Uncle Sean's Update - 7/30/21

Happy Friday!!!
 
WOW - It was another action packed week so let’s get to it!!!  Here is the Uncle Sean Update for 7/30/21:
 

• It’s Fed Week!!!!  Guess what – nothing happened - again LOL!!!!  Here is the non-eventful FOMC statement as well as Chairman Powell’s  press briefing video and transcript (warning – the video is about an hour long and unless you are a super-dork like me, you will fall asleep).  All kidding aside there were some important notes from Chairman Powell’s press briefing.  Here is Uncle Sean’s geeked-out op-ed (not that anyone cares so feel free to scroll down, but I’m gonna’ tell it anyway – LOL):
  • From a market standpoint I personally love this new Fed.  Powell has been telling us the same story for months now so there is no shock to the markets.
    • Inflation continues to run hot and way above the targeted 2.5% rate.  However, it is seen as largely transitory and due in large part to supply shortages and concentrated in a few areas of the economy (specifically mentioned new and used automobiles as well as rentals due to worldwide semiconductor shortages resulting in production limitations).
    • Discussions regarding the “timing, pace, and composition” of eventual tapering has begun – but no timeline as of yet as more data is needed.
    • The risk to the economy of tightening too soon is far greater than continuing the current expansionary policy.  “Unknowns” (uncertainty is almost always bad) continue to drive economic concerns.
    • Impact of expiring supplemental federal unemployment benefits is still unknown (set to expire on Sept 6, but about half of States have already canceled them).
    • The federal eviction moratorium from the CDC is set to expire on July 31 and the economic effects are largely unknown at this time.
    • Covid Delta variant is creating significant concerns as it is unknown as to how this may or may not affect the economy – potential for shutdowns, school reopening concerns, daycare closing – all of which could significantly impact employment for caregivers as well as working parents, etc.
    • 2Q GDP came in below expectations at 6.5% versus 6.3% in 1Q and significantly lower than expectations of 8.4% (you can bet your life that the Fed was pouring over this data before it became publicly available)…
  • Ahhh…  Uncle Sean reminisces of learning how to drive on the ice in Oklahoma – take your time and practice slow and easy corrections…..  If you jerk the wheel or hit the brakes too fast, you’re going to have problems.  While this is good for the markets and the overall economy (long, slow, protracted recovery), it certainly continues to place an unequal strain on community banks as they are not designed to operate for extended periods of time in a zero interest rate environment.

 

• Robinhood (Nasdaq: HOOD) priced their IPO at $38 per share (low end of the expected range of $38 - $42) giving them a very nice valuation of $32B but certainly less than some had thought.  “HOOD”” opened at $38 raising $1.89B, but traded down most of the day and closed at $34.82 (down 8.37%).
  • Here’s some good news – Robinhood did not have to halt trading on their own shares to raise emergency liquidity…  LOL!!
  • Okay, okay – I know Robinhood has been easy to highlight concerns and poke fun of (comes with the territory of being a maverick and revolutionist), but Uncle Sean does support their overall goal of democratizing finance.  Truth be told, I don’t know of a single Gen Z person who hasn’t asked me or told me about Robinhood and how cool it is.  From that perspective, they are certainly winning and have awakened an entire new generation of retail investors.

 

• SBA announced the opening of the PPP Direct Forgiveness Portal and will begin accepting applications from borrowers on August 4 for loans up to $150,000 from participating lenders that opt-in to this program through https://directforgiveness.sba.gov.

 

• Check out Atomic (much more than just a payroll API) getting it done this week!!!!
  • Digital Onboarding and Atomic pair up to modernize direct deposit acquisition through the Digital Onboarding account engagement platform. 
  • Unifimoney selects the Atomic API-powered solution to enable users to set up and modify payroll direct deposits “quickly and easily, circumventing the cumbersome paper-based processes”.

 

• Bambu and Moven partner to help FI’s deliver next-gen wealth management solutions.

 

• MOCA has partnered with the Armed Forces Financial Network (AFFN) to offer MOCA’s Digital-First Next-Generation Card-Based Payment Platform to the United States military community worldwide.  Nice job MOCA and thank you for supporting our military personnel!!!!

 

• M1 Financial announced their M1 Owners Rewards Card Visa credit card issued by Celtic Bank with rewards of up to 10% if you own fractional stock shares in the rewards vendor within the M1 SIPC account.  Individuals who own at least 1 cent of a fractional share of a stock on the day of a purchase are eligible for the boosted rewards.  All cash back is automatically deposited into your investment portfolio which can be re-invested or withdrawn.

 

• Current selects The Bancorp Bank as their new sponsor bank following a “year of tremendous growth for Current, which has nearly 3 million members, significantly up from the 1 million mark it reached in 2020.”  
  • Full disclosure – I don’t know for sure, but it doesn’t look like The Bancorp Bank is replacing the other sponsor banks for Current, rather just supplementing.  Maybe a pre-emptive move by Current in order to avoid an HMBradley moment?

 

• Kleberg Bank (great folks over there) announced a partnership with Autobooks to provide Kleberg Bank’s SMB customers with a simplified solution for digital invoicing and online payments conveniently located within Kleberg’s online banking platform.

 

• Marqeta inks a deal with Google Pay to power the new virtual Google Pay balance card.  This is great news for Marqeta as it is a HUGE logo win; and it allows for revenue diversification.  Recall the 5/21 Uncle Sean Update where we talked about the Marqeta S-1 “on page 24 of the S-1 under Risk Factors, Marqeta states that Square accounted for 60% of 2019 net revenue, 70% for 2020, and 73% for 1Q2021 revenue…”  I just quoted myself in third person, didn’t I (eyes rolling)….  LOL!!!

 

• Citizens Bank has agreed to acquire Investor Bank in a massive $3.5B mega-merger transaction.  It will be interesting to see how much the recent White House Executive Order plays into this from a regulatory scrutiny standpoint (check out the link to the 7/9 Uncle Sean Update where we detailed the EO directive to “update guidelines on banking mergers to provide more robust scrutiny of mergers”)….  In the interim,  here is the really well done Investor Deck by Citizens Bank detailing the acquisition.

 

• Visa rolls out BNPL feature.  For more info, check out Visa's API model for installment solutions for “pre-purchase, during purchase, and post-purchase programs”.

 

• Mastercard launches new Start Path incubator program for cryptocurrency and blockchain startups

 

• SWIFT launches SWIFT Go to enable near real-time low-value payments directly from bank accounts.  I’ll let you determine whether this is a threat to Ripple or a reactionary response by SWIFT to try to remain relevant….  Hmmmm…..

 

• Zelle announced 2Q21 transaction results that includes the processing of “$120 billion on 436 million transactions. Year-over-year sent payment values increased by 68%, while payment transactions increased by 58%.”  This compares to 1Q results of $106 billion on 392 million transactions.  WOW – that is a STRONG trajectory; and pretty soon that’s going to add up to some real money – LOL!!!!

 

• Fintech funding continues to be smoking hot this week (is unicorn status even a thing anymore???):
  • Sila (API regulatory compliant platform for Payments-as-a-Service) raised $13M in Series A funding.
  • Lolli (bitcoin rewards) raised $10M in Series A funding round.
  • Nium (cross-border B2B payments) raised $200M in Series D round with a valuation just north of $1B with U.S. expansion plans (3% of revenue now, plans to increase to 20% in 18 months).
  • Paystand (B2B payments)( raised $50M in Series C funding.
  • iCapital Network (wealthtech alt investing platform) raised $440M funding round at a valuation of approximately $4B.
  • Fireblocks (blockchain security service provider) raised $310M in Series D with a $2B valuation.
  • At-Bay (cyber insurance) raised $185M Series D with a valuation of $1.35B.
  • Artis (real-time lending and payments) raised $7M in Series A funding round.
  • Zilch (BNPL) raised an additional $110M in Series B extension and will use the funds to expand into the U.S. and enhance their growth in the U.K.
  • Lithic (card issuing – fka Privacy.com) raised $60M in Series C with a valuation of $800M.
  • Figure (financial services through Provenance blockchain) raised $200M Series D with a $3.2B valuation.
  • Prime Trust (fintech infrastructure) raised $64M Series A $64M in Series A funding.
  • Mercury (neo business bank) raised $120M in Series B at a $1.6B valuation touting 40,000 business customers.

 
 
Random Uncle Sean Stuff:

• 28 days until college football!!!

• With respect to the “dog days of summer” – here are a few “it’s so hot” jokes to brighten your day:
  • It’s so hot I saw a bird pull a worm out of the ground with an oven mitt!
  • It’s so hot that Siri asked me to dip her in a glass of ice water!
  • It’s so hot my chicken just laid an omelet! 
  • It’s so hot that the catfish are already fried when you catch ‘em!    
  • It’s so hot that the seatbelt buckle makes a darn good branding iron!
  • It’s so hot, the frozen pizza I bought at the store was ready to eat by the time I got home!
  • And my personal favorite - It’s so hot they installed a fan in the debt ceiling!!!!!

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.