David Fuller and Eoin Treacy's Comment of the Day
Category - Technology

    Investors Stick With Bitcoin ETFs Despite Crypto's Recent Slump

    This article from Bloomberg may be of interest to subscribers. Here is a section:  

    Bitcoin is on pace for its worst monthly performance since May, but exchange-traded fund investors are still plowing money toward products that track the cryptocurrency’s futures.

    The ProShares Bitcoin Strategy ETF (ticker BITO) has taken in more than $40 million so far in December, its third straight monthly infusion, according to data compiled by Bloomberg. Similarly, investors have added $6.5 million to the Valkyrie Bitcoin Strategy ETF (BTF) since the end of November, also its third consecutive month of inflows.

    That comes amid a crypto downturn that’s seen Bitcoin lose 17% during the last month of the year, putting it on pace for its worst performance since May when it shed 35%. Other cryptocurrencies have lost ground too as investors pull away from some of the riskiest corners of the market. 

    Both BITO and BTF launched in October, the first two Bitcoin-futures funds to trade in the U.S. Both had banner starts, with ProShares’s product in particular seeing massive amounts of investor interest. Still, the recent inflows for both funds pale in comparison to what each saw upon their debuts. 

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    James Webb Space Telescope rockets into history

    This article from NewAtlas may be of interest to subscribers. Here is a section:

    The new mirror is as revolutionary as the spacecraft that carries it. Instead of being in a single piece, it is made of 18 gold-plated beryllium hexagonal mirror segments measuring 1.32 m (4 ft). These are controlled by hundreds of actuators that allow the telescope to adjust its own optics. This is extremely important because the JWST will be over a million miles away. The Hubble mission's early days were marred by a design flaw that required astronauts to visit the telescope several times to make repairs and adjustments, but this won't be an option for the JWST – it has to be as self-reliant as possible.

    Unlike the Hubble, which sees in visible and ultraviolet light, the JWST looks in the infrared range. This will allow it to see further into the past than any previous instrument by seeking out objects at the edges of the universe, which date back to near the beginning of time and are receding from us so fast that their light has shifted into the infrared band.

    With this capability, the 6,500 kg (14,300 lb) Webb will look at how the first galaxies formed in the early universe, study star formation, learn more about how galaxies evolve, and focus on exoplanets in other solar systems to seek out evidence of potential life.

    Unfortunately, this super vision requires the JWST to operate at temperatures below -223.2 °C (-369.7 °F), which is difficult to achieve in the full glare of the Sun. To do this, the telescope is equipped with a sun shield about the size of a tennis court that is made of five layers of thin sheets of a polyimide film called Kapton that are coated with aluminum. This material is stable across a wide range of temperatures and insulates the telescope, allowing the spacecraft to be hotter than boiling water on one side, but colder than liquid oxygen on the other.

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    Why the Bezzle Matters to the Economy

    This article by Michael Pettis for the Carnegie Endowment for International Peace may be of interest to subscribers. Here is a section:

    First, the bezzle represents recorded or perceived wealth that does not exist as real wealth (productive capacity), and as such it boosts collective recorded wealth above real economic wealth. This discrepancy gooses GDP growth in at least three ways. One way this happens is that bezzle creates a temporary wealth effect that boosts consumption and investment spending to a level higher than where either normally would have been. A second way is when part of this false wealth shows up either as higher income or higher profits for the entity that benefits from the boost in recorded wealth. A third way is when rising market values collateralize increases in borrowing that are then used either to raise prices further or to increase spending. It is not a coincidence that GDP growth rates are always higher than expected in periods during which a great deal of bezzle is being created.

    Second, the reverse is true when the bezzle is directly or indirectly recognized and amortized, as it must eventually be. One or more sectors of the economy (households, businesses, local governments, farmers, or banks) must absorb the loss. As they do, the wealth effect reverses, their lower earnings or profits are reflected in lower-than-expected GDP figures, and they are forced to pay down the debt. Just as it is not simply a coincidence that bezzle is created mainly during economic booms, nor is it a coincidence that it tends to be recognized during economic downturns or financial crises.

    Third, bezzle creation seems to be systemic. There are periods, in other words, when it seems that the operation of the financial system errs toward creating bezzle, and these times always seem to be followed by periods in which the bezzle is automatically wrung out of the system.

    Fourth, as Galbraith especially pointed out, the bezzle has a self-reinforcing impact on growth in either direction. When it is being created, the illusion of wealth tends to reinforce growth and encourage the creation of more bezzle. When it is being amortized, it tends to inflict additional costs of financial distress on the economy, especially to the extent that it was financed by debt.

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    Europe's Power Crunch Shuts Down Factories as Prices Hit Record

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    Electricite de France SA said last week it will halt four reactors accounting for 10% of the nation’s nuclear capacity, straining power grids already faced with the prospect of a spell of cold weather. At the beginning of January, almost 30% of France’s nuclear capacity will be offline, increasing the country’s reliance on gas, coal and even oil.

    “If we have a very, very cold day, it could be problematic, especially if we have to import and our neighbors have problems as well,” said Paris-based Anne-Sophie Corbeau, a research scholar at the Center on Global Energy Policy at Columbia University. “This is the domino effect we need to fear. But electricity will be expensive, there’s going to be a cost to pay.”

    German power for next year jumped to a high of 335 euros a megawatt-hour, following a 25% rally on Tuesday, before slipping back. The French equivalent rose as much as 2.5% to record of 408 euros. Prices gained amid thin holiday trading even as gas declines. There was also speculation some traders may be closing short positions due to rising capital requirements from exchanges.

    “The strength in the French market has been the main engine -- aside from gas prices -- of strength in neighboring markets, including Germany, in recent days,” said Glenn Rickson, head of European power analysis at S&P Global Platts.

    “I also suspect that any big moves ahead of the run-up to Christmas have as much to do with the thinness of the market and traders needing to close short positions ahead of shutting down for the holidays as anything else.”

    Soaring gas and power prices have already forced European utility giants from RWE AG to Uniper SE to boost liquidity requirements. Many smaller suppliers didn’t have the same option, with more than 20 going out of business in the U.K. alone.

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    Musk Says He Has Sold Enough Stock to Unwind 10% of His Stake

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    Elon Musk has disposed of enough shares to reach a target of reducing his stake in Tesla Inc. by 10%, the head of the electric-car leader said in an interview. 

    “I sold stock that should roughly make my total Tesla share sale roughly 10%,” he told satirical website Babylon Bee. 

    Musk has been offloading Tesla stock since asking his Twitter followers in November whether he should sell some of his stake. The move is part of a plan to generate cash to cover an estimated tax bill of more than $10 billion on stock options Musk is due to exercise.

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    Bitcoin Chartbook 2022 Is This Halving Cycle Over?

    Thanks to a subscriber for this report from Incrementum. Here is a section:

    1.Due to its unusual investment characteristics in terms of performance, correlation and volatility, Bitcoin (and selected altcoins) can serve as useful supplement within a diversified portfolio.

    2.Gold and Bitcoin are non-inflatable and as such profit from monetary inflation. Together they shine even brighter due to a superior risk/return profile. We are convinced that an increasing number of investors will treat Gold and Bitcoin as parts of one non-inflatable asset class.

    3. Most altcoins are not here to stay. However, some projects have the potential to serve as market disruptors and substantially change aspects in our lives. Conceptionally, we consider (most) altcoins more like venture capital investments, whereas Bitcoin to us is digital Gold.

    4. Various indicators are signaling a bullish environment for Bitcoin. However, the most relevant model to monitor is the S2F model by PlanB. In this regard, it is our opinion that the current halving cycle is not over yet. Our base scenario is a delayed peak in this cycle. If this assumption is correct, we could see the Bitcoin price pushing above USD 100,000 in the coming months.

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    Cultivated meat: Out of the lab, into the frying pan

    This article from McKinsey may be of interest to subscribers. Here is a section:

    Cultivated meat has the potential to not just match but surpass the taste and texture of conventional meat, as well as to introduce novel products. If consumers take to these products, the market for cultivated meat could reach $25 billion by 2030 (Exhibit 3). Currently, the world primarily eats the meat of animals that are the easiest to farm industrially, but cultivated meat won’t face those constraints. Instead, the industry could select cell lines from specific animals with the best traits, such as Wagyu beef or wild salmon, and replicate them at the same cost as, say, beef patties or tilapia.

    Cultivated meat can also go one step further and select cell lines from animals that are not widely eaten because of their low meat content, long growing time, or lack of availability. For example, ostrich meat, a product that has challenged many ranchers, could be cultivated and become a trendy low-fat, red-meat alternative. There could even be room for highly creative product innovation: the industry’s imaginative take on dodo poultry could make a better nugget than chicken, or a burger made of what research chefs think mammoth might have tasted like could be a mouthwatering new concept.

    While most start-ups are focusing first on more popular species and breeds, Eat Just’s GOOD Meat and the company Orbillion Bio are exploring Wagyu, and the company Vow is working to explore more exotic options, such as kangaroo and alpaca.

    In the nearer term, companies may choose to focus on a single area and mix plant protein and other flavors into their products to achieve the desired taste and texture. Eat Just’s chicken product sold in Singapore, for example, is more than 70 percent cultivated cells, with a small amount of plant protein added in for structure, while Future Meat in Israel mixes cultivated fat with plant protein. It’s too early to tell if blended options are merely an interim fix or if they present a sufficiently compelling option for long-term adoption.

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    Stocks Under Pressure as Megacap Tech Sells Off

    This note from Bloomberg may be of interest. Here is a section:

    A rout in some of the world’s biggest technology companies dragged down the broader equity market, outweighing gains in companies that stand to benefit the most from an economic rebound.

    The S&P 500 fell after earlier climbing on bets that central banks can move toward tighter policies to fight inflation without derailing the economy. The Nasdaq 100 tumbled, led by losses in giants like Apple Inc. and Tesla Inc. Commodity, financial and industrial shares rose. European equities jumped as the region’s policy makers unveiled a gradual pullback of pandemic stimulus, while the pound gained as the Bank of England unexpectedly raised rates. Bitcoin slumped.

    Central banks are weighing measures to fight price pressures while balancing risks to growth amid coronavirus challenges. European Central Bank President Christine Lagarde unveiled forecasts showing a strong economic rebound along with an outlook for faster inflation. The Federal Reserve said Wednesday it will accelerate the pace at which it tapers bond purchases, and projected rate hikes through 2024.

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    Big Tech Getting Crushed in Jittery Day for Stocks

    This article for Bloomberg may be of interest to subscribers. Here is a section:

    “Anytime there’s a risk of easy money being taken away, that will result in some of these very expensive areas of the market to pull back,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.

    “The pressure on the Fed to pick up the pace of tightening is only mounting. With higher prices permeating the marketplace, we could see a snowball effect when it comes to inflation challenges as more suppliers justify higher prices and more consumers begin to close their wallets,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial.

    “The inflation trajectory remains worrisome. While we believe that price pressures will abate next year, the Fed is doing the prudent thing by tapering faster, so that it is well-positioned to hike rates if needed,” said Win Thin, global head of currency strategy at Brown Brothers Harriman.

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    U.K. Plans Giant Battery to Manage Surge in Offshore Wind

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    The first phase of the Teesside battery is due to be completed by 2023, a Sembcorp spokeswoman said by phone, adding that the investment required would be in the “hundreds of millions” of pounds.

    “Flexible energy sources play an increasingly important role in maintaining secure and reliable energy supplies,” Andy Koss, Sembcorp’s chief executive officer for the U.K. and Middle East, said in the statement. With a growing reliance on renewables, the U.K. energy system must be “able to respond

    quickly to changes.”

    The new storage site is expected to top the largest current planned battery -- a 100-megawatt facility by Zenobe Energy Ltd. Sembcorp said its total U.K. battery pipeline is now almost half a gigawatt. It already operates 70 megawatts and has a further 50 megawatts due to come online in early 2022.

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