Fintech Focus For February 19, 2021

Quote To Start The Day: Motivation is what gets you started. Habit is what keeps you going.

Source: Jim Rohn

One Big Thing In Fintech: “There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time,” Robinhood founder Vlad Tenev said. Such a change, he argues, would allow Robinhood to cope better with periods of acute volatility.

Source: The Block

Other Key Fintech Developments:

• Nvidia unveils new mining processor.
• Tokenization would fix naked shorting.
• Public.com compared to Robinhood.
• Coinbase appointed Stripe executive.
• PFOF: An explanation and a debate.
• Wilshire Phoenix launching new ETF.
• UBS: Fingerprint cards to boost bank.
• Marqeta looking to credit card space.
• Portugal The Man adds coin incentive.
• ICE cleared its first CDS option trades.
• Bitfinex improving paper trading tech.
• Create engaging financial experience.
• Instadapp adds DeFi smart layer tech.
• Cosmos launches Stargate upgrades.
• State Street and its research platform.
• Hightower adds new board members.
• Charged Particles grows, taps $750K.
• Why some countries say no to crypto.
• GoCardless grows, opened NY office.
• Neocova eyes growth with new CEO.

Watch Out For This: If you’re a fast fashion lover, there’s a good chance that many of the clothes in your closet are made in Bangladesh. For decades, the country has been a hub of low-wage garment manufacturing. But soon, it may be known for something else as well: recycling.

Source: Fast Company

Interesting Reads:

• Visuals: Recessions and businesses.
• Ted Cruz blasted over trip to Cancun.
• Unpacking Dispo, the new photo app.
• The lowdown on high-flying stocks. 
• UN chief backing blueprint on climate.
• Tesla is cutting prices on two models.
• 1M shares of GME not able to deliver.
• YouTube redefines video experiences.

Market Moving Headline: Easy money and an improving economy suggest not only lower volatility but further equity gains. That said, those gains are not likely to be shared equally.

Assuming volatility continues to grind lower, history suggests favoring cyclical over defensive stocks. Based on 20 years of data, when the VIX is falling the MSCI Cyclical – Defensive Return Spread Index posts an average monthly gain of around 1%. When the drop in volatility is large, 10% or more, average cyclical outperformance expands to nearly 2%.

Given this dynamic I would continue to favor cyclical expressions including machinery, specialty chemicals, and cyclical parts of technology. At the same time, I would remain underweight the more overpriced parts of consumer staples, particularly household and food products. For investors, the conclusion is not just to maintain equity exposure, but to favor those parts of the market most likely to benefit from a normalization of both the economy and (hopefully) financial markets.

Source: BlackRock