Good Morning Everyone!
Welcome to the 990 new subscribers who have joined this week. If you’re reading this but haven’t subscribed, join our community of +66k smart, fun & edgy investors 👇
*This is sponsored advertising content.
SIX things you need to know this week in 60 seconds.
US households are dipping into savings
“I thrive in chaos” – BAM, probably
Short sellers slowdown
US oil prices dip below $100
Crypto Winter forces another freeze
Can’t get a date IRL?
1. MACRO
US households are dipping into savings
American households stockpiled $2.7 trillion in extra savings from the start of the pandemic to the end of 2021.
With stimulus checks rolling in, child tax credits providing further relief, and business shutdown, the personal savings rate reached a record high of 34% in April 2020.
Now—with record inflation and wage gains that can’t keep up—the trend has reversed.
Despite checking account balances remaining well above 2019 levels, US consumers (of all income levels) are starting to dip into their pandemic piggy banks to help cover rising costs.
GRIT’S TAKE: As a result, personal savings has plummeted to 5.4% – the lowest mark since 2009.
GRIT’S ACTION: Average interest rate of a savings account is 0.06%. Inflation is at 8.6%. Do with this what you want.
Under the Radar
Electric vehicles are still missing what drivers want: character & unique style. Led by an experienced leadership team, EVT Group is creating and redefining the joy of motoring for the electric age by acquiring iconic brands and helping them to bring the joy back to motoring*!
A PSYCHEDELIC APPROACH. Opioid addiction has become a major health crisis with massive annual costs totaling over 2% of GDP. Nirvana Life Sciences is taking theories developed in the 60s & 70s and applying modern approaches to develop novel psychedelic-based medicines that deliver practical, non-addictive solutions for effective pain management and addiction treatment*!
*This is sponsored advertising content.
2. DEALS
“I thrive in chaos” – BAM, probably
As the list of risk factors in the region grows, most asset managers are shying away from European markets. Brookfield Asset Management isn’t most asset managers.
“Frankly, we love these kinds of markets”
BAM just hit an annual record with over $12B spent on European deals this year, bringing its Europe AUM up to more than $125B.
They started out with ~$6B just 10 years ago.
The firm—which will open new offices, raise fresh money, and invest in a range of sectors—noted it expects dealmaking to remain busy through the end of the year, particularly in infrastructure and renewables.
GRIT’S TAKE: BAM sees a market in turmoil as a less competitive market—they’ve also got a track record of executing this gameplan.
GRIT’S ACTION: Long
3. STOCK MARKET
Short sellers slowdown
After months of heavy (successful) wagering against the market, bears are taking their paws off the gas.
In May, total short selling increased by $61B. That number was just $20B last month, indicating fears of further pain are subsiding.
The options market is suggesting a similar sentiment with skew collapsing and bullish options outpricing their bearish counterparts.
There are still plenty of bears out there though: shorts added $6.3B to positions against $SPY last month, up from 40% from May.
GRIT’S TAKE: Last weekend we wrote about the likelihood of downward revisions in estimates going into earnings season – short sellers will be watching this closely.
GRIT’S ACTION: Dollar-cost averaging into the S&P.
4. COMMODITIES
US oil prices dip below $100
The wave of negative sentiment that swept the commodity market has rubbed off on oil.
Fears of a recession and weaker demand were exacerbated by last week’s consumer spending and industrial orders reports which seemed to confirm those suspicions for oil traders.
The price for US oil fell below $100 a barrel this week (for the first time since May) and Brent prices suffered their second biggest ever decline in dollar terms on Tuesday.
Prices rebounded yesterday, but we are seeing signs of a slowdown: demand was down 2% YoY through June 24 on a 4-week-average basis.
GRIT’S TAKE: If you’re subscribed to The Bullpen you know I’ve been saying this for months!
GRIT’S ACTION: Wasn’t touching it then and definitely not touching it now.
5. CRYPTO
Crypto Winter forces another freeze
Vauld on June 16: “Vauld continues to operate as usual despite volatile market conditions”
Vauld on July 4: Vauld is suspending withdrawals, trading, and deposits “due to a combination of circumstances such as the volatile market conditions”
A new crypto lender overexposed to the harsh elements of Crypto Winter has frozen its (+800k) users’ accounts in yet another case of yield farming gone incredibly wrong.
By now, you know the drill – a chain reaction involving Terra, a certain overleveraged hedge fund, and a domino effect of pain for crypto lenders.
This one ends with a larger crypto lender (Nexo) swooping in and signing a term sheet giving it a 60-day window to finalize the acquisition of the struggling lender (Vauld).
GRIT’S TAKE: Since the day fellow struggling lender Celsius froze accounts (June 12), users have withdrawn ~$198M from Vauld accounts.
GRIT’S ACTION: Playing defense and doing due diligence on altcoins.
6. ENTERTAINMENT
Can’t get a date IRL?
Young people are priced out of the housing market, so they’re buying real estate in the metaverse.
In China, young people shut out of the IRL dating scene are also turning to the metaverse.
Tencent-backed metaverse dating platform Soul—where you’ll find avatars in place of traditional profile pics—connects users algorithmically based on personality and interest (like Tik Tok).
After abruptly pulling plans to list shares in the US last year, and despite unfavorable conditions for unprofitable tech (which Soul is), the social media company is now pushing for a Hong Kong listing.
GRIT’S TAKE: I’m not interested in metaverse dating or unprofitable tech.
GRIT’S ACTION: I’m married to the game.