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SIX things you need to know this week in 60 seconds.
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1. MACRO
Homeowners are tapping equity as prices skyrocket
Over the weekend we dove into the real estate market and broke down the pros and cons of buying vs. renting. We concluded:
Purchase the home you live in
One of the bonus reasons for that is because your home equity can be used as a line of credit (HELOC).
The average loan size for a mortgage in the US is at an all-time high of $402,440. Homeowners are tapping into that equity now more than ever with interest rates at historic lows. They’re using that cash for home improvements, emergencies, paying down debt, or even to take on more debt (i.e., buy more real estate).
GRIT’S TAKE: Perhaps spooked by memories of the financial crisis, or wary of sky-high home prices, some banks have scaled back their HELOC programs, and as interest rates rise, this cash source will become less attractive to homeowners.
GRIT’S ACTION: Own your home.
2. DEALS & IPOs
Private equity giant to go public
TPG Capital is one of the last original buyout giants that remains a private partnership. It looks like they’ve seen the success that their publicly traded peers, like KKR & Co., Blackstone, and Apollo Global Management, have been having in the markets and are ready to get in on the action.
The private equity firm focuses on leveraged buyouts and growth capital. They manage nearly $100B in assets, and they made winning early-stage investments on disruptive companies like Airbnb and Uber.
They plan on filing confidentially in the coming weeks with shares expected to begin trading by the end of the year.
GRIT’S TAKE: Earlier this summer TPG was contemplating both the traditional IPO and SPAC routes. Back then, the WSJ valued the company at an estimated $10B. Hmmm… a 10x jump in valuation seems a tad aggressive. For reference — Blackstone and KKR’s market caps are $146B and $55B, and they manage ~$650B and ~$250B, respectively.
GRIT’S ACTION: Subscribe to our paid newsletter we will show you some private deal flow Blackstone execs wish they could see.
3. STOCK MARKET
Walmart is positioning itself for the 15-min city
Last week, Walmart beat Wall Street expectations with strong earnings and raised its forecast for the year. On Tuesday, they announced the launch of GoLocal — their white-label, last-mile delivery service for local retailers.
The service will feature self-driving cars and drones, and they’ll offer options like 2-hour, or 2-day delivery. Walmart currently partners with FedEx for online deliveries, but they wouldn’t say if they would be using them for GoLocal. They did, however, say that they would be leveraging partnerships with innovative players in the space (think Waymo, Cruise, Nuro)
They’re not the only big name getting into the drone game — UPS, Uber, Amazon, and Alphabet are all working on similar services. Alphabet’s Wing has already delivered 10k cups of coffee, 1700 snacks, and 1200 roasted chickens to customers in Australia over the last 2 years.
GRIT’S TAKE: We are moving to a 15-minute city where everything will be delivered ASAP at the push of a button. Have an emergency and need something delivered in an hour? Tap. Have all the time in the world but don’t feel like getting off the couch? Tap. GoLocal is just another example of this new world we’re heading towards.
GRIT’S ACTION: Playing the theme through industrial REITs like WPT that just got taken out and Parkit (PKT-V).
4. COMMODITIES
Shipping & Handling Not Included
There’s nothing “transitory” about the global supply chain bottleneck, and you need not look further than the chart above to see it. The cost of shipping a container from Shanghai to L.A. is 6x higher than May 2020, and the cost is 10x higher for containers going from Asia to Europe!
The shortages, which are driven mostly by COVID-related congestion around China, are creating bidding wars that are increasing costs. Increased costs push exporters to raise prices, further fuelling inflation. ‘Round and ‘round we go!
GRIT’S TAKE: The Baltic Dry Index, which tracks cargo commodities specifically, is at 11-year highs — a big reason why the cost of construction services has been skyrocketing.
GRIT’S ACTION: Own real assets.
5. CRYPTO
MicroStrategy buys more Bitcoin
Find yourself someone who looks at you the way Michael Saylor looks at Bitcoin. His company, MicroStrategy (which moonlights as a business software provider), bought 3,907 bitcoins between July 1 and August 23 at an average price of $45,294, for a total of ~$177M.
This extends MicroStrategy’s lead as the biggest public Bitcoin holder, putting their total holdings at 108,992 bitcoins — roughly $5.1B at current levels. Their total costs? $2.918B.
GRIT’S TAKE: This is a smaller purchase than MicroStrategy made in June ($489M), but I don’t think anyone is questioning Saylor’s conviction. GRIT’s right there with him!
GRIT’S ACTION: Long Bitcoin and looking for an entry point on Ethereum.
6. ENTERTAINMENT
NFTs are the new Lambos
Or if you want the ultimate status symbol — a Lambo NFT!
Last week, I wrote about how transaction volume on OpenSea had surpassed $1B. This week, it topped $3B! One of the biggest transactions has been an EtherRock that sold for $1.3M (or 400 Ether). Yes, it’s literally a clip art of a rock.
We also mentioned last week that companies were getting into the mix, and giving off serious “how do you do, fellow kids?” vibes. On Monday, Visa purchased a CryptoPunk for ~$150k. The following day, Budweiser spent $25k on a fan created NFT, and then another $96k on the domain name ‘Beer.eth’ through the Ethereum Name Service on OpenSea.
GRIT’S TAKE: You might not like them or understand them, but it might be time to start taking NFTs seriously as they are closely linked to the blockchain, which is where everything is headed!
GRIT’S ACTION: Our iconic GRIT NFT recently sold to a collector with +$370k worth of MOONCATS 😉
Under the Radar
Hyperledger & Ethereum just got put on notice. A big increase in large blocks being routinely processed has catapulted TAAL onto the blockchain mainstage. BSV now producing more transactions per day than Ethereum and BTC ! They just reported Q2 revenues of $6.7M (almost 7x quarter-to-quarter), and they’re expecting to exceed results again in this quarter*!
Transactions per day:Bitcoin SV: 2.3M Ethereum: 1.25M BTC: 264K BCH: 84K ADA: 75K
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*SOURCES
1. TheDailyShot.com
2. WSJ
4. Marketplace, Bloomberg
6. NY Post, CNBC, Coin Telegraph
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