Hey Influence Traders,
There was a ton of ripple-causing action yesterday.
From D.C. to California to Europe …
From fossil fuels to windmills to crypto and SPACs ..
But First — They’re Back!
Our favorite “meme” stocks, GameStop (Ticker: GME) and AMC Entertainment (Ticker: AMC), traded up over 15% each yesterday on social media discussions of another potential short squeeze.
The SEC indicated that it will bring tougher oversight to two investor darlings — cryptocurrencies and special purpose acquisition companies (SPACs).
SEC Chairman Gary Gensler told lawmakers that SPACs and cryptos raised significant policy and investor-protection questions.
He called SPACs “blank-check IPOs” and stated that the SPAC boom has placed “a lot of demands on the SEC’s limited resources.” He also said that SPACs raise a number of policy questions, including whether “SPAC investors [are] being appropriately protected” and whether “SPACs fit into our mission to maintain fair, orderly and efficient markets.”
SPACs are still on fire and are on track to raise as much money as they did in their record-setting 2020, so we’ll see if these comments dampen investor enthusiasm. I do not believe these comments will have any impact on SPACs that have already merged with an investment.
Crypto enthusiasts hoped that this administration would be crypto-friendly but have thus far been disappointed. Gensler told a House Appropriations Committee subcommittee that he has concerns about everything from crypto exchanges to decentralized financial platforms and that he looks forward to “working with fellow regulators and with Congress to fill in the gaps of investor protection in these crypto markets.”
He suggested that he wants to bring the protections investors expect from the major exchanges to crypto.
Literal DC Action
Washington DC’s attorney general announced a lawsuit against Amazon (Ticker: AMZN), accusing it of anticompetitive practices.
The suit involves provisions in AMZN contracts that prohibit sellers from offering the same items for lower prices on competing platforms.
Violations of the provisions could result in sellers losing access to Amazon's online marketplace, which accounts for approximately 40% of e-commerce in the U.S., or sanctions against the third-party sellers.
AMZN has been accused of similar practices around ebooks and data, and is the subject of many antitrust rumors, particularly under this administration.
In order not to draw any unwanted attention to itself, AMZN announced that it was buying MGM in a mega $8.45 billion media deal. The deal gives AMZN access to more than 4,000 films (including the James Bond franchise) and 17,000 TV shows to fill out its Prime Video content.
AMZN seems to be an unstoppable force … let’s see if the long arm of DC can halt that growth.
Remember: busting up monopolies is not necessarily bad for investors as the parts are often greater than the whole.
A Dutch court found Royal Dutch Shell (Ticker: RDS.A) “partially responsible for climate change” and ordered it to curb its carbon emissions by 45% by 2030.
The action was brought by a group of climate activists and the ruling could have a far-reaching impact on the rest of the global fossil fuel industry. Other companies should expect similar lawsuits.
Exxon (Ticker: XOM) is dealing with its own climate issues. Activist investors, led by hedge fund Engine No. 1, challenged XOM’s management over climate policy by contesting the election of one-third of the company’s board — and recently picked up two seats themselves.
If Engine No. 1 succeeds, you can anticipate XOM investing more heavily in renewable energy systems.
CA Wind Action
The Biden energy plan cleared another hurdle in its quest for renewable power when the U.S. Navy dropped objections to the Administration OKing two areas off the California coast to be developed for wind turbines.
The plan allows commercial offshore wind farms in a 399-square-mile area in Morro Bay along central California, and another area off the coast of Humboldt in Northern California.
The administration estimates that wind turbines in Morro Bay and near Humboldt could together eventually generate enough electricity to power 1.6 million homes.
The announcement comes on the heels of the approval of the Vineyard Wind project on the East Coast, the nation’s first commercial offshore wind farm. A dozen other offshore wind projects along the East Coast are now under federal review.
No details have been released on the company that will get the project, but ENBW (Ticker: EBK), a German electric utility, has been working with California and the feds for 5 years to get clearance on the Morro Bay project.
Local fishermen are not happy.
I’ll be keeping an eye on EBK and other announced vendors.
Cutting Through the Noise for You,