← Money Rehab with Nicole Lapin
Money Rehab with Nicole Lapin
Wall Street News Roundup: IPO Winter is Over, RFK vs Tylenol and Interest Rates
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If you take only one thing away from today's episode, Money Rehabbers, let it be this. In my not so humble opinion, Public is the best brokerage for investing in bonds, stocks, ETFs, options and even crypto. You can try it out for yourself and see why I love it so much. @Public.com MoneyRehab Public is legit, the only platform I use to buy bonds. Before public, I used to buy government bonds the hard way. Slow websites, confusing interfaces, website designs straight out of the early 2000s. Just picture where fun goes to die. That was it. And then I found Public about five years ago and I have not looked back. I can now finally buy bonds without wanting to rip my hair out. Public makes it so easy to buy bonds. Whether you're into Treasuries or corporate bonds, you can browse thousands of options right from your phone. But like I said, Public isn't just all about bonds. You can also find stocks and ETFs and they offer a high yield cash account with a 4.1% APY, which is higher than the national average. They even have retirement accounts. You can now open a traditional or Roth IRA or both right on public so your future self covered. And for a limited time you can earn a 1% match on all your IRA deposits, IRA transfers and 401k rollovers. If you want an investing experience that's both smart and simple, head to public.com money rehab one more time. Public.com money rehab this is a paid endorsement for Public Investing. Full disclosures and conditions can be found in the podcast. Description Support for today's episode comes from Square the easy way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. On this show and in my books, I always talk about how important it is to have multiple streams of income. But how do you actually go from hobby to hustle? The answer? Square. I have seen it so many times in real life. Just this weekend at the Farmer's market there was a mom selling banana bread. We love banana bread and I could not resist. In the past I might have missed out because I never carry cash. But with Square, she was able to take my card. In seconds I got my delicious treat, she got paid and neither of us had to stress, with Square you can get all the tools to run your business with none of the contracts or complexity. And why wait? Right now you get up to $200 off square hardware at square.com go mnn that's square.com G O M N N as in Money News Network. Run your business smarter with Square. Get started today. I'm Nicole Lapin, the only financial expert. You don't need a dictionary to understand. It's time for some money rehab. Money rehab. It's time for a roundup of the biggest stories on Wall street and how they're gonna affect you and your wallet. Today we're talking about what might be the kickoff to one of the trading seasons we have seen in the last two years. We'll also get into RFK and Tylenol and of course make an educated guess about what the Fed might do next week. So why is this such an exciting time in the market? Well, it looks like the IPO winter might be over, or at least dethawing. An ipo, short for initial public offering, is a company's big financial debut. It's the moment a private company decides to go public and list its stock on an exchange, opening the doors for everyday investors like you and me to buy little piece of the company for the very first time. Six companies are going public in the next few weeks. The biggest name on the list is Klarna, the buy now, pay later company. They're joined by the likes of Gemini Space Station, a cryptocurrency exchange figure, a blockchain lending company via Transportation, a software services company, and BlackRock Coffee, a you guessed it, coffee company. No relation by the way, to BlackRock, the asset management giant. That would be an interesting extension. And to be clear, this is not me telling you to buy any of these stocks, but I am celebrating the simple fact that more companies are finally becoming available for everyday investors to buy, because it really hasn't been that way recently, which bucked a trend for decades. The playbook was simple. When a company grew and it needed more money to expand or wanted to better capitalize on its own success, it went public. That meant raising cash by selling shares. Not only is this great for investors, but it's also good news for employees with stock options because it's a lot easier to sell shares in a public company than it is a private company. So if you're an employee with shares in a public company, typically you're going to have way more flexibility around what you do with your shares. Of course, going public comes with strings attached. Companies must follow a lot of rules. Financial disclosures, investor transparency, no funny business with the balance sheets, and so on. Plus, shareholders get voting rights, which means companies don't always get their way. And let's not forget that being public also leaves you susceptible to activist investors or hostile takeovers. If Someone scoops up enough stock or just makes you way more vulnerable to seriously being affected by bad pr. With those downsides in mind, it is no surprise that when private equity and venture capital groups came along, companies jumped at the chance to raise money from them. Instead, these deals required fewer disclosures than going public and gave founders far more control over who could invest. Not only could they carefully curate their investors, but they also controlled when and if employees could sell their stock. Overall, this hasn't been great for for employees. Sure, it's nice to have a pile of shares in a hot company like OpenAI if you're an early hire. But then what? You can't sell them the way you would a normal public stock and your retirement account ends up being dangerously overexposed to one single private company. To correct this, you have to invent all sorts of fancy workarounds. And as I've said in recent episodes, it's not great for everyday investors either for companies to be opting into VC and out of US the public market. Some of the most successful companies in the world right now, like OpenAI, are completely off limits to retail investors. And it's honestly quite a bummer. Sure, you can become an accredited investor, which opens up the door to much fancier financial products, but for most people, that lucrative path to building wealth is closed off. And this is a very modern problem. Back in 1996, regular retail investors had more than 8,000 public companies to choose from. Fast forward to today. If you look at the companies with a market cap of over 250 million, which is still pretty small comparatively, you're down to about 3,600 companies. Limit it further to the company's worth over a billion dollars and the number shrinks to just 2,500. Meanwhile, more people than ever want in on the stock market. It is still a massive driver of wealth, but there is this growing tension. Tons of demand from investors, but a shrinking supply of investment opportunities. To make matters worse, in the past few years, companies have basically stopped going. In 2020, 134 companies went public. In 2021. That number spiked to 235, likely due to the fact that some companies were waiting for Covid to be quote over before ipoing. But then the floor fell out. Only 14 went public in 2022. It ticked up slightly to 23 companies in 2023 and climbed to 46 companies in 2024. For comparison here, between 1991 and 2000, the average number of IPOs per year was 300. And as you know because you're listening to the show right now. It's not like people are any less interested in investing and yet we have fewer opportunities. So I am really excited about what these six IPOs might be telling us about the not so distant future. Now let's move from IPOs to another three letter abbreviation that's on everybody's mind right now. RFK. RFK recently testified in a very tense Senate hearing with some leaders on both sides of the aisle taking issue with RFK's stance around vaccination vaccines. But what I want to talk about today are the shock waves that RFK sent through the market because of a report he's apparently working on that has big implications for the pharma industry. We all know that there is a long list of stuff pregnant people are not allowed to have. I found this out when I was pregnant last year. Especially when it comes to medicine, the list is so, so long. And I found that out when I had a cold when I was very pregnant. For a long time, the only approved painkiller for pregnant women has been acetaminophen, with Tylenol being the best known form of acetaminophen. So when word got out that RFK Jr. Was planning to release a report naming Tylenol specifically for rising autism rates, it caused confusion and worry in pregnant women and really families in general. It also rattled Tylenol's parent company Can View, whose shares tumbled 14% on the news, though they did rally a little bit afterward. It's going to be interesting to see how the company handles this and what the report actually finds. After all, they're not the only ones making acetaminophen products and it would be strange to single out a brand name instead of the active ingredient itself. But this is a perfect example of what I was talking about earlier with public companies. Stock price, which is a very real number, is very vulnerable to headlines like this. RFK just said that he was going to put out a report linking Tylenol to autism and the stock moved. There is a not even a report analyzed yet. Just the mere suggestion of one can move a market. Yes, it is a cuckoo crazy world. Last up, the Federal Reserve committee meets on September 16th and 17th. So just a spoiler alert. We're going to be talking about this in a wrap up for at least two weeks now. I know we already have, but I wanted to get this big event on your mental calendar well before it happens. In this meeting, the Fed decides rates, so that is a big deal. But it's not going to affect you immediately. And the Fed wants you to know that the Fed does not set rates for your credit card directly or your student loans. What they do set is the rate at which banks borrow money. That number ultimately does trickle down into calculations that do impact what you pay on stuff like a car loan or a mortgage, but it isn't the exact number that you see on your bill. But it is looking like the Fed will cut rates, especially after getting some new data yesterday showing that the economy added fewer jobs than previously thought by a lot. Annual revisions to nonfarm payrolls for the year showed a drop of over 900,000 jobs from initial estimates. Right now the Fed funds rate is four and a quarter to four and a half percent. And as Austan told me, the Fed wants to see it settle much lower between three and three and a quarter percent. Now, zooming out, historically speaking, what we do have now, even before a cut is still super low, but not compared to where we were during COVID President Trump is pushing hard for the Fed to cut rates and he has been unusually vocal about it, putting a lot of pressure on jpow, even threatening to fire him. So in the lead up to this meeting, it's going to be really interesting to see if that pressure ramps up. Generally markets do like cuts, but not always, and any movement is usually more of a blip than a long term trend. Still, this is one story to definitely keep an eye on in the upcoming weeks and one we will absolutely be talking about a lot more as we see the decision and the potential fallout. For today's tip, you can take straight to the bank. If you work at a private company and you've been granted stock options, now is the time to potentially dust off that equity agreement. With more companies testing the IPO waters, you want to understand the vesting schedule and what your options look like if your company goes public. I did a whole episode about this. It's actually one of my favorite episodes of Money Rehab and I've linked that in the show notes. If you want a refresher on private company equity. In the meantime, try to get a summary of your holdings and any upcoming cliffs or exercise windows. The more clarity you have now, the better positioned you will be to make smart financial decisions if that IPO bell rings. Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some Money Rehab? And let's be honest, we all do. So email us your Money questions money rehaboneynews network.com to potentially have your questions answered on the show or even have a one on one intervention with me. And follow us on Instagramoneynews and TikTokoneyNewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.