Depth Charges

What’s Going On Here?

The US president launched a fresh offensive on Friday against anticompetitive company practices in several sectors, with Big Tech a particular target.

What Does This Mean?

The American administration is worried that tech giants currently have too much power to exploit users’ personal data and squeeze out smaller competitors. Friday’s executive order proposes to tackle this problem in two ways. First, it calls for regulatory reforms improving scrutiny of merger deals in the tech sector and preventing dominant companies from taking would-be rivals out of the market. Second, it suggests new rules increasing oversight of firms’ data-collection and user-surveillance practices.

But the president’s new plans cover more than just the tech sector. Also in his crosshairs is the pharmaceutical industry – with government health officials asked to help drive down the prices of prescription drugs by importing cheaper alternatives from Canada, among other things.

Why Should I Care?

For markets: We’re all tied to tech.
If successfully implemented, this latest crackdown could hit tech firms’ growth – and with valuations sky-high, their share prices are vulnerable. The five biggest tech companies – Apple, Microsoft, Alphabet, Amazon, and Facebook – are currently worth an average 31x next year’s forecast earnings, almost 50% more than the US S&P 500 overall (tweet this). But even those passively invested in the index should be worried: these five firms represent almost a quarter of its total market value.

Zooming out: Tech today, crypto tomorrow?
If regulators are being asked to reduce consumer harm, then the crypto industry looks ripe for intervention. That could be bad news for Circle, the crypto-focused payments firm that last week announced plans to “go public” later this year via a $4.5 billion merger with a special-purpose acquisition company (SPAC). Circle’s popular USDC stablecoin is pegged to the value of the US dollar – but with 90% of the world’s central banks exploring digital versions of their respective currencies, such unofficial competitors’ days may be numbered.

You might also like: The next big disruption to the crypto industry.

Copy to share story: https://www.finimize.com/wp/news/depth-charges/

🙋 Ask a question

How You Could Profit From The M&A Boom

What’s Going On Here?

Global mergers and acquisitions (M&A) are currently on track for a new annual record.

There are four major factors at play: one of them is the rise of SPACs, which by one estimate could drive $1 trillion worth of deals in the next two years.

And there are two main ways to play this opportunity, focusing on companies with certain features and those in particular industries.

So that’s today’s Insight: what’s driving the M&A boom, which companies are most likely to benefit – and the simple change you can make to your investment process to profit from these deals.

What’s Going On Here?

Three lines on a chart late last week showed British economic growth slowed to a mere 0.8% in May, disappointing pundits.

What Does This Mean?

Despite strong showings from its soccer teams, the UK’s post-coronavirus recovery lost a little steam in May. Fresh data out on Friday showed the country’s economy grew just 0.8% compared to the month before – barely half what investors were expecting, and a marked slowdown from April’s 2% rate. While relaxed restrictions saw restaurants, hotels, and movie theaters reopening their doors, increases there were outweighed by contractions in the construction and manufacturing sectors – thanks in part to the global microchip shortage dragging down British carmakers.

But it ain’t all bad, guv. The UK economy is now just 3% smaller than it was before the pandemic – and the country’s central bank reckons the difference will have been made up by the end of the year, thanks to plucky Brits spending the savings they accumulated during last year’s lockdowns.

Why Should I Care?

The bigger picture: They think it’s all over...
With Britain’s economy getting back to winning ways, the Bank of England may soon begin withdrawing some of its antiviral support measures. That’s if nothing derails the recovery – a not insignificant risk, given the fast-spreading Delta variant’s potential to wreak further havoc. Ensuring economic growth continues may yet necessitate further work: just look at China, which decided on Friday to reduce local banks’ cash reserve requirements in order to boost lending and spending.

Zooming out: Out of puff.
At least one British manufacturer got a boost on Friday: medical device maker Vectura accepted a $1.2 billion takeover offer from American-Swiss tobacco firm Philip Morris International. Ironically, Vectura mainly produces the sort of inhalers used by asthma sufferers – a condition that smoking helps trigger. Still, the deal should help Philip Morris towards its goal of $1 billion in annual non-nicotine sales by 2025…

Today's big stories

Depth Charges

What’s Going On Here?

What Does This Mean?

Why Should I Care?

How You Could Profit From The M&A Boom

No more crypto FOMO

The Lion Sleeps Tonight

What’s Going On Here?

What Does This Mean?

Why Should I Care?

The no-nonsense way to invest in bitcoin

🔨 Craft your crypto strategy