Carbon prices could go from $3 to $147 by 2030

Quick Hits from GRIT

Happy Friday Everyone 👋

SIX things you need to know this week in 60 seconds.

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Don’t let your client’s cannabis business go up in smoke because the green is cashed. Canna Business can get them $5M in working capital in 48 hours! They can also help with real estate, equipment, and invoice financing*.

*as of 4pm ET, 9/23/21
1. MACRO

Now that everyone has calmed down: an Evergrande update

If you’re reading this, then you already know: the global financial system did not collapse. Phew! If you didn’t catch my thread on why earlier this week amid the baseless chaos, take a quick moment to catch yourself up now — I’ll wait here.

Ok good, you’re back. Since then, financial regulators in Beijing told the “embattled developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds.”

Chinese officials are instructing local governments to brace for Evergrande’s collapse by focusing on preventing unrest, limiting job losses, and anything else that could hurt the broader economy (think the “This is Fine” meme).

GRIT’S TAKE: 

GRIT’S ACTION: This is not the Chinese Lehman Brothers. President Xi has a BIG BAT with $3.2T USD in foreign currency reserves. I am staying invested!

2. DEALS & IPOs

“It’ll be different this time” - WeWork, probably

A little over 2 years ago WeWork filed for its IPO. Word on the street was a $47B valuation. That paperwork, however, brought up a lot of questions regarding the company’s finances and leadership.

The spotlight was particularly bright on then CEO Adam Neumann, whose list of accomplishments included (but were not limited to): handing out tequila shots after discussing layoffs, smoking weed on a private jet, trademarking the word “We” for $5.9M…get the picture? Neumann was shown the door after that, but not before receiving $1.7B for his services on the way out.

Now that things are totally different you guys, WeWork is gearing up for round 2 in October. This time via SPAC, and a valuation of $9B.

GRIT’S TAKE: “WeWork going public via a SPAC makes sense because investors have made so much money in the stock market over the last 12 months they need tax losses to offset their gains.” - Genevieve, March 23, 2021

GRIT’S ACTION: No thanks.

3. STOCK MARKET

US households bank deposits increased 28% in 15 months

Seventeen. Point. Four. Trillion. That’s how many dollars US households held in savings accounts in the first quarter of 2021. Does anybody want to take a wild guess at the average interest earned in a US savings account? SIX BASIS POINTS! It’s no wonder investors are flocking to crypto lending!

So, what should households do with all that cash?

Well, one option is to take a page out of the “Buy the Dip” generation’s playbook and…well, buy the dip! The S&P is currently in the middle of its 25th dip since the March 2009 low, and over those 12 years the BTD strategy has paid off.

GRIT’S TAKE: It’s like he took the words out of my mouth: “There's 72MM millennials the oldest of which is 41. They've lived through 2 gigantic market events (GFC / COVID) while investing for the future. Some of them have embraced virtual assets that drop 50% all the time. Do we think they're scared of random selloffs anymore?” Michael Antonelli

GRIT’S ACTION: BTFD.


UNDER THE RADAR

A 20+ YEAR OF DRONE INNOVATION: Did you know drones are for more than just cool Youtube videos? Draganfly is the award-winning, industry-leading drone solution that’s bringing real-life changes to enterprises around the world. And they’re doing it fast, with revenues increasing 114% YoY! Best part? They’ve just begun trading*!

ESG BOOMING: Big-name stock exchanges, rating agencies, auditors and index providers have banded together in a group led by former central banker Mark Carney to focus on achieving net-zero carbon emissions. This push began in April with the formation of the Glasgow Financial Alliance for Net Zero, which includes +250 banks accounting for US$88 TRILLION in assets.

YOUR ENTERPRISE BLOCKCHAIN TRANSACTION PROCESSOR: Hyperledger & Ethereum just got put on notice. A big increase in large blocks being routinely processed has catapulted TAAL onto the blockchain mainstage. BSV now producing more transactions per day than Ethereum and BTC ! They just reported Q2 revenues of $6.7M (almost 7x quarter-to-quarter), and they’re expecting to exceed results again in this quarter*!
Transactions per day:
Bitcoin SV: 2.3M
Ethereum: 1.25M
BTC: 264K
BCH: 84K
ADA: 75K

*This is sponsored advertising content.

4. COMMODITIES

Carbon prices could go from $3 to $147 by 2030

GRIT subscribers know that I’m firmly in the “carbon is the new oil” camp, and have been for some time now.

Barclays released an ESG research report this week titled “Carbon pricing: preparing for the inevitable”. In it, they confirm that carbon is the clear path to fighting climate change and they go in-depth on the significant role carbon pricing will play for policymakers.

Besides a ton of ominous data on global warming, the report contained pricing projections for carbon through 2030, which ranged as high as $147/tCO2e. That’s excellent news for carbon investors when you consider the current global average price is $3/tCO2e!

GRIT’S TAKE: The report advised investors to anticipate discussions regarding carbon pricing at COP26 (United Nations Climate Change Conference), which starts November 1.

GRIT’S ACTION: Long carbon stocks & deals. Subscribe to my paid newsletter to find out which ones!

5. CRYPTO

Sport-focused NFT start-ups raise over $900MM in crypto gold rush

It was a busy week in the NFT world (when is it not these days?), particularly with some sports-focused companies riding the JPEG market’s momentum into funding rounds.

Dapper Labs, who created NBA Top Shot, raised $250M at a $7.6B valuation in a round led by Coatue. Sorare, a French fantasy soccer NFT platform raised $680M in a round led by SoftBank that valued the company at $4.3B. Sleeper, a San Francisco-based fantasy sports startup, raised $40M in a round led by Andreessen Horowitz which valued them at $400M.

GRIT’S TAKE: It used to be that ads on jerseys were the last remaining untapped revenue source for sports organizations. Not anymore! I expect more sports leagues and organizations will begin adopting blockchain technology (like everybody else) in search of additional sources of income.

GRIT’S ACTION: Long ethereum.

6. ENTERTAINMENT

Trader makes $50M bullish bet on S&P 500

Someone out there is betting big that the S&P 500 is going to rally through to the end of the year.

Word on the street is this is a trader who is making up for not being exposed to the S&P enough. That, or they just have faith that J-Pow & Co. will continue to make the money machine go brrrr long enough to lift the index to new highs. Here are the details of the trade:

  • 25,000 Dec. 448/470 call spreads for $7.91

  • 32,000 Nov. 448/460 call spreads for $4.35

  • 43,000 Oct. 442/452 call spreads for $3.89

The $50M worth of options contracts could be worth up to $136M if they reach their expiration dates in the money.

GRIT’S TAKE: This reminds me of one of my favorite Warren Buffet quotes: “Nobody wants to get rich slow.”

GRIT’S ACTION: Buy stocks. Not options.


*SOURCES
1. WSJ, ZeroEdge
2. Protocol
3. Daily Shot, Compound Advisors
4. Barclays ESG Research
5. CNBC, Bloomberg
6. Bloomberg

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