A year in the tech, macro, crypto world in 2023 from Patrick Boyle
Jan started with, precarious US debt ceiling negotiations which could have ended up in a default
ChatGPT, Bard led AI mania with just 1million users in 5 days for chatgpt
AI mania that led to new skill group called 'prompt engineers'!
Bankruns caused sustained high level of interest rates at Silvergate, SVB & Signature Banks.
SVB had parked bulk of its funds at long term bonds whose prices dramatically dropped with rising interest rates creating a huge unrealised loss which is far more than the equity of the bank.
This emerging scenario triggered a bank run from the VCs who were already struggling with their liquidity positions at start ups (who also advised their portfolio companies to withdraw money while they can). Before this contagion take down more banks and more small scale firms getting trapped for cash, SVB and such needy banks were given bridge loans from Treasury to prevent startup melt down particularly in the Silicon Valley.
Then came First Republic bank failure. Including the previous bank failure this year, resulting adjusted for inflation asset losses of that of 2008 with 25 banks defaulting at the time
Credit Suisse defaulted after sustaining a long battle of bad assets and compromised short term cash position and lack of investor confidence and susequently merged with UBS to avoid a massive recession in Germany and wider Europe and Global monetary system
Commercial real estate crisis particularly in the US with lacklustre demand for property spaces (19% vacancy rates) and potential difficulty for commercial property owners to remortgage their properties to be in line with the interest payments they were receving from commercial properties
NVIDIA 24% jump in 1 day. JP Morgan doubled its price target citing the unique position NVIDIA had in powering the chips required for supporting the demand for generative AI models
June came the blow to Crypto. SEC initiated prob against Binance diverting customer money and also usingbsecret trading houses to prop up the prices of its assets in the exchange. Similary Coinbase was allged by SEC for operating as unregistered brokers and unregistered securities
Meta launched 'Threads' which was very similar to 'X' (Twitter). This resulted in sparring between Tech titans Elon Musk and Mark Zuckerberg in which Elon challenged Mark for a cage fight. 100 million users in just 5 days for Threads though. However Threads usage dwindled drastically though
August, China had officially fallen to deflation with prices having dropped 0.3% from the prior month. China has14% drop in exports in dollar terms too. Deflation is more dangerous than inflation and chinese authorities are censoring the news around this.
Sam Bank-Friedman was sent to prison for releasing the diary of his girl friend whose witness could have played an important role in the upcoming trials for SBM on his alleged manipulations on crypto assets and in the crypto exchange he founded (FTX)
Mexico became the largest export partner for US overtaking china - benefitting from automobile exports and diversification drive from US on its supply chains
Huwaei Matt60 phone launch became a serious headline across China and rest of the world for the progress Chinese domestic industry has made in producing a phones without part from American led chip producers
In October, US introduced further restrictions to sell semiconductor chips to China by increasing the range of products it involved. Further extended to 21 other countries
Hamaz - Israel war erupted on 7th October. One of the largest bombing campaigns followed the Hamaz attack and now is estimated to have taken 20,000 lives in Gaza
Sam Bankman-Fried trials on his frauds at FTX and Almeida started. SBM was proven guilty in all charges - creating exceptions for his own investment company (Alameida) in FTX, the crypto exchange he was running, he directed this firm to produce falsified financial projections with an aim to mislead his investors. SBM also directed donations for democratic and republican parties in an effort to influence the crypto regulation in his companies' favor
Sam Altan fired by hos own board at OpenAI and his coming back upon the siege put up by OpenAI employees. Eventually Sam Altan got rid of the board which fired and his co-founder Ilya who led the coup against Sam.
Binance founder CZ (Chang Peng Zau) was alleged for and fined for his failure to protect against money laundering and trading with embargo countries. He agreed for a fine (~$4Billion) and an agreement to step down as the CEO of Binance
Bitcoin rally by almost 30% in the last 2 months
Fed rates stay at 5.25-5.5% which is a 22 year high. However Fed has indicated a 0.75% reduction in cuts in the coming year. Inflation is also coming down. However the reaction from market is jumping down.
China's property default rates are increasing due to a weakening economy as well as a negative equity conditions in the property market. China's trade dispute with US is not going to help the demand conditions and they may well soon have another dispute with European countries where demand for products are weakening and sentiment may not be all favourable
Market rally at NSE and NASDAQ and its unevenness. This rally is led by the top 7 firms who has approaximately ~30% of the market capitalisation. The remaining 70% has no participation and may well be seeing a drop.
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