Episode 03: Sell off
Coming off Friday’s market upswing, the major news coming out over the weekend was the progress on the PPP program for small businesses getting new funding by the government. Shake Shack returned $10 million back into the government program to help small business. Hopefully that money gets redistributed to those who need it most.
There was a piece put out by VC legend Marc Andressen on how the US should be focused on new products, new industries and new sciences to take big leaps forward. What was apparent about our current situation is that our supply chain was a big challenge in the US to addressing solutions for Covid-19. So let's get to building!
Markets closing down today.
Dow - -2.44%
S&P -1.79%
Nasdaq -1.03%
What is driving the down market is oils historic lows of $-37 dollars a barrel. This is because no one wants to take the delivery of the barrels; it's a true supply and demand challenge.
Another interesting stat that I spoke about on Friday is that 80% of companies bailed on their future guidance for investors because many don’t feel it’s valuable for them to give guidance under the current conditions.
VC Funding & IPO Side
Oric Pharmaceuticals, an San Francisco company is expected to go public this week raising $5 million and market cap value at $424 million.
In M&A, STX Entertainment, a US production company who did "Bad Moms" and "Hustlers", agreed to merge with Eros International valued and Indian production company at $1 billion. It's truly a Hollywood merging with Bollywood.
Locally MindsDB a Berkeley based company raised $3million
Final Thoughts
In summary, many have asked why the markets aren’t truly reflecting the current environment with all the bad things happening in the economy. The way to think about it is that markets are always forward looking so they are projecting out 6 to 8 months ahead and that is what is driving some of the rally. The thought is that we will get a vaccine, the economy will jump back, things will start trending in a positive direction as the government reopens and there is also an absence of another market having no other place to put your investments.
The issue is that we have never experienced anything like this so analysts don’t truly have models reflecting the current impact. So what you will find is as headlines come out like today’s oil crash the market will adjust and sell off accordingly. My dad always taught me that in times of crisis cash is king.
We will see you on Friday to recap the week and I will have a special guest who is an expert in the HR sector to help provide guidance and tips for what we are currently dealing with in unemployment.
See you Friday!