#44 Daily Financial News Round Up - Dec 14,2021
What news caught my attention?
Walmart entered the money-transfer business in 2014 and charged prices 87% below its competitors. This move by Walmart helped save around $2.4 billion in fees for its customers who predominantly fall in the unbanked category. According to CFPB, there are 7.1 million unbanked consumers in the US. Professor Cooper notes in his WSJ article that Walmart demonstrates that competition is more helpful in helping the unbanked communities rather than regulation. He argues that regulation forces companies to adhere to a standard and obscure the market, which has unintended consequences of increased prices for consumers. In contrast, competition amongst firms results in reduced prices for consumers, which is a huge plus point for the unbanked communities. The underlying principle is that competition and regulation seem to work as substitutes in price reduction.
New York-based bitcoin firm NYDIG raised $1 billion at a more than $7 billion valuation. The firm runs a bitcoin trading, brokerage, custody and asset-management business that caters to institutional investors. This funding round signals institutional investors’ interest in the cryptocurrency markets, which is a massive boost for that industry.
Millennials are finally letting go of their tag as renters and are buying houses. The pandemic accelerated millennials' desire for homeownership, supercharging the real estate market. Economists believe while demand for larger living spaces drove the increased estimates during the pandemic, the millennials homeownership desire will keep the demand estimates at the same levels for the next few years. So, the increased activity in the real estate market is not just a pandemic trend. In 2019, millennials surpassed the baby boomers to become the largest living adult generation in the U.S, making them the dominant demographic influencing significant markets.
My Takeaways:
Competition and regulation - what’s the relation between these two forces? Are they substitutes as Walmart’s entry into the money-transfer business suggests? Let’s dig more into this.
Cryptocurrency start-ups see high valuation and money inflow from institutional investors giving the markets more legitimacy.
Millennials are the dominant demographic influencing many significant markets in the US, including the mortgage markets.