Welcome back to Weekend Reading.
Dedicated friends and readers, please forgive the relative brevity of this edition.
It turns out a “work from home order” being announced as we work through listing proceedings for one of our private equity holdings and in the leadup to EOFY, is quite the series of time-consuming events for a Friday. Regardless, we have some interesting snippets from macro and markets around the globe for your reading pleasure.
For those in Sydney – including us – stay safe, follow guidelines and try not to let your working from home experience turn into a recreation of The Shining.
Let’s look back on the week.
Totally Not Inflation
Global equities have climbed this week after Fed Chair Powell has come out and re-emphasised his stance that inflationary pressures are transitory in nature – the narrative for inflation has shifted significantly but seems to have mixed followings throughout capital markets.
The S&P 500 climbed just over half a percent after Powell made the announcement to the market.
Czech Out That Map
Speaking of central banks, this was a great map that accompanied a Bloomberg article on the Czech Republic hiking rates – whilst I can’t profess to be an expert on many things, let alone the koruna or its macro backdrop, but the view of who has and hasn’t been changing policies is fascinating by from a geographic perspective.
A Land of Milk and Bubble Tea
The Chinese bubble tea chain Nayuki Holdings Limited just raised $656 million USD in their Hong Kong IPO, pricing at the top of marketed range and riding the new wave of HK IPO’s after a disappointing appearance from new listings during Q1 2021.
The Shenzhen-based firm sells fresh-fruit teas, cold-brew beverages, and baked goods. It recorded losses of 203 million yuan in 2020 and 40 million yuan in the previous year, according to its prospectus, however revenue rose 22% year-on-year to 3.1 billion yuan.
Stuck at Home, All Alone
Forgive the crass implication, but you’d assume months locked at home together with your significant other would create a spike in birth rates in the U.S.
But nine months after the declaration of a national lockdown and state of emergency, U.S births fell by 8% in a month, or 4% for the full year.
Most likely it’s due to fears around the availability of hospitals and healthcare, or the lack of familial support networks due to lockdown.
*All numbers in USD from BofA Securities
- Equities: $7.0 billion into equities
- Bonds: $9.9 billion into bonds
- Precious Metals: $0.2 billion out of gold
- Cash: $53.5 billion out of cash
Flows to Know
- Smallest inflow to TIPS in 7 weeks ($0.3bn)
- Smallest inflow to Europe in 10 weeks ($0.2bn)
- Largest 7-week outflow from tech since January 2019 ($5.7bn)
- Largest outflow from financials since March 2020 ($2.9bn)
- Largest outflow from value in 7 weeks ($0.6bn)
Asset Inflation, Commodity Inflation and Housing Inflation
The Central Bank “Inequality Trade”
Growth vs Value – the Comeback
A pair of brothers from Cape Town, formerly running a cryptocurrency investment platform, have made off like the wind and vanished – along with 69,000 BTC held in their custody.
At their highs in April, this would have represented around ~$4 billion USD worth of coins, the largest ever dollar-loss in a crypto scam to date.
There were more red flags than a matador competition with this one – as Bitcoin was reaching record highs in April, the elder brother (‘Africrypt’ CEO, Ameer Cajee) informed clients that the company was the victim of a hack, and to “not inform lawyers and authorities”, as this would slow down the recovery process of the missing funds.
Even retired Nigerian brigadiers would be suspicious of that announcement.
But, if you believe Black Swan author Nassim Taleb, this wasn’t so bad because…
Going to Zero
Nassim Taleb has taken to Twitter to state that blockchain shows no evidence of being a useful technology, and that Bitcoin is worth “exactly zero” – outlining four key arguments against the cryptocurrency in a paper called “Bitcoin, Currencies and Bubbles”.
Due to time constraints we won’t summarise those arguments here, but it is an interesting read if you have a moment over the coming weekend/potential week in lockdown.
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.
As a reminder, we will be changing the call schedule to be Tuesday and Thursday mornings, same time as usual, starting 1 July.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team
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The views expressed in this article are the views of the stated author as at the date published and are subject to change based on markets and other conditions. Past performance is not a reliable indicator of future performance. Mason Stevens is only providing general advice in providing this information. You should consider this information, along with all your other investments and strategies when assessing the appropriateness of the information to your individual circumstances. Mason Stevens and its associates and their respective directors and other staff each declare that they may hold interests in securities and/or earn fees or other benefits from transactions arising as a result of information contained in this article.