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Crypto is worthless
Also in this edition: Nike does the right thing, Sri Lanka is broke, Accenture 🤝 Facebook.
Good morning!
r/investmentadvicegonewild has an unlikely legion of followers sneaking in for some trading opportunities. Who? Wall Street traders. After being stung by GameStop, they are trawling Reddit, Twitter, and Discord looking for insight on memes (and trades). Fascinating, huh?
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The Market Signal
Stocks: Indian benchmarks touched record intraday highs before profit-booking saw them slip into the red towards the end of yesterday’s trading. Realty stocks performed well, while those in the metal and IT sectors came under selling pressure. Global cues remain strong with many central banks playing it cool in the face of rising inflation.
Crypto Is Worthless, Says Man Who Bet On 2008 Crash
More than a decade ago, in what is regarded as the greatest trade ever, John Paulson shorted the US economy. He made $20 billion.
Crypto trade? The canny investor now says that cryptocurrencies are a giant bubble. Describing them as a “limited supply of nothing”, he says the bubble would pop and investors would be left holding worthless…well, nothing. That should be a good opportunity for someone like him.
Why? Before the housing crisis, Paulson bet that bond prices would fall. He would have lost money if they had risen. He reasoned that they could not rise too much and hence his losses would be limited, but he would make a pile if they crashed. And that is what happened.
No, thanks: Cryptocurrencies are too volatile for this trading strategy. In the one year to April 2021, Bitcoin went from a little over $6,000 to about $60,000. A big short position on it would have wiped out the trader.
Paulson? He is buying gold to hedge for inflation.
Sri Lanka Is Short On Food, Fuel, and Forex
Sri Lanka is on the verge of sovereign default and also runs the risk of running out of food. Amid a worsening economic crisis, Sri Lanka has declared a food emergency to prevent hoarding of sugar, rice, and other essentials.
How did this happen: The island nation’s trade deficit has been widening and it has pushed the Lankan rupee into a free fall. President Gotabaya Rajapaksa’s government, which took office in March 2020, has banned hundreds of foreign-made goods, including vehicles and essential items such as edible oils and turmeric to save foreign currency reserves.
COVID-19 effect: The pandemic shattered the tourism industry, one of the main foreign exchange earners, and shrunk the economy by a record 3.6% last year. About $1.5 billion of debt repayment will be due in the coming months but reserves were just $2.8 billion at the end of July.
Breathe Easy, Says Nike
Ever heard a multinational corporation tell its employees to not work? Or startups used to graveyard shifts switch off the lights?
Nike has shuttered its offices for a week to help its employees’ relax and recharge. Indian e-commerce startup Meesho is going on a 10-day break right after its festive season sale in November for its staff to reset and recharge.
Giving space to breathe: Covid-19 has caused work to encroach into personal lives and spaces. Companies and governments are now realising it could lead to stress and mental health pandemic.
Slash hours: France, which already has a 35-hour workweek, wants to bring it down to 32 hours (or four days a week). China is taking steps to get rid of its infamous ‘996’ work culture (9 am to 9 pm, six days a week). In one extreme case, a tech worker died of exhaustion. Another committed suicide.
The Signal
In the modern-day work culture, long hours have become the measure of how hard a person works. The pandemic may be forcing a change in that culture as burnouts and deaths are compelling employers to relook at practices that have focused more on productivity than employees. Keeping mental health as a top priority, several millennials are quitting their dream jobs for a new career or just some R&R. While some companies may be prioritising employee health in the realisation that it would increase productivity, big companies such as Google and Facebook are cutting the pay of employees working remotely. That could be counterproductive.
Facebook is Accenture’s Dirty Diamond Client
Content moderation has always been a murky business. But what if you could get a decent chunk of the $8.8 billion industry? That's the opportunity blue-chip consulting firm Accenture saw in Facebook’s $500 million-a-year deal to keep the platform clean and SFW. A New York Times report said nearly 1,300 such Accenture moderators sit in Mumbai.
Enough: But things are changing. With increased media scrutiny and employees filing class-action lawsuits, the company has identified content moderation as a “risk factor” in its annual report. Its CEO Julie Sweet has ordered a review into Accenture’s business with Facebook while leaving the contract intact. For now.
Given the 🤷: Facebook did what Facebook does best — shrugged it off: not our workers, and, therefore, not our responsibility. In 2019, this came to light when The Verge detailed working conditions of a Cognizant site in Phoenix, Arizona, where workers were diagnosed with PTSD, among other issues. Cognizant would later exit the content moderation business. Whether Accenture follows suit with its “diamond client”, though, remains to be seen.
Bulls Charge Nifty’s ‘1,000’ Record
The bulls are charging ahead. The NSE’s 50-share benchmark surged 1,000 points to hit 17,000 in just 19 trading days. Led by banking and IT stocks, this is its second-fastest 1,000-point rally since March 2020.
Aiming higher: The pace of vaccination picking up and robust corporate earnings are keeping sentiments strong. In fact, market pundits have already predicted Nifty at 18,500 levels by December 2021.
New funds: Sachin Bansal’s Navi Mutual Fund has sought Sebi approval to launch a fund of funds that will feed into the Vanguard Total Stock Market Index Fund, creating another avenue for Indian investors to invest in US stocks. And broking firm Zerodha has got in-principle approval from Sebi to set up mutual funds.
What Else Made The Signal?
Panic loo: Americans are back to hoarding toilet paper. Fears of another Covid-19 lockdown have pushed consumers to buy these products in bulk.
One foot in: Amazon is making its way into India’s farms with an app that dispenses real-time information and advice to farmers.
No more Slacking: Apple has banned its employees from discussing pay equity on Slack. They can chat about dogs and crack dad jokes, though.
Xi’s Ant grip: Chinese state-backed firms are buying ownership in Ant Group. This will loosen the fintech giant’s hold on users but may revive its IPO.
Mi’s EV: Xiaomi is preparing to disrupt the EV market. It has already hired 300 employees and committed an investment of $10 billion over 10 years.
Auto boom: Car sales have zoomed with Tata Motors selling 53% more vehicles in August 2021 than August 2020. Hyundai sales went up 12% while Maruti's rose 5%.
Let’s game: Facebook is entering the fantasy sports and games market with the launch of Facebook Fantasy Games.
FWIW
Bella Ciao: A private firm in Jaipur is giving its employees a day off to find out how the professor will avenge Nairobi’s death.
Getting glitzy: After a lacklustre turnout last year, the Venice film festival is back with a bang-on line-up this year, albeit with masks and COVID-19 tests.
In-house desert ritual: Nevada’s wackiest annual fest, Burning Man, is going on full swing via virtual reality this year to skirt any hiccups that may arise due to the pandemic.
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