Happy Friday, everyone.
I hope you’ve had good weeks and are looking forward to the weekend. Before we were even halfway through the week, stock markets were in turmoil and bra magnate Michelle Mone had launched an ICO. More on the former below, and let’s wait and see what happens re the latter…
All the best,
1. A bumpy week for investors, but stock market falls like that are no reason to panic
Global markets saw a significant sell-off this week, with the Dow Jones dropping 10 percent from its January peak. Here are a few things to bear in mind when markets are edgy:
Markets have been toppy for a long time, and many analysts have been predicting a correction for months. A correction is not a bellwether for recession.
The 8.5 percent drop we saw at the beginning of the week was not technically a correction, which is classified as a 10 percent fall or more. US markets were, by closing bell on Thursday, down 10 percent on their January highs, and the speed of the sell-off has taken investors by surprise, but stocks are still (at the time of writing) around where they were during December.
What is causing this? It might sound bizarre, but probably fear that the American economy (which drives global growth) is getting too strong.
A lot of commentators said Trump looks like a numpty (again) for boasting about the bullishness of the markets, but the real story is that investors are concerned his pro-growth policies will work so well that they’ll overheat the economy. The Federal Reserve will then try to slow things down by raising interest rates faster than anyone anticipated. There’s a good piece in The New York Times that explains this phenomenon.
And what that means, is the end of easy money: the era we’ve lived through since the financial crisis. The global economy has recovered, and central bankers are about to play catch-up.
2. SpaceX launches a rocket, an electric car and a fake man into space
On Tuesday, Elon Musk’s SpaceX launched a rocket called the Falcon Heavy. Seven years ago, this 27-engine monster was just a model on a desk. Its successful flight means it’s now the most powerful rocket in operation, and also the cheapest option, at a cool $90m-ish per launch, for customers like satellite companies and Nasa.
The car, a Tesla Roadster, complete with Starman driver, was meant to be orbiting Mars, but too much welly on the third burn means it’ll actually overshoot, and end up in the asteroid belt between Mars and Jupiter.
It feels like we’re now well and truly in the Private Space Age. $90m might sound like a lot, but compare it to the rocket’s nearest competitor, United Launch Alliance’s Delta IV rocket, which has launch costs of around $400m. We can all look forward to space rides, then cheap in-space living, with materials mined locally (from asteroids) and probably some bureaucratic planet protection regulatory body to ensure soft-colonisations.
In fact, this latter prediction makes one wonder what the role of government will be in all of this. We’re used to totalitarian galactic empires in fiction, but in real life, space looks like the domain of the private company, not the state. It’s not just Musk: think about Jeff Bezos’s Blue Origin, Virgin Galactic and exciting asteroid mining firms like Deep Space Industries.
Futurist Robin Hanson, one of the guys who worked on the precursor to the internet, Project Xanadu, has some great blog posts about life in space, covering topics like how a resources boom on Mars would pan out.
3. Seedrs’ secondary market
Equity crowdfunding platform Seedrs announced this week that it’s secondary market, which launched in beta last summer, is now open to all investors who want to buy shares in firms that have raised capital on the platform. It says it’s already sold more than 850 share lots, worth over £250,000 across 166 businesses.
I feel like I’ve been writing for donkeys about secondary markets in this sector and the need for liquidity. Seedrs has done well to formally launch one. Equity crowdfunding platforms have had to wait until they hit a certain size to make doing so worthwhile. Moreover, incentives have been a bit wonky for investors, who need to hold Enterprise Investment Scheme-qualifying investments for at least three years in order to get the 30 percent tax relief, and for secondary market investors who don’t get any tax relief. And real-time trading is virtually impossible: Seedrs, for example, fixes a price for sale.
The only way to progress from here would be via platform collaboration which, given how competitive a sector it is, seems unlikely.
CAUGHT OUR EYE
There was an interview in the Telegraph this week with Andrew Hunter, one of the co-founders of job search site Adzuna. The entrepreneur has just returned to work full-time after taking 18 months off to battle stage 4 Hodgkin’s lymphoma. When, in the summer of 2016, he was told chemotherapy hadn’t worked, he sold shares in Adzuna to pay for a treatment. Well worth a read.
Chinese e-commerce titan JD.com will move to take on Amazon in Europe as early as next year. With legions of migrant workers, it’s able to deliver a box of cereal in Beijing for less than a dollar. Can it do the same in Europe?
Founder and CEO Richard Liu told the FT that the firm aims to be ubiquitous across the continent within a few years, moving first into France, then Germany and the UK. Liu says JD is considering using local partners for last-mile delivery in Europe while owning its own network of warehouses.
Plainly, we won’t get deliveries for less than a quid here. It’ll be the consumer that shoulders the cost – the (literal) price we pay for minimum wage and maximum work legislation. But it will be interesting to see how quickly JD can capitalise on economies of scale and compete on price.
Gene sequencing has gone mobile. Almost three decades after scientists embarked on the ambitious and enormously expensive Human Genome Project, scientists have used a device – developed by Oxford Nanopore Technologies – to sequence the human genome that fits in the palm of your hand.
This kind of technology will change medicine, making it predictive and preventative. People will use these kinds of tools in their own homes, with tests, screenings, and treatment being tailored accordingly.