Market Talk, October 3rd 2021

(Edition #26)

Market Talk

October 3rd, Edition 26

Good morning,

Market Talk is where I round up some of the data from public markets over the past week in a bitesize format.

Each Sunday I will share:

• The best pieces of company-related insights I have consumed over the week

• The greatest articles I have read during the week

• One stellar podcast or interview


For Subscribers

This coming week I will share my write-up on Clearwater Analytics for the company spotlight segment on Tuesday.

Substack notified me that I will be granted access to a beta for embedding PDFs directly into substack, so I am hoping I get access in time for that.

Following that, I will be sharing my discussion surrounding my own portfolio on Thursday, as Q3 has now come to a close.


📈 Market Action 📉

Here are your quick updates from the past week for various asset classes.

Global Equities

Source: (FinViz)

Exchange-Traded Funds

Source: (FinViz)

The S&P 500

Source: (FinViz)

Sectoral ETFs for the US

Source: (SPDRIndustryETFs)


🌎 Global Indices 🌎

The Americas

Source: (Koyfin)

Europe & UK

Source: (Koyfin)

Africa & Middle-East

Source: (Koyfin)

Asia

Source: (Koyfin)


🛢️ Commodities 🛢️

Energy

Source: (Koyfin)

Metals

Source: (Koyfin)

Agricultural

Source: (Koyfin)


💷 Major Currencies 💷

FX rates are correct as of the time of publishing.

🔇 US Market Sentiment 🔇

Fear & Greed Index

The CNN Greed and Fear Index measures market sentiment based on seven factors; momentum, price strength, price breadth, put/call ratios, junk bond demand, volatility, and safe-haven demand.

The current reading stands at 27 down from 32 last week.

Source: (CNN)

Volatility

The CBOE VIX stands at 21.15, up from 17.75 the week before.


Major Earnings for the Coming Week

Some of the major earnings for the upcoming week, compiled by Fincredible.

Source: (Fincredible)

Upcoming IPOs

Source: (Nasdaq)


🕵️ Company Insight 🕵️

Here, I will share a handful of interesting, company or industry-specific, pieces that I have read over the last week.

Admittedly, I have been hyper focused on the Clearwater write-up this last week, so haven’t been reading too much headline news.

1) Square: TikTok Partnership

Source: (Square, Barron’s)

TikTok users can now send their followers directly from videos, ads, or shopping tabs, on their profiles to an online Square store.

This integration will see Square open up its seller tools to over 1B Tik Tok users in a move that offers new top-funnel opportunities to existing Square sellers, as well as attracting potential new sellers directly from TikTok.

TikTok For Business users can now quickly and easily set up a free, fully integrated Square Online store and start selling right away. This feel like low hanging fruit for Square. This comes after Square has been making strides towards integrating their seller and cash app ecosystems further by acquiring BNPL provider and aggregator, Afterpay, and launching the Cash App Pay service. I recently wrote about this, here.


2) Twitter: NFT Verification, Lighting Bitcoin Tips, and Professional Accounts

Source: (Twitter, Tech Crunch, Tweet)

Product velocity at Twitter has been great this year. This is an objective truth, regardless of whether or not you like the platform, the business or the stock. Here are a handful of the latest product enhancements to bless our timelines.

Professional Accounts: Starting this week, Twitter began to roll out limited professional accounts for users who wish to build a brand identity on the platform. Selecting a professional account will grant access to Twitter Ads, Quick Promote, Advanced Profile Features and Twitter’s “future efforts around shopping”.

Users have always had access to ads and promotions, so the advanced profile features and Twitter’s long-awaited commerce integration is the tea here. In time, users will be able to display all three of the below modules (about, shop and newsletter) on their page.

Whilst all three have been tested and partially rolled out, a wide coverage mass rollout is yet to take place.

Lightning Bitcoin Tips: Tipping on Twitter (whether crypto, Cash App, Venmo or Paypal) has been around for a few months now. The use of lightning wallets, however, is relatively new and is popular amongst crypto enthusiasts due to lower transaction fees.

NFT Verification: Twitter have stated in the past they intend to allow for some form of collectables to exist on user’s profile pages. In a mock-up shared by Justin Taylor, Head of Product Marketing at Twitter, he would show that users may soon be able to connect an NFT wallet to verify their NFTs on Twitter with an Ethereum verification stamp to prove it has been minted on the ETH blockchain.

For more insight into these features, as well as other updates related to filtering and safety measures, I recommend this Tech Crunch piece.


3) Uber: Is Everything Destined to be a Super App?

Source: (Newswire)

Uber look to be carving out another potential growth vector this Halloween as they experiment with the sale of pumpkins (and other Halloween goods) this October with customers across Los Angeles, San Diego and West Palm Beach directly from the UberEats App.

Uber’s head of grocery and new verticals, Raj Beri, would state that “Our goal is to make Uber a destination that customers can rely on to get whatever they need when they need it, so creating a Holiday Shop that offers festive items for all types of celebrations was a no brainer”.

It is said that after Halloween, the shop will transition into upcoming holidays and continue to rotate seasonally while it expands to more markets.

Perhaps a sign of what is to become of these food couriers come last-mile delivery services. In the UK, I can now order the usual hot food from a range of restaurants, but I can also my weekly grocery shop from most of the largest 5-6 supermarkets in my city. China has nailed this aspect of national supply chain leverage with some providers, such as JD, offering same-day delivery in parts of the State.


4) Zoom: $15B Acquisition of Five9 Cancelled

Source: (Ark Invest, CNBC, Zoom)

Zoom’s attempt to purchase Five9, the cloud contact centre software maker, for ~$14.7B in an all-stock offer has been rejected by Five9 shareholders.

The deal, which was set to be Zoom’s first $1B+ acquisition, was set to become the second-largest tech acquisition of the year. It appears that shareholders rejected the deal after the advice of proxy advisory company (ISS) suggested that voting the proposal down would be the correct option.

Founder and CEO, Eric Yuan, would state that Five9 “presented an attractive means to bring to our customers an integrated contact centre offering” but also remarked that, in the face of the rejection, “it was in no way foundational to the success of our platform, nor was it the only way for us to offer our customers a compelling contact centre solution.”

The team over at Ark Invest, who clearly have a natural bias towards Zoom, wrote an interesting rebuttal to the ISS team. You can find that here.

A great read for an opposing perspective.


📰 Brain Food 📰

Here is a shortlist of a few interesting pieces that I have read over the course of the week, to feed your mind.

Note, these articles are not numerically listed in order of perceived value.

To access the suggested article, click the purple link after the source subheading.

1) Harvard, a Media Company

Length: Moderate Read

Source: (The Generalist)

Mario Gabriele posted the below table on Twitter during the week, showing how Harvard Business Review compared to the NYT, Economist, Forbes, Fortune, and Axios.

After catching my curiosity, the team at the Generalist now had my attention. This piece explores the 100-year history of Harvard’s media empire, how they modernised it for the 21st century, and where it may be heading in the future.

A fun and interesting piece of work, that I think anyone will enjoy.

“If you only have a couple minutes to spare, here’s what investors, operators, and founders can learn from Harvard, as a media company.

There are different paths to success. The Harvard Business Review (HBR) was founded in 1922 and struggled to breakeven for more than 25 years. Today, it’s one of the world’s most impactful media organizations. 

Media can turn expenses into revenue. Plenty of businesses devote time to content marketing. But by building a media arm worth paying for, companies are able to turn marketing expenses into a revenue stream. 

The next HBR could be built by a startup. Edtech companies and fundraising platforms look well-positioned to run the Harvard playbook and create a durable, valuable media arm. 

Adapt or die. HBR adapted its content and form multiple times over its history to appeal to contemporary readers. It did so while preserving its foundational value.”

2) Mistakes were made (I did a dumb thing)

Length: Light Read

Source: (Neckar’s New Money)

As someone who likes to write about their own mistakes, I applaud those who also engage in the, sometimes painful, art of self-reflection.

In this piece, Frederik Neckar reminisces about the emotional regret caused by flirting too closely with SPACs, as well as sharing some lessons learned from the Druckenmiller during the 2000 tech bust.

“Looking at my account triggered an accelerated grief cycle. This can’t be happening, I can’t believe this is happening, maybe I can fix it by sacrificing a goat, why does this always happen to me, and, oh my god, I fucked up again.

Facing an already tenuous writing career, I experienced visions of a future in which I told strangers about how I had gambled away my savings before retiring to the nearest tent city. I couldn’t think straight, struggled to fall asleep at night, and was not interested in waking up and facing the day.

Last year, uncertainty had led me to flee to safety. This year, trying to fix my past mistake led me to overtrade and take on way too much risk. I turned to friends for advice with the words: “Hey. I think I did a dumb thing. Again.”

3) Moat Erosion Starts Behind the Castle Walls

Length: Light Read

Source(Intrinsic Investing)

Last week I shared a piece from Ensemble Capital discussing the mortgaging of one’s moat. This week, the topic of discussion is moat erosion, and how this often spawns from within the business itself.

“On the defensive side, we want to own companies we believe will maintain (and ideally widen) their economic moat for the next decade and beyond. If we believe the company is culturally agile, run by exemplary stewards of capital, and cares for all its stakeholders, then we’ll be more confident it can keep competition at bay. However, if one of our companies is rotting from the inside, we want to get out as soon as possible.”

4) China Has Built The World’s Most Expensive Silicon Carbide Fab, But Numbers Don’t Add Up

Length: Light Read

Source(SemiAnalysis)

This is really more of a “hey, look at this” rather than a “hey this particular article was amazing” kind of recognition this week (it was a great article though). Last week I discovered SemiAnalysis after having a brief call with the author Dylan Patel.

Here, Dylan shares free research at a regular cadence on all things semiconductor. I have shared a few extra items in the “other items I read” segment.

I wanted to share this newsletter for any readers who have a keen interest in the world of semis, or those who are looking to learn more.

“China has consistently pushed large amounts of money into semiconductors via tax policy, subsidies, and loans. This has resulted in the entrance into the supply chain being sped up, but it isn’t all pretty. Wuhan Hongxin Semiconductor Manufacturing (HSMC) is the most public case of a kerfuffle. Money was raised but squandered and operations never commenced. A $20B project resulted in a mostly empty cleanroom and a trail of unpaid employees and contractors. Creditors and investors were stiffed, and the company eventually collapsed.”


Other Items I Read This Week:

• SemiAnalysis: Chinese NAND Apocalypse and Memory Oligopoly Woes

• 1 Main Capital: Q2 FY21 Letter

• A Wealth of Common Sense: Are Rising Interest Rates Bad For Tech Stocks?

• Collaborative Fund: History's Seductive Beliefs

• Value Stock Geek: Q3 Portfolio Review

• Entertainment Strategy Guy: Is Disney Finally Bigger Than Netflix In The US? Yes…


🍬 Ear Candy 🍬

There is a huge range of Podcasts to listen to, and the choice can feel quite saturated at times. Here, I will share one podcast I listened to during the week, that I feel is worth your time.

Rui Ma - Talking China

The Business Brew

Last week Bill Brewster would host Rui Ma on the Business Brew to talk about all things China. Rui has spent over a decade as an investor and analyst in Chinese tech as well as being the host of echBuzz China.

In this discussion, they break down some of the myths that Western investors have about China, discuss the ed-tech clampdown, and offer up a refreshing perspective on China’s investment scene. I really enjoyed this one.

On an unrelated, but still somewhat related, note I discovered a newsletter publication named ‘China Talk’ during the week, which shares weekly news on China’s political, tech, and business environment. This might be of interest to some readers.

Host: Bill Brewster

GuestRui Ma


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Disclosure

These are opinions only of the individual author. The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company. All content is purely subjective and you should do your own due diligence.
Occasio Capital Ltd makes no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece. Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice. Any projections contained in the Information are based on a number of assumptions as to market conditions and there can be no guarantee that any projected outcomes will be achieved. Occasio Capital Ltd does not accept any liability for any direct, consequential or other loss arising from reliance on the contents of this presentation. Occasio Capital Ltd is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.