Moonfare | March 29th, 2024

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GOOD MORNING

Here’s everything you need to know today. Sam Bankman-Fried, FTX's erstwhile hero, finds himself sentenced to 25 years with a side order of an $11 billion fine, underscoring a major move towards accountability in the crypto space. On another front, Home Depot secures a landmark $18.25 billion acquisition of SRS Distribution, hammering down its biggest deal to deepen ties with the construction sector.

Economically speaking, all eyes are on the upcoming PCE report, hinting at a 0.4% inflation increase that might put the Fed's strategies to the test. Meanwhile, Reddit's top brass are banking their shares post-IPO, with a notable stock sell-off leading to a 25% price drop, stirring the pot of market dynamics.

From crypto crackdowns and mega mergers to inflation indicators and executive exits, it's just another day in the world of finance.

Let’s dive into more detail below.

In a turn of events the fintech and crypto world have been waiting for, Sam Bankman-Fried, or SBF, the founder of the once-dominant FTX exchange, has been sentenced to 25 years in prison.

This verdict was handed down after a high-profile trial that exposed the staggering fraud and conspiracy leading to the collapse of his cryptocurrency exchange and a related hedge fund.

Although federal prosecutors sought a much harsher sentence of 40 to 50 years, the judgment rendered by the Manhattan federal court was less severe, albeit significantly more than the leniency sought by his defense.

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Home Depot has announced its acquisition of SRS Distribution in a landmark $18.25 billion deal, including assumed debt. Home Depot's most significant transaction to date is to expand its business with major contractors and construction firms.

Scheduled to close in the fiscal year ending in late January 2025, this move underscores Home Depot's strategic shift toward capturing a larger share of the professional construction and renovation market.

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In a climate of persistent inflationary pressures and economic speculation, the financial markets brace for releasing the Personal Consumption Expenditure (PCE) report tomorrow. Economists forecast a 0.4% rise in prices for February, potentially challenging the Federal Reserve's monetary policy stance.

Amidst this backdrop, the Fed's recent decision to hold interest rates steady emerges as a pivotal factor for investors, particularly in gold and Bitcoin, which have been roaring.

Economists are anxiously eyeing the Federal Reserve's preferred inflation measure, the PCE report, predicting a 0.4% increase in prices for February. This anticipated rise marks the second consecutive month of inflationary pressures, complicating the Fed's strategy against inflation.

Despite these challenges, the Fed, through its March meeting, signaled a cautious yet unpanicked approach, emphasizing the need for more data before considering rate cuts. Fed Governor Lisa Cook and her colleague Christopher Waller underscored the bumpy path to disinflation, advocating for a prudent, data-driven approach to monetary policy adjustments.

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In a storm of IPO madness and financial FOMO, Reddit’s top brass have significantly reduced their stakes in the company. Insider trading reports following the popular platform's IPO reveal a collective sale of stocks worth millions by none other than the CEO, CTO, and COO of Reddit. Such moves often pique the market's interest, with investors and analysts keen to decode these high-level dispositions' undercurrents.

Steve Huffman, Reddit’s CEO, led the charge by offloading $16 million worth of stock, followed by COO Jennifer Wong, who matched Huffman's figure. Not far behind, CTO Christopher Slowe parted with shares totaling $6 million. This concentrated sell-off, clearly laid out in recent filings, presents a moment of recalibration within Reddit's inner financial sanctums, marking a substantial shift in insider share distribution and ownership.

Reddit's stock experienced a significant downturn, with shares plummeting 25% over two days, closing at $49.30 on Thursday. This decline took the stock below its closing price from its initial trading day on the New York Stock Exchange the previous week. This downturn sharply contrasted with the optimism surrounding Reddit's initial public offering (IPO). Adding to the downward pressure, shares slumped an additional 10.4% following news of insider sales by the company's CEO and COO, underscoring the challenges facing the social media platform in the volatile market.

On its first trading day, Reddit's shares soared, opening at $47 and rapidly climbing up to 70% from the IPO price, briefly valuing the company at $10.9 billion. In the subsequent days, the momentum sustained, with shares escalating another 9% to close at $65.11 amid high trading volume. But, as they say, what goes up must come down, especially if the CEO and COO are selling.

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1. S&P 500 Sets New Record, Seals Best First Quarter Since 2019

The S&P 500 clinched its highest first-quarter gain in years, closing up 0.11% and marking a new record, while the Dow Jones added modestly and the Nasdaq saw a slight dip.

2. Nvidia Drives Quarterly Surge

Nvidia led the quarter's impressive rally, soaring 82.5% as the AI boom continues to fuel investor enthusiasm, contributing significantly to the quarter's standout performance.

3. Oil Prices on the Rise, Heading for Monthly Gains

Oil prices increased over $1, setting the stage for a third consecutive month of gains, driven by strong demand and tightening supply.

4. Consumer Savings Increase Amid Economic Uncertainty

Piper Sandler notes a rise in consumer savings as worries over the job market prompt a cautious approach to spending, potentially impacting future consumer expenditure.

5. Retail Investors Buy In Heavily

Retail investors showed strong buying activity, adding $3.5 billion in equities this week, with significant interest in Nvidia, Tesla, and AMD.

6. Strategas Sees Continued Equity Market Strength

Despite a rotation away from tech and communication services, Strategas remains optimistic about the equity market's outlook, citing historical trends favoring continued gains.

7. Apple Faces Down Quarter

Apple struggles through the quarter with over an 11% decline, though history suggests potential for recovery post-significant downturns.

8. Tesla Tumbles, Leading S&P 500 Declines

Tesla emerged as the quarter's biggest laggard in the S&P 500, reflecting challenges such as reduced demand and increased competition, dropping around 29%.

9. S&P 500 and Dow Poised for Historic Gains

The S&P 500 is on track for back-to-back quarters of over 10% gains, a feat not seen in over a decade, indicating robust market momentum.

10. Energy Sector Leads S&P 500's March Rally

The energy sector outperformed in March, contributing to the S&P 500's overall positive performance, with stocks in this sector seeing significant gains.

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Today's insights are courtesy of Moonfare. Success in private equity starts with accessing superior fund managers. Discover the Moonfare difference. Our Investment Team analyses hundreds of investment opportunities a year but chooses just 5% of them for our platform.

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