The Breakdown

Today on the Brief: President Trump wants a cut of the TikTok deal Previewing this week’s COVID-19 vaccine trade  Dave Portnoy breaks into bitcoin Our main conversation is with Bobby Goodlatte.  Bobby is the founder of Form Capital, a new seed investment firm that focuses on supporting portfolio companies with value-add design.    Bobby was an early employee at Facebook and has been an active angel investor since 2012, with investments that include Coinbase.    In this conversation, he and NLW discuss: The early days of Facebook Why angel investors don’t like new angel investors to get involved How Silicon Valley reflects larger questions of equity valuations  How social media has changed over the last decade Why politics is now “downstream from algorithms”  Why there are still possibilities to build new social networks Why today’s social networks could make different decisions that would be better for the world.  Find our guest online: Website: Form Capital  Twitter: @rsg 

Today on the Brief: The TikTok-Microsoft Deal The Twitter hacker was 17 A changing of the guard for crypto hedge funds Our main discussion: recapping the best interviews of July 2020 Despite a huge variety of perspectives and experiences, one theme shown through in Breakdown conversations in July: the disparity between the stock market and the real economy and a growing unwillingness of people to accept their place in the order.  This show features clips from: George Gammon - @GeorgeGammon Daniel Lacalle - @dlacalle_IA George Goncalves - @bondstrategist Sahil Bloom - @SahilBloom Tyrone Ross - @TR401 Tony Greer - @TgMacro Jill Carlson - @jillruthcarlson Michael Krieger - @LibertyBlitz Sergey Nazarov - @SergeyNazarov

Bitcoin started as a rebellious, anti-establishment technology. In many parts of the world, and for many people, it remains exactly that.  At the same time, however, there is a wave of traditionalists and institutional players moving into the space.  Are they buying into the revolution, or are they trying to capture value while fitting the disruption into a box that maintains the current power structure they lead?  Those are the key questions explored by Meltem Demirors in her new essay “Unintended Architecture.” The piece is our selection for this week’s “Long Reads Sunday.” 

On this week’s edition of The Breakdown Weekly Recap, NLW argues the big story of the week was actually a set of smaller stories that preview the faultlines and economic debates likely to absorb us in the coming months.  These include: The Federal Reserve signaling that fiscal stimulus needs to do more The beginning of the battles on fiscal stimulus The introduction of the “not safe to vote” narrative  The Big Tech vs. The World fight  The beginning of coronavirus lawsuits  Back to school Jobless claims getting worse Kodak and reshoring 

Today on the Brief: The DXY hits a 52-week low Consumers seeking alternatives to cash  Bank of England rebuilds settlement system to work with CBDCs Our main conversation is with trader and analyst Tony Greer. In this conversation, he and NLW discuss: The Federal Reserve’s role in increasing inequality  How the Robinhood crowd differs from the 1999 bubble Why high-frequency traders might be the real villains when it comes to the retail bubble Why gold is surging even though the dollar remains fundamentally sound  How to navigate the disparity between markets and the real economy Why real estate is doing well even as the economy is floundering  Find our guest online: Website: tgmacro.com Twitter: @TgMacro

Today on the Brief: More bad news from jobless claims and the GDP The big tech hearing was a whole bunch of nothing; watch TikTok instead Robinhood dives into Kodak (but so do illegal insider traders) Our main conversation is with independent bond strategist George Goncalves. We discuss: How the bond market watches Federal Reserve meetings What, if anything, was new about this week’s FOMC meeting What it means that the bond market and equities market tell different stories Why the bond market has been telling a long-term story of slowing growth Whether institutional investors are actually moving away from government debt and into gold  Why Judy Shelton should have a place on the Federal Reserve Find our guest online: Twitter: @bondstrategist

Today on the Brief: Big tech goes to Washington The debate on the next COVID-19 relief act heats up More on institutional investors’ move into gold  “Imagine a world without counterparty risk.” That was Chainlink co-founder Sergey Nazarov’s answer when asked to describe the true disruption of decentralized finance to a traditional finance audience.  On this episode of The Breakdown, Sergey and NLW discuss: Brand-based contracts vs. math-based contracts The history of smart contracts What it means to build an “abstraction layer” for “universally connected smart contracts” Key moments in the history of smart contract infrastructure  Where smart contracts and DeFi are in terms of analogies to the early internet  Why Sergey believes traditional finance will inevitably shift to a math-based contract model  Find our guest online: Website: Chainlink Twitter: @SergeyNazarov

It was a beautiful Monday.  Bitcoin crashed through $10,000 and got all the way up to a new yearly high of about $11,000 before retracing slightly.  As with any dramatic price action, people were quick to start giving their interpretations of why it happened.  In this episode, NLW explains eight of those interpretations, including: Banks stacking due to changes in custody rules Money printer go brrr Stock to flow model Robinhood traders piling in DeFi gain recycling  Buyers exceeding sellers “Perfect storm” Dollar crash, negative real interest rates and the search for a new reserve currency Ultimately, NLW argues that it is this last factor driving up not only bitcoin but gold and silver.

Special purpose acquisition companies have been around since the 1990s, but have seen a significant uptick in popularity in recent years. Companies like Virgin Galactic, Draft Kings and Nikola have changed SPAC’s reputation from a tool for second- and third-tier private equity shops to win fees to a legitimate alternative to initial public offerings. In 2020, SPACs have made up roughly 40% of the IPO market. Recently, chatter around SPACs reached a fever pitch with the listing of Bill Ackman’s Pershing Square Tontine Holdings - the largest-ever SPAC.  In this episode, NLW breaks down: What a SPAC is Standard SPAC terms  Why the traditional IPO process has generated growing discontent, especially from Silicon Valley The benefits of SPACs for companies and investors The downsides of SPACs for companies and investors  A number of reasons explaining why SPAC popularity is surging now How Robinhood retail traders are creating an important bridge buyer for SPACs Why Ackman’s Tontine Holdings SPAC could change how we think about SPACs in the future  Are SPACs a bubble? Cited resources: SPAC Man Begins - Alex Danco SPACs as a Call Option on Hype - Bryne Hobart SPACs: the most ludicrous bubble we’ll ever see… why not $IAC? - Yet Another Value Blog Return of the SPAC - John Street Capital 

This week on Long Reads Sunday, our selection is “Whose Century?” by Adam Tooze in the London Review of Books.  Nominally a review of four recent scholarly works on the conflict between the US and China, Tooze main argument is that the central problem with viewing this as a new Cold War is the idea that it is new.  Instead, we need to understand that, contra Fukiyama’s famous essay, history didn’t end in 1989 - at least not for the Chinese. What’s more, the narrative of having “won” the Cold War fails to take into account our spectacular failures in Asia.  Only by reframing our understanding can we make sense of the most important geopolitical conflict of the coming century.