The Fed raised interest rates Wednesday. It also signaled that it would raise rates twice in 2019. With all the debt floating around the U.S. economy, it was the right thing to do. But the already jittery markets didn’t take the news well and dropped sharply. The Dow Jones Industrial Average finished Wednesday down 352 points (CNBC).
As our own Adam Sharp noted yesterday, the Fed increasing rates is going to have a significant impact on companies carrying too much debt – and there are a lot more of those types of companies than you would think (Early Investing).
With investors looking for shelter, the Early Investing triumvirate of startups, cryptos and cannabis is looking like a good alternative – especially with crypto markets staging a bit of a rally (Chepicap).
Now on to the News Fix!
Last week, we told you Uber, Airbnb, Lyft, Slack and Pinterest were considering initial public offerings (IPOs) next year (Early Investing). Let’s add food delivery service Postmates and cybersecurity firm CrowdStrike to the list of companies that might go public in 2019 (Forbes).
The ones that do end up launching IPOs next year will be rewarding early investors with large returns.
In last week’s News Fix, we mentioned cigarette giant Altria was trying to acquire a piece of Juul. Well, guess what? It happened. Altria paid $12.8 billion to get a 35% stake in the popular vaping and e-cigarette company (NPR).
That gives Juul a $38 billion valuation (Vox). But there’s a fascinating twist to this story.
Juul is paying employees and investors a little more than $4 billion in the form of dividends – $150 per share – as a reward and to keep the peace. Juul’s original mission was to lead consumers away from big tobacco and cigarettes. And many are upset that Juul is partnering with one of the cigarette industry’s biggest companies (Recode).
In an astonishing bipartisan display of common sense, two congressmen have introduced legislation that would bring regulatory clarity to cryptocurrencies and tokens. The “Token Taxonomy Act,” introduced by Reps. Warren Davidson, R-Ohio, and Darren Soto, D-Fla., would remove the securities tag from tokens once their networks were fully functioning (CNBC).
That is sensible. When companies are raising money to build out a network, it makes sense for tokens to be considered securities. But once the network is built and tokens are predominantly used for transactions, it makes no sense to call them securities.
The time for this legislation has come. Will Congress actually act on it? Not immediately. Other issues are sucking the oxygen out of the room. But this is progress. Congress is showing signs that it understands the needs of the crypto industry. Now we need to keep pushing it to actually do something.
So write to your members of Congress. Write to your senator. Tell them you want to see Congress provide crypto-friendly regulations and clarity. Every letter you write, every email you send, every phone call you make brings us one step closer to a more crypto-friendly world.
And that’s your News Fix!
Senior Managing Editor, Early Investing