Investment Banks Concluded Worst Year Since 2019 📉

🐺 Hi pack-mates,

This is Howling Markets, the experienced banker that introduces you to the world of the financial markets!

Today we will be covering:

• Education: What Is an Investment Bank? 🏦

• Solana Is Releasing a Crypto Smartphone! 📱

• Investment Banks Reported Worst Year Since 2019 📉

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

What Is an Investment Bank?

An investment bank is a financial intermediary that helps companies issue new securities through a procedure called underwriting.

During this process, the investment bank gives valuable advice to the company and helps them fill out all the necessary documents that must be filed before the issuance. Then, once everything is approved, the investment bank will purchase the entire amount of securities directly from the company at a fixed price and then will try to resell all the securities to the public through an Initial Public Offering.

However, the activities of an investment bank are not limited to underwriting and they also offer broker and dealer services, assistance with mergers and acquisitions and support during equity sales.

Broker and dealer services are usually only granted to companies or wealthy investors and consist in helping the client find the securities they want to buy in the market. In the case of brokerage services, the investment bank will only find a viable counterpart to the trade, whereas when they act as a dealer, they often buy the securities themselves directly from the client.

Mergers occur when two companies want to create a single corporation by unifying their forces and benefiting from economies of scale. Acquisitions, instead, occur when a company wants to purchase another one which could either agree or disagree with said purchase.

When the other company does not want to be acquired, the acquiring company will engage into a hostile takeover where they will try to buy as many publicly traded shares as possible until they reach the voting majority, then they will elect a new board of directors and vote in favor of the acquisition.

Finally, equity sales occur when a company wants to sell a line of business. In this case the role of the investment bank will be to evaluate this line of business, find potential clients and file all the necessary documents to ensure that the sales go smoothly.

Solana Is Releasing a Crypto Smartphone!

Well, we all know at this point the incredible results that Solana has been having both as a network and as a cryptocurrency. But what if I told you that Solana Labs, the company that created Solana, has also created another company called Solana Mobile?

And what if I told you that not only a Solana phone was already released, but that they are going to release another one this year?

On the 22^nd of July 2022 Solana Mobile announced the launch of Saga, an Android based phone with many unique features related to the cryptocurrency world. The phone presented an integrated crypto wallet, direct access to the Solana blockchain, a custom “dApp store” for cryptocurrency applications and a Seed Vault, a security feature that helps keep all password and security phrases safe.

The launch of the phone started at a price of $1000, however after a couple of months characterized by low demand, the price dropped quite significantly below $600.

But, as we briefly mentioned, this year Solana and its memecoins have become extremely popular, transforming the Saga phone into an opportunity that was just impossible to pass. Together with the purchase of the smartphone, any buyer would have received an original NFT collection and an allocation of BONK tokens, which after the recent surge, more than paid the cost of the entire phone!

Because of this, in recent months the smartphone sold out and the secondary market caught fire with unopened devices being sold for more than $3,000!

Solana Mobile decided to ride this wave and announce a second version of this crypto phone, called Chapter 2, that will be shipped to the public at the beginning of 2025.

Currently it is already possible to preorder it at a cost of $450, which the company expects to be enough to fully cover the price of the phone except shipping fees and taxes. Will you join this movement?

Today’s Howling Question

And now, it is time for our howling question!

Well, Solana Mobile is having a great time, but what about its cryptocurrency SOL? What is the Year-to-Date (YTD) return of this coin?

a)      -4%

b)      -2%

c)      +5%

d)      +10%

e)      +15%

Try to answer the question by yourself, and then check the correct answer after the last interesting news!

Investment Banks Concluded Worst Year Since 2019

Two of the largest and most important investment banks in the world, Goldman Sachs and Morgan Stanley, reported a significant drop in operating activities and in profits as they released their 2023 year-end earnings.

Goldman reported a drop of 24% in net income caused by a reduction in investment banking activities and a poor retail banking performance. However, the earnings were still better than what analysts expected given a more than 50% increase in the fourth quarter earnings with respect to the ending quarter of 2022. This caused Golman’s share price to increase by +0.71% despite the grim news.

Morgan Stanley, instead, reported an 18% drop in net income and due to the lack of other positive news, the share price plummeted by almost -4.20% on Tuesday, and they are currently trading even lower before the market opens.

Do you think that these earnings report can signify a worrying contraction in the economy? Or do you believe that more or less everything is still under control?

Equity and Debt Markets Update ⚖️

And now, our daily markets update!

On Tuesday the market did exactly what we expected during the previous newsletters. Stock prices rebounded after taking out the all-time high and fell by -0.37%.

The closing candle shape is still relatively indecisive with long wicks both above and below the body of the candle, but the series of bad earnings is certainty forecasting a poor future performance, at least in the short run.

The bond market reacted to the news and the stocks’ performance with a powerful increase in yields completely disregarding the support/resistance line that it had been testing since the beginning of the year.

On Tuesday the US 10 year government bond yields surged by +2.78%.

Answer

The correct answer is a) -4%.

After a crazy 2023 year, the 2024 has started with a consolidation period for this innovative cryptocurrency. It mainly moved sideways following a retracement at the end of December and it concluded its Tuesday’s trading session -3.95% YTD.

Howl-Worthy Memes 😂

🐺 See you next time!

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