Yesterday saw Snapchat go public in the largest float since Chinese eCommerce giant Alibaba in 2014. The company’s young founders – one of whom is a Stanford drop-out – become the latest tech multi-billionaires. In economic news, Eurozone inflation finally hit its 2 per cent target after four years, while the US Federal Reserve primed markets for a March rate hike.
Fresh-faced Evan Spiegel and Bobby Murphy, the entrepreneurs behind Snap Inc, opened the New York Stock Exchange for the company’s blockbuster market debut. For readers over the age of the 30, the app was designed for use on mobile devices as a messaging service. But it’s not about old-fashioned texting – it’s much trendier than that. The app lets users share pictures and videos, applying various (often bizarre) filters, and deletes the messages seconds afterwards. In a frantic day of trading, the company’s share price rocketed 44% from a bullishly priced $17 to close at more than $24 a share. This values the company at around $28 billion. Quite impressive, given that Snapchat has never actually turned a profit.
The appetite for the stock highlights the return of ‘animal spirits’, a reference to the increased risk-taking seen on Wall Street in recent months. Confidence is sky-high in the US, and a sustained recovery in earnings growth, alongside a pro-business Trump administration, continues to drive the bullish sentiment.
The stage is set
The positive momentum has also made three interest rate hikes in 2017 look all the more likely. With US inflation on the cusp of the 2 per cent target and the number of people claiming unemployment benefits at its lowest since 1973, Fed governor Jerome Powell stated on Thursday that “the case for a rate increase in March has come together”. The hawkish narrative from various policymakers – even the most dovish among them – led Morgan Stanley to change its economic forecasts to three increases this year, followed by four in 2018 (versus two and three, respectively).
The economy is in largely good shape, although fourth-quarter growth of 1.9% was not as strong as many economists expected. Consumer spending was robust, offset slightly by revisions to business and government investment. Economic data early in the first quarter has been mixed, with retail sales rising in January but homebuilding and business spending on capital goods easing. It will be interesting to see whether President Trump’s proposed stimulus package of sweeping tax cuts and infrastructure spending can really deliver his campaign pledge of 4 per cent annual GDP growth.
Fiddling Fillon?
The French presidential elections are nearing as Francois Fillon’s chances of success are disappearing. The front-runner for the centre-right Républicans, who served as prime minister between 2007 and 2012 under then-President Nicolas Sarkozy, has hit the headlines for all the wrong reasons. “I have nothing to hide”, Fillon said on Monday as accusations surfaced over whether he employed his wife Penelope in a fictitious Parliamentary job. He has defiantly refused to drop out from the race, batting down a rebellion by members of his party as police searched his home this week.
Fillon will be summoned for questioning on 15 March but, guilty or not, his decision to stay in the race is a political windfall for Marine Le Pen, leader of the National Front. Her party may not have the support needed to reach the Elysee Palace, but it is likely to make progress in local assemblies, the European Parliament and the national assembly on the back of Fillon’s alleged fiddling.
And finally…
The Academy Awards have yielded many memorable moments over the years. Marlon Brando sending on a native American to decline his Best Actor award for The Godfather; and Sally Field screaming “You like me! You really like me!” to name but two. But such rose-tinted recollections have surely been eclipsed by the unlikeliest of Hollywood denizens – two Californian accountants.
Starstruck senior partner Brian Cullinan was apparently so distracted by the A-listers he encountered backstage, he failed to notice that he’d handed the wrong envelope to presenters Warren Beatty and Faye Dunaway, who announced “La La Land” as winner of Best Picture. The producers of the much-nominated musical were half-way through their acceptance speeches before they were interrupted to be told that “Moonlight” was the real winner.
Image credit: dpa picture alliance / Alamy Stock Photo
