SPACs thrive as most IPOs wither
SPACs are capital markets cockroaches, surviving and even thriving when most other offerings have withered.
The big picture: April has been a very busy month for the blank-check biz, which many had forgotten about since its 2021 boom and subsequent bust.
There have been 16 new SPAC IPO filings, including from market vets Alec Gores and Michael Klein, plus another 11 IPOs that priced.
Nine new deSPAC transactions were announced, while Webull and two others closed.
Zoom in: The simplest narrative is that SPACs are rushing in where traditional IPO issuers fear to tread.
Yet that doesn't entirely track. Yes, lots of expected IPO issuers hit the brakes after "Liberation Day," but it's not like they were rushing to market in 2023 or 2024 — two years in which SPAC IPO volume was relatively light.
Behind the scenes: Perhaps a larger factor is that the SPAC sponsors and investors seem to have finally worked through most of their 2021 and 2022 overhang, and are ready for new business.
Remember, lots of institutional investors have SPAC allocations, given that it's more opportunity risk than principal risk (so long as someone's paying attention to redemption windows).
There's also a growing belief that the valuation correction could foment new deal opportunities, and relief that some recent merger announcements have included recognizable names and sizable slabs of common stock financing.
Finally, there are fewer worries about SEC enforcement.
Yes, but: Bulge bracket banks are mostly sitting on the sidelines.
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- Hamilton Spectator
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Miami Herald
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Trump's tariffs could pay for his tax cuts -- but it likely wouldn't be much of a bargain
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Economists and budget analysts do not share the president's enthusiasm for using tariffs to finance the government or to replace other taxes. 'It's a really bad trade,'' said Erica York, the Tax Foundation's vice president of federal tax policy. 'It's perhaps the dumbest tax reform you could design.'' For one thing, Trump's tariffs are an unstable source of revenue. He bypassed Congress and imposed his biggest import tax hikes through executive orders. That means a future president could simply reverse them. 'Or political whims in Congress could change, and they could decide, 'Hey, we're going revoke this authority because we don't think it's a good thing that the president can just unilaterally impose a $2 trillion tax hike,' '' York said. Or the courts could kill his tariffs before Congress or future presidents do. A federal court in New York has already struck down the centerpiece of his tariff program — the reciprocal and other levies he announced on what he called 'Liberation Day'' April 2 — saying he'd overstepped his authority. An appeals court has allowed the government to keep collecting the levies while the legal challenge winds its way through the court system. Economists also say that tariffs damage the economy. They are a tax on foreign products, paid by importers in the United States and usually passed along to their customers via higher prices. They raise costs for U.S. manufacturers that rely on imported raw materials, components and equipment, making them less competitive than foreign rivals that don't have to pay Trump's tariffs. Tariffs also invite retaliatory taxes on U.S. exports by foreign countries. Indeed, the European Union this week threatened 'countermeasures'' against Trump's unexpected move to raise his tariff on foreign steel and aluminum to 50%. 'You're not just getting the effect of a tax on the U.S. economy,' York said. 'You're also getting the effect of foreign taxes on U.S. exports.'' She said the tariffs will basically wipe out all economic benefits from the One Big Beautiful Bill's tax cuts. Smetters at the Penn Wharton Budget Model said that tariffs also isolate the United States and discourage foreigners from investing in its economy. Foreigners see U.S. Treasurys as a super-safe investment and now own about 30% of the federal government's debt. If they cut back, the federal government would have to pay higher interest rates on Treasury debt to attract a smaller number of potential investors domestically. Higher borrowing costs and reduced investment would wallop the economy, making tariffs the most economically destructive tax available, Smetters said — more than twice as costly in reduced economic growth and wages as what he sees as the next-most damaging: the tax on corporate earnings. Tariffs also hit the poor hardest. They end up being a tax on consumers, and the poor spend more of their income than wealthier people do. Even without the tariffs, the One Big Beautiful Bill slams the poorest because it makes deep cuts to federal food programs and to Medicaid, which provides health care to low-income Americans. After the bill's tax and spending cuts, an analysis by the Penn Wharton Budget Model found, the poorest fifth of American households earning less than $17,000 a year would see their incomes drop by $820 next year. The richest 0.1% earning more than $4.3 million a year would come out ahead by $390,070 in 2026. 'If you layer a regressive tax increase like tariffs on top of that, you make a lot of low- and middle-income households substantially worse off,'' said the Tax Foundation's York. Overall, she said, tariffs are 'a very unreliable source of revenue for the legal reasons, the political reasons as well as the economic reasons. They're a very, very inefficient way to raise revenue. If you raise a dollar of a revenue with tariffs, that's going to cause a lot more economic harm than raising revenue any other way.''
