The Hoot #17

Scatt's Seeds for Thought:

🌱 The Oracle of Osaka 🇯🇵

🌱 a16z's Latest 'State of Crypto' 📊

🌱 Bank of England Creates A Digital Pound 🤔

🌱 Putin Loves Crypto Mining ⛏️ 🇷🇺

Meme of The Week

Year-to-date Market Performance:

• S&P 500: 7.77%

• Dow: 1.07%

• Nasdaq Comp.: 15.83%

• Bitcoin: 83.42%

• Ethereum: 74.50%

• Scatt Capital’s Fortune Strategy: 40.53% (Since Inception: 36.19%)

• Scatt Capital’s Flight Strategy: 10.26% (Since Inception: 10.26%)

• 7-Day Change in Crypto Market Cap: +$92bn

• Bitcoin BROKE $30k last week AND Ethereum BROKE $2k- both were key resistance levels!

• CPI came in at a 5.0% increase Year-over-Year, vs. an expected 5.1%. Core CPI came in inline with expectations (0.4% MoM). This is the 9th consecutive month we’ve seen declines in inflation - things are on the up!

• PPI for March came in at 2.7%% YoY vs. an estimated 3%, with core PPI coming inline with estimates. This is GOOD news, people - a lot better than where we were 12 months ago.

• Retail Sales for March came in at -1.0% MoM vs. estimates of -0.5%. Consumers spent less than estimated… 'caution' seems to be the word of the year so far.

• Minutes from the last FOMC meeting showed that all officials backed a 25bps rate hike in March (good... there's NO doves or hawks); they project a "mild recession" starting in late 2023; and all officials backed the continuation of balance sheet reduction (drying up the liquidity they injected during covid).

• Data for the Week Ahead: HUGE EARNINGS WEEK (CHECK CALENDAR HERE); Housing Starts (March); Existing Home Sales (March)

The Oracle of Osaka 🇯🇵

Warren Buffett, widely known as the 'Oracle of Omaha', is unofficially changing his nickname to the 'Oracle of Osaka'. He and his business, Berkshire Hathaway, are ramping up investment efforts in Japanese businesses. In a recent interview with Nikkei (Japanese newspaper) Warren Buffett stated that he intends to add to his existing Japanese investments, and that he's incredibly proud of the performance so far. Back in 2020, Berkshire disclosed that it had acquired ~5% in each of Japan's top 5 trading houses (Itochu, Mitsubishi, Mitsui, Sumitomo, & Marubeni). They then increased their stakes in November. Later in the interview, he then also goes on to mention that they are considering additional investments in other Japanese companies 👀

This is pretty big news, folks. From a monetary policy perspective, Japan 🇯🇵 is a stand-alone in that they are one of the few (if not the only) countries that have adopted an 'easy' or expansionary policy. It's yield curve control - a core pillar of its policy implementation - has come under extreme market skepticism, particularly in an internationally-high inflationary environment, and with other major central banks raising interest rates 😬

So does Buffett know something that the rest of us don't? 🤔 Well, yes probably several things - he's a billionaire for s*** sake. But jokes aside, part of his investment thesis is that he's 'greedy' when other people are fearful, and vice versa (no, it's not just a profound quote - he actively applies this) ✍🏼

a16z's Latest 'State of Crypto' 📊

Andreessen Horowitz (aka a16z) is likely considered the most prominent venture capital fund in the world. They are renowned for being early investors in the likes of Facebook, Airbnb, Lyft, Coinbase, Robinhood, Instagram, Skype, & many others when they were just start-ups ✍🏼 Point being, they're seriously on top of things and have a huge community with a wide reach. They, along with many other VC funds, have been actively involved in the crypto & blockchain-related space over the last 3-5 years, betting on who they think will emerge as winners. In addition to writing checks, they've also done their own research which is summarized in their annual letter, the 'State of Crypto'.

Don't worry about reading it... here are the key takeaways:

• The number of ACTIVE crypto addresses (crypto wallets) hit an all-time high (15m), twice the number in March, 2021 ✌🏼

• Ethereum consumes 0.001% of the energy that Youtube consumes. ETH now has unreal utility, AND is environmentally friendly too - that's something we can get behind 🤝🏼

• Layer 2's (the networks built on top of Layer 1's like Ethereum) made up around 7% of Ethereum's fees. 12 months ago this figure was at 1.5%... Sure, Ethereum might be increasingly expensive to use, but L2's like Polygon, Optimism & Arbitrum are expanding quickly offering a more efficient and cost-effective alternative 📈

• The number of people actively developing in the space has consistently risen since 2020. More people working on it = More innovation & growth 👊🏼

• And in my eyes the most crucial point: The U.S. may not be a leader in the Web3 space. More than a quarter (26%) of developers LEFT the U.S. between 2018 and 2022 due to regulatory confusion and threats 👎🏼

a16z also released a 'State of Crypto' Index which can be used to track the overall crypto market's health 🩺🩻 Check it out here.

Bank of England Creates A Digital Pound 🤔

Unlike the U.S., England & many European nations have had a friendly approach to crypto, and have welcomed it with open arms 🤗 Well, maybe not open arms, but half-open (still better than Uncle Sam). The Bank of England has recently announced that they're looking to hire a team of up to 30 people ("experts") to help them develop a central bank digital currency, or CBDC for short. CBDCs have been spoken about before by other government officials, but so far only 9 countries have launched one (8 of them are in the Caribbean & 1 in Africa) 🪙

Before you get too excited... nothing has been set in stone just yet. We're still a while away from the BOE establishing 'Britcoin' (I'm sorry I just had to...). And even when they do, there will likely be a catch somewhere knowing these power-hungry politicians 👀 Nevertheless, we'll take the win for now... it's awesome to see a 1st world country starting to take this seriously 🙌🏼

Putin Loves Mining Crypto ⛏️🇷🇺

Russia has been in the news a lot over the last 12 months, for ALL the wrong reasons. This time it's a little less about the war itself, and more about economics. As of last week, Russia just became the 2nd largest crypto miner in the world 🌏 displacing Kazakhstan. According to a report from BitRiver (the biggest miner in Russia), the Russian Federation attained a mining power of 1 gigawatt during Q1 '23 ⚡️. The U.S. still remains the biggest miner in the world boasting an annual capacity between 3-4 gigawatts 🇺🇸 The U.S. really have that "I'm not competitive I promise" attitude... and 1 minute later come screaming past you 🏃🏻‍♂️💨

Why the increase though? Well it's likely linked to the war with Ukraine (what isn't?), and how the West attempted to shut them off from the financial system. The Russian Ruble has fluctuated wildly since the onset of the invasion, likely questioning its stability going forward. They were then forced to look into an alternative means of exchange, like bitcoin & other forms of crypto 🪙

If you like receiving market updates, check us out here on LinkedIn, or here on Twitter 📊

See you next week 🦉

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.