Hello, hello! 👋🏻👋🏻
Welcome back to another edition of Tidbits covering all the recent things worth talking about in business, media, and technology.
🗺 World Affairs + Geopolitics
#1 Biden Says Putin Can’t Remain in Power After Ukraine War
U.S. President Joe Biden castigated Russia’s leader, Vladimir Putin, in a speech in Poland on Saturday, repeatedly calling him a “dictator” and saying that he “cannot remain in power” after the Ukraine invasion.
Biden implored the world’s democracies to steel themselves for a protracted conflict with Putin’s government, his latest plea for allies to hold the line against an adversary he labeled a “butcher.”
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He concluded his speech by remarking, “For God’s sake, this man cannot remain in power.”
It wasn’t clear if the line had been in the text of the speech, and a White House official later said that Biden meant Putin could not be allowed to exercise power over his neighbors or the region and that the president was not calling for regime change in Russia.
Source: Bloomberg
Biden seems to have caused a minor (major?) diplomatic crisis. Although he seems to have said what many Western elected officials already believe, it’s not helpful for negotiating a diplomatic resolution with Putin. But is a diplomatic resolution even possible? The West has a lot more leverage over Putin now than a month ago given Russia’s weak performance in Ukraine. Will Putin accept less given his position is a lot weaker?
The Ukraine war seems to be in a near-term equilibrium where all sides take stock of their positions and reassess their plans. Ukraine appears to have done a lot better than expected (most expected Ukraine to lose within days / weeks). Russia actually seems to be losing significant manpower and equipment…and will likely have its military might permanently impaired. US / EU relationship has strengthened. Russia / China relationship has possibly weakened (?).
What does a resolution / exit strategy looks like from here?
#2 Germany Braces for Less Gas as Russia Demands Ruble Payments
Germany’s economy minister, Robert Habeck, said Berlin has triggered the early-warning stage of a contingency plan that aims to insulate the country against any possible reduction in Russian gas deliveries, adding that Russian supplies continue uninterrupted.
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The announcement comes after Russia’s government said last week that it would only receive rubles as payment for gas exports. Gas contracts between German and Russian companies are denominated in euros. Western sanctions imposed on Moscow for its invasion of Ukraine prevent companies from purchasing rubles.
Source: WSJ
Yep – as expected. When western sanctions were first announced, there was a carveout for Russian oil and gas. Since Europe still depends on Russia for oil and gas, the idea was to continue to allow Europe to buy Russian oil and gas, even while banning most other transactions with Russia.
At the time, I questioned whether global leaders truly understand the purpose of Money. Yes, Europe would want to keep buying oil and gas and give Russia Euro (or USD) for it, but why would Russia want those currencies if they can’t spend it?
It’s only natural that Russia would want to get paid in a currency they can use (e.g. Rubles, RMB, gold, etc).
#3 U.S., NATO Preparing for Russian Biological, Nuclear Incidents
The U.S. is working with NATO allies to prepare for the possibility Russia deploys biological, chemical or nuclear weapons as part of its invasion of Ukraine, a senior Biden administration official said Thursday.
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Biden, speaking at the White House Wednesday, said there’s “a real threat” that Russia will use chemical weapons.
Source: Bloomberg
Ideally for the West, Russia accepts less (given its weakening negotiating position) as everyone works towards a diplomatic resolution.
However, Russia could try to escalate its way out of the situation. While Russia’s leverage has declined in almost all dimensions, it still holds the nuclear / mass destruction card. Before the war began, many people questioned the quality of US intelligence suggesting Putin was preparing to invade Ukraine. It turns out the intelligence was spot on. While I am skeptical about Russia’s desire to escalate into the nuclear / weapons of mass destruction realm, I think it makes sense to pay attention to what intelligence circles are saying just because they seem to be wired into the right places at the moment. If US intelligence thinks Russia could deploy nuclear, biological, or chemical weapons, it might make sense to at least consider the scenario.
#4 EU Clinches US LNG Deal In Bid To Curb Reliance On Russian Gas
The invasion of Ukraine by Russia, Europe’s top gas supplier, pushed already-high energy prices to records and has prompted the EU to pledge to cut Russian gas use by two thirds this year by hiking imports from other countries and quickly expanding renewable energy.
President Joe Biden, who attended the EU leaders summit in Brussels on Thursday, promised the US would deliver at least 15 billion cubic metres (bcm) more LNG to Europe this year than planned before, sources familiar with the matter said.
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But since US LNG plants are already producing at full capacity, analysts said most of the additional gas going to Europe would have to come from exports that would have gone to other parts of the world.
Source: Aljazeera
This is an under-hyped geopolitical shift in my opinion.
A few years ago, it felt like the EU could be going down the path of true independence (free from US orbit). And the world could have become multi-polar (US in one sphere, Europe in one sphere, and China in another sphere). The EU saw the dangers of becoming long-term reliant on the US given unpredictable US politics, especially under Trump. And the EU had the right tools to free itself. It has a large economy (EU as a whole has an economy that is approximately as large as the US) with strong and growing ties to China. It was becoming more energy independent assuming it could integrate with Russia. For a few centuries, the EU sat atop the world, only to be defeated by its own internal divisions.
And these divisions are once again preventing it from reclaiming independence.
EU is nowhere near energy independent, and now has hitched itself long-term to the US energy ecosystem, while the Middle East increasingly tries to shift towards China. EU economic independence is also dashed as EU / China trade undergoes the same sort of national security scrutiny seen in the US. And defense is once again a major concern. While the EU fancifully ignored the need for military protection, Russia’s aggression now pushes the EU back into the arms of the US the same way World War 2 did (the alternative is to unify security needs under Germany, but I’m pretty sure the EU won’t want that as a whole).
This may just look like an LNG deal, but it’s probably the end of the EU independence experiment / plans for the next 20 years (maybe longer).
For the EU, energy, economy, security all point towards the US, again.
#5 War Got Weird
The U.S. Marines may have seen the writing on the wall; this year they will stop using tanks.
We could thus be looking at one of those epochal shifts in the way wars are fought. One example is the sinking of the British warships Prince of Wales and Repulse by Japanese aircraft in 1941, which heralded the end of surface ships as the kings of the sea. But an even better parallel might be the invention of the gun, which ended horse cavalry’s domination of the battlefield.
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So what does the battlefield of the future look like? Perhaps less of a static front, and more like a game of cat-and-mouse, with slow-moving infantry and stealthy drones hunting each other down across a battlefield the size of the whole country.
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[Ukrainian Lt. Col. Yaroslav] Honchar describes these technological battles, and Aerorozvidka’s way of fighting, as the future of warfare, in which swarms of small teams networked together by mutual trust and advanced communications can overwhelm a bigger and more heavily armed adversary.
“We are like a hive of bees,” he said. “One bee is nothing, but if you are faced with a thousand, it can defeat a big force. We are like bees, but we work at night.”
Source: Noahpinion
Fascinating article exploring how war is changing.
Long-time readers know that this is a topic of interest around here. Because wars define security. And security defines nations. And nations define capital markets.
Changing nature of war means changing nature of security. Changing nature of security means changing definitions of nations. And changing nations mean changing capital markets.
#6 Elon Musk’s Business Ties to China Create Unease in Washington
Elon Musk’s ties to China are causing unease in Washington, including among some Republican lawmakers who have been among the billionaire entrepreneur’s ardent supporters.
The concerns center on the potential for China to gain access to the classified information possessed by Mr. Musk’s closely held Space Exploration Technologies Corp., including through SpaceX’s foreign suppliers that might have ties to Beijing.
Some lawmakers also are troubled by the lack of clear lines between SpaceX and auto maker Tesla Inc., which also is run by Mr. Musk and has extensive operations in China. Tesla has developed advanced battery packets sought by the Chinese, and China has adopted a less-expensive battery technology championed by Mr. Musk.
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China is one of Tesla’s biggest markets, thanks in large part to support of China’s Communist Party and Mr. Xi. Chinese authorities gave Mr. Musk low-interest loans, cheap land and other incentives for a Shanghai facility that opened in 2019 where Tesla vehicles and battery packs are assembled.
Source: WSJ
A few years ago, we discussed how the US is often underestimated. One key argument is that US economic might is often underestimated by GDP measures because the GDP generated by US-owned assets abroad are included in foreign GDP numbers. US economic power is far, far greater than it appears. And US investors have significant stakes in many leading foreign companies. For example, even without sanctions, Russia’s economy would have been in trouble given how many US firms decided to shut down out of their own choice. The GDP generated by these companies were not included in US GDP but rather in Russian GDP.
BUT, this article also shows that this dynamic can cut both ways. With many US companies and US investors highly exposed to foreign assets, what does it mean to be a US company or US investor (or whatever country you are reading this from)? How can we know that these “US companies” and “US investors” have interests aligned with the US if their economic interests are somewhere else? These are hard questions to answer. At the end of the day, Capitalists are loyal to Money. And if the Money is somewhere else, it should make you question where loyalties lie.
This is likely one reason why China has cracked down on “wild capitalism”. If too many Chinese people derive their economic well-being from certain entities (e.g. major tech companies) or countries (e.g. US capital markets), then it raises questions about where their loyalties lie.
🤑 Economics + Markets
#7 G7 To Crack Down On Russia’s Ability To Sell Its Gold
G7 leaders have agreed to crack down on Russia’s ability to sell its gold reserves to support its currency as they launch a new effort to hinder any attempts by Moscow to evade financial sanctions imposed by the west.
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“G7 leaders and the EU will continue to work jointly to blunt Russia’s ability to deploy its international reserves to prop up Russia’s economy and fund Putin’s war, including by making clear that any transaction involving gold related to the Central Bank of the Russian Federation is covered by existing sanctions,” the White House said in a statement.
Source: FT
After the US sanctioned Russia’s reserves and caused an uproar about the “weaponization” of money, there’s been a lot of talk about the world moving away from the USD as a reserve currency and possibly towards RMB or gold. Although the world seems to be surprised the US has this kind of power, this is something we discussed around here a few years ago.
Interestingly, most analysis still seem to be missing the point. There seems to be real belief that Russia could just use gold instead of USD.
But Money is not a thing. Money is a promise. It doesn’t matter what you use to represent those promises. If the other side doesn’t want to accept your promises, it doesn’t matter if it’s paper, gold, diamonds, moon rocks, fairy fire, or pixie dust.
Whatever it is, the promises are not accepted. The G7 is refusing to accept Russia’s promises (very understandable since Russia has broken its promises over Ukraine…if Russia can’t keep its very important promises in one area, why would you accept their promises in another?). The problem isn’t the USD or the asset backing the currency. The problem is trust.
#8 Powell Is Ready to Back Half-Point Hike in May If Necessary
Federal Reserve Chair Jerome Powell said the central bank is prepared to raise interest rates by a half percentage-point at its next meeting if needed, deploying a more aggressive tone toward curbing inflation than he used just a few days earlier.
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“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” Powell said in a speech titled “Restoring Price Stability” to the National Association for Business Economics on Monday.
Following his formal remarks, Powell was asked by the moderator if there was anything stopping policy makers from hiking by a half point in May, which would be the first increase of that magnitude since 2000.
“What would prevent us? Nothing: Executive summary,” he said, drawing laughs from the audience. He added that such a decision had not been made, but acknowledged it was possible if warranted by incoming data.
Source: Yahoo / Bloomberg
The Fed is getting more aggressive. Beware.
The real economy runs on liquidity. And capital markets run on liquidity squared.
#9 U.S. Goods Risk Being Late as China’s Lockdowns Worsen Shipping Port Jams
Congestion in the key Chinese ports of Shenzhen and Hong Kong due to Covid-19 lockdowns has risen to the highest level in five months, posing possible delays to goods heading to the U.S. this summer.
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“Shenzhen is the second-busiest port next to Shanghai, so we will expect to see significant volume shift to the other ports within China,” said Ryan Closser, a director at FourKites, a supply-chain information provider. “A couple more weeks of shutdown may not have a huge disruption, but the longer the area is shut down, the more of a ripple effect it will have.”
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The lockdowns have come at an inopportune time for consumers in the U.S., which is seeing container-ship congestion ease in Los Angeles and Long Beach on the West Coast. Trans-Pacific delays have largely shifted to Asia, with China seeing 14% more vessels than a median count from April 2021. Ships in the U.S. are 6.2% less than the median.
Source: Bloomberg
The Fed needs to control inflation. And inflation isn’t getting better because supply chains aren’t getting better.
#10 Commodity Traders Sound Alarm on Plunging Market Liquidity
Whipsawing commodity prices and eye-watering margin calls are forcing traders to reduce their activity, driving liquidity out of markets and exacerbating price swings, according to some of the world’s biggest trading houses.
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Engelhart halved its positions over the past six or seven months, he said. The company is not alone. As commodities swing wildly, traders and industrial players are struggling to keep up with massive cash requirements to back up their positions or put on new ones, which is squeezing participants out of the market.
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Commodity trader balance sheets are also under pressure. Reliant on credit from banks to finance shipments, traders are hitting funding limits when prices rise sharply, curbing their ability to exploit arbitrage opportunities.
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While the costs associated with trading commodities are growing, higher prices also mean the traders, especially those with large physical books, need additional credit to finance the cargoes they ship around the world.
Source: Bloomberg
Liquidity is tightening. Volatility creates more volatility.
#11 Yen Unraveling Risks Collapse to 1990 Level as Fed, Oil Weigh
The recent surge in dollar-yen has been fueled in large part by the widening yield gap between the U.S. and Japan — which boosts the former and weighs on the latter — as traders adjust to an increasingly hawkish Federal Reserve. Treasury yields have soared while those in Tokyo have been kept in check by a dovish Bank of Japan, which shows little inclination toward raising rates even as the fallout from the Ukraine war fuels inflation around the world.
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Furthermore, Japan’s exposure to higher oil prices as a net importer means the yen has also lost some of its luster as a haven, failing to benefit much from periodic bouts of risk aversion that the war has prompted. That has exacerbated its poor performance, in particular against currencies of commodity producing nations.
Source: Bloomberg / Yahoo
Similar to the LNG deal above (article #4), I think the Yen dynamics are under-discussed. Everyone rightfully knows that China is the world’s largest creditor (they save a lot of money and lend it to borrowing nations like the US). But Japan is just right behind China (and is currently the largest creditor to the US, not China).
The dynamics going on in Japan and the Yen have a significant impact on USD and US treasuries. Given that Japan’s Central Bank has committed to pinning the entire JGB (Japanese government bond) market to 0% yield out to 10 year maturities (in a decades-long effort to generate inflation through very, very cheap money), US treasuries have been an attractive alternative for Japanese savers. Despite the easy money policies, Japanese people aren’t taking out 0% loans to invest in Japanese growth but rather taking their money and buying US treasuries.
However, with rising inflation forcing the Fed to raise rates, this is forcing the spread between US treasuries and JGBs to a very, very wide (and possibly unsustainable) levels. This will accelerate JPY outflows and weaken the JPY. JPY weakness would come at an inopportune time because Japan is a major importer of commodities (since it has almost no natural resources across its island chains). A weak JPY means things like oil and other commodities become even more expensive in JPY (on top of the fact that these commodities are getting more expensive in its pricing currency, the USD).
If Japan loosens its foot on the domestic treasury market to support the JPY, it could reduce US treasury buying, which would further push US treasury rates up. If Japan keeps its foot on the domestic treasury market, it would have to pay an ever bigger bill on imports.
People rightfully know the Fed is important. But the Bank of Japan is the Fed’s key banker / creditor…the banker’s banker.
#12 Alibaba Ups Buybacks to $25 Billion as Crackdown Signs Ease
Alibaba Group Holding Ltd. soared as much as 13% on Tuesday in New York after ramping up its share buyback program to $25 billion, fueling hopes that Beijing is easing off an internet crackdown that wiped out $470 billion of the e-commerce giant’s value.
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Alibaba’s up-sized buyback represents one of the largest shareholder-reward programs in China’s giant internet industry, and coincides with a re-calibration of sentiment after Xi Jinping and his deputy Liu He pledged to support the economy and markets and finish the clampdown on the tech sector “as soon as possible” — triggering a historic rally in Chinese stocks.
Source: Bloomberg
Chinese ADRs / tech stocks were very, very weak until Alibaba brought some animal spirits back.
#13 China Removes Key Hurdle to Allow U.S. Full Access to Audits
China modified a decade-long rule that restricted offshore-listed firms’ financial data sharing practice, potentially removing a key hurdle for U.S. regulators to gain full access to auditing reports of the majority of the 200-plus Chinese companies listed in New York.
The revised draft rules deleted the requirement that on-site inspections should be mainly conducted by Chinese regulatory agencies or rely on their inspection results, the China Securities Regulatory Commission said in a joint statement with other regulators Saturday. The CSRC will provide assistance during the process through a cross-border regulatory cooperation mechanism. Meanwhile, all companies listed directly or indirectly overseas will be responsible for properly managing confidential and sensitive information, and protecting national information security, according to the statement.
Source: Bloomberg
This also helped fuel animal spirits in Chinese ADRs / tech stocks.
Though Gary Gensler (head of SEC) recently cast doubts on a quick resolution.
#14 SPACs Face Fresh SEC Legal Threat for Overly Bullish Forecasts
SPAC sponsors who embellish projections about the companies they plan to take public face a new threat in a plan from the U.S. Securities and Exchange Commission.
Wall Street’s main regulator will propose curbing the legal protections that some blank-check companies have relied on to make bullish forward-looking statements about the firms they plan to merge with, according to people familiar with the matter who requested anonymity because the plan is not yet public. The regulation, set to be released on Wednesday as part of a broader set of SPAC rules, would clarify that investors can sue over inaccurate special purpose acquisition company forecasts.
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The SEC declined to comment. Limiting SPACs’ so-called safe harbor from legal liability is in line with rules that currently exist in a traditional initial public offering. The restrictions generally prevent companies from giving guidance that may not come to fruition.
Source: Bloomberg
This is interesting because 2021 was a record year for capital raising, and interestingly more money was raised through SPACs than traditional IPOs.
Many SPAC sponsors will argue that SPACs are better for everyone because traditional IPOs are “broken” and “leave money on the table”. For example, many companies pop after an IPO. A company could price at $5 billion and then quickly “pop” 60% to $8 billion valuation. SPAC sponsors will claim that “pop” is money left on the table ($3 billion in this example), which should rightfully belong to the company / insiders.
That’s fair, but a majority of SPACs have turned out to be disasters. The problem is that SPAC sponsors aren’t stopping at taking their fair share of “money on the table”. Many SPAC sponsors are very aggressive about about how much money IS on the table to begin with. Instead of pricing their SPACs at the “right” valuation (e.g. $8 billion in our example), many SPAC sponsors have made up impossible projections to price their deals at perhaps $10 billion, $15 billion, $20 billion. It almost doesn’t matter because the projections are made up. Indeed, no money “left on the table”.
The SEC is now investigating this problem.
#15 Google to Pause Ads That Exploit or Dismiss Russia-Ukraine War
Alphabet-owned Google will not help websites, apps and YouTube channels sell ads alongside content that it deems exploits, dismisses or condones the ongoing Russia-Ukraine conflict, the U.S. company said Wednesday.
Google, whose advertising software helps publishers generate revenue, bars ads from appearing next to content that incites violence and denies tragic events. It is broadly applying those policies to the war.
Source: US News / Reuters
You are probably wondering why I have this in the economics section, but there is a very important question about how capitalism works here:
Many people rightfully question Facebook’s model, which allows it to gather a lot of data on you and then allow advertisers to spend money targeting you. In some edge cases, Facebook has taken money from Russian entities so that those Russian entities can target propaganda at certain people. It feels wrong for Facebook to make money this way.
But the Google model is also worth questioning. Google allows / allowed Russian propagandists to spread propaganda (e.g. on Youtube) similar to Facebook. Instead of charging for it, Google does it for free using its targeting algorithms trained on your personal data (e.g. Youtube recommending radical videos to you). Even more interestingly, Google allowed Russian propagandists to run ads on their videos / content and paid them a cut of the revenues.
Is it worse that Facebook takes money from adversaries or it is worse that Google enriches adversaries? Both are spreading propaganda. People seem to hate Facebook a lot more, but I personally think the Google model is more problematic.
👻 Cryptocurrencies + NFTs
#16 Axie Infinity’s Ronin Network Suffers $625M Exploit
The latest crypto hack may be the largest yet.
The gaming-focused Ronin network announced Tuesday a loss of over $625 million in USDC and ether (ETH).
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An attacker “used hacked private keys in order to forge fake withdrawals” from the Ronin bridge across two transactions, as seen on Etherscan.
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“We are working directly with various government agencies to ensure the criminals get brought to justice,” the blog notes.
Source: Coindesk
#17 Metaverse Fashion Week Draws Big Brands, Startups
Brands including Forever 21, DKNY and Estée Lauder have joined in the first Metaverse Fashion Week, which began Thursday and runs through Sunday in the virtual world called Decentraland.
Digital-only fashion shows have taken place in the past, but the four-day event is one of the highest-profile efforts to gather big brands around—or inside—the concept of the metaverse, a virtual world where people can interact, work and shop.
Luxury fashion brands and smaller startups are using the virtual event to host fashion shows and open stores in Decentraland, selling both physical items deliverable in the real world and digital goods accompanied by non-fungible tokens, the digital assets known as NFTs.
Source: WSJ
Fashion, culture, NFTs, and metaverse / digital worlds continue to converge in interesting ways.
#18 The DOJ Says It Found The Frosties Rug Pull Masterminds
Two alleged masterminds of the Frosties NFT scam have been arrested, the Justice Department announced Thursday.
Ethan Nguyen, who officials say used several handles including “Frostie,” and Andre Llacuna, identified in the charges as “heyandre,” face wire fraud and money-laundering conspiracy charges for defrauding thousands who bought the Frostie NFTs in what became this year’s first major “rug pull.”
Nguyen and Llacuna, who were arrested in Los Angeles, are accused of launching the digital collection of colorful ice-cream-scoop characters and promising buyers a host of money-making features, such as staking and breeding. But the NFT project abruptly shut down hours after the Frosties sold out in January. The accused rug-pullers then transferred $1.1 million in crypto proceeds out of the Frosties wallet, the DOJ said.
Source: Protocol
People are learning a lot about incentives as crypto reinvents the financial wheel. It turns out that if you give people Money before they deliver on Work, then they may never deliver on the Work…
This is why Capitalism is a grand bargain – You must do the Work first to earn the Money.
Many people buy into new NFT projects only to discover that the creators run away with the funds without delivering on their promises. Good thing the government still tries to protect consumers despite consumers repeatedly yelling at the government to stay away from their decentralized ecosystem.
#19 Bored Ape Yacht Club’s Newest Merch Drop Can Only Be Bought With ApeCoin
Bored Ape Yacht Club NFT holders can buy new merchandise items from Yuga Labs — but they can only use the newly-launched ApeCoin to do it, according to an announcement in the BAYC Discord server. Yuga Labs, which has a large stake in the organization backing ApeCoin, will get more ApeCoin (and more control over the organization) as NFT holders pay for their merch.
That is, assuming they can. Continuing cryptocurrency’s trend of “money but worse,” users complained they were having trouble checking out.
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The merch drop highlights something strange about ApeCoin, which, so far, has been used as an in-game currency for Benji Bananas, a game from Animoca Brands. ApeCoin is also a way to vote in the ApeCoin DAO — DAO is short for “decentralized autonomous organization,” though, in this case, the decentralized and autonomous parts both seem pretty, uh, arguable.
Members who pay in ApeCoin are essentially giving their ApeCoin DAO vote back to Yuga Labs, further consolidating Yuga Labs’ control over the DAO.
Source: The Verge
This is a really interesting evolution / test case. A DAO is supposed to be like a club where you get to vote and have a say in how it is run. To be part of this club, you need ApeCoins. Part of the value of being in the club is that you get swag for being in the club. Except in this case, you only get the swag if you give up your membership (your ApeCoin tokens).
🔋 Energy
#20 Most Japanese Back Nuclear for First Time Since Fukushima
The survey result marks the first time since the Fukushima disaster in 2011 that an increasing role for nuclear has been favored. It comes amid surging power prices and warnings of electricity shortages in Tokyo.
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Japanese public opinion moved decisively against atomic power after the 2011 earthquake and tsunami resulted in the meltdown of three reactors at Fukushima, with most of the country’s operable nuclear reactors remaining shut. Russia’s invasion of Ukraine has pushed up energy prices globally, however, and a recent tremor in Japan took several gas- and coal-fired plants offline, leading to the first-ever electricity supply alert for Tokyo.
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Japan is the world’s second-biggest LNG importer, so a revival in atomic power there would have a big impact on global gas markets. Countries from South Korea to Belgium have been reassessing the role of nuclear to help speed the transition away from fossil fuels, with the war in Europe making atomic power look even more attractive.
Source: Bloomberg
The last country to have a major nuclear disaster was Japan. It’s interesting that the recent events in Ukraine and the rise in energy prices have shifted Japanese opinions that quickly.
💬 Media + Games
#21 CBS: Welcome to the Metaverse
This was a surprisingly good documentary on metaverse gaming + crypto / NFTs.
#22 Wendy’s teams up with Facebook’s Meta to enter the ‘Wendyverse’
The Ohio-based fast-food chain announced its entrée into the metaverse on Wednesday, in a new online community dubbed the ‘Wendyverse.’ To create the alternate reality, the company teamed up with Meta’s (FB) Horizon Worlds. Beginning on April 2nd, U.S. and Canadian customers 18 and up with Facebook’s virtual reality headset Quest 2 can access the 3D-world.
Once inside, fans can go to the company’s first virtual-reality restaurant in the Wendyverse Town Square Central. But unlike on Earth, visitors can go behind the counter or meet up with fellow customers at the orange soda fountain in the square.
Source: Yahoo
Facebook is trying to do Roblox-y things. Except Roblox works on many devices, while this only works in Oculus headset.
#23 Game Developer Boss Fight Entertainment Joins Netflix
Since we launched mobile games to our members around the world just four months ago, we’ve been expanding our games catalog bit by bit as we build out our in-house creative development team. So today, we’re excited to announce that Boss Fight Entertainment is joining Netflix.
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We’re still in the early days of building great game experiences as part of your Netflix membership. Through partnerships with developers around the world, hiring top talent, and acquisitions like this, we hope to build a world-class games studio capable of bringing a wide variety of delightful and deeply engaging original games – with no ads and no in-app purchases – to our hundreds of millions of members around the world.
Source: Netflix
Netflix acquires its 3rd game studio. Netflix seems pretty serious about this, though I’m not sure the subscription business model will allow Netflix to develop great games. Apple is currently struggling with its game subscription.
💰 Fintech
#24 Apple Working to Bring More Financial Services In-House
Apple Inc. is developing its own payment processing technology and infrastructure for future financial products, part of an ambitious effort that would reduce its reliance on outside partners over time, according to people with knowledge of the matter.
A multiyear plan would bring a wide range of financial tasks in-house, said the people, who asked not to be identified because the plans aren’t public. That includes payment processing, risk assessment for lending, fraud analysis, credit checks and additional customer-service functions such as the handling of disputes.
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The first product that will rely on the new system is expected to be the upcoming “buy now, pay later” service. That feature, called “Apple Pay Later” internally, will have two parts: “Apple Pay in 4” for short-term, four-installment payment plans without interest and “Apple Pay Monthly Installments” for long-term payment plans with interest.
Source: Bloomberg
Potentially a big deal.
#25 Apple Buys UK Fintech Start-Up Credit Kudos
Apple has acquired British fintech start-up Credit Kudos, according to people familiar with the matter.
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Based in London, Credit Kudos develops software that uses consumers’ banking data to make more informed credit checks on loan applications. It is a challenger to the big credit reporting agencies, which include Equifax, Experian and TransUnion.
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The company operates in a nascent space in the world of fintech known as “open banking,” where third-party firms securely link to people’s bank accounts to extract information and make payments on their behalf, provided they’ve got consent to do so.
The trend has gained momentum in Europe in recent years thanks to fintech-friendly rules introduced in 2018 that aim to increase competition in the payments industry. It has ignited huge interest from investors, with Silicon Valley start-up Plaid being valued at $13.4 billion in a funding round last year.
Source: CNBC
Is Apple about to become a direct competitor to BNPL players or some portion of the financial network infrastructure?
#26 Apple Launches The First Driver’s License And State ID In Wallet With Arizona
Apple announced that Arizona is the first state to offer driver’s license and state ID in Wallet. Starting today, Arizonans can add their driver’s license or state ID to Wallet, and tap their iPhone or Apple Watch to seamlessly and securely present it at select TSA security checkpoints in Phoenix Sky Harbor International Airport.
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Additional states will offer driver’s license and state ID in Wallet soon. Colorado, Hawaii, Mississippi, Ohio, and the territory of Puerto Rico plan to bring this feature to their residents, along with the seven states Apple previously announced.
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Driver’s license and state ID in Wallet takes full advantage of the privacy and security built into iPhone and Apple Watch, and offers benefits that a physical ID card can’t match. Unlike physical ID cards, driver’s license and state ID in Wallet presents only the information needed for the interaction, and the user has the opportunity to review and authorize the information being requested before it is shared. Additionally, driver’s license and state ID in Wallet is presented digitally through encrypted communication directly between the device and the identity reader, so users do not need to show or hand over their device.
Source: Apple
IDs have finally launched. This is potentially a significant advantage for Apple over time. Knowing who you are (and doing identity checks) are one of the most cumbersome processes for fintechs. But a lot of people will probably want to store their digital IDs in Apple Wallet to take advantage of its convenience.
#27 Adyen Expands Beyond Payments, Announces Embedded Financial Products
Adyen (AMS: ADYEN), the global financial technology platform of choice for leading businesses, has today announced its expansion beyond payments to build embedded financial products. These products will enable platforms and marketplaces to create tailored financial experiences for their users such as small business owners or individual sellers. The suite of products will allow platforms to unlock new revenue streams and increase user loyalty.
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Going forward, Issuing will be included in a full suite of embedded financial products, as platforms have highlighted the need to reduce other financial complexities for their users too. Among the products that will be built out are multi-currency accounts, allowing users to receive payments, initiate pay outs, and safely store money all in one place. These accounts will also enable platforms to facilitate the extension of financing to their users within the platform interface. Due to Adyen’s data-driven risk-scoring capabilities, these financing offers are pre-qualified and require no additional checks on the user end. This will enable platforms to solidify their relationships with their users, while also providing a traditionally underbanked segment, namely small business owners, with the funds needed to build their businesses.
Source: PR Newswire
🛍 Commerce
#28 Sea to Shut Shopee India Unit After Political Headwinds
Sea Ltd. is shutting its main e-commerce operation in India just months after its October launch, blaming “market uncertainties” for scuppering one of its more promising overseas endeavors.
Sea, part-owned by Tencent Holdings Ltd., is pulling out of the world’s fastest-growing online and mobile market as hostility grows toward Chinese companies. Shopee’s closure comes weeks after New Delhi banned Sea’s most popular mobile gaming title Free Fire, citing security concerns because of its Chinese links.
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Early this month, Sea said Shopee will focus on Southeast Asia, Taiwan and Brazil, and announced the online-shopping arm’s exit from France just months after launching its maiden foray into Europe.
Source: Yahoo / Bloomberg
Sea is shutting Shopee India. This comes shortly after Sea’s leading game, Free Fire, was banned in India.
#29 Shopify Launches New ‘Linkpop’ Link In Bio Tool With Built-In E-Commerce Features
Shopify has entered the “link in bio” market with the launch of a new tool called “Linkpop.” The new offering is aimed at creators and allows them to sell products directly from their Linkpop page. Creators and merchants can include important links on the page and also launch storefronts to sell directly on the platforms where they’re engaging with followers. Consumers can then browse a Shopify merchant’s selection of products and make purchases directly on Linkpop without having to leave the app they were using.
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“Merchants and creators today are using multiple channels to engage with customers, and that number of touchpoints will only continue to grow,” Amir Kabbara, the director of product at Shopify, said in a statement. “With Linkpop, we’ve created a surface that unifies all links merchants post across social channels. What’s even better, we’ve made it a shoppable destination so it’s easy to purchase products directly on Linkpop, which is a win-win for merchants and buyers alike.”
Source: TechCrunch
👨💻 Technology
#30 EU Targets Big Tech With Sweeping New Antitrust Legislation
The EU has unveiled its biggest ever legislative effort to balance competition in the tech world. The new Digital Markets Act, or DMA, is intended to rein in the power of the largest tech corporations and allow smaller entities to compete with the mostly US-based firms. So far, the EU has tackled antitrust issues on a case-by-case basis, but the DMA is intended to introduce sweeping reforms that will address systemic issues in the whole market.
Today’s announcement targets interoperability of messaging apps like WhatsApp, Facebook Messenger, and iMessage, with the EU saying that vendors will have to “open up and interoperate with smaller messaging platforms, if they so request.” The EU says that this should give users more choice in how they send messages, without having to worry about what platform the recipient is on. There’s also a requirement that users should be able to “freely choose their browser, virtual assistants or search engines.”
Source: The Verge
The EU’s GDPR regulations have caused tech companies to adjust their privacy practices globally (now you get annoying data tracking requests on every website without actually improving your privacy much).
What will come of the EU’s new DMA regulations?
It will also be interesting to see whether the DMA requirements for tech gatekeepers to make their services and data interoperable create new problems on the privacy side. How does a company ensure that your data is not misused if any app can request to connect to your data held at Google, Facebook, Apple, etc? For example, the West has been concerned about data handled by Yandex (Russia’s Google). What if Yandex’s messaging service wants to connect to WhatsApp?
#31 Nvidia 2022 GTC Keynote
While many companies tout “unparalleled innovation”, I’ve found that only a few are truly deserving of that title.
Nvidia’s one of them.
This is a long keynote, but if you want a look into the future, it’s worth every single minute. Nvidia continues to be one of the leading torchbearers in two of the most important mega trends threading all of human history – energy and computation. And its innovations and ecosystem continue to accelerate. Not only is it a leading hardware and platforms company now, it’s also shaping up to be a leader in AI / digital twins software. And digital twin technology will have an immense impact on our future.
If you would prefer to read instead of watch, Nvidia has a nice listicle of all of their press releases and blog posts related to the event here.
#32 NVIDIA Research Turns 2D Photos Into 3D Scenes in the Blink of an AI
When the first instant photo was taken 75 years ago with a Polaroid camera, it was groundbreaking to rapidly capture the 3D world in a realistic 2D image. Today, AI researchers are working on the opposite: turning a collection of still images into a digital 3D scene in a matter of seconds.
Known as inverse rendering, the process uses AI to approximate how light behaves in the real world, enabling researchers to reconstruct a 3D scene from a handful of 2D images taken at different angles. The NVIDIA Research team has developed an approach that accomplishes this task almost instantly — making it one of the first models of its kind to combine ultra-fast neural network training and rapid rendering.
NVIDIA applied this approach to a popular new technology called neural radiance fields, or NeRF. The result, dubbed Instant NeRF, is the fastest NeRF technique to date, achieving more than 1,000x speedups in some cases. The model requires just seconds to train on a few dozen still photos — plus data on the camera angles they were taken from — and can then render the resulting 3D scene within tens of milliseconds.
Source: Nvidia
Amazing.
#33 Snap Buys Brain-Computer Interface Startup For Future AR Glasses
Snap said on Wednesday that it has acquired NextMind, the Paris-based neurotech startup behind a headband that lets the wearer control aspects of a computer — like aiming a gun in a video game or unlocking the lock screen of an iPad — with their thoughts. The idea is that NextMind’s technology will eventually be incorporated into future versions of Snap’s Spectacles AR glasses.
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Snap isn’t the only big tech player interested in brain-computer interfaces like NextMind. There’s Elon Musk’s Neuralink, which literally implants a device in the human brain and is gearing up for clinical trials. Valve is working with the open-source brain interface project called OpenBCI. And before its rebrand to Meta, Facebook catalyzed wider interest in the space with its roughly $1 billion acquisition of CTRL-Labs, a startup developing an armband that measures electrical activity in muscles and translates that into intent for controlling computers.
Source: The Verge
🍪 Semiconductors + Chips
#34 ASML Is The Only Company Making The $200 Million Machines Needed To Print Every Advanced Microchip. Here’s An Inside Look
This was a really fun look into ASML’s business. One of the best I’ve seen.
#35 Intel’s Long-Awaited Arc GPUs Begin Shipping Today, Starting In Laptops
Maybe you’ve heard about it: After years of rumors and occasional false starts, Intel is leveraging its experience building integrated GPUs to enter the dedicated graphics business. The company’s Arc GPUs will be trickling out throughout 2022, and Intel’s stated goal is to shake up a market that has been dominated by Nvidia’s products (and AMD’s, but let’s be honest, mainly Nvidia’s) for years now.
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The Arc 3 is clearly being positioned as a competitor to low-end dedicated laptop GPUs like Nvidia’s GeForce MX 550 and MX 570, which also use a 64-bit memory bus and similar power budgets (between 25 and 45 W). It will also likely end up competing with the Radeon 660M and 680M GPUs included in Ryzen 6000 series APUs, which are technically integrated graphics sharing system memory but benefit from DDR5 support and the RDNA2 GPU architecture.
Source: ArsTechnica
Intel is behind in its core business, but it’s now trying to compete in discrete GPUs as well. Aggressive.
🚘🌽 “Nuts and Bolts” Tech
#36 Waymo’s Self-Driving Cars Are Going Fully Driverless In San Francisco
Waymo will begin operating self-driving taxis in San Francisco without a person behind the car’s vestigial wheel. In a March 21 blog post, it said it was “ready to begin introducing the Waymo Driver in fully autonomous mode” and called it “a major step on our path to deploying a fully autonomous commercial service.”
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Waymo has been running some version of a ride-hailing service in San Francisco since February 2021, when it launched a robotaxi fleet exclusively for its employees. In August, it expanded the service to a limited group of San Francisco residents known as “trusted testers.” Since then, Waymo has been honing its driving software and pushing for government approvals to launch a fully driverless ride-hailing service open to the whole city.
Waymo already operates a driverless robotaxi fleet in Phoenix. That’s where the company opened the first fully autonomous ride-hailing service in the US on Oct. 8, 2020. Its cars have been ferrying passengers around the city for the past year and a half. But expanding to other cities has proven to be a technical and regulatory challenge.
Source: Quartz
#37 Uber Wants to Outdo Amazon for Local Commerce Delivery
Uber Technologies Inc. is taking its ambitions in delivery beyond food and into retail, seeking to “out-Amazon” Amazon.com Inc., Chief Executive Officer Dara Khosrowshahi said.
At an industry conference on Tuesday, Khosrowshahi compared Uber’s offerings to Canadian e-commerce company Shopify Inc., which helps merchants set up and operate their digital storefronts. “We think of this as essentially a local Shopify — we can help you power your local online commerce and the Uber platform and the Uber audience is undeniable in the world,” Khosrowshahi said, speaking at the ShopTalk conference in Las Vegas.
Source: Yahoo / Bloomberg
🚀 Enterprise Software
#38 Okta Tumbles After Hacking Group Lapsus$ Claims Data Breach
The hacking group Lapsus$ claims it gained internal access to the system privileges of Okta, the San Francisco-based company that manages user authentication services for thousands of corporate clients.
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“In late January 2022, Okta detected an attempt to compromise the account of a third party customer support engineer working for one of our subprocessors. The matter was investigated and contained by the subprocessor,” Chief Executive Officer Todd McKinnon wrote in a Twitter post. “We believe the screenshots shared online are connected to this January event. Based on our investigation to date, there is no evidence of ongoing malicious activity beyond the activity detected in January.”
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Lapsus$ also had touted leaks of employee accounts for LG Electronics Inc. and source code for Bing, the Microsoft Corp. search engine, and Cortana, Microsoft’s virtual assistant.
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The Lapsus$ group has emerged only in recent months, offering to pay employees at global corporations for access to their company.
Source: Bloomberg
It also turns out Lapsus$ is a bunch of kids.
Although it doesn’t seem like there will be much real fallout from this breach, it does raise concerns. If Okta truly were breached by criminals or nation-state hackers, the fallout could have been catastrophic. Hopefully Okta spends time reviewing this situation and improves their procedures.