Market Munch🍕| July 9 2022🚀
Twitter acquisition balancing on a knife's edge, Russia puts it's foot down, and a sheriff drops into the Wild West of crypto.
Good morning Munchers!
Here is your daily dose of the news that can make you sound smarter at parties - In 6 minutes and 3 seconds.
Let’s dive in
What’s hot, what’s not
Market Commentary
S&P500 and NASDAQ stay flat but more or less continue their longest winning streak since March. Long time since we made money, huh?
Mortgage rates recorded their largest weekly decline since 2008. Homeowners can breathe a little freely.
US Economy adds 372k jobs as opposed to 272k expected. A pleasant surprise in this deep, deep sea of macroeconomic carnage.
Headline Roundup
Elon’s Twitter takeover falls apart 💰💸💔(1/5)
Elon has quite literally walked away from discussions surrounding Twitter’s takeover.
Musk’s team raised doubt over the percentage of users that are bots on Twitter.
Conclusion? They can’t figure out exactly how many spam accounts exist.
Twitter’s stock price has crumbled in the weeks since acquisition whispers started - which gives the impression that Mr. Musk is overpaying for the company.
No one wants to be overcharged a few billion dollars.
If Elon buys Twitter - it’ll probably be at the same price he quoted - but if he doesn’t, he’ll be subject to a $1 billion breakup fee.
Regardless of what happens, Twitter has been subject to -
A lot of controversy
Shaky stock performance
Employee unhappiness
Rifts between management
A slowdown in growth
This blue bird might be getting it’s wings clipped. 🕊️
Putin pisses the West off a little more 🛢️🛢️🛢️(2/5)
President Putin’s words are very clear - “the West risks inflicting more harm upon themselves”.
G7 members recently got together to discuss ramping up sanctions on Russia - with the intent of capping their oil revenue. We’re quick to forget that Russia is the world’s 2nd largest oil exporter.
And Putin isn’t taking this sitting down - he’s very publicly said that he’ll cut oil exports if the G7 continues with this plan.
What does cutting exports do? It’s basic economics. Lesser supply means that there is more money competing for lesser things - leading to a price spike.
And JP Morgan predicts a price spike up to $380 a barrel if Russia lives up to their word.
Guess we’re on a slippery slope. 🔥
Crypto gets the US Fed’s evil eye 💼🏦💵 (3/5)
The crazy crypto casino is flying into regulators’ airspace - and with good reason.
In the last few weeks, we’ve had -
a ~60% pullback in all the ‘blue-chip’ cryptocurrencies
LUNA’s $45 billion network going up in smoke
tons of the biggest crypto lenders restricting withdrawals (Celsius, Vauld, even Binance for a bit - for technical issues)
the biggest crypto hedge fund went belly-up (so long, 3 Arrows Capital)
altcoin ecosystems completely blow up, and bring retail investors down with them
None of this flies well with the regulators - after all, they’re the sheriffs of the Wild West that is the crypto space.
The Federal Reserve’s vice chair essentially drew a ton of parallels with the finance industry and the crypto industry - calling for the exact same regulation.
Takeaway? Lesser scams, lesser rugpulls, and crypto YOLO profits being taxed (if any) 🤠
China’s darkening real estate market faces a $13bn reckoning 🏠💣🧯(4/5)
Chinese property developers are facing a giant wall of foreign bond repayments that amount to about $13bn - all due before the full-time bell rings this year.
This large sum casts a dark shadow over the industry.
The Chinese real estate sector was single-handedly responsible for an insane amount of wealth creation, but is now dealing with ripples of default.
Regulators have tried reeling in some of the excessive leverage used by companies to thrive in low-interest-rate environments - which knocks off investors that relied on this to deliver massive returns.
Last Sunday Shimao Group defaulted on a $1bn bond - concerning bondholders and investors alike.
This adds to a growing list of developers that are in hot water - including Sunac and China Evergrande (which made quite a few headlines).
A Chinese fixed income investor said it best - “a few of these privately owned enterprises may live — and by live, I mean hop along on a crutch”.
Reckoning is to come. 🧑🚒🔥
SoftBank’s big gun is prepping his own army 🤑💳💰(5/5)
Rajeev Misra is no ordinary investor - he is the trader that rode the waves of the tech-bull run with the fabled $100bn SoftBank Vision Fund.
It’s the latest of a long-line of high profile departures from the embattled group - which recently had quite a few BIG bets go sour. This includes Uber, DiDi, Klarna, WeWork and DoorDash.
Tightened economic conditions routed SoftBank’s profitability as risk assets crashed and burned. We saw a reduction of 96% in their quarterly profit for the first 3 months of 2022.
Rajeev Misra is setting up a new fund with around $6bn under management - and it’s backed by the biggest names in the Gulf.
You’ve got ADQ, Mubadala and the Royal Group - chaired by none other than the UAE President’s brother.
It’s a lot of money at stake - and it looks like the bets that worked in SoftBank’s early years will cease to do so now.
Only time will tell where this one goes.
Aaaand that’s a wrap!
Thanks a ton for reading. Any feedback is open - positive or negative. Hit my line at aryaansh.rathore@gmail.com or https://www.linkedin.com/in/aryaansh/.