#43 Daily Financial News Round Up - Dec 13,2021
What news caught my attention?
GameStop's share prices fell after the company announced that the quarterly loss had widened from the level a year ago. AMC's share prices tumbled as well after the company disclosed that its CFO and CEO sold $10.2 million of stock. Despite these signals, meme stock investors continue to buy/hold these stocks and note that Wall Street's short sellers are betting against these companies. Meme stock investors' actions reflect that they don't care about their underlying fundamentals. Instead, they care about their sentiment. Can we classify meme stock investors as sentiment traders?
With public and private markets focusing on climate change, the surge for electric vehicles and chargeable equipment is rising. As a direct result, demand for lithium is high, surging its price.
Ares Management Corp. raised $8 billion for a fund making direct loans to small and midsize US companies. A decade long low-interest-rate environment has given birth to a new asset class - "private credit". Private credit is the credit given out by nonbank financial firms to companies. How is private credit different from bank credit? Banks typically use the deposit money to make loans, so consumer regulations constrain them. In contrast, nonbank firms do not use the deposit money to make their loans, so regulations do not constrain them. Instead, they use the funds raised through investors. Investors frustrated by low yield in traditional investments like fixed income, government bonds etc., turned to private credit funds in search of high yields.
My Takeaways:
In my opinion, it is great to use new mediums such as TikTok and Instagram to provide and consume stock market information. But, ultimately, trading strategies should be based on sound fundamental analysis. And not on being contrarian or sentiments rooted against the Wall Street participants.
Lithium is the new hot commodity.
The private Credit market is where the new action is in the financial markets.