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“It is well enough that people of the nation do not understand our banking & monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford
Translation: This one speaks for itself. And with the rise of the Internet, the masses are beginning to understand our banking and monetary system (h/t Luke Gromen). The GameStop saga has helped reveal the ‘man behind the curtain controlling the wizard.’ It’s a sham, and the centralized few have been taking advantage of it for a long time. The future of the financial system is decentralized…
Recap: Lyn breaks down the path ahead in terms of likely Fed and Treasury actions, and the potential outcomes (see her decision tree). Real rates have been artificially suppressed, and are now starting to rise (which we've seen in the past 2 weeks) - this has serious investment implications across the board.
Comment: Another great update, Lyn's framework is particularly useful in proactively preparing for different paths of policy actions. How the Fed handles the rise in real rates is critical. There is a deluge of US Treasury issuance that will come in the 2H21 (see graphic below), and the past 3 auctions have gone horribly (no one wants to buy US bonds at current rates). For now, the government will likely continue to finance itself at the short end of the curve (~2yr) where the Fed has pegged rates near 0, and let the yield curve steepen (long end to rise) until "something breaks." Rising real yields will pressure high multiple (high terminal value sensitive) stocks... it's a particularly critical time to be macro aware.
Recap: Great interview with Cuban about the crypto landscape, with a particular focus on NFTs (non-fungible tokens), the underlying importance of blockchain, and how DeFi will transform the financial industry. Blockchain will transform the world, just like the Internet has... and he believes DeFi is one of the most important things to come out of the pandemic (America 2.0).
Comment: Our views closely align with Mark’s on the underlying importance of blockchain technology, and the DeFi transformation that has begun. His NFT examples are particularly enlightening and highlight how critical aspects of the world will be built on blockchain. From 48min to ~55min mark, he basically describes the CrowdCent DAO we are in the process of building - a must listen to section... The current Internet is built on advertising because payments weren't embedded; that is set to change as blockchain tech proliferates... and it looks like this new world will be built on ETH.
Recap: Biden came out with an executive order focused on 'securing' the US' critical supply chains, with a focus on: 1.) pharmaceuticals 2.) semiconductors 3.) rare earth minerals 4.) battery technologies
Comment: The announcement foots with our expectations (see last week’s Curation). Energy and money are two intertwined massive markets of paramount geopolitical importance. The US' hegemony (Petrodollar system) is currently being challenged, and this order highlights efforts to defend the current system. Semiconductors are the new oil; they are critical building blocks in technology, notably all things 'electric.' Rare earth minerals and battery technologies are two other critical components of the alternative energy supply chain - the new frontier as we shift away from fossil fuels. As oil becomes less important, the US dollar loses power on the margin... the US needs to re-shore and control these ‘new’ critical supply chains.
CrowdCent Thoughts & Predictions
Additional commentary updated from mid February 2021 here
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Look forward to more updates soon - the future is here...
Jason & Ryan