, on Friday, a strong unemployment report by LBS renewed investors’ confidence in the stock market, high enough to finish the week almost flat.
Beyond the overall market, Saudi Arabia’s prince, the man behind the world’s largest initial public offering, took a page out of Beyond Meat’s (BYND) IPO. More information is available in the “Water Cooler” section. Don’t forget to scroll down to read more about what happened in the stock market last week.
Market Recap
- U.S. markets: All three indices finished Friday approximately 1% higher than where they started the day. Scroll to the “Overall Market” section to learn more.
- Cryptocurrency: Bitcoin’s price continues to hover in the mid-$7,000 level. Beyond the overall ups and downs of the cryptocurrency market, an interesting report by Deutsche Bank predicted that, contrary to mainstream believes, the world’s central banks are the entities that are going to drive the adoption of cryptocurrencies.
SHOUTOUT
Scoopers, thank you as always for sending us your questions, feedback, and requests. This week’s special thanks go to Gordon J. and Richard H. for sending us two very interesting questions.
Gordon asked:
- “Being Canadian, what about the POT STOCKS in Canada? Things seemed to have gone bust. Any info on the big guns?”
- The Editorial team: Gordon, we love your question. We will be dedicating a whole Daily Scoop to this question. Keep an eye for it this week.
Richard asked a specific question about learning to trade on his own.
- The Editorial Team: Richard, that’s a great question. There are a lot of great investment resources you can use to get started. Check out https://www.investor.gov/. This website is created and run by the government, therefore we feel comfortable sharing it with you. Start from there, and gradually expand your horizon.
As always, send us your questions, feedback, and requests. We read all of our emails. Our email address is members@tradestocks.com. Or, simply reply back to this email.
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OVERALL MARKET
Phewww….
What happened last week?
Despite the gloomy start to December, the last two days of the week saved the market. A small upward movement on Thursday, followed by a big leap on Friday, turned the early gloom to boom. We finished the first week of December almost flat. Phewww…
What happened on Friday?
Earlier in the week, there were talks of economic recession. You couldn’t open the website of any financial media and not come across at least one article talking about how billionaire X or hedge fund Y is preparing for a major stock market decline in the near future. The cautionary tales scared the market for a few days in a row.
Came Friday, and a strong unemployment report by the Bureau of Labour Statistics renewed confidence in the U.S. economy, and the stock market gained back all that it had lost in December.
WATER COOLER
Taking a page from Beyond Meat’s IPO.
So, what happened?
Saudi Arabia is having a cash problem, and hoping to solve it by taking its national treasure, the country’s oil reserves and operations under the umbrella of a company by the name of Aramco, public. It’s a smart move. Initial public offerings are one of the best ways for entities around the world to raise money. But, there was a problem.
When Saudi’s prince announced the intention to take Aramco public, Bernstine ran a survey and revealed a lack of interest in the IPO by the global institutional investors to invest in Aramco at the price the prince was hoping to sell shares. The Saudis had two options. Sell their shares at a lower price, or, create scarcity. Economics 101 — scarce things sell for a higher price. Doesn’t that sound familiar to you? Where did we see the same strategy working like a charm?
Beyond Meat’s (Ticker: BYND) IPO comes to mind. When the meat-alternative company was going public, it decided to only offer a very small portion of its available shares to the public. Limited availability of shares boosted the price high up, and the company went ahead and offered a secondary public offering just a few weeks after the initial one.
What happened then?
The crown prince of Saudi is taking a page out of Beyond Meat’s IPO. The IPO is going to offer only 1.5% of Aramco’s shares to the public market, and it is only available in the country’s own stock exchanges. Scarcity will boost the price, keeping the title of the most valued IPO in the world reserved, while leaving the door open for a second public offering at an even higher price.
The cash crunch problem is most likely solved.
| Disclosure: Authors of this Scoop own shares of Alphabet (Ticker: GOOG / GOOGL) and EXPE (Ticker: EXPE). |
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
