“The consumer has been resilient. All along the consumer has been surprising us.” Mastercard CEO Michael Miebach
The latest CPI numbers are in, and inflation hasn’t slowed this much since the beginning of 2021. Consumer prices increased at a pace of 3% last month, the lowest the economy has seen in over two years. Some economists are convinced that inflation could be in the rearview mirror, while others argue that the economy isn’t out of the woods yet.
Meanwhile, the Federal Reserve is still widely expected to raise interest rates as soon as this month. But that could put an end to the hiking cycle.
According to Mastercard CEO Michael Miebach, it’s the consumer that’s been propping up the economy. He told CNBC, “The consumer has been resilient. All along the consumer has been surprising us” globally. He also says consumers are faced with making tradeoffs in the face of high inflation, prioritizing necessities but also finding a way to make it work in their favor by not cutting out things like travel. Those tradeoffs could finally be coming to an end.
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European embedded finance platform Solaris has disclosed a EUR 38 million first close of a Series F funding round, spearheaded by its existing lineup of investors. The Berlin-based fintech will direct the proceeds toward bolstering its governance and compliance in the region as well as preparing for future growth. Solaris COO Chloé Mayenobe is stepping down from a role that will be eliminated at the company.
California-based fintech startup Merqube has attracted $22 million to its coffers in a Series B funding round. Intel Capital spearheaded the round alongside new investor Allianz Life Ventures as well as existing backers City, JPMorgan, UBS and Laurion Capital. Merqube is behind technology for index-linked investing and plans to direct the proceeds toward expansion, hiring and innovation.
The Federal Trade Commission is targeting artificial intelligence, particularly Open AI’s popular ChatGPT product, to learn how data is gathered and the risks along with it. The regulator is exploring whether ChatGPT’s influence is causing reputational damage to people.
Card company Marqeta is making an expansion push in Latin America. The company has partnered with Fitbank, a Brazil-based banking-as-a-service platform, and card giant Visa. As a result of the collaboration, Fitbank will serve both as a customer of Marqeta and as a BIN sponsor for other businesses that want to operate in the area.
Speaking of Visa, the card giant has teamed up with San Francisco-based Car IQ for in-vehicle payments. Cars will be able to access merchants on Visa’s platform for transactions such as buying fuel, paying for parking, car repairs, etc., via the Car IQ Pay vehicle wallet.
Blockchain-based payments startup Ripple has scored a major victory after being accused of selling an unregistered security by the U.S. SEC. A court has ruled that digital asset XRP, which is issued by Ripple, doesn’t fit the bill as a security, bringing to an end a years-long battle with the regulator. The ruling is a blow to the SEC and a coup not only for Ripple but the broader cryptocurrency industry, which has been operating in a murky regulatory climate. The XRP price soared 75% in response. Ripple CEO Brad Garlinghouse touted the win on social media, saying:
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Michigan-based Arbor Financial Credit Union has selected AI-fueled fintech company Upstart to deliver personal loans to its members. Arbor says that by partnering with Upstart, it can expand its online footprint, create more tailored products, and grow its member base. The two organizations began working together in a lesser capacity last year.
Turkey has minted its maiden fintech unicorn. Papara, an electronic payments startup, has attained unicorn status with a valuation of over $1 billion thanks to a recent deal with Beka Finance of Spain, a Bloomberg report reveals. According to the details of the deal, Papara gave Beka a combination of cash and shares to acquire a mobile banking rival dubbed Rebellion. Papara, which boasts 16 million active users, also has a European neobank in its sights.
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Affirm: Affirm stock has taken investors on a roller coaster ride lately. In July so far, the stock has traded in a range of between $12.81 and nearly $18 per share. Earlier this month, Piper Sandler Analyst Kevin Barker lowered his rating on the BNPL stock from neutral to underweight. Meanwhile, Mizuhoi analyst Dan Dolv remains bullish on Affirm stock, recently raising his price target on the shares from $17 to $20. At last check, Affirm stock is trading just below $17 per share.
Affirm Stock Chart | Image by TradingView
The Fed meets toward the end of this month to determine the fate of short-term interest rates. One policymaker whose will not be weighing in is St. Louis Fed President Jim Bullard. He resigned from his role, effective mid-August, to join Purdue University. Bullard, who tends to be hawkish on monetary policy, has recused himself from meetings in the meantime.
Meanwhile, the fintech sector is gearing up to report its Q2 earnings results, with Jack Dorsey’s Square set to report in early August. Banking giant JPMorgan has just released its quarterly results in which Q2 profits soared by 67%, buoyed in part by the bank’s recent acquisition of the troubled First Republic Bank.
With inflation finally abating, and the end to the Fed’s hawkish monetary policy within reach, it could be smoother sailing for H2 2023 vs. the first half of the year, if the most optimistic of the outlooks come true. But according to others, like UBS strategists, there’s still a possibility of rough seas ahead. As a result, a cautious optimism about the rest of the year seems to be in order.