Digital Asset Degeneracy

The recent BTC halving didn’t really have much degenerate activity? May 7, 2024 | Peel #704 Silver Banana goes to... [SRS Acquiom. ]() In this issue: - ❓ There has to be a reason the U.S. economy is doing reasonably well. - 🤝 Seems like Sony & Apollo are next in line for the Paramount deal. - 🐒 The recent BTC halving didn’t really have much degenerate activity? Market Snapshot 📸 = Banana Bits 🍌 - Our hearts go out to the family & friends of the heroic BofA associate and former U.S. military member who tragically passed just days ago. - Citi CEO Jane Fraser sounds the alarm on changes in [low-income consumer spending trends]() - The Fed’s lack of rate cuts hurt [more than just your portfolio](=) - S&P 500 companies get their first dose of [good news for Q2 earnings]() Call it a career booster. The SRS Acquiom 2024 M&A Deal Terms Study is here. As always, it’s got the exclusive deal data, analysis, and insights to help you do your best work even better. This isn’t a regurgitation of publicly available information or a lengthy list of things you and your boss(es) already know. No, every data point and insight comes from private-target deals that SRS Acquiom provided M&A services on—more than 2,100 private-target deals, valued at more than $475 billion, that closed between 2018 and 2023. Not the kind of intel you’ll find elsewhere. The latest trends in valuations? Deal structures? PPAs and RWI? Earnouts, escrows, and indemnifications? It’s all here, and only here. So if you’re looking for a ticket to smarter negotiations and deal terms, and better results all around—the kind of stuff that makes your clients and bosses take notice—this is the closest you’re going to get. [So get it while it’s hot]() >> Macro Monkey Says 🐒 Ferris Bueller’s Economy Like taking the mileage off a 1961 Ferrari 250 GT California Spyder by driving in reverse, the Federal Reserve has attempted to take the mileage off of… everything… by raising interest rates. For Ferris Bueller, it didn’t take long to learn that driving in reverse might be the answer to all of his (and Cameron’s) problems. But for the Fed, it’s been over 100 years, and we still don’t really know if/how/why/what effect raising rates has, but at least it seems to work. Fortunately, we did get some economic policy from Ferris Bueller’s Day Off that we’d like to put to work today. The Numbers Sometimes, we should all be taking a deep breath, or stopping to smell the roses. As Ferris says, “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.” Today, we’re gonna stop and look around. It’s not every year that we have a once-in-a-generation pandemic that seems to only boost the economy, so let’s see how we’re doing. [Source]() If you’re wondering how the U.S. economy has been able to hold us so strong in the face of inflation, a less horny hiring market, and JPow coming after our livelihoods, look no further than the above chart. The U.S. economy is and, since World War II, has always been determined almost entirely by consumer spending. As long as spending remains strong, there’s a damn good reason not to be too worried in the short term. But, keeping that spending high requires a lot to work in its favor. [Source](=) The lower, the better when it comes to inflation and unemployment, but as a general rule, the U.S. economy is firing on all cylinders when the sum of these two rates is less than ~10. Technically, this is called the “Misery Index,” and the ideal range is 5.5-6.5. These two things tend to pull in opposite directions, but since 1990, they’ve been more correlated than not. The overarching point is that we want these two things to be as low as possible but not lower. Inflation is largely affected by our Federal deficit, as a widening spread is indicative of an economy that needs further stimulus to drive growth. Stimulus is itself a “shock” to economic conditions even when expected, as it’s effectively “helicopter money.” [Source]( So, it’s no wonder that the combination of falling inflation, historically low unemployment, and widening federal deficits has been good for consumers and corporations in the short term. Longer term, this could be an issue… or even the issue of the time. But today, we’re looking around, and seeing this makes U.S. economic resilience a lot more understandable. The combination of low unemployment, high but slowing inflation, real wage growth, and fat federal deficits gets us to a really good place in the short term, allowing for savings to explode as we can see below. [Source]( Rising real wages and growing asset valuations will, in turn, lead to strong wealth and income effects, where consumers spend more and feel generally less concerned about their economic position due to those increasing wages and assets. This, in turn, will lead to generally higher rates of consumer spending, keeping this whole economy going. The Takeaway? There’s a reason the U.S. economy has been a roided up Chad compared to all the other not-jacked, virgin economies in the rest of the developed world. But, those reasons are, uh… concerning… to say the very least… when we extend our time frame beyond right now. Rising government spending is particularly a focus as we can only borrow from ourselves for so long before interest payments on federal debt exceed total tax revenue collected. Borrowing to pay interest is like testing a gun by shooting yourself in the head. So, this is largely why we wanted to stop and look around today—to enjoy it while it lasts. That’s not to say we’re totally f*cked going forward because, like how the market can remain in a bubble longer than you can stay solvent, the economy can stay irrational longer than we might be alive. Idk, maybe our kids will figure it out. What's Ripe 🤩 Palantir (PLTR) 📈8.1% - AI and war have been super trendy lately. Don’t worry though, because you can still profit off of it—just not with Palantir in the first quarter. - Shares pumped into last night’s earnings report, then subsequently dumped more than 8% after hours as guidance came up short of expectations. - The AI data analytics firm earned $0.08/sh, right in line with estimates, while sales of $634mn beat. Guidance of $649mn-$653mn was a disappointment to analysts expecting… $653mn. Paramount (PARA) 📈3.1% - “Falling Apart” is a great way to describe Paramount’s content, viewership, and the almost-deal they had with Skydance. - But, it’s also the opposite way to describe common shareholders, Apollo and Sony. The latter two have paired up with $26bn to do what Skydance couldn’t. - The Apollo/Sony deal is preferential to common shareholders as it doesn’t f*ck them over by giving a premium only to the voting shares 77% controlled by Redstone, so they’re happy to see Skydance walk. - However, Paramount leadership is big mad as this new deal would likely break up the firm, making them a portfolio company of Sony’s media business. What's Rotten 🤮 Spirit Airlines (SAVE) 📉9.7% - Passengers are thrilled as they’re finally getting their revenge for the abuse suffered on *checks notes* every single Spirit flight that’s ever happened. - Investors are following in JetBlue’s footsteps and ditching Spirit after Q1 earnings told them to. EPS and revenue missed for the low-cost airline. - Spirit reported a $1.46/sh loss on $1.27bn in sales, wider than expected and a 6.2% descent from last year. - But that’s still 93.8% less of a decline than most Boeing planes (and whistleblowers) experience. Tyson Foods (TSN) 📉5.7% - Tyson must’ve spared a few chickens and shot some of those antibiotics into their own profits, as there’s no other way to fatten ‘em up so quickly. - Their chicken business swung from a loss to a $158mn profit in Q1. And, that was where the good news ended as the beef market is heavy beefin’ with investors. - One of the largest meat firms in the world saw its beef unit maintain a $35mn loss thanks to a continued undersupply of cattle in the U.S., leading to losses. Thought Banana 🤔 The Running of the Bulls You have to be a special kind of degenerate to participate in Pamplona, Spain’s annual Running of the Bulls event. Similarly, it required superhero levels of degeneracy to sit on BTC bought in 2020-2021 until it became profitable again. Nonetheless, people have managed to survive both. I’m not sure which is more dangerous, but I’m gonna have to put the mortgage on one of them (I lost a lot of money on this weekend’s Kentucky Derby) or you might start to see much more broken English in this newsletter. Luckily, I think I know which one to go with… What Happened? The Great BTC Halving of 2024 came and went, and… prices barely moved. [Source](=) Again, for the uninitiated, the BTC halving is an every 4 year event that halves the reward paid to miners for “creating” BTC blocks. It’s a mechanism in the source code from Satoshi to keep the asset deflationary until 2140, when the last BTC is mined. Given the decrease in supply, many noobs (myself included) expected prices to step up a leg higher following the event. However, as the wise apes in our [Discord channel](recently pointed out, it’s not that easy. Generally, prior to the halving, investors will bid up BTC prices in anticipation. So, this leaves a 6-18 month period of consolidation and price discovery to adjust for the new rate of increasing supply. Then, all 3 halvings in the past have seen a “rocket pump inbound” after that, to quote this very wise Discord ape. [Source - (WSO Discord)]( But, this halving has something none of those previously dealt with—institutional demand. Prior to the halving, the average number of BTC mined per day sat around 900 BTC, with a new block mined every 10 minutes (6.25 BTC reward x 144). Now that the reward for mining has been reduced to 3.125 BTC, we can assume the number mined daily is at least half the of the previous 900 unless the time to mine a block has changed at all (I couldn’t find reliable data on this). So—like with any asset—the question is “does demand outweigh supply?” According to Christopher Jensen, Director of Digital Asset Research at Franklin Templeton, institutional managers have bought an average of 2,400 BTC per day since Jan 11th. That was the day the SEC stopped being huge losers and finally decided to let investors get exposure to BTC without needing a Coinbase account or MetaMask/Ledger wallet. If my math is correct, 2,400 is, in fact, greater than 900. The Takeaway? Like anything that matters, BTC bulls will have to wait a little while to get the price returns they expect. But, if you can hold through the 75% decline from Nov 2021-Nov 2022, that’ll be a piece of cake. Or, maybe the U.S. will go full TikTok and ban BTC from the “Land of the Free.” There’s always another side to the story, so do your research before you follow in my footsteps my putting the mortgage on it. F*ck it, bull running is way more fun. Someone pick a bull for me to throw size at, and let’s get the adrenaline going again. 💭 The Big Question 💭: Will BTC prices follow the trajectory seen in the prior 3 halvings? What other factors are we not considering? Are you buying BTC right now? Banana Brain Teaser💡 Previous 📅 Pumping alone at their respective constant rates, one inlet pipe fills an empty tank to ½ of capacity in 3 hours and a second inlet pipe fills the same empty tank to ⅔ of capacity in 6 hours. How many hours will it take both pipes, pumping simultaneously at their respective constant rates, to fill the empty tank to capacity? Answer: 3.6 hours Today 🕐 If the range of the six numbers 4, 3, 14, 7, 10, and x is 12, what is the difference between the greatest possible value of x and the least possible value of x? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says🤓 “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” — Satoshi Nakamoto Today's Peel? 😁[All the bananas](=) 😐[Meh](=) 😩[Rotten AF](=) Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]( // [WSO ALPHA](=) // [ACADEMY]() // [COURSES]( // [LEGAL]() [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353