Why work? Just Chill

Also in today’s edition: BigBasket in small towns; Capital year; China crisis percolates down

January 11, 2022 • Estimated Reading Time: 11 minutes

Good Morning! There’s going to be a PayPal coin. The company is planning to list its own stablecoin so it too can partake in the madness that is crypto assets. The token was discovered by developers who discovered pictures and code. The coin will be backed by the US dollar. It’s not really an alt coin then.

ICYMI, in the latest episode of our podcast, we learn that WFH is here to stay. While the rest of the world is hooked on WhatsApp, there's a curious messaging app war playing out in the US ft. teenagers and college students. And Apple’s iMessage is seemingly winning it. Find out why in this episode of The Signal Daily.

The Market Signal

Stocks: Employment numbers buoyed markets today with both benchmark indices closing above key psychological levels. All sectors closed in the green today. Among the 50 Nifty stocks, 35 posted gains. Paytm was an outlier, falling to a record low on a pessimistic outlook from Macquarie.

Crypto: Bitcoin fell below $40,000 to a five-month low at 20:05 IST before bouncing back. All cryptocurrencies were trading at varying degrees of losses at 20:30 IST.  

BigBasket Taps The Untapped Market

Many online grocers (read: Flipkart, Meesho, DealShare and Udaan) have set up shop in the untapped markets of small towns. Tata’s BigBasket will follow the route, as it starts testing the group-buying model.

Why this market? Growth and margins are under pressure in bigger cities where it's fiercely competitive, particularly with quick commerce players burning rubber. So, the companies are now trying to capture the semi-urban markets which are price- and relationship-sensitive. 

Relationship commerce: The companies are getting persons who are well networked in their neighbourhoods to moonlight as the influencer-cum-delivery persons in local communities. Their recommendations are a key factor in driving the growth of the business.

The Quit Work Movement is Raging

Millennials are no fans of the rise and grind culture. The testament to that is this subreddit.  A capitalist’s nightmare, it celebrates resignations and encourages individuals to work as little as possible. They are probably doing something right—it is 1.6 million strong today.

The great resignation: In August 2021, 1.4 million Americans voluntarily quit their jobs, the highest in two decades. American millennials are also driving lesser than their predecessors, thanks to growing WFH scenarios.

A shifting paradigm: More and more youngsters are quitting their low-paying or dissatisfying jobs to take on a passion project. The resurgence of this philosophy –ditching overvaluation of work to prioritise meaningful pursuits—has got them gunning for more me-time.

Capital Surge 

Private capital—private equity and venture capital—has never had it so good. The giant pools of capital have grown larger and larger, controlling assets worth trillions of dollars. 

Deals galore: PE firms struck 13,000 deals worth $1.8 trillion in the first 11 months of 2021. Global venture investing rose 92% in 2021 to $643 billion. 

PE and VC firms invested $63 billion in 1,202 deals in India last year. VCs poured in $131 billion into Chinese companies. They put in a whopping $297 billion in US startups. 

The Signal

Last year was a record-breaking one for private capital in terms of investment as well as public listings. Valuations went through the roof as 238 VC-backed companies debuted at more than $1 billion and 35 listed at more than $10 billion. VCs seeded 17,000 startups and funded another 8,000 early stage firms. They created 586 unicorns globally. 

Although overall PE investments fell in many markets, including China, they drove consolidation in the US, Brazil and India. The top 11 listed PE funds rose $240 billion in market value in 2021. But now valuations are rising and markets are sobering up as central banks raise rates. It remains to be seen if 2022 will hold the trend.

Tracking The Third Wave 

After 750 doctors in Delhi, close to 1,000 Delhi police personnel, and 114 cops in Mumbai have tested positive for the virus. India also recorded 1,66,497 fresh cases on Monday, a dip for the first time in two weeks. While West Bengal logged in record numbers, Mumbai registered a dip. 

Defence minister Rajnath Singh, Karnataka CM Basavaraj Bommai and Bihar CM Nitish Kumar have been diagnosed with Covid-19.

The virus is catching on; hopefully, so will takers for the vaccine. A Pfizer Omicron vaccine is on the way.  

Elsewhere: Spain is in trouble. Hospitalisations are rising in Britain and Italy. China has detected a community spread in Tianjin. Total cases surpassed one million in Australia. 

China Property Crisis Reaches Local Govts

The crisis in China’s private property market is gradually seeping into public finances. Cities in interior China are facing revenue erosion by a third as land and property deals have come to a standstill. 

Dubious vehicles: Chinese cities operate through special financing vehicles which allow them to circumvent a direct-borrowing ban on local governments. They have an estimated $8 trillion in outstanding debt. With revenues dwindling, many could go bust as $31 billion dollar bonds come due in 2022. 

Lehman redux? After slumping in 2021, land sales are expected to plummet another 20% this year. Evergrande evoked memories of the Lehman Brothers collapse although it still seemed unlikely. Now it doesn’t seem that far-fetched.

FYI

Back on track: Apple supplier Foxconn can finally resume operations on Wednesday. It was closed in December 2021 after 250 workers fell sick of food poisoning. 

Helping hand: Cash-strapped Sri Lanka has asked China to help restructure loan repayments even as it struggles with a food and electricity crisis. 

Finally sold: Mahindra and Mahindra has sold the debt-ridden carmaker SsangYong Motor to electric car maker Edison Motors for $255 million.

Game on: Video game maker Take-Two Interactive plans to buy Farmville creator Zynga for $12.7 billion.

Ballot rush: About 800,000 legal non-citizens can vote in local elections in New York City.

FWIW

Beware of freebies: Can malware be delivered via snail mail instead of email? Sure can. The FBI has warned businesses of a rise in cyber-attacks via the US postal service. Hackers are mailing well-wrapped malware-loaded USB sticks to offices hoping someone will plug them into computers. FIN7 hackers’ group is alleged to be behind it. 

Goat Musk: Elon Musk stans have united. This time, to kickstart an Elon Musk-themed cryptocurrency. The fans have also created a goat statue with the Tesla founder's face glued on. We wonder what Musk feels about that.

Girl, interrupted: File this under short people problems. After 34 years on the job, a female driver in Manchester was shown the door because she's too short to do the job. Now, 25,000 people are rallying behind the five-foot-tall driver. 

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