Comment of the Day
20th June 2023
Eoin Treacy
Jun 21
Video commentary for June 20th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: bitcoin surges on insitutional interest, gold and silver contract on positive real rates, stocks pause, China cuts rates but not enough to satisfy markets. airlines breaking higher, variability in performance of the shipping sector.
Crypto Exchange Backed by Citadel Securities, Fidelity Goes Live
This article from Bloomberg may be of interest. Here is a section:
An expectation among regulators that crypto exchanges should be separated from broker-dealer functions, similar to the structure of traditional financial markets, will create opportunities for EDX, Nazarali said.
“We believe crypto is here to stay, but for it to evolve as an asset class it needs to adopt the rules and investor protections that exist in traditional finance,” Nazarali said in an interview. “The message we’ve got from our investors is that this creates an even bigger space for us.”
Already backed by companies including Paradigm, Sequoia Capital and Virtu Financial Inc., EDX raised new funding through additional investors including Miami International Holdings, GTS, GSR Markets, and HRT Technology. It plans to launch EDX Clearing to settle trades later this year.
The US Securities and Exchange Commission recently widened its crackdown on the crypto industry through lawsuits against two of the biggest firms, Binance and Coinbase, alleging that they acted as unregistered securities exchanges, broker-dealers and clearinghouses. The firms have denied the allegations.
Eoin Treacy's view
This smells of cronyism. Two weeks ago the SEC sued both Binance and Coinbase for running unregistered securities exchanges. That is despite repeated efforts by both companies to engage with regulators. Binance alleges the SEC chair of offering his services as a consultant to the firm immediately before the case was announced.
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KKR Agrees to Buy Up to $40 Billion of PayPal's Pay-Later Loans
This article from Bloomberg may be of interest. Here is a section:
Buy-now-pay-later loans have become increasingly popular, especially among younger consumers, as a way to split up larger purchases and pay them off in instalments. PayPal joined the fray in 2020 and has since issued more than 200 million of the loans to more than 30 million customers around the world.
With the new deal, KKR’s private credit funds and accounts will acquire “substantially” all of PayPal’s existing European buy-now-pay-later loan portfolio and eligible future loans, according to the statement. PayPal will remain responsible for customer-facing activities such as underwriting and servicing.
PayPal has said for months that it’s been looking to offload a significant portion of its receivables. The deal allows the company to continue offering buy-now-pay-later loans, which it has said entice users to use its services more, without using up large portions of its balance sheet.
Credit has become KKR’s biggest business by assets. The firm just last month elevated Dan Pietrzak to become global head of private credit as it looks to compete in the increasingly heated market where rivals have doubled down.
“Having the ability to work exclusively with a scaled and high-quality strategic partner like PayPal is a testament to the strength and maturity of our asset-based finance business,” Pietrzak said in the statement.
Eoin Treacy's view
There are two themes converging in this development. The first is buy-now-pay-later (BNPL) grew at an exponential rate during the low interest rate era and exploded during the modern monetary theory experiment. The second is the willingness of private equity groups to expand rapidly in the private credit space.
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Airbus Lands Record-Breaking Order From Indigo
This article from Bloomberg may be of interest. Here is a section:
Airbus secured the biggest aircraft order in aviation history, notching a 500-plane deal with India’s dominant airline, IndiGo. The mammoth accord for Airbus’s top-selling A320 family of single-aisle jets brings IndiGo’s order backlog to close to 1,000 planes as extends its lead in the world’s fastest-growing large market for aviation.
“No one has ever ordered an order of this magnitude,” IndiGo Chief Executive Officer Pieter Elbers said from the podium. “It speaks to the potential of Indian aviation and the ambitions which Indigo is having.”
Eoin Treacy's view
An Indian airline placing the world’s largest airplane order is not something most investors would have predicted a decade ago. It is a clear vote of confidence in Indian consumers’ appetite and ability to pay for domestic and international travel. Greater access to travel will also enhance the ease of doing business and help to spread opportunity to more regions of the country.
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Eoin's personal portfolio: stock market long initiated June 12th
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary on a daily basis until there is a change.
This section continues in the Subscriber's Area.
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