Key Events
👉 Wall Street’s New Sanctuary – Texas
Blackrock based TXSE Group and Citadel securities plan to launch the Texas Stock Exchange. The exchange has raised about $120 million and plans to attract global companies as capital markets rebound after the pandemic.
But how does an exchange really function? Why create another one?
The image that comes to mind of an exchange is people meeting in one centralized location to sell assets. If the whole community comes together, it would be very hard to convince your peers to move to a different location where there are less people. More people means more potential buyers, which means more liquidity.
However, the U.S. equities market does not function like this. The market consists of multiple exchanges connected via a computer network. So, your thinking is not that I am going to choose one specific location, stand there and trade all day, but I can transfer orders between different locations.
Enforced by U.S. regulation, all exchanges must be linked. Though your exchange might be new and offer relatively less liquidity, if the stock is trading at an attractive price, the trade will happen at your exchange.
Nonetheless, why would companies list their stock on your exchange?
The U.S. equities market sets corporate governance standards for companies. So, if the NASDAQ decides that companies should have diverse boards and your board only has men, then the exchange will not list it. Similarly, the Texas Stock Exchange has its own standards to attract companies, such as ‘we will protect companies from wokeism.’
That’s how an exchange attracts listings.
👉 U.S. 30-year Fixed Mortgage Rate Dips
The average rate on the 30-year fixed mortgage fell back under 7% this year. What does this mean for the economy?
Interest rates and mortgage rates (long-term rates) usually move together. Mortgage lenders assume some risk when they issue loans to homeowners. So, their rate of return should at least be as high as the return offered in 10-year treasury bills.
The fact that mortgage rates fell reflects the optimism that the Fed is going to cut interest rates into the latter half of the year.
👉 The Yankee Stadium Now Has Reverse ATMs
Cash is the third-most popular way for transactions, accounting for 16% of all payments in 2023. However, that’s down 2% from the previous year, the decline being accelerated by the pandemic. Still, businesses charge fees for cash payments.
Suppose you own a store and the customer pays for their $100 purchase of goods with a credit card, you get $97 and the $3 goes to intermediaries. In exchange for the fees, you and your customer benefit from convenience and possibly higher sales.
However, if the customer decides to pay $100 worth of cash, you can’t pay your supplier with cash—it’s inconvenient. So, you would have to do some work to transfer the cash into your bank account. You have to contract a Company such as Brinker to safely transport and deposit your cash. The point being that the delays and costs would make your cash worth less than $100.
It’s totally possible that it will be worth less than $97. Obviously, you do not want to accept cash payments, so you charge your customers fees to cover your costs of putting the money in your bank account.
A reverse ATM like the one in the Yankee Stadium and other cashless venues accepts $200 of your money and gives you a debit card for $196.50.
Mergers and Acquisitions
Piper Sandler agreed to buy smaller investment bank Aviditi Advisors.
Private Equity
Bain Capital to buy PowerSchool in a $5.6B deal.
Initial Public Offerings
Rapport Therapeutics, a developer of neuro medicines, raised $136m in its IPO.
Venture Capital
Fibe, a digital lending platform, raised $90M in Series E funding.
