Summary:

Blue Apron Holdings IPO

The Blue Apron Holdings IPO today is reminiscent of the dot com boom.  The market is saying the 5-year old company is worth close to $2 billion. This IPO represents a “down round” which may occur after a company suffers a decline in valuation after it has received initial rounds of capital investment. The initial offering was $10/share, and by the closing bell it only managed to close at $10. This stock may go below $10 as early as tomorrow, as many investors were planning to flip the stock. The concept of this company is not proprietary; indeed the recent merger of Amazon and Whole Foods could pose a serious market threat to this company.

Rand Paul

In more news on this ever-evolving Republican Health Care saga. the Republicans are caving in to media and left spins the Republican Healthcare bill as a re-distribution of wealth from the poor to the rich.  You are not taking from the poor by stealing less from the rich. For some reason, the voting public expects American profit-seeking companies to sell insurance to people who are already sick. This would be the equivalent of selling home insurance for a house that has already burned, or car insurance for a car that has just been in an accident.   Rand Paul is getting a lot of press recently because he is the only Republican who opposes this on principle. He believes in the freedom for Americans to purchase the kind of insurance they need. They can pick their deductible; they can pick their co-pay. They can have the freedom to buy or not to buy health insurance.  But this can only happen in a market where insurance companies are allowed to make a profit and are free to compete for insurance business without government intervention.

U.S. Dollar Continues Decline

  • The U.S dollar continued its decline today falling to a fresh 8-month low, closing to about 95.60
  • The dollar is being led lower by a surging euro; the euro is actually at a 12-month high against the U.S. dollar
  • Trading just below 114.5
  • It wasn’t too long ago the euro was down around 105, and there was a lot of talk about parity with the dollar
  • I was saying that the euro has bottomed; that the euro is going to rise
  • And the rise is just now beginning for the euro, I think there’s a lot more to this move
  • Other currencies are also following the euro’s lead, but ultimately I think they will surpass it
  • The dollar has a substantial ill-gotten gain that it needs to surrender
  • The dollar got bid up for years based on a misunderstanding of the true state of the U.S. economy
  • Of the efficacy of Fed monetary policy
  • The market was factoring in far more rate hikes than the Fed was capable of delivering
  • Meanwhile the economy is rolling over
  • I mentioned on my last podcast Mario Draghi’s statement about the deflationary threat subsiding
  • About the drop in inflation being transitory and the euro rose on that
  • The very next day, the ECB went out to do damage control
  • Why is it “damage” when the currency is going up?

Strength in Financial Markets

  • The only segment of the market that was strong today were the financials
  • The banks feel they are going to benefit from higher interest rates, higher spreads
  • And here, we had those bogus stress tests where the Federal Reserve supposedly stress-tested all the banks
  •  And, what to you know? The all passed
  •  So that is creating a bid for the banks
  • I have said this before, when it comes to higher interest rates and banks, be careful what you wish for