Friday,
December 18, 2020

Market recap

Dow Jones

30303.37

148.83 (0.49%)

S&P 500

3722.48

21.31 (0.58%)

Nasdaq

12764.75

106.56 (0.84%)

Google

$1,740.51

-$16.68 (-0.95%)

Roku

$329.48

$3.66 (1.12%)

Peloton

$136.80

$2.80 (2.09%)

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Top Story

Stimulus Package Status Update

Compromises on Both Sides of the Aisle

After months of back and forth surrounding a second COVID-19 relief bill, lawmakers seem to be zeroing in on an agreement. Meanwhile, coronavirus hospitalizations are hitting all-time highs and vaccine distribution is beginning around the country.

Democrats are settling for less than the $2.4 trillion bill they passed in the House, and Republicans are agreeing to spending more than the $500 billion they initially proposed. Along with the stimulus deal, lawmakers must agree on a full-year spending bill to keep the government running before the current bill expires at 12:01 a.m. tomorrow.

Stimulus Details to Come

The granular-level details of the stimulus deal are still being ironed out as of the time of this publication, but the package is likely to include another round of checks sent directly to American households. It will also likely include enhanced unemployment insurance of $300 per week, vaccine distribution funding, rental assistance, and funding for schools, small businesses, and healthcare providers.

The second round of direct checks to American households will likely be smaller than the first. Earlier this year, eligible individuals received up to $1,200 and $500 per dependent. Representatives said this round of direct checks would likely be closer to $600 or $700 per individual.

Why Households Need Relief

In November the United States poverty rate hit 11.7%—up 2.4% from June. In the past five months, 7.8 million Americans have fallen below the poverty line. Poverty levels have been higher at other points in American history, but this number marks the single largest jump in a single year since the US government started tracking poverty rates in the 1960s.

Economists say two factors are to blame for the sudden increase in poverty. First, millions of Americans are unable to find steady work. Second, government aid has fallen sharply for the unemployed. Jobless claims hit 885,000 in the week ending December 12—the highest they have been since early September.

Many households are struggling financially. Both sides of the aisle agree that Americans need some form of relief from the government.

SoFi Member Stories: MaryBeth

Hear how a SoFi personal loan helped MaryBeth take control of her debt after a medical procedure and see more stories like hers in the Facebook SoFi Members group.


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Bitcoin Prices Surge to Record Highs

Bitcoin Tops $23,000 for the First Time

Bitcoin surged more than 9% on Thursday to surpass $23,000—a new record. The world’s largest digital currency is up 220% this year, and analysts expect more growth in the future. That said, Bitcoin has a history of rallying and then plunging.

Three years ago Bitcoin saw a huge price spike but then prices dropped significantly. Critics believe the cryptocurrency might be headed in that same direction now. Advocates, however, point out that Bitcoin is becoming more popular for long-term investors like asset managers and family offices. This means that the cryptocurrency is in a different position than it was three years ago.

As Bitcoin has surged this year, BBG Galaxy Crypto (BGCI), a wider crypto index, has more than tripled. Cryptocurrency-related stocks in South Korea, Japan, and China have also soared this year.

Other Reasons Why Crypto Is Climbing

Traditional financial leaders have invested heavily in cryptocurrencies in recent weeks, lending potential staying power to Bitcoin and its competitors. Earlier in December, MassMutual, one of the world’s oldest insurance companies, announced it would purchase $100 million worth of Bitcoin. The purchase represents less than 0.05% of MassMutual’s general investment account, but it remains a sign of growing faith in the cryptocurrency.

Across the pond, London’s Standard Chartered (SNTDF) investment bank partnered with Chicago’s Northern Trust (NTRS) to create an institutional-grade cryptocurrency-storage solution. The platform will help institutions invest in cryptocurrency assets starting in 2021. Major banks in Singapore, Spain, and Zurich also released plans to enable cryptocurrency investments by wealthy individuals and institutions.

Determining Bitcoin’s Fair Value

Wall Street disagrees about the fair value for cryptocurrencies like Bitcoin. On one hand advocates like Guggenheim Partners CIO Scott Minerd say Bitcoin’s value should eventually climb to $400,000 per coin. Minerd said his valuation was based on scarcity, and the Fed’s “rampant money printing.” In his opinion, “bitcoin actually has a lot of the attributes of gold.”

Meanwhile skeptics say Bitcoin is currently overvalued by more than 50%. An analysis by Claude Erb, a former Commodities Portfolio Manager at TCW Group, titled, “Bitcoin Is Exactly Like Gold Except When It Isn’t” says that when modeled on a social-network valuation model, Bitcoin should be priced around $12,315. According to that model, Bitcoin may not reach a fair value of $74,000 for 120 years. Advocates and skeptics have strong opinions about bitcoin and other cryptocurrencies. Both sides will be eager to see if the digital currency’s rally continues.

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Friday Fundings: StockX, Bolt, and ClickUp

StockX Valuation Hits $2.8 Billion

In a recent $275 million funding round for StockX, the online shopping platform popular with sneaker collectors doubled its 2019 valuation to reach $2.8 billion. StockX has now raised a total of $490 million.

10 million shoppers browsed sneakers, streetwear, handbags, and electronics on StockX over Black Friday weekend. The platform feels somewhat like shopping on the stock exchange because customers can view data like the 52-week high and volatility for popular items.

StockX generates revenue by charging a percentage of each purchase made on the platform. The company was profitable for the first time in the third quarter of 2020.

Estonian Ride-Hailing Platform Bolt Raises $180 Million

Bolt, the European ride-hailing company that competes with the likes of Uber (UBER) and Lyft (LYFT), raised $182 million in its latest round of funding. The company will use the cash to ramp up safety measures on its platform, and will invest in facial recognition technology and artificial intelligence.

While not available in the United States, Bolt has more than 50 million users in over 40 countries across Europe and Africa. Like its American competitors, Bolt’s sales fell 75% when the coronavirus hit in March. However, food delivery service and scooter rentals have helped buoy the company through the pandemic. The new funding will help Bolt shore up its balance sheets.

ClickUp Raises $100 Million for Productivity Optimization

ClickUp, the productivity software company that has seen massive growth during the COVID-19 pandemic, raised $100 million in a Series B funding round. The investment brings the company’s valuation to $1 billion. Over the past several months, ClickUp’s user base has hit 2 million.

ClickUp will use the funding to continue scaling its team and product. While the company’s main focus is on building productivity software, it also aims to become a one-stop platform for email and other productivity solutions. This week, ClickUp launched revamped iOS and Android apps.

Not-So-Breaking News

Financial Planner Tip of the Day

"Cryptocurrency is still a relatively new technology, which means it can act like a newborn: crying, not understanding how things work, crawling and stumbling, and behaving irrationally. You’ll need to get used to huge price swings, instability when least expected, and rollercoaster performance reports. Be sure you can take it."

Brian Walsh, CFP® at SoFi

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