Hey Snackers,
Crypto island = not a British reality show. Real-estate developers are marketing a "crypto-native" luxury island in the Bahamas complete with NFT villas. The island previously hosted Fyre Fest. What could go wrong?
Stocks fell to close out the month as investors await tomorrow’s Fed rate decision, which is expected to be a fourth consecutive “jumbo” hike (think: 75 basis points). In October, the Dow had its best month since 1976, while the S&P 500 gained 8%.
Chase launches a techy rent-payment platform to boost reliable revenue (minus the checks)
Chuck your checkbook… Rent payments are entering the 21st century. Yesterday JPMorgan Chase said it's testing a digital platform called “Story” to automate rent payments, which are still often paid by check. Here’s how it’s supposed to work:
- Renter center: Story will let renters enroll in auto-pay programs, get notifications, and view their payment history online.
- Owner dashboard: Story will allow landlords to view payments across their properties, use analytics to set prices, and screen prospective tenants.
Rent tech is stuck in the dark ages… Today, 78% of US renters pay their rent by check — a paper technology that’s been used since the 1400s. One reason: most of America’s 12M landlords have relatively few units and collect payment just once a month, so they haven’t needed fancy systems. Now startups and banks are pushing for techier tools:
- Rent rewards: Bilt Rewards, which offers a credit card in partnership with Mastercard and Wells Fargo, lets users earn rewards points by paying rent on time and then use those points to pay for travel, Amazon purchases, or even homes.
- Big bucks: This month Bilt raised $150M at a $1.5B valuation, and rent-tech startups Esusu, Stake, and Piñata have also raised millions for rent-rewards programs.
Banks are betting big on boring… Banking big shots like JPMorgan and Goldman Sachs are investing in more consistent revenue streams like specialty consumer loans and co-branded cards to offset volatility in their investment-banking and trading divisions — and rental payments are as consistent as it gets (though less exciting than IPOs). JPM is already the biggest lender to US landlords; now it aims to snag a chunk of the $500B/year that Americans spend on rent.
Central banks are losing money as interest rates roar, swallowing their own bitter pill
Venmo requesting JPowell… Everyday folks are struggling with higher interest rates, from mortgages to hefty credit-card payments. But Jack and Jill aren’t the only ones: central banks are suffering from their own medicine.
- The Fed’s losing money — something it’s never consistently done before. That’s partly because it now has to pay higher interest to banks for depositing money at the Fed (think: reserves and overnight loans).
- Losses are piling up: The Fed’s interest payouts now exceed the $8T+ that it earns on Treasury bonds and other securities. FYI: in recent years, it earned about $100B in profit, which is sent to the Treasury to reduce federal deficits.
- Not just the US: Central banks worldwide are dealing with the fallout of their inflation-fighting rate hikes, which don’t seem likely to slow anytime soon. Eurozone inflation just hit a record 10.7%.
The name’s bond… Higher interest payments on bank deposits aren’t the only problem. The bond market is experiencing its worst selloff in a generation. As rates rise, the value of existing bonds falls. People are selling old bonds as new ones are issued at higher rates.
- That’s bad for the Fed and other central banks that racked up huge bond portfolios to help stimulate their pandemic economies (bond-buying = more cash in circulation).
- As bond prices plunge, banks are watching the value of those holding plummet. The central banks of Australia, Switzerland, and the Netherlands are already seeing red. Global government-bond losses are on track for the worst year since 1949.
Pressure might not “break” the bank… but enough political backlash might make it adjust course. While losses don’t hamper central banks’ ability to conduct monetary policy (aka: do their job), they’re drawing concern from politicians. Without income from the Fed, the Treasury needs to borrow more to fund government spending. Now, calls are growing to slash the interest payments that central banks make to commercial banks.
Heard on the Block: “CBDC”
🛹 If the “How do you do, fellow kids” meme were a crypto…
Creators like Satoshi Nakamoto and companies including Circle have launched cryptocurrencies. Now central banks want in on the fun with a digital currency they can issue and control (aka: a “central bank digital currency,” or CBDC). India's central bank plans to start its CBDC pilot today, and the US Fed is “exploring” CBDCs.
What else we’re Snackin’
- Boot: Days after taking over as Twitter CEO, Elon Musk has dissolved the company’s board and is said to be planning a round of layoffs. Also: Twitter might charge users $20/month for a coveted blue checkmark.
- TokShop: TikTok owner ByteDance is rolling out Amazon-esque sites to lure US shoppers. As China’s economy slows, tech titans like Alibaba and JD have turned to the West for growth.
- DisNo: Shanghai Disney abruptly shut down, locking in visitors until they tested negative for Covid, after the city reported new cases. Mickey’s park has closed twice this year because of China's strict Covid policy.
- Complicated: Shares of robo-truck biz TuSimple fell 45% after it fired its CEO and cofounder, Xiaodi Hou. The FBI and SEC are reportedly investigating whether the company defrauded investors and transferred TuSimple’s IP to a China-backed startup.
- Check: Starting today, NYC employers with four or more employees are required to include the salary range in job posts. Advocates of the new law hope the transparency will help close racial and gender wage gaps.
Tuesday
- Earnings expected from Eli Lilly, Pfizer, BP, AMD, Sony, Mondelez, Airbnb, Marathon Petroleum, Uber, Public Storage, and McKesson
Authors of this Snacks own: shares of Amazon, Disney, Twitter, and Uber
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