Coinbase IPO Tops $100 Billion

And more that happened last week…

Biden Sanctioned Russia

Many had speculated the Biden administration might ease back on the Trump-era trend of slapping sanctions on political rivals with little regard for the consequent political blowback. But so far it seems Biden is no more meek than his predecessor. While Trump favored the flagrant use of tariffs and protectionist trade measures as a tool of economic policy, Biden seems to wield the sanction stick more as a tool of foreign policy.

The long list of sanctions against Russia imposed by the Biden administration this week is wide in its scope, but deliberate in its targets. For example, it targets 16 individuals and 16 entities deemed responsible for American election interference, and according to Treasury Secretary Janet Yellen, the campaign against this sort of behavior is just beginning. Most notably, the sanctions also prevent American financial institutions from participating in the primary market for Russian bonds, which could prove to be a drag on the Ruble, as America holds a significant portion of Russian debt.

Despite sweeping sanctions, Putin is no stranger to this type of pressure, in fact, as his armies congregate on the Ukrainian border as we speak, he may be in a less compromising position than we are inclined to believe. Oddly enough, situations like this seem to be where Putin thrives, playing the game he knows best — using geopolitical conflicts and proxy fights to create economic leverage with his Western adversaries. His goal? To put Russian power on full display for the world while America tries to stifle it.

House Prices Soar

In much of the rich world, low interest rates & economic stimulus have created a surplus of cash and cheap money. Borrowing money in America is the cheapest it’s ever been. This has fueled the most rapid year-over-year increase in American home prices in 15 years, which stands at 11% as of January.

However, cheap loans don’t mean lenient lending practices. In the run-up to the 2008 financial crisis, there was a massive increase in the percent of mortgages that were considered subprime, or high-risk. Today, that trend has reversed in that an increasing number of borrowers have a strong credit history, and are relatively low-risk. The level of risk and leverage on banks’ balance sheets is therefore much more sound than it was in the years preceding America’s last housing crisis.

Changes in the workplace precipitated by the pandemic also mean many no longer have to commute to work every day, which has resulted in growth in suburban home prices outpacing urban home prices, reversing another ten year trend in home ownership.

While America’s housing market may be stronger and more valuable than ever before, the market’s rise underscores a more complicated economic picture in America that has been exacerbated by the pandemic — an unbalanced recovery.

Coinbase IPO

Coinbase, the largest cryptocurrency exchange in the US (and among the largest in the world), was listed on the Nasdaq exchange this week via a direct listing, ending its first day of trading with a $64 billion market cap. Trading was briefly halted after shares shot up around 25% to nearly $410 per share, briefly giving the firm valuation of over $100 billion.

Coinbase’s listing comes amidst a sort of investment frenzy surrounding the cryptocurrency market, which explains in part why so many investors are eager to get a slice of the crypto pie.

The crypto market, long the subject of skepticism from institutional investors, has seen a flood of institutional money in recent months, which has driven up digital coin prices to new record highs.

Bitcoin, the most popular cryptocurrency, breached $61,000 for the first time earlier this month, and now trades upwards of $63,000, giving it a market cap of $1.1 trillion. Ethereum, another popular coin, is trading north of $2500, up nearly 40% since last month.

Grap IPO

Often referred to as the Asian counterpart to Uber, Grab, which started out as a simple ride-hailing app with a strong presence in the Southeast Asian market, has grown to become a robust technology company that offers everything from food delivery and ride-sharing to trip planning, grocery shopping, mobile payments processing, and lending.

Grab plans to list on the Nasdaq stock exchange through a SPAC (Special Purpose Acquisition Company) that values the Singaporean firm at $40 billion, making it the most valuable SPAC listing to date.