Market Melt-Up, AI Startups Overheat, Crypto Renewed Interest
Deutsche Bank Crypto Custody Service, Mistral's $113M Seed Round, Banks Renewed Crypto Interest
By @HooiTerrence
Chief Investment Strategist
The below is the opinion of the authors. Any conclusions are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.
1.) Market Melt Up
Consumer sentiment has reached its highest level in four months, indicating a positive outlook on the economy.Expectations for year-ahead inflation have declined for two consecutive months, signaling potential easing of inflationary pressures. Fed Chair Jerome Powell's testimony on monetary policy and the economy aims to address concerns from both Republicans and Democrats.
Fed' Monetary Policy
- Consumer sentiment rose above expectations to its highest level in 4 months in June.
- Improvements were seen in both the current conditions index as well as consumer expectations.
- Expectations for year-ahead inflation fell for the second consecutive month to 3.3%.
- Long-term inflation expectations remain elevated at 3%.
- Fed Chair Jerome Powell is presenting a semi-annual report on monetary policy and the economy.
- Powell needs to reassure Republicans of the central bank's commitment to combating inflation.
Singular’s Take: As Powell signals a delay in rate cuts, corporate America faces mounting pressure as $260 billion of corporate debt matures within a year, leading to increased risks of defaults, distressed exchanges, and the need for companies to refinance loans, exchange debt for equity, or repurchase debt at discounted rates to avoid bankruptcy.
Singular’s Action: Consumer sentiment surpassed expectations, reaching its highest level in four months in June, with improvements observed in both the current conditions index and consumer expectations, while year-ahead inflation expectations declined for the second consecutive month to 3.3%, the lowest since March 2021, while long-term inflation expectations remained elevated at 3%.
2.) AI Startups Overheat
Artificial intelligence is currently generating the most excitement in startup circles, capturing significant attention.
This week, a four-week-old startup has raised an impressive $113 million in seed funding to compete against OpenAI in developing and applying advanced language models and generative AI.
However, when we examine the performance of AI-focused companies in the public markets, it becomes apparent that this focus alone does not guarantee stock market gains. This observation becomes evident when analyzing the recent performance of highly valued AI-oriented companies that went public leading up to the market peak.
To illustrate this point, we utilized Crunchbase data to curate a selection of venture-backed companies operating in the AI space that went public on U.S. exchanges within the past three years. Below, you can find a list of the 5 companies we discovered.
Singular’s Take: AI's impact on tech and growth stocks is surging, with Google positioning itself as a leader in AI research and implementation. The rise of AI introduces the "$20T question" regarding its potential economic impact globally.
Singular’s Action: We are closely monitoring companies driving AI advancements as they seek to capitalize on its transformative potential. The integration of AI can provide a competitive edge, but ethical concerns and workforce implications also arise. Overall, AI's impact on the industry is profound, and its potential economic impact remains a key focus for investors and businesses alike.
3.) Big Banks Getting into Crypto
The growing involvement of influential financial institutions like Fidelity, Charles Schwab, Citadel, Virtu, and Sequoia in the cryptocurrency space, combined with the renewed interest expressed by BlackRock, Deutsche Bank, Fidelity, WisdomTree, and Valkyrie, highlights a significant shift towards embracing cryptocurrencies within the financial industry.
After dedicating nine months to development, this group has recently introduced its new cryptocurrency exchange, EDX Markets. What sets EDX apart from other crypto platforms is its focused role as an exchange. Unlike platforms like Binance and Coinbase, EDX will not engage in custodial or brokerage services.
By limiting its scope to acting solely as an exchange, EDX aims to differentiate itself in the crypto market. This strategic decision allows the platform to concentrate on providing efficient and reliable trading services while avoiding the complexities associated with custody and brokerage operations. The involvement of well-established Wall Street giants in this venture signals their recognition of the growing significance and potential of the cryptocurrency industry.
Singular’s Take: The renewed interest from BlackRock, Deutsche Bank, Fidelity, WisdomTree, and Valkyrie highlights the increasing recognition of cryptocurrencies as a significant asset class and the emergence of a more mainstream acceptance of digital currencies. This development further solidifies the relevance and long-term viability of cryptocurrencies within the traditional financial industry.
Singular’s Action: It’s Bitcoin season!
Notable Mentions
1.) Student Loan Debt Statistics In 2022: A Record $1.7 Trillion
2.) Science corner: Bill Gates-funded mosquito project in Colombia
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