Welcome back to our Weekend Reading.
There’s been no shortage of news this week, from Jackson Hole and the impact of Fed Chair Powell’s speech, GDP data, vaccination rates and crypto volatility – that last one is a tautology if I’ve ever seen one. We closed out a largely positive month for financial markets and move into what is historically a volatile and underperforming one… So lots to look forward to.
Let’s look back on the week.
Sending the Market Signals?
$1.5 trillion USD asset manager Franklin Templeton may have been flagging an intention to enter the digital asset space this week, as keen eyed observers spotted several job postings related to cryptocurrency trading and research.
Franklin already have a Digital Assets Management division in the company which it has been building out recently.
This may indicate another institutional entrance into the cryptocurrency space, or this could be another red herring like the Amazon job opening for a blockchain product lead a few weeks ago – that sent Bitcoin powering up over 14%, until a statement from the company re-iterated they were not getting involved in the space… yet.
WhatsApp Pussy Cat?
The Irish Data Protection Commission has taken WhatsApp to task this week, fining them a whopping $266 million USD for failing to be transparent about how they handle consumer information.
As a point of reference, the European General Data Protection Regulation (GDPR) is one of the beefiest data privacy regulations in the world, and is used maintain standards of consumer data protection even back in the US, if they wish to continue using their same methods to deal with EU citizens.
The GDPR also gauged Amazon’s pocket a few weeks ago, when it was hit with a 756 million Euro fine for processing customers’ personal data in violation of GDPR legislation.
Truly the EU is the complete opposite of a toothless tiger when it comes to data privacy.
Stop the Planes
Sticking with the Euro theme for just a moment, the EU voted to place new restrictions on travellers from the U.S as COVID infection rates pick up drastically throughout North America.
The lifting of US travel restrictions back in June lined up almost perfectly with the bottom of cases, before they began to spike thereafter, so perhaps we should use travel restrictions as a contra-indicator for COVID cases going forward.
(Don’t) Smoke If You Got ‘Em
In a former life working for a Japanese multinational, I got to pick up on some of the incredible nuances of Japanese culture. Particularly in a corporate setting, there are hidden details and behaviours that whilst imperceptible to me, made or broke a career in head office.
For example, each executive of the company was incredibly talented at a musical instrument or singing/karaoke, as a corporate culture necessity over and above a musical passion. Our CFO probably said five words in the two years I was there, but at our Christmas party he could shred an eight-string guitar to Metallica, behind his back, three wines deep. In Osaka particularly, these talents were valued just as highly as negotiating skills, the same way Aussie culture would value getting a beer after a meeting to build rapport.
But a darker aspect of Japanese culture, which several domestic firms are seeking to tackle as health risks continue to mount, is a penchant for smoking.
Nomura, Japan’s largest brokerage firm, is the latest (and largest) company to address the issue, sending a memo out this week to employees to refrain from smoking during working hours, even if working from home. This comes as a survey out of Japan reports 20% of existing smokers increased their dependency whilst working from home. Nomura have been providing financial assistance to employees looking to quit smoking since 2017, according to Bloomberg.
Completely contrary to Nomura’s message, but I could not help using this GIF:
*All numbers in USD from BofA Securities
Equities: $19.2bn to stocks
Bonds: $12.7bn to bonds
Precious Metals: $0.5bn to gold
Cash: $23.0bn out of cash
Flows to Know
Largest inflow to high yield bonds in 10 weeks ($1.6bn)
Largest outflow from Treasuries since Feb ’21 ($1.3bn)
Largest inflow to tech stocks since Mar ‘ 21 ($2.5bn)
Top 10 ranking for new S&P 500 closing highs in a year, past 100 years
Global equity inflows to March 2018 levels
Weaker US consumer confidence & spending
Bill Gross, co-founder of Pacific Investment Management, has described long-term U.S Treasuries, and the funds that buy them, as belonging “in the investment garbage can” – truly a poet of our times.
Gross began betting against U.S treasuries around 1.25%, saying that in this current market environment, yields have nowhere to go but up.
The OPEC+ coalition has agreed to stick to their existing plan of raising oil production to 400,000 barrels per day in October, in the face of improving global oil demand.
In “one of the quickest meetings in recent memory”, less than an hours worth of talks were needed to agree to the plan and execute.
OPEC+ is staring down the barrel, pun intended, of volatile demand as new resurgences of COVID cases pop up around the world, and ongoing sanctions by the U.S on Iran’s oil exports.
WTI traded 0.9% lower on the news, to price at around $67.90 USD per barrel, with this news coming off the back of 45% of idle supply being brought back online in the last few months.
Our morning calls continue, please do tune in for a daily dose of market insights and access to some leading experts in the funds management field.
Tune in from 9:30-10:00am AEST, Tuesdays and Thursdays.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team.
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