ETH Merge, Overheaters Prison, Flat Market, Food Prices Soar

Crypto

ETH Merge Complete

• The massive overhaul of Ethereum known as the Merge has finally happened, moving the digital machinery at the core of the second-largest cryptocurrency to a vastly more energy-efficient system after years of development and delay."
• It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake.
• "The metaphor that I use is this idea of switching out an engine from a running car," said Justin Drake, a researcher at the non-profit Ethereum Foundation.

(Coindesk)

NFT minted after ETH Merge cost $60K in transaction fees

• Within 17 seconds [of the finalized ETH Merge], the first NFT was minted on proof-of-stake Ethereum, paying a transaction fee of 36.8 ETH ($60,626).
• The NFT named “The Transition” features an Ethereum panda mascot and is part of a collection of 100 on NFT marketplace OpenSea.
  (The Block)

ETH down 5% despite smooth Merge

• Many speculators were hoping the Merge would boost ETH's price
• ...developers behind the effort pointed out the Merge itself doesn't directly improve the blockchain protocol's scaling.
  (Yahoo! Finance)

Investing

Druckenmiller: The Market Is Going To Be Flat For 10 Years

• "...there’s a high probability in my mind that the market at best is going to be kind of flat for 10 years, sort of like this ’66-’82 time period, but the nice thing is there were companies that did very very well in that environment back then." (The Acquirer's Multiple)

Chinese Tech Giants Lose Backers

• ...early backers of some of China’s most successful tech companies are starting to withdraw their support.
• South African-based Naspers reduced much of its stake in the gaming and social media company Tencent, selling off 1.1 million shares and dropping its stake to under 28%.
• SoftBank recently sold off its own stake in the e-commerce company Alibaba, and Berkshire Hathaway lowered its stake in the EV company BYD
  (Validea)

Great News For Energy Stocks

• the Biden Administration is considering refilling the SPR when crude oil prices dip below $80 per barrel. This effectively puts a floor under the crude oil prices, which is great news for energy stocks.
• ...and Europe looking for more energy next year because they're cutting off Russia, things are looking very good in the energy patch.
  (ValueWalk)

Economics

Mortgage Rates Top 6%, Highest Since 2008

• The average rate on a 30-year fixed mortgage climbed to 6.02% this week, up from 5.89% last week and 2.86% a year ago
• A borrower who buys a $500,000 house with a 20% down payment and a rate of 2.86% could expect to pay about $200,000 in interest over 30 years for their $400,000 loan. If their rate is 6.02%, they could pay $465,000 in interest
  (WSJ)

Railroads/Unions "Tentative Agreement" Avert Rail Strike

• CBS News Kris Van Cleave sheds more light on the tentative deal by railroads and unions to avoid a strike Friday.
• "There is a tentative deal to avoid a rail strike. Railroads say tentative agreements include a 24% wage increase during over by 2024 — w/14.1% bump effective immediately — and 5 annual $1,000 bonuses. Unions get their sick time demand. Deal followed a 20 hour negotiating session," Van Cleave tweeted.
  (ZeroHedge)

Food Prices Soar

• Food costs spiked 11.4% over the past year, the largest annual increase since May 1979, according to data released Tuesday by the Bureau of Labor Statistics.
• Egg prices soared 39.8%, while flour got 23.3% more expensive. Milk rose 17% and the price of bread jumped 16.2%.
• Meat and poultry also grew costlier. Chicken prices jumped 16.6%, while meats rose 6.7% and pork increased 6.8%. Fruits and vegetables together are up 9.4%.

(St. Louis Post-Dispatch)

Continual High Inflation is Legacy of $2 Trillion Fiscal Stimulus

• Tyler Goodspeed argues that the current inflationary pressures are in large part a consequence of the American Rescue Plan of 2021. The $2 trillion bill (equal to 10 percent of US GDP) resulted in historical levels of aggregate demand.
• "We have also seen rents increase because, as the economy slows, many people can’t afford a down payment on a new home. I believe we are going to see shelter inflation quite elevated for the next year."
• "I think that the Fed is ultimately going to have to hike rates even higher than an additional seventy-five basis points."
  (Hoover Institution)

Debt Diplomacy – Is China the East IMF?

• The International Monetary Fund is not the only option for countries in desperate need of funding. The Financial Times recently reported that China has been sending out tens of billions in secretive “emergency loans” to countries facing financial hardship.
• China seems to be upping its aid and has provided more funds than even the World Bank.
• Former Vice President Mike Pence accused China of using “’debt diplomacy’ to expand its influence. [China] is offering hundreds of billions of dollars in infrastructure loans to governments from Asia to Africa to Europe and even Latin America. Yet the terms of those loans are opaque at best, and the benefits invariably flow overwhelmingly to Beijing.” Pence claimed that China would prey upon poor nations and take ownership of key infrastructure upon default.
  (Armstrong Economics)

Switzerland to Imprison People For Heating Homes

• Imagine going to jail for three long years for heating your home or business.
• That now may become a reality in Switzerland, where heating your home above 19 C (66.2 F) is considered excessive and a punishable offense.
• Water may not be heated above 60C (140F), and saunas and hot tubs powered by radiant heaters are prohibited. Indoor swimming pools also must remain cold.
  (Armstong Economics)

Gold And Silver Are Disappearing From Vaults Worldwide

• While you weren't paying attention, inventories of silver at the vaults of the London Bullion Market Association (LBMA) have continued a historic plunge.
• China has been repatriating gold, which has also been “flying off the Comex” faster than it has in years. Things could be getting spicy for the metals market.
  (QTR’s Fringe Finance)

Business

Apple, Amazon Passed on LIV Golf Media Rights

• Tech giants were approached by upstart golf league but didn’t express interest, joining list of media platforms
• The two tech giants were approached by LIV about potentially carrying its events on their streaming platforms, but neither expressed interest and talks never advanced to any serious negotiations.
• LIV has been accused by critics of using golf to repair the reputation of Saudi Arabia after various human-rights abuses.
• CBS, NBC and ESPN have deals with the PGA Tour, which is in an increasingly contentious feud with LIV.
  (WSJ)

China Wanted GE’s Secrets. But Then Their Spy Got Caught

• How the arrest of a burned-out intelligence officer exposed an economic-espionage machine.
• Xu Yanjun’s arrest marked the first time an MSS (China Ministry of State Security) officer was lured out of China and extradited to the US.
• “The leadership asks you to get the materials of the US F-22 fighter aircraft. You can’t get it by sitting at home.” - Xu Yanjun (Chinese spy)
  (Bloomberg)

Adobe acquires Figma for $20B

• Taking out one of its biggest rivals in digital design.
• Design and prototyping, for individuals and teams, executed in a very streamlined and modern, cloud-based environment, are Figma's product strengths, and it's amassed some 4 million users to date.
• The acquisition is coming in the form of a deal that is half cash and half stock, Adobe said, and it will also include 6 million additional restricted stock units granted to Figma’s CEO and employees that will vest over four years subsequent to closing.
  (Yahoo! Finance)

Bed Bath & Beyond is closing about 150 stores

• The closures are part of a broader plan to try to stabilize the company’s finances and turn around its declining sales.
• The home goods retailer released its plans last month to close the “lower producing” locations, representing about 20% of its namesake stores.
• Bed Bath & Beyond posted a list of 56 namesake locations it will close. They are scattered across the U.S., from California and Nevada to Ohio and Florida.
  (CNBC)

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