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In This Issue:
Judgment Day
Twitter Spaces Link!
Bitcoin Thoughts And Analysis
Legacy Markets
Coinbase Goes International
Juicy Details From MicroStrategy’s Earnings
Celsius Whistleblower Reveals The Truth Behind One Of The Biggest Crypto Crashes | Jason Stone
Judgment Day
As the banking sector grapples with growing uncertainty, today may be seen as the calm before the storm. Analysts are diligently determining which banks are most susceptible to the risks of rising interest rates, with the market providing some insights. A number of regional bank stocks were halted yesterday after experiencing a substantial decline of over 20%.
Leaders have issued statements to ease public concerns:
In March this year, President Joe Biden stated: “Today, thanks to my administration's prompt action, Americans can trust the security of the banking system. Your deposits will be available when needed. Taxpayers will not bear the losses. Instead, the funds will come from the fees banks pay into the Deposit Insurance Fund.”
Also in March, Federal Reserve Chairman Jerome Powell declared: “Our banking system is robust and resilient, featuring strong capital and liquidity. We are dedicated to learning from this experience and working to avert similar events in the future.”
It is crucial, however, to recall that comparable assurances were given before the Great Recession. Many leaders at the time thought the housing crisis was a minor issue that would self-correct. To help you form your own opinions, here are some notable quotes leading up to the 2008 crash, which echo today's reassurances:
For you to draw your own conclusions, I compiled some of the most famous quotes leading up to the ‘08 crash. Spoiler alert, the similarities to what we are told today vs what was said back then are striking.
In October 2005, President George W. Bush said: "A homeownership society is a compassionate society. ... By helping more Americans to own their own homes, we're serving our communities and building a more hopeful America. And that's what we want. We want an America where the dream of homeownership is a reality for everybody."
In December 2006, Treasury Secretary Henry Paulson said: "I don't see a subprime mortgage crisis. I think the housing market is healthy. I think the underwriting standards have been very strong and I think it's contained."
In March 2007, Federal Reserve Chairman Ben Bernanke said: “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”
In August 2007, White House spokesperson Tony Fratto said: "We're not in a housing crisis. We're in a slowdown. There's a big difference."
While a crash akin to 2007 and 2008 is not guaranteed, the pieces are in position. The Federal Reserve has undertaken significant measures to address inflation, and today might be their final action. It remains to be seen whether the foundation can endure the strain. The recent slump in bank stock prices could be the market's expectation of the Fed's decision to raise interest rates, or it may signal what lies ahead. Regardless, we must remain alert and thorough in our examination of the situation.
Twitter Spaces Link!
Click the image below if you missed Yesterdays Twitter Space or click HERE.
Bitcoin Thoughts And Analysis
Bitcoin continues to trade around $28,600, bouncing off of the 50 MA as support. Not much to do here but wait - same story as the past few days/weeks.
Legacy Markets
US futures and European stocks advanced ahead of a Federal Reserve meeting, with investors expecting a continuation of the rate-hike cycle. S&P 500 and Dow contracts rose after previous losses, while regional US lenders PacWest Bancorp and Western Alliance Bancorp fell in premarket trading. Europe's gains were led by defensive sectors, and the dollar weakened with 10-year Treasuries extending gains amid demand for haven assets. Investors anticipate a 25 basis point increase in borrowing costs at today's Fed meeting before a pause in the aggressive hiking cycle. Uncertainty surrounding the US debt ceiling and the potential impact on markets has led to a recommendation for defensiveness in asset allocation.
Key events this week:
US ADP employment, S&P Global US services PMI, US ISM services, Wednesday
Fed Chair Jerome Powell holds news conference following rate decision, Wednesday
US initial jobless claims, trade balance, Thursday
European Central Bank rate decision, followed by ECB President Christine Lagarde’s news conference, Thursday
US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.3% as of 10:08 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index fell 0.2%
The MSCI Emerging Markets Index fell 0.4%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.4% to $1.1043
The Japanese yen rose 0.6% to 135.67 per dollar
The offshore yuan rose 0.2% to 6.9191 per dollar
The British pound rose 0.4% to $1.2515
Cryptocurrencies
Bitcoin was little changed at $28,682.58
Ether fell 0.1% to $1,868.19
Bonds
The yield on 10-year Treasuries declined three basis points to 3.40%
Germany’s 10-year yield declined two basis points to 2.24%
Britain’s 10-year yield declined three basis points to 3.64%
Commodities
Brent crude fell 1.7% to $74.07 a barrel
Spot gold was little changed
Juicy Details From MicroStrategy’s Earnings
Summarizing a company's earnings in just a few paragraphs is always challenging, but here are the key points. MicroStrategy opens with their commitment to their bitcoin strategy, stating, “The conviction in our bitcoin strategy remains strong as the digital asset environment continues to mature.”
The company highlights its strategic move to repay its bitcoin-backed loan and acquire additional bitcoin. “In Q1, we strengthened our capital structure by reducing leverage by fully repaying our bitcoin-backed loan. We also continued to strategically manage our balance sheet through the addition of 7,500 bitcoin in the quarter for a total of 140,000.”
MicroStrategy reveals its potential collaboration with Coinbase for quick cash. “From time to time, the Company may be extended short-term credits from Coinbase or other execution partners to purchase bitcoin in advance of using cash funds in the Company’s trading account. The trade credits are due and payable in cash within days after they are extended. As of March 31, 2023, the Company had no outstanding trade credits payable.”
It's important to note that MicroStrategy utilizes Coinbase to purchase their Bitcoin. “We determine the fair value of our bitcoin based on quoted (unadjusted) prices on the Coinbase exchange (our principal market for bitcoin).”
Lastly, MicroStrategy's statement addresses its debt obligation over the next 12 months.
“We believe that existing cash and cash equivalents held by us and cash and cash equivalents anticipated to be generated by us are sufficient to meet working capital requirements, anticipated capital expenditures, and contractual obligations for at least the next 12 months. Beyond the next 12 months, our long-term cash requirements are primarily for obligations related to our long-term debt. As of March 31, 2023, we do not expect cash and cash equivalents generated by our enterprise analytics software business to be sufficient to satisfy these obligations. As a result, we would seek to satisfy these obligations through various options that we expect to be available to us, such as refinancing our debt or generating cash from other sources, which may include the issuance and sale of shares of our class A common stock, borrowings collateralized by bitcoin, or the sale of our bitcoin.”
Despite concerns, MSTR stock closed up 6.68% as earnings estimates exceeded expectations by 2,490%, primarily due to Bitcoin's contribution.
Coinbase Goes International
After one year and three months since the initial announcement, the Coinbase International Exchange (CIE) has finally launched. Regulated by the Bermuda Monetary Authority (BMA), the CIE allows institutional users in eligible jurisdictions outside the US to trade perpetual futures. Currently, here's what the CIE offers: “Coinbase International Exchange listed BTC and ETH perpetual futures contracts earlier today. All trading is settled in USDC; no fiat on-ramps required. The contracts initially offer up to 5x leverage.” According to the press release, there is no explicit mention of the countries where the CIE is operating.
If you're worried about Coinbase leaving the U.S., the following statement should alleviate those concerns: “Rest assured that Coinbase is committed to the US, but countries around the world are increasingly moving forward with responsible crypto-forward regulatory frameworks to strategically position themselves as crypto hubs. We would like to see the US take a similar approach instead of regulation by enforcement which has led to a disappointing trend for crypto development in the US. The Coinbase International Exchange is an expansion, bringing the safest, most trusted name in crypto to the global market.”
Celsius Whistleblower Reveals The Truth Behind One Of The Biggest Crypto Crashes | Jason Stone
In this video, Jason Stone shares his experience as a whistleblower at Celsius after it acquired his company, KeyFi. He sheds light on the unethical practices that he discovered regarding customer funds at Alex Mashinsky's company and the subsequent threats he faced from Celsius. Join us as he uncovers the truth behind what happened at Celsius and shares his personal account of the events.
In this episode with Jason, we discussed:
What happened with Celsius
Chapter 11 is only to protect the executives
We got screwed by Celsius
The first trigger
Spending $80 million on Cel token
Voayger & Celsius
Whistleblowing
What’s going on now with Celsius
Jason was threatened by Celsius
What is Jason working on right now
Why Celsius bought Jason’s company
The future of DeFi
Final thoughts
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.