Pigs Are Flying | The Daily Peel | 12/7/22

We’ve all heard the (true) story of the blindfolded dart-throwing monkey that got better returns than stock-picking pros. You may have also heard that Elon’s Neuralink is equipping monkeys with intelligence-enhancing brain implants (Also true). So, is it really soooo crazy to think this could all be his evil plan to “outsmart the market”?

You be the judge. What’s clear is that the unpredictable stock market can make anyone go bananas. But there are alternatives. In fact, as stocks and DeFi crashed, one investment platform had 3 recent exits, realizing: +13.9%, +17.8%, and +21.5% net returns each.

It's called Masterworks. They’re unlocking the $1.7 trillion high-end art market for investors like you. Now, nearly anyone can invest in shares of multi-million-dollar art by names like Banksy and Picasso. Why art? Well, contemporary art prices:

• Outpaced the S&P 500 by 131% over the last 26 years.
• Have the lowest correlation to equities of any asset class, according to Citi
• Beat gold, real estate, and stocks in inflationary periods historically

Daily Peel readers are invited to skip the waitlist with this exclusive link. It's so easy, a monkey could do it.

See important Regulation A disclosures.

• The US and France have agreed to somehow squash the beef over electrification subsidies
• Has no one learned that you just can’t accurately predict the economy? Anyway, here’s what a bunch of rich people think
• Horrifically tough scene for Donnie T and his business’s *alleged* tax fraud that is definitely for sure a complete shock to everyone…
• Neuralink, of course, is now facing the notorious nightmare of being probed by the feds over alleged animal welfare violations

JPow’s Boss Sounds the Alarm

No, not Joe Biden. We’re talking about JPow and every central bank chair in the world’s de facto “boss,” and that’s the Bank of International Settlements, or BS for short.

**BIS, my bad (typo). Anyway, the Bank of International settlements is often called “the bank of central banks,” which is a helpful analogy but somewhat overstates the importance of the institution. Most of the BIS’s benefit comes from the research and analysis it provides, and in emergency situations, it’s a central bank’s central bank.

Okay, now that we’ve squared that circle, let’s see what’s going on. On Monday, the BIS dropped its hottest mixtape (aka “Quarterly Review”) maybe ever. Acclimated to irrelevancy, the BIS took center stage this week as its latest Quarterly Review highlights an alleged $80tn “blind spot” looming over global financial markets. After digging through this egregiously long report, we’re ready to call fact or cap.

Call: Fact. Hate to say it, but it’s pure facts at the Peel.

But, but, the claim is mildly overblown out of context and majorly absurd considering the media’s reaction to it. Let’s see why.

Foreign exchange swap markets function like any other swap market—it’s basically a market in which you can buy insurance against your own financial risk exposure. It’s as if you loaded up on $AMC, and your homie did the same on $GME, and you both agreed to pay each other monthly premiums in order to get the other to cover your losses if (and when) they come.

That’s a very dumbed-down version, but it exhibits the functionality of the market the BIS is worried about. (here’s a full explanation by the legends at Investopedia).

Now, the BIS is exceptionally concerned about the seemingly unnoticed growth in the market of foreign exchange swaps. From $55tn in dollar debt just 10yrs ago, today’s value exceeds $80tn—a figure that “exceeds the stocks of dollar Treasury bills, repo, and commercial paper combined,” according to Reuters. It seems as if this massive exposure—and its relevance to the inflation fight—isn’t getting the love it deserves.

The BIS uses the BOE’s recent Truss-induced flare-up as an example of how incoming distortions could force an increase in dollar supply, thus hyping up inflation once again.

Not sure if you’ve noticed, but inflation has been a bit of an issue in 2022. The Fed would give up anything to get rid of it, and yet, volatility in foreign currency markets threaten to force JPow and the gang to start slinging even more dollars out of thin air, thus sparking higher inflation at literally the worst possible time.

But fate loves irony, and the past few years have not been kind to JPow. But hey, at least if inflation is up 10%, your paycheck will probably go up like 6% instead of the usual 2.1%. Congrats!

Source

Vivint Smart Home ($VVNT) ↑ 32.37% ↑

In the realest “pair of star-crossed lovers” acquisition, energy giant NRG Energy yesterday agreed to purchase smart-home servicer Vivint Smart Homes. Certainly star-crossed, but genius? Maybe…

NRG is shelling out $5.2bn for the deal, leading to Vivint’s nearly 1/3 jump in value. So it’s only natural we’d ask—uhm…why??

Well, NRG expects the acquisition will allow them to develop a market-leading home service provider, expanding from energy services to ancillary technologies in the home. Bold move; let’s see if it pays off.

Textron Inc ($TXT) ↑ 5.25% ↑

And now for another company you’ve never heard of…(it was a rough day yesterday, leave me alone).

Textron is a bit of a jack-of-all-trades, but the company is for sure a master of one as the US Army pen’s Textron’s subsidiary Bell Helicopter for an $80bn contract to produce its next line of helicopters, replacing the legendary Black Hawk (yes, the one from Black Hawk Down).

Shoutout to the little guys out there, as Bell and Textron’s V-280 Valor outplayed Lockheed and Boeing’s Defiant model for the contract award. Shares surged 5.25% on the news.