Good Morning Everyone!
Welcome to the 1,725 new subscribers who have climbed aboard the GRIT rocket ship this week. If you're reading this but haven't subscribed, join our community of over 237k smart, fun & edgy, investors 👇
*This is sponsored advertising content and the disclaimer at the bottom of this email MUST be read carefully.
SIX things you need to know this week in <5 minutes:
China’s sudden pivot
Biggest banks get bigger
Chips: From drought to glut
Oil: China reopens, US restarts, Kremlin responds
Fidelity: Marches deeper
Mastodon rejects cash out of principle
1. MACRO
China’s sudden pivot
After abandoning its zero-Covid strategy earlier this month following waves of protests, China has taken another leap in easing what had been some of the world's harshest lockdown restrictions.
From January 8, incoming travelers will no longer need to quarantine but rather they will only be required to present a negative test within 48 hours to be granted entry.
The policy shifts have come quicker and more aggressively than businesses had expected, which points to further disruptions in the coming months as the economy catches up and infections rise.
Beyond that, however, analysts expect a strong and swift economic rebound through 2023.
GRIT'S TAKE: China's reopening should boost demand for commodities and global service sectors, and could help ease supply-chain strains.
GRIT'S ACTION: Short-term pain for long-term gain.
Under the Radar
POWERED UP. Imagine a world where affordable, reliable, and sustainable energy powers every city. With hundreds of billions lining up to support the renewable energy race, Alkaline Fuel Cell Power Corp is bringing power to the people through hydrogen fuel cell technology and high-efficiency on-site sustainable energy infrastructure.
*This is sponsored advertising content and the disclaimer at the bottom of this email MUST be read carefully.
2. DEALS
Biggest banks get bigger
Over the past 10 years, Wall Street's six biggest banks have seen a rise in public anger, stricter regulations, geopolitical mayhem, market ups and downs, and scandals straight out of a Hollywood script.
They've also collected (or are approaching) $1 trillion in profits (not revenue, profits).
Yes, despite all of these headwinds, JPMorgan, Bank of America, Wells Fargo, Citibank, Goldman Sachs, and Morgan Stanley will have put up the first trillion-dollar decade ever in the history of US banking at some point within the next few weeks (if they haven’t already).
Not surprisingly, the most profitable year of the period was 2021, which saw the group net some $160 billion—more than 2013 and 2014, combined.
GRIT'S TAKE: This wouldn't have been possible without the bailout in 2008. To that end, the group has added ~$200 billion to their buffers over this period to avoid a repeat.
GRIT'S ACTION: Long
3. STOCK MARKET
Chips: from drought to glut
The bullwhip is reaching peak effect in the semiconductor industry.
The previous drought in chips for everything from PCs and smartphones to washing machines and autos has been replaced with a glut that has forced chipmakers to shift their strategies.
As recession fears rise alongside interest rates and inflation, consumer demand for chip-carrying goods grows increasingly weak, leaving retailers scrambling to get rid of excess inventories.
Meanwhile, chip inventories are ~40 days above the median for the industry and its supply chain. That’s the highest in over a decade.
GRIT'S TAKE: With the economy slowing and demand for PCs and smartphones waning, inventory levels could remain elevated through H1 2023.
GRIT'S ACTION: Long
4. COMMODITIES
Oil: China reopens, US restarts, Kremlin responds
We touched on the effects of China's easing on commodities above – oil is no exception with the swift reopening expected to be among the leading drivers of demand (and prices) in 2023.
Stateside, the US' biggest fuel makers have restarted refineries after a Texas storm last week brought on freezing temperatures which forced a halt in operations.
Over in Russia, the Kremlin has announced a ban on the sales of crude oil to countries imposing the $60 price cap in an effort to undermine Western plans to undermine it.
Heavily dependent on oil revenues, Putin has left an exemption loophole in the ban through which he could still sell at or below the Western price cap, should it convenience him.
GRIT'S TAKE: Many Russian crude exports are actually already selling well below $60 to countries not part of Western sanctions.
GRIT'S ACTION: Many moving parts, ever-present uncertainty.
5. CRYPTO
Fidelity: Marches deeper
The deeper and colder the Crypto Winter gets, the warmer and more inviting Fidelity Crypto looks.
Stop me if you've heard this before but Fidelity making moves (yet again) to strengthen its foothold in an industry begging for security.
Building off the waves it made by offering Bitcoin for 401(k)s and, more recently, the launch of its early-access waiting list, Fidelity has just filed three new trademarks that hint at a wider range of crypto-related offerings.
The applications include an online marketplace for digital media, virtual real estate investing, investment services for mutual and retirement funds in the metaverse, as well as investment advice and financial planning services (also in the metaverse).
GRIT'S TAKE: Is Fidelity on its way to becoming the most trusted name in crypto?
GRIT'S ACTION: Educating myself on self-custody.
6. ENTERTAINMENT
Mastodon rejects cash out of principle
Mastodon is an open-source microblogging site founded in 2016 by German software developer Eugen Rochko.
After Elon's Twitter takeover, daily downloads of the Mastodon app skyrocketed, jumping from 6k on October 27 (day of acquisition) to a peak of 243k on November 18.
Since then, Rochko—who pays himself a humble EUR$2,900 per month—has rejected hundreds of thousands of dollars from Silicon Valley VC firms hoping to profit from the wave of anti-Twitter sentiment.
You see, Rochko created the platform as a non-profit and has pledged to keep its status as such "untouched," promising Mastodon will never "turn into everything you hate about Twitter".
GRIT'S TAKE: Jack Dorsey basically ran Twitter as a non-profit too. He’d be proud.
GRIT'S ACTION: Twitter 4 lyf.
*SOURCES
2. Bloomberg
3. WSJ
5. Decrypt
Disclaimer: The publisher does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.
Grit Capital Corporation is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.
THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.
No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.
Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.
The publisher, its affiliates, and clients of the a publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Neither the publisher nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.
By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.
Gritcapital.substack.com (“Grit”) is a website owned and operated by Substack. Grit is paid fees by the companies that make investment offerings on this website. Be aware that payment of these fees may put Grit in a conflict of interest with the investor. By accessing this website or any page thereof, you agree to be bound by the Terms of Use and Privacy Policy, in effect at the time you access this website or any page thereof. The Terms of Use and Privacy Policy may be amended from time to time. Nothing on this website shall constitute an offer to sell, or a solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction where such an offer or solicitation is against the law or to anyone to whom it is unlawful to make such offer or solicitation. Grit is not an underwriter, broker-dealer, Title III crowdfunding portal or a valuation service and does not engage in any activities requiring any such registration. Grit does not provide advice on investments or structure transactions. Offerings made under Regulation A under the U.S. Securities Act of 1933, as amended (the "Securities Act") are available to U.S. investors who are “accredited investors” as defined by Rule 501 of Regulation D under the Securities Act well as non-accredited investors, who are subject to certain investment limitations as set forth in Regulation A under the Securities Act. In order to invest in Regulation A offerings, investors may be asked to fill out a certification and provide necessary documentation as proof of your income and/or net worth to verify that you are qualified to invest in offerings posted on this website. All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. Grit does not verify the adequacy, accuracy or completeness of any information. Neither Grit nor any of its officers, directors, agents and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy, valuations of securities or completeness of any information on this site or the use of information on this site. Neither Grit nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising from any error or incompleteness of fact, or lack of care in the preparation of, any of the materials posted on this website. Investing in securities, especially those issued by start-up companies, involves substantial risk. investors should be able to bear the loss of their entire investment and should make their own determination of whether or not to make any investment based on their own independent evaluation and analysis.