Life's too short to bet the under

Quick Hits From Grit

Happy Friday Everyone 👋

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

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1. MACRO

The jobs are there, the workers are not

JOLTs data released on Monday showed 590k new jobs added making a total of 10.1M openings in June. That would be great, if not for the fact that there were still 8.7M unemployed in July.

By June the economic output had bounced back to pre-pandemic levels, but we did it with 6.6M fewer jobs…So why the disparity?

There are several factors: unemployment benefits, skills, and geographic mismatches, ongoing COVID-related fears, childcare, etc.

GRIT’S TAKE: There’s some good news: initial unemployment claims dropped for the third week in a row, down to 375k, and continuing claims fell for the second straight week to 2.9M.

GRIT’S ACTION: Stay invested.

2. DEALS & IPOs

A record $174B spent on renewable energy in first half of 2021

Big oil is transitioning from fossil fuels, they’ve must’ve read the United Nation’s ‘code red for humanity’ report, and they’re paying top dollar for clean energy assets like offshore wind, solar farms, and turbine makers.

The problem is that a limited pipeline of projects amid rising competition has companies like BP and Royal Dutch Shell bidding up prices, which are in turn shrinking margins for the energy developers.

GRIT’S TAKE: In order to reach the desired temperature increases of 1.5°C or less, wind and solar capacity will need to grow at a rate 5 times higher than the average of the last 3 years, between now and 2050. That’s going to require ~$92T — not a good sign for an industry with diminishing margins.

GRIT’S ACTION: GRIT subscribers know how I’m playing this: CARBON. I am up 15x on my initial investment in a private carbon deal that just went public.  Subscribe to get the inside scoop!

3. STOCK MARKET

Blackstone extends its empire, acquires WPT Industrial

Blackstone has been on a real estate shopping spree over the last 12 months, buying up seemingly every piece of land they come across. So much so that it has become the world’s largest private owner of commercial real estate, a segment they’ve been focused on recently.

If you’ve been with GRIT for a while, you’ll remember I highlighted WPT back in December 2020 at CAD$14. WPT is an industrial REIT that focuses on distribution and logistics properties. Blackstone’s cash deal at US$22 per unit values the company at US$3.1B, including debt.

GRIT’S TAKE: This is a clear play on the growing e-commerce industry by Blackstone. The shift to online shopping has highlighted the importance of supply chains, and they’re taking advantage of it.

GRIT’S ACTION: I’m looking to redeploy my gains from WPT into another industrial REIT soon. Subscribe now to find out which one!

4. CRYPTO

Crypto Wild, Wild West

Bitcoin has shown a lot of strength recently, gaining +30% over the last month, and has settled around its 200 day moving average.

The crypto industry as a whole, however, suffered a legislative setback this week despite intense lobbying. An agreement couldn’t be met regarding the language in the infrastructure bill on broad oversight of virtual currencies. In a nutshell: the bill’s definition of a “broker" currently includes individuals like software developers. We don’t want that.

Government regulators and private companies are also ramping up efforts to fight illicit activity in the industry, which has been increasing. This week, hackers stole $600M in Bitcoin, dogecoin, and ether from DeFi network Poly Network. The hackers said they did it for “fun” and have returned half of the funds already.

GRIT’S TAKE: We’ve long said here that it’s still too early for Bitcoin, and these are some of the reasons why above. BUT the fact that they’re starting to be addressed legislatively means we’re on the right path.

GRIT’S ACTION: Long Bitcoin and looking for an entry point on Ethereum.

5. ENTERTAINMENT

Life’s too short to bet the under

At least that’s probably what they said at DraftKings after watching Penn National (Barstool Sports) acquire theScore for $2B. Not to be outdone, the fantasy sports and online betting giant made a couple of moves of its own, capping off a busy week for M&As in the sector.

On Monday, they announced the purchase of Golden Nugget (online casino gaming) for $1.56B in an all-stock deal — a 53% premium. The next day they launched their highly anticipated in-house NFT platform in a collaboration with Tom Brady’s NFT side hustle, Autograph.

GRIT’S TAKE:  DraftKings paid top dollar for Golden Nugget, so what makes the deal so attractive? They’ll save millions in overlapping costs, create new cross-selling opportunities, have more efficient marketing, an expanded customer databases…oh, and the online casino margins are much more attractive compared to sports betting!

GRIT’S ACTION: Long DraftKings.


Under the Radar…

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The world’s first and largest augmented reality NFT platform is making moves! New World is doing its best New York Yankees impression by snatching up all the top talent, like Italian designer, Gianpiero D’Alessandro, and Toronto musician, Karl Wolf! Check out parent DeFi company, publicly traded Graph Blockchain now*!
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SOURCES
1. WSJBloomberg
2. ReutersBloomberg
3. CommercialObserver
4. BloombergCNBC
5. WSJCoindesk

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