What we’re reading (1/2)
“Stocks Face Rockier Path In 2022 As Fed Rate Increases Loom” (Wall Street Journal). “[F]ew investors expect 2022 to go as well as 2021, with the Federal Reserve on the verge of raising interest rates, a new Covid-19 variant sweeping the country and government aid to families dwindling. Already, oil prices have slipped 11% since their highs in late October, reflecting traders’ concern about slowing demand for fuel. The S&P 500 spent much of the past two months trading sideways, while some speculative investments, such as shares of smaller, fast-growing tech companies, fell sharply—hurt by fears that they would be especially vulnerable to tighter monetary policies.”
“Among 2021's Best-Performing Hedge Funds: Citadel” (Crain’s). “Deep-pocketed investors have been flocking to private companies because stakes can be acquired relatively cheaply…[a] reliance on private investments should give investors pause, said Chris Walvoord, global head of alternatives research at Aon Plc. ‘Everybody needs to be careful shifting into this direction,’ he said, noting that funds more heavily weighted with illiquid private investments are at greater risk if something goes wrong. ‘If a quarter of your investors ask for their money back, you’re going to have to shut things down, because it’s going to completely unbalance the portfolio.’”
“Bitcoin Has Plunged 32% From Its All-Time High This Year. But Investors Can Take Advantage Of A Tax Loophole While They Wait For The Cryptocurrency's Comeback.” (Insider). “One advantage crypto has over stocks is that the wash sale rule doesn't apply to it. A wash sale is when a security is sold at a loss and repurchased shortly after. When this is done with securities, any losses incurred are not deductible. Some seasoned crypto traders purposely sell their digital assets below the purchase price and then buy them back at the same or similar price to take advantage of this tax-loss harvesting rule.”
“Fed Repo Facility Use Jumps To Record High On Final Day of 2021” (Yahoo!Finance). “More than 100 participants on Friday put a total of $1.905 trillion at the Fed’s overnight reverse repurchase agreement facility, in which counterparties like money-market funds can place cash with the central bank. The previous record, set on Dec. 20, was $1.758 trillion. Friday’s $208 billion leap was the biggest one-day increase in usage since June 17 after the central bank increased the offering yield to 0.05%. That compares to the last trading day of 2020 when a mere 15 counterparties tapped the facility for $9.65 billion.”
“A Booming Startup Market Prompts An Investment Rush For Ever-Younger Companies” (Wall Street Journal). “Blank Street has a simple business: It sells coffee—sometimes in carts, usually in small stores. It launched its first location 17 months ago, before it began dotting Manhattan and Brooklyn with baristas…in today’s booming market for early-stage startups, the New York-based company has received commitments for its third funding round in a year. The $35 million investment comes just three months after the still-fledgling company received $25 million, said Vinay Menda, Blank Street’s chief executive.”
