Welcome back to our Weekend Reading.
Between earthquakes and riots, I hope everyone is looking forward to the Mad Max-style water wars we seem due for. If only Melbourne had some unoccupied tradespeople around to help patch things up.
It’s been a week of ups and downs in markets, from iron ore sell-offs to “Turnaround Tuesday” actually being more like Wednesday and Thursday.
Let’s look back on the week.
World’s Most Public Sell Limit Trade
Cathie Wood spoke at the Morningstar Investment Conference on Wednesday, arguing against fellow institutional investor Rob Arnott on the valuation merits of growth stocks.
Of course, the topic turned to Tesla (TSLA: NASDAQ), a key holding in the Ark Innovation ETF (ARKK: NYSE), a position she defended vigorously throughout her presentation.
However, as both a glimpse into the future and a potential signal for TSLA bears to get their put options in order, Wood noted that “if nothing were to change in our outlook and we got to $3,000… we’d be peeling out of it”.
Granted, that is roughly 400% higher than the current price, but lest we forget Tesla was only $88 per share at the start of 2020.
Not often that you get a to-the-dollar ceiling at which just over $4 billion USD in ownership may suddenly exit…
You Take the High Road, I’ll Take the Low Road
This week we saw two conflicting rate actions within emerging markets.
Turkey’s Monetary Policy Committee announced a surprise rate cut, plunging the Turkish lira to a record low against the USD. Their one-week repo rate (Turkish version of a cash rate) was dashed by 100 basis points down to 18%, in defiance of the majority of the market suspecting it would remain at 19%.
This is also on the back of Turkey printing an annualised 19.25% inflation rate last month, dropping the real interest rate below zero for the first time since October last year.
On the other side of that coin, Brazil announced it would raise interest rates by 100 basis points this month in an attempt to bring inflation back under control, raising rates from 5.25% to 6.25% – this was in line with market expectations, however.
A Tale as Old as Time
The Epic of Gilgamesh is considered to be the earliest surviving piece of notable literature in human history, and the second oldest religious text just after the Pyramid Texts.
There’s a very intimidating looking statue of him on the University of Sydney campus, currently staring at a construction site I believe – but I digress.
The 3,500-year-old clay tablet named “the Gilgamesh Tablet” is set to return to Iraq, after the U.S Justice Department determined it had been stolen and illegally sold during the Gulf War.
The tablet until now was owned by Hobby Lobby, the multi-billion dollar retail chain which displayed it at the “Museum of the Bible” in Washington which is also owned by the billionaire founder, David Green.
Given that Gilgamesh is Mesopotamian, a religion predating Christianity by around 3,500 years, the time differential is like buying the Mona Lisa to hang in a Museum of NFTs.
*All numbers in USD from BofA Securities
Equities: $24.2bn out of equities
Bonds: $10.0bn into bonds
Precious Metals: $84mn into gold
Cash: $39.6bn into cash
Flows to Know
First outflow from global equities for 2021
Largest outflow from US equities since Feb 2018 ($28.6bn)
Largest outflow from Europe YTD ($1.8bn)
Natural Gas Futures up 6x in UK/EU
Shipping rates up 6-7x since Jan 2020
1st Outflow for Global Equities 2021
What is the Charge?
Apple (AAPL: NASDAQ) may find itself faced with a brand new expense shortly, as the European Union pushes for a universal charger for all smartphones and tablets.
Not the first time EU regulation may impact multinational standards, this new policy is aimed at cutting waste and simplifying life for consumers.
Given that this draft proposal extends across other equipment such as cameras and headphones, it’s very likely that the charger may end up being some variation of a USB-C charger which we already see on many devices today.
Apple has expressed fears that “strict regulation one type of connector stifles innovation rather than encouraging it” – surely that has nothing to do with the fact that they removed chargers from new iPhone packs last year and have begun to charge separately for them?
Sure Beats the Old Job
Former Trump administration secretary Steve Mnuchin has landed on his feet nicely, with his firm Liberty Strategic Capital raising $2.5 billion USD for a new private equity fund.
It’s often forgotten that Mnuchin was a very well-off movie producer and financier prior to his short stint in the White House.
Despite having existing ties to the Middle East, his political connections may have aided in most of the funds for his new venture coming out of Saudia Arabia’s sovereign wealth fund.
The fund is focused on technology, fintech and financial services.
Mnuchin has a track record of successful deals and being a shrewd operator, so we may see the emergence of another high-profile institutional investor within the technology space in the future.
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 9:30-10:00 am AEST, Tuesdays and Thursdays.
Have a safe and enjoyable weekend.
Max and the Mason Stevens team.
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