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Aug. 23 Markets Report: A Dumptruck Named Recession

Guy Ovadia
By
Guy Ovadia
Guy Ovadia

Guy Ovadia

Guy is a writer, filmmaker, and certified geek; he is a lifelong gamer, early bitcoin adopter, and professional journalist with a passion for old-school comprehensive reporting. Before joining the content team at MoneyMade, Guy studied at the School of Journalism at Northeastern University where he contributed to the Huntington News and Story Bench while working as a video production assistant. Topics he has since covered include racial equity in the legal cannabis industry, geopolitical conflicts in the Middle East, and the implications of blockchain adoption, just to name a few. So, it’s safe to say that, as a writer, Guy doesn’t shy away from controversy.

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Biden signs Inflation bill, Adam Neuman gets a second chance, and U.S. bankers are caught using WhatApp (an apparent nono).

Markets Report logo

Macro

Macro graphic

Macro Scoops OTD

Economic graphic
Source: theguardian.com

US economics

  • Interest Rates: 2.50%
  • Unemployment Rate: 3.5%
  • GDP YoY: -0.9%
  • CPI YoY: 8.5%

Biden’s Big Bill

Stocks & Bonds

Bond graphic
Source: https://moneymade.io/asset/bond

Bond yields

  • US3M: 2.7116%
  • US2Y: 3.3056%
  • US10Y: 2.998%
  • US30Y: 3.244%

Make Bonds Great Again

  • An analysis by Morgan Stanley Chief Cross-Asset Strategist Andrew Sheets found that holding cash is more attractive than stocks. Accelerated quantitative tightening—reduction in the Fed’s balance sheet—will deteriorate the appeal of riskier assets in favor of treasury bonds.
  • Refinitiv reported that $4.1 billion in junk bonds were sold in the U.S. this past week, marking the highest issuance level since early June. S&P Global Rating expects 3.5% of junk bond issuers to default on their debt in the next 12 months, and ICE Data Services found that 6% of junk bonds—roughly worth $90 billion—are in distress (defined as yielding at least ten percentage points more than treasuries).
  • Prices for meme stocks fell across the board on Monday:
    • AMC dropped 38% after offering new APE preferred share class
    • BBBY dropped over 12% after it was reported that the company’s suppliers stopped shipments due to outstanding bills. The dumping of shares by investor Ryan Cohen also contributed to the decline.
    • GameStop shares dipped 4.3% as revenue from their NFT marketplace took a plunge.
  • Ford promised to appeal a $1.7 billion class-action verdict that connects the automaker to a pickup truck crash that killed a couple in Georgia, USA. CEO Jim Farley said that Ford “continue[s] to be hampered by recalls and consumer-satisfaction actions” in an earnings call last month.

Sector performance

  • Energy: 3.03%
  • Consumer Staples: 0.88%
  • Telecom: -3.74%
  • Real Estate: -2.40%

S&P 500 winners & losers

  • Coterra Energy Inc: 6.28%
  • Occidental Petroleum Corp: 4.99%
  • Moderna Inc: -17.84%
  • Match Group Inc: -13.31

Real Estate

Real estate graphic
Source: moneymade.io/assets/real-estate

The Housing Market is Hurting

Crypto

SBF Gets the Bag

  • Bankrupt cryptocurrency brokerage Voyager Digital got heat from its creditors after saying it’ll hand out $1.9 million in bonuses to retain 38 of its key employees.
  • Leaked documents revealed that FTX made $1.02 billion in 2021. If true, this means that the revenue from Sam Bankman-Fried’s crypto exchange spiked 1,000% from $89 million at the year’s start.
    • FTX.US got a cease-and-desist letter from the FDIC for allegedly misleading consumers regarding whether their funds are federally insured.
    • Binance CEO Chanpeng “CZ” Zhao allegedly subtweeted Bankman-Fried for trader’s orders getting stuck on FTX in a rare bout of online drama between crypto founders.
  • Seven South Korean financial brokerages have begun seeking preliminary approval to launch virtual asset exchanges. This embrace of cryptocurrencies contrasts with the aftermath of the Terra Luna collapse, which a Korean firm had developed.

NFTs & Metaverse

Metaverse graphic
Source: moneymade.io/assets/metaverse

From Metaverse to Mainstream

  • Asset management firm Invesco launched a $30 million Metaverse Fund. The fund will be actively managed to invest in seven key areas, including blockchains, hardware, operating systems, and artificial intelligence and will charge investors a 0.75% management fee.
  • Decrypt reported that the CryptoPunks floor price briefly surpassed that of Bored Ape Yacht Club. They found that BYAC NFT prices hit an 8-month low over the weekend after falling 33%—Punks’ prices only dropped 24%.

Commodities

Commodities graphic
Source: https://moneymade.io/asset/commodities

Gas Exports Hit the Breaks

Startups

Second Chances?

  • Adam Neumann, the co-founder of famously failed office-sharing unicorn WeWork, got Andreessen Horowitz (a16z) to invest $350 million into Flow, his new residential real estate startup, valuing it at over $1 billion.
    • The firm also gave Neuman $70 million to start a web3 carbon credit platform called Flowcarbon. The connection between Nueman’s two companies remains unclear.
  • Fund-day Monday—Crunchbase reported some major funding this past week in energy and biotech.
    • Bill Gates’s nuclear energy company TerraPower raised $750 million in a funding round led by the South Korean SK Group.
    • Cambridge, Massachusetts-based biotech Orna Therapeutics mustered $221 million in Series B to develop RNA therapies.
    • Senda Biosciences, another Cambridge biotech firm developing programmable medicines, got $123 million in a Series C round.
Guy Ovadia

Guy Ovadia

Guy is a writer, filmmaker, and certified geek; he is a lifelong gamer, early bitcoin adopter, and professional journalist with a passion for old-school comprehensive reporting. Before joining the content team at MoneyMade, Guy studied at the School of Journalism at Northeastern University where he contributed to the Huntington News and Story Bench while working as a video production assistant. Topics he has since covered include racial equity in the legal cannabis industry, geopolitical conflicts in the Middle East, and the implications of blockchain adoption, just to name a few. So, it’s safe to say that, as a writer, Guy doesn’t shy away from controversy.

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