The Hoot #10

Scatt's Seeds for Thought:

🌱 Scatt 🦉  

🌱 The SEC has Crypto's Number 🫵🏼

🌱 The First Digital bond 💲

🌱 Paris Hilton & The Metaverse 💌 📲

Meme of The Week

Year-to-date Market Performance:

• The S&P 500 is up 3.24%

• The Dow is down 1.00%

• The Nasdaq Comp. is up 8.87%

• Bitcoin is up 39.77%

• Ethereum is up 33.64%

• The Fortune Strategy Strategy is up 21.57% (17.23% since inception)

• PCE is the Fed's favorite inflation gauge. We received data on Friday showing a hotter-than-expected figure of 4.7% YoY, versus an estimated 4.3%. Stubborn inflation = higher rates.

• US credit card debt is at its highest levels ever.

• Consumer Spending data for January showed 1.8%, versus an estimate of 1.4%. They say don’t bet against Uncle Sam, I say don’t bet against the American consumer!

• Initial Jobless Claims came in 192,000 vs an expect 197,000. We just can't escape this tight labor market! Citi says its thanks to the service (vs. goods) sector growth.

• Existing Home Sales for Jan. came in at 4m vs. an expected 4.02m.

• Mortgage Demand is at it’s lowest level in 28 years.

• 73.9% of Scatt Capital's portfolio companies have beaten earnings expectations.

Scatt 🦉

You've seen him stealing The Rock's tequila 🥃, munching on popcorn to Microsoft boxing 🥊 Google in the AI race, and you've even seen him blowing his Valentine a kiss 💋 But who is this unique character? 🪶 Scatt is our Eurasian Eagle-Owl 🦉, a very handsome one might I add. But my dear friend, please don't be fooled. He is no ordinary Eurasian Eagle-Owl - he is a MARKET CRUSHING bird 📈🦉 

At Scatt Capital, we manage 2 different investment strategies. Both of which serve to facilitate successful integration between investors, cryptocurrencies and the digital asset realm.

Find Your Fortune 

The Fortune Strategy ⚖️ invests in an actively managed combination of both large cap cryptocurrencies, and US equities. The idea is to provide a balanced level of exposure to cryptocurrency. Not to mention, the owl symbolizes ‘Fortune’🦉.

Fight or Flight?

Fight it or fly with it, but crypto is here to stay. The Flight Strategy 💸 invests in a broad spectrum of cryptocurrencies, with the aim of providing a passive, low-cost way of investing in the crypto space as it takes off 🚀. Our goal with this is to create a mutual fund, but for crypto (call us the Vanguard of Crypto).

FYI: With this, we plan to take your investment experience to new heights 🏔️. Both of these strategies are in the process of becoming registered funds, but as of writing are not. You'll be able to track their performance in the market section 📈.

The S.E.C. has Crypto's Number 🫵🏼

The Securities Exchange Commission has declared war on crypto ❌  and so far there are 3 different BATTLES taking place. 

THE FIRST: Kraken (one of the biggest crypto exchanges in the world) is being forced to close its staking services as per orders of Gary Gensler, Chairman of the S.E.C. PLUS they are fining the exchange $30 million. There were a few rumors circling that the SEC had their eye on staking services, pushing Brian Armstrong - the CEO of Coinbase - to tweet that it would be a grave 🪦 path for the U.S. to take. For reference: Staking is an easy way for people to earn crypto, without buying or selling the asset itself. Now, the whole argument of whether or not the S.E.C. clamps down is based on whether they're able to prove it is classified as a 'security' i.e. are the returns dependent on what other people do?

Rumour has it that Coinbase's staking service is next on the S.E.C.'s list.  For reference, staking-related services made up about 10% of Coinbase's total revenue in 2022 😬

THE SECOND: A New York regulator ordered Paxos to stop creating more tokens. Now, we all now Binance, right? They have a native stablecoin (crypto coins that are pegged to the dollar) on their exchange called BUSD (Binance USD) - which is now the 3rd largest stablecoin by market cap, and accounts for 1 third of the exchange's trading volume ❗️ The curveball here is that Paxos is the company that creates BUSD 👀 The result? Binance has had the largest OUTFLOW of funds from a crypto exchange SINCE FTX went bust 😳

THE THIRD: The S.E.C. is coming after HEDGE FUNDS. They're trying to introduce new legislation 📖 that would make it harder for crypto firms to offer custodial services (the holding of assets for money managers like hedge funds, private equity firms, VC's, pensions etc.). IF this passes (A BIG 'if' & lots of hoops to jump through before that), it could remove A LOT of liquidity from these big exchanges 💧 making it harder for everyday investors to buy & sell crypto. 

Digital Bond 💲

Siemens is the third largest company on the German exchange. They're a tech-focused company specializing in infrastructure, transport & healthcare. Now, Polygon is a blockchain network built on top of the Ethereum network, with their own coin: MATIC. They are what is known as a ‘Layer 2 scaling solution’. These are basically just projects that run on top of existing blockchains, and aim to increase the efficiency and speed of the underlying blockchain.

As is common practice, Siemens issues bonds as one its many methods of raising capital. We just got news that Siemens is issuing its first ever 'digital bond' (worth $64m) via the Polygon network, citing reasons such as reduced paperwork & the ability to reach out directly to potential purchasers. This is TEXTBOOK use-case for the blockchain and crypto, and it's just been endorsed by the 3rd largest German company 💥 🤯 This is HUGE for crypto, and a feather in Polygon's cap 🪶 In a press release, the company stated that paper-based certificates; central clearing authorities, and banks acting as intermediaries (all components in a traditional bond issuance) are UNNECESSARY.

Polygon after carrying everyone in the industry 😮‍💨

This isn't Siemens' first experiment with the blockchain. At the end of 2021, they partnered with JPM and developed a blockchain program which facilitates in-house payments 🧾.

 Parisland

Paris Hilton and the metaverse. There are 2 phrases you never thought would be used in the same sentence. The Sandbox is a virtual world where players can build, own and monetize their various experiences. The virtual world has a strong partnership with the Ethereum blockchain, thus making the opportunities endless given Ethereum's versatility (such as creating & selling NFTs, peer-to-peer payments, building decentralized apps etc.)

Now, Paris Hilton has partnered up with The Sandbox and will be hosting Parisland. Described as a "romantic adventure set on a tropical island", Parisland is an in-game dating reality show - and will be hosted by Paris herself. It launched the day before Valentines, and will run for 1 month. Players will be able to eat at the local restaurant on the island, flirt with other players, and even shop for and plan their weddings, weddings at which Paris Hilton will perform. 

Welcome to the future, ladies & gentlemen 😆 Let's see how this all unfolds...

We reached double digits #10 🫶🏼 Thank you for your continued support.

I'll see you next week for another update. 🦉

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.