Wall Street News Roundup: IPO Winter is Over, RFK vs Tylenol and Interest Rates

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2:16and applicable terms. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

2:33It's time for a roundup of the biggest stories on Wall Street and how they're going to affect you and your wallet. Today, we're talking about what might be the kickoff to one of the most exciting 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 de-thawing. 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 a little piece of the company for the very first time.

3:16Six 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.

3:51Because 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.

4:25Of 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.

5:05These 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 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.

5:42And 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.

6:19Fast 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 companies 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 public. In 2020, 134 companies went public.

6:57In 2021, that number spiked to 235, likely due to the fact that some companies were waiting for COVID to be, quote, over before IPO-ing. 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 369. 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.

7:42Now, 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 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.

8:18The 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, Kenview, 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.

8:57After 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 not even a report to analyze 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.

9:37So 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.

10:12But 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 non-farm 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 Austin 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.

10:55President Trump is pushing hard for the Fed to cut rates, and he has been unusually vocal about it, putting a lot of pressure on JPAL, 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.

11:29If 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.

12:11money 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 rehab at money news 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 Instagram at Money News and TikTok at Money News Network 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.