Sushiswap Ports Over $800 Million, Scott Melker Early Access and Paying to Lend Cash #13
Market Meditations | September 11, 2020
Today we give early access to our podcast with Scott Melker, we discuss negative rates following the market anticipation of an interest rate cut and more economic pain and continue the Sushiswap drama
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We decided to make today’s edition free to celebrate Koroush AK partnering with crypto.com. As far as my audience is concerned this partnership simply means I will make more content, higher quality content while occasionally sharing a terrific product that I genuinely believe in.
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Generosity and Success: Veteran Trader Ex DJ/Producer Scott Melker Shares the Dark Side of Becoming a Crypto Influencer
Are You Ready to Start Paying to Lend Cash?
Dow Jumps 200 Points in Choppy Trading as Tech Tries to Bounce Back Again
Drahi Offers $3 Billion to Take European Telecom Empire Private
UK Secures Agreement With Japan on First Post-Brexit Trade Deal
Tether Launches on Solana Blockchain
Sushiswap Successfully Ports Over $800 Million Worth of Tokens From Its Rival Platform Uniswap. Founder Returns Funds to the Project’s Treasury
Lagarde Says Central Bankers Are Nearing Decision on Whether to Issue a Eurozone Digital Currency
Choosing Between the Hard and the Easy Option
#5 Generosity and Success: Veteran Trader Ex DJ/Producer Scott Melker Shares the Dark Side of Becoming a Crypto Influencer
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Today’s edition will be headlined by my podcast with the incredible Scott Melker.
This episode means a lot to me. 30 days ago, while Scott and I were connecting over skype, he told me I should take social media more seriously and start a podcast + newsletter. A week later Market Meditations was born and now here we are. Scott selflessly motivated me to set out on this path and I will be forever grateful.
For those who don’t know Scott is the author of The Wolf Den Newsletter and host of The WOAS Podcast. He’s also an active investor/trader with over 20 years of experience. He’s been featured on Bloomberg, The Wall Street Journal, The New York Times, Coindesk and amongst others.
He’s one of the most genuine human beings you’ll ever meet. He’s an open book that shares with us the dark side of being a crypto influencer, trading tips, insights into his mindset and much more!
Are You Ready to Start Paying to Lend Cash?
The Debt Management Office sold 6 month bills with an average yield of minus 0.0005% in an auction on Friday, Bloomberg reports. It’s the first time investors bought the short term debt at a negative rate. Essentially, investors agreed to pay the U.K. government for lending it cash for short periods, a sign they anticipate a Bank of England interest rate cut and more economic pain.
Negative rates 101. Negative rates are a monetary policy tool that is reserved for when the economy is underperforming. They are a measure to disincentive savings and encourage spending. Spending has a multiplier effect: you buy a carton of milk, the store takes a cut, the farmer takes a cut and those cuts enable them to pay their employees who go and buy a carton of milk and so on and so forth. The success of expansionary monetary policy is often measured by its inflationary effects. Many run for the hills when they hear the world inflation but a bit of inflation is a healthy sign of exactly that positive multiplier effect. Negative rates literally mean that you will be charged to save money and that you will be rewarded for borrowing money. It should cast serious doubts over whether it makes sense to keep a high proportion of money in your savings account (do not forget that savings accounts also have taxation charges).
The drop comes after trade talks between the U.K. and the EU frayed, spurring bets the BoE may cut its main rate by almost 20 basis points by the end of the next year. The yield on the 2 year government bonds fell this week to record negative territory, and the average rate on one of the 3 month bills are close to slipping below zero for the first time since 2017.
The lack of success with regards to Brexit is just one of the reasons to be concerned about the prospects of the U.K. economy. There is also: the government’s plan to end the furlough program (and the impact on unemployment figures) and not to mention the rising number of coronavirus cases in the country. They dampen the optimism over the 6.6% monthly growth in GDP in July.
BoE Governor Andrew Bailey did say last month that the central bank has plenty of room to add more monetary stimulus to fight the U.K. economic slump. 3 month sterling LIBOR (the rate banks can borrow from each other) is also below the BoE benchmark, a move that often precedes a rate cut. Most funding rates as far out as 12 months are at all time lows.
The markets are already beginning to factor in negative rates and given the evidence above, it seems sensible to understand your personal exposure and resilience in the face of negative rates.
Dow Jumps 200 Points in Choppy Trading as Tech Tries to Bounce Back Again. Stocks rose in another volatile session on Friday as tech once again attempted to rebound from its recent slump. The Dow Jones Industrial Average traded 237 points higher, or 0.9%. The S&P climbed 0.7%, and the Nasdaq Composite traded 0.5% higher. Shares of Facebook, Netflix, Alphabet and Microsoft were up slightly. Apple and Amazon, however, slid 1.1% and 0.4%, respectively. Recently, the tech sector experienced a massive pullback that saw the Nasdaq drop 10% in just 3 sessions, dipping into correction territory. Read more.
Drahi Offers $3 Billion to Take European Telecom Empire Private. Billionaire Patrick Drahi is offering 2.5 billion euros ($3 billion) to shareholders to take Altice Europe NV private. This is in a bid to end 5 years of share volatility at the French telecommunications company. Drahi, the founder and largest shareholder, will pay 4.11 euros a share through his Next Private vehicle, the companies said in a statement on Friday, valuing the entire company at 4.9 billion euros. The offer represents a 24% premium over Thursday’s closing price, and the shares jumped as high as 4.22 euros in early trading Friday. Analysts have commented that the offer undervalues the company materially, and so recommend that the shareholders do not accept the offer. Read more.
UK Secures Agreement With Japan on First Post-Brexit Trade Deal. Britain secured its first big post-Brexit trade deal on Friday, an agreement with Japan which it hailed as ‘historic’ as it struggles to agree on trade with its closest trading partners in the European Union. Britain said digital and data provisions in the agreement would help British fintech firms operating in Japan. Since formally leaving the EU in January, Britain has focused on negotiating new trade deals with countries around the world although experts say they are unlikely to replace exports lost to the EU if a deal cannot be reached with Brussels. Other negotiations, especially with the United States, have progressed more slowly. Read more.
Tether Launches on Solana Blockchain. Popular but controversial stablecoin project Tether has launched its USDT token on yet another blockchain. After the news that Tether would integrate with layer-2 solution OmiseGo two weeks ago, Solana is the next blockchain on which Tether will be supported. Solana is said to be way faster and cheaper than Ethereum, with a capacity of over 50,000 transactions per second and fees often less than $0.00001 per transaction. Tether CTO Paolo Ardoino told The Block that USDT will be integrated with three more blockchains in the near future. Read more.
Sushiswap Successfully Ports Over $800 Million Worth of Tokens From Its Rival Platform Uniswap. Founder Returns Funds to the Project’s Treasury. On Monday, I wrote about Sushiswap’s heist in detail and yesterday, the successful migration of liquidity from Uniswap to Sushiswap occurred. Over 800 million tokens were ported and after a full first day of being live, SushiSwap’s Twitter account reported that the protocol had locked up over $1 billion worth of tokens, making it the largest DEX by liquidity. Right before finalizing the newsletter, the founder of the project, pseudonymous dev Chef Nomi, announced on Twitter that he had returned the stolen funds worth $14 million to the project’s treasury. SUSHI token price reacted positively on the news and instantly jumped up ~15%. What a rollercoaster! Read more.
Lagarde Says Central Bankers Are Nearing Decision on Whether to Issue a Eurozone Digital Currency. Central banks from all around the world are thinking about introducing their own digital currencies. During the European Central Bank monetary policy meeting on Thursday, Christine Lagarde, the head of the European Central Bank, said that it would soon be made public whether the Eurosystem will start working on a digital version of its currency. This comes months after Lagarde first inclined that the ECB was working on such an initiative, according to The Block. Read more.
Choosing Between the Hard and the Easy Option
Always making the easy choice doesn’t get us far ahead in life. Spending instead of saving, procrastinating instead of actually starting to work, ordering processed foods instead of cooking our own healthy meals, everybody recognizes that we sometimes gravitate towards the easy solution instead of choosing the one with the best long-term result. Our biology is wired to chase instant gratification and quick dopamine hits but by doing so, we oftentimes end up negatively affecting our physical or mental health.
Naval Ravikant’s personal trainer has a famous quote that perfectly encapsulates this: “Hard choices, easy life. Easy choices, hard life”. If we always take the easy route, we accumulate the negative effects which eventually compound into a real problem. Take working out as an example. Not working out for a week won’t have a direct negative effect on your body. Never work out in your life and you’ll likely be confronted with all sorts of serious health problems before you actually grow old. Our bodies deteriorate silently until it’s too late to actually change it. We should prevent, not react.
Instead of choosing comfort, we should go with the harder option more often. Spending time at the gym likely won’t make you happy at the time, but by taking care of our bodies we actually end up having more energy to do other things later. We make our lives easier by putting in the effort to improve it. When making a decision, remind yourself to ask whether or not you’re making the harder choice once in a while. You’ll not only get ahead of the majority of people, your own life will become easier when you find a balance between spending and saving, staying home vs going for a workout and eating out vs cooking your own meals.