Happy Friday Everyone 👋
SIX things you need to know this week in 60 seconds.
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*as of 4pm ET, 10/21/21
1. MACRO
Inflation: not so transitory
U.S. food at home prices had their biggest single monthly rise of the year last month (1.2%) and are now 4.5% higher than September 2020.
To add insult to injury, Nestle, Danone, and Procter & Gamble all announced further price hikes this week thanks to greater-than-expected costs increases. The persisting labor and materials shortages have done nothing to help the situation.
According to supermarket experts, consumers begin resisting price increases above 5%, so inflation in grocery stores is reaching a tipping point of sorts.
GRIT’S TAKE: Pricing power is key. Big companies typically have an easier time passing on price increases to consumers than do smaller ones. They’re also better equipped to weather labor and materials shortages with backup suppliers, multiple shipping routes, reformulated products, etc.
GRIT’S ACTION: The average interest rate on a savings account in America is 0.06%. Inflation is killing the value of your money. Investing fixes this.
Under the Radar
A 20+ YEAR OF DRONE INNOVATION: What kind of impact can a drone have on a business or government agency? If it’s a Draganfly, it can do a lot: mapping, surveying, data collection, temperature-sensitive deliveries, thermal, heart rate, and breathing rate scans…get the picture? Where can you find them?! On Wall Street*!
*This is sponsored advertising content.
2. DEALS & IPOs
There’s never been a better time to be a startup
Proceeds from sales and public listings of startups this year have already doubled 2020’s total! The jump can be attributed mainly to tech companies, which have completed more traditional IPOs this year than any year since 2000.
With so many companies bringing in so many dollars ($513.6B to be exact) in exits, venture capitalists (VCs) have already poured more money into deals in 2021 than they did all of last year (by 40%).
But they aren’t the only players in the VC game anymore — private equity and hedge funds are getting in on the action too (think Tiger Global, Blackstone, Blackrock, KKR, SoftBank, etc.).
GRIT’S TAKE: According to Pitchbook, nontraditional startup backers like the ones listed above are actually out-investing traditional VC firms $350B to $221B.
GRIT’S ACTION: We are working on a platform that will allow ALL types of investors to get access to deals previously only a select few had access to. Stay tuned!
3. STOCK MARKET
Wicked high returns from Harvard
The biggest university endowment fund just got even bigger. The Harvard Management Company (HMC) reported a 33.6% return for the fiscal year ending June 2021. The fund now sits at $53.2B.
Harvard lagged behind some of its Ivy League peers like Dartmouth and UPenn (whose endowments grew 47% and 41%, respectively), but the report was a nice surprise from what can otherwise be described as a boomer approach over the last decade or so (read: low risk).
HMC’s private equity assets returned a ridiculous 77% while their public equity holdings returned a measly (by comparison) 50%.
So what do the top 5 holdings of the biggest endowment in the U.S. look like? Kind of boring, actually:
· AAPL: Apple (19%)
· RPRX: Royalty Pharma (17%)
· SGMS: Scientific Games Co. (12%)
· FB: Facebook (10%)
· PANW: Palo Alto Networks (5%)
GRIT’S TAKE: Unless you include other investments… The information isn’t publicly available, but according to multiple sources, Harvard and some of the world’s other largest university endowment funds have been investing in Bitcoin (and cryptocurrency in general) since as early as 2018.
GRIT’S ACTION: I didn’t get into Harvard. Turns out it doesn’t matter since we are making money the same way: Apple, Facebook & Bitcoin.
4. COMMODITIES
Historic copper squeeze
In London Metal Exchange (LME) monitored warehouses, available copper stockpiles have shrunk by more than 90% to the lowest levels since 1974. We’re also seeing this trend begin to play out in Chinese and U.S inventories.
The inventory crunch has sent the price of copper back up to record levels and the LME is making efforts to curb backwardation (increasing spread between spot and futures prices).
GRIT’S TAKE: Demand for copper is expected to increase alongside the global economic recovery, exacerbated by climate ambitions around the world that call for more of the crucial metal. Expect prices to remain elevated.
GRIT’S ACTION: Long First Quantum for my exposure exposure.
5. CRYPTO
Crypto: so hot right now
Monday, 10/11: “I personally think that bitcoin is worthless.” – Jamie Dimon (CEO, JPMorgan).
Friday, 10/15: Jack Dorsey (CEO x 2, Twitter, Square) announces that his favorite company is considering building an open-source mining system. This would make mining accessible to everyone. It would also make existing shareholders (which as of last week includes GRIT!) very happy.
Tuesday, 10/19: the first Bitcoin futures ETF (ProShares Bitcoin Strategy ETF; $BITO) launches. We won’t get into the merits of buying it vs. actual Bitcoin here, but it debuted nicely with a gain of nearly 5%.
Wednesday 10/20: Bitcoin powers to fresh all-time highs with Ethereum fresh on its tail. Jamie Dimon calls in sick to work.
GRIT’S TAKE: Imagine not being invested in crypto.
GRIT’S ACTION: Long Bitcoin, Ethereum, and Square.
6. ENTERTAINMENT
What do Roblox and Martha Stewart have in common?
Besides being wildly entertaining, both Martha Stewart and Roblox understand the value of NFTs!
Stewart just unveiled a Halloween collection with NFTs that are selling for thousands of dollars. She’s 80 years old, but the fact that she has jumped headfirst into NFTs should surprise exactly no one considering she also sells CBD with Snoop Dogg.
Meanwhile, Roblox got one step closer to becoming the metaverse leader by announcing some exciting new features, one of which bears a striking resemblance to the NFT model: developers will be able to create limited edition items that can be sold to users. The developers could then also earn royalties off of them.
They must have read my breakdown of the P2E economy last week!
GRIT’S TAKE: Old money and the Boomer Brigade believe crypto and NFTs have no utility. Smart investors/companies know otherwise and are planning accordingly.
GRIT’S ACTION: Long emerging metaverse kings: Roblox & Facebook.
*SOURCES
1. WSJ, Daily Shot
4. Bloomberg, Mining.com
6. Techcrunch, WSJ
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