Happy Friday Everyone 👋
Thrilled we hit +31k subscribers this week. The Grit family is growing beautifully, thank you all for being part of our movement to democratize financial insights!
FIVE things you need to know this week in 60 seconds. If you’re reading this but haven’t subscribed, join our community of smart, fun & edgy investors 👇
*as of 4pm ET, 6/17/21
1. MACRO
Import/export prices are surging at a record pace
US export prices have risen every month since April 2020 for a YoY increase of over 17.4%. That’s the highest increase since the price index was first published in 1983!
On the other side of things — supply chain bottlenecks and rising costs of petroleum products caused import prices to increase more than expected last month. The price index for imports has surged 11.3% since May 2020, the largest increase since 2010-11.
GRIT’S TAKE: At Grit, we protect ourselves from inflation with: stocks, real estate, and farmland. We ALSO hedge against supply shortages by making sure we’re first in line at Starbucks for our morning coffee, like Genevieve ; )
2. DEALS & IPOs
The NASDAQ is experimenting with psychedelics
Today, Peter Thiel-backed ATAI Life Sciences ($ATAI) becomes the 3rd psychedelics company to list on the NASDAQ, joining Compass Pathways ($CMPS) and MindMed ($MNMD).
They’re aiming to raise $214M in the IPO with a target valuation of $2.3B.
ATAI is a drug developer that works with psychedelics like psilocybin, LSD, MDMA, ketamine, and all the stuff that the burnouts did in high school, except they’re trying to help solve mental health, not enhance the Burning Man experience.
GRIT’S TAKE: 24 months ago there were ZERO psychedelic companies. Now, there are dozens of companies (big and small) that are attracting attention and serious institutional capital as the taboo around the substances fades and the benefits become more obvious. Sound familiar?
The market cap for the top 10 psychedelics companies right now is ~$3.5B. The market cap for the current top 10 cannabis companies is ~$48B. Could psychedelics be the next cannabis?
3. STOCK MARKET
“Cash rules everything around me” – Jamie Dimon (probably)
Buying stocks, real estate, farmland, alternative assets, cryptocurrencies, emerging markets. These are all ways people traditionally hedge against inflation. Not JPMorgan, though!
Instead of doing any of those things, the US’s biggest bank has been hoarding cash and is sitting on $500B in straight cash homie! Why?
I wonder what makes him say that?
GRIT’S TAKE: The stockpiling strategy, which was announced on Monday, had JPMorgan well positioned to benefit from a rise in interest rates, as they could have used the cash to invest in higher-yielding assets. Now that the Feds dot plot shows no expected boost in rates this year it’ll be interesting to see what the firm decides to do with it.
4. COMMODITIES
Commodities pump the brakes
Concerns about inflation, global reopening demand, higher raw-materials costs, and skyrocketing freight prices (above) have all contributed to a massive surge in commodities this year. But prices have cooled in June, potentially signalling that we’ve hit peak inflation.
Lumber, the Lamborghini of commodities this year, for example, is down over 40% from its peak in May, now trading below $1000. Gold has been taking a beating since its recent trip to $1900. Copper has been fairly stable, but it’s slumped since reaching an all-time high in May. The Bloomberg Commodity Spot Index has also been declining since the start of June.
What else is slumping? Silver, platinum, iron, corn, steel, soybeans, aluminum. If it rhymes with “oddity” it’s probably down.
GRIT’S TAKE: On Wednesday, the Chinese government announced it would release stockpiles of copper, aluminum, and zinc to rein in speculation and restrain surging prices. I would too if I could get near-record prices for my stockpiles!
Or if I had a bunch of pallets sitting around I might take them public via a SPAC or launch a nice ETF for people to get exposure…like this guy 🙂
5. ENTERTAINMENT
Let me see you throw your ‘diamond hands’ up! 💎🙌
Earlier this month, we established that meme stocks should now be considered an asset class. In a way, institutional investors recognized this as early as last year when Reddit (aka Wall Street Bets) became must-read material for them after the pandemic caused a surge in retail trading.
Goldman Sachs is taking their research a step further by keeping tabs on diamond hands (or paper hands in some cases). Their analysts are using data to track the volume of trades that are likely to be executed through payment-for-order-flow (PFOF), which are attributable to retail investors.
Remember — it’s because of PFOF that brokerages like Robinhood can afford to offer commission-free trading!
GRIT’S TAKE: Time will tell if Goldman’s new sentiment-gauging strategy will work, but the data does point to something interesting. They are finding that in most cases, retail trading as a percentage of overall volume drops significantly ahead of the ultimate peak and subsequent decline (of meme-stonks). This means that at some point “diamond hand” retail investors are actually selling to institutions before prices reach the literal moon.
UNDER THE RADAR…
New World is the FIRST + LARGEST augmented reality NFT platform. They partner with artists, celebrities (Drake, ever heard of him?), and companies to create opportunities on a global scale. And they just got scooped up by publicly traded Graph Blockchain!
Blockchain Foundry gives you exposure to core blockchain infrastructure, stablecoins, and NFTs without the steep price tag of other blockchain names. Real revenue, real customers, and a real blockchain roadmap.
Flora Growth is taking over the world…First: Colombia… Now: Europe! Flora signed an agreement to become a long-term strategic partner to Hoshi International; with experienced leadership and a global distribution network, agreement to serve as a major catalyst for revenue growth as Flora brings its brands and cannabis into the EU. Expect STRONG MARGINS at scale!
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*SOURCES
1. Reuters
3. WSJ, NYT, TechCrunch, SEC
5. Bloomberg
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