The Breakdown

Today on the Brief: Market reaction to Pres.Trump contracting COVID-19 Subpar September jobs report Decentralized exchanges have third straight 100%+ growth month    Our main discussion features Stephen Palley and Preston Byrne of Anderson Kill.  Yesterday, BitMEX was targeted with both civil and criminal complaints, with the CTO being arrested for violation of the Bank Secrecy Act.  In this conversation, NLW talks to two crypto legal experts to discuss: The specifics of the charges How long this investigation has been in the works  Whether there was anything surprising to legal experts Why the criminal complaints represent an escalation of enforcement  Whether there are implications for other industry areas, particularly decentralized finance  Find our guests online: Stephen Palley: @stephendpalley Preston Byrne: @prestonjbyrne Anderson Kill: andersonkill.com

When popular finance writer Morgan Housel asked followers on Twitter to share the commonly held investing beliefs they most disagreed with, the internet responded with vigor.  A thousand or so replies later, NLW ranks the top 10 investing ideas we should be questioning, including: Ignoring compounding interest in our 20s Buying homes rather than renting  The idea US Treasury bonds are risk-free Listen to hear the full list.

Today on the Brief: Coinbase offers severance to employees who want to leave over new politics policy Long-term job cuts hamper any idea of V-shaped recovery Last chance for a stimulus package before the U.S. presidential election Our main discussion is a narrative shift from DeFi back to bitcoin.  Over the summer, DeFi led the crypto charge. From growth in total value locked to narrative dominance to even leadership in the all important category of crypto drama, DeFi was it.  Now, as a potentially turbulent macro environment rears its head, the narrative is shifting back to a focus on bitcoin.

Monday, Coinbase CEO Brian Armstrong published the innocuously titled “Coinbase Is a Mission-Driven Company.”  While the post talked a lot about Coinbase’s core mission, its real goal seemed to be to make clear Coinbase would not be engaging with any other social or political issues beyond that, and to the extent employees wanted to do so they needed to do it on their own time.  The reactions were intense, immediate and in many instances, totally opposite.  In this episode, NLW breaks down the entire social media reaction and the arguments for and against this policy.

DeFi is one of the breakout crypto categories of 2020. Indeed, yield farming and the grand game of “money legos” has been so profitable that many are following every new protocol with rapt attention.  This is all the more true for projects graced by YFI creator Andre Cronje. So when word got out about a new, pre-release game economy engine called “Eminence,” the DeFi degens took advantage of the permissionless nature of DeFi to pump $16 million or so into EMN.  What happened next was arguably the first pre-release hack in DeFi’s history. This episode breaks down what happened and what it means for the fledgling field.

Today on the Brief: After four weeks down, bitcoin bounces back on suspicions that recent bearishness was overblown KuCoin exchange gets hacked for somewhere between $150 million and $280 million Jack Dorsey outlines Twitter’s blockchain and bitcoin beliefs during Oslo Freedom Forum appearance Our main discussion: Digging in to bitcoin’s 64-day run over $10,000 Bitcoin has been above $10,000 for longer than any time in its history. Its volatility is also at recent historic lows. In this episode, NLW puts this in the context of broader market movements and explains why new price floors are self-reinforcing. 

This week’s Long Reads Sunday is a reading of “The Currency Cold War: Four Scenarios” by Jeff Wilsner – part of CoinDesk’s Internet 2030 series.  In it, Wilsner talks to experts about four scenarios: A multi-currency scenario, where exchange is abstracted away via digital wallets A China-led scenario A U.S.-led scenario A bitcoin/non-state currency-led scenario In addition to reading, NLW gives his take on which scenario is most likely.

On this edition of The Breakdown weekly recap, NLW looks at the fourth painful week for traditional markets in a row.  He discusses the factors contributing to the trouble, including:  A normal correction from too-high valuations The return of COVID-19 lockdowns The end of easy recovery gains  Diminishing likelihood of a stimulus bill Election volatility

Sven Henrich is the founder and lead market strategist at NorthmanTrader. Well known for his appearances on CNBC, CNN Business and MarketWatch, Sven is also the host of the Straight Talk podcast.  In this conversation, he and NLW discuss: The ever-weakening economic cycle Why the Fed has boxed itself in  Why the asset price bubble is contributing to wealth inequality  How market capitalization-to-GDP reached all-time highs What the election means for markets  Find our guest online: Twitter: NorthmanTrader Website: northmantrader.com

Today on the Brief: Initial U.S. jobless claims up to 870,000 Partial lockdowns begin in earnest in Europe and Israel The global demand for American stocks Our main discussion: Did corporate insiders perfectly time the market top?  August saw the largest volume of insider selling since 2015, with more than 1000 corporate officers offloading $6.7B in stock. Subsequently, the market has seen a 10% decline since the S&P500 all time high of Sept. 2. What’s more, according to new statistics, insider selling is happening at the fastest pace since 2012.  The question is: What do these executives know that the rest of the market doesn’t?