China’s Crude Behavior

Plus: The hits keep coming in Cryptoland ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

November 29, 2022

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TOGETHER WITH

Good morning.

Something smells fishy Down Under.

Thousands of dead sea critters, possibly anchovies or sardines, washed up on the popular Semaphore Beach in Adelaide, Australia, over the weekend, prompting local authorities to launch an investigation. It’s likely that the usual suspects are behind the aquatic carnage: rising water temperatures, disease, and harmful salt or oxygen levels. And while beachgoers were disturbed, pizza lovers were doubtlessly delighted with all the free toppings.

Morning Brief

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Xi Jinping’s rough weekend drags down oil.

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The FTX aftershocks continue in Cryptoland.

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A Russian e-scooter company wants to go public.

Energy

China Unrest Tanks Oil

Chinese protesters calling for Xi Jinping to step down are likely to be disappointed. But they have managed to topple oil prices.

The price of crude has been falling for the past three weeks, but this weekend’s protests erupting throughout China pushed prices to their lowest point since January 4. With the EU set to cap the price of Russian oil in December, OPEC’s meeting this weekend looks set to get a little tense.

We’re Not Gonna Take It — China Remix

The protests sweeping major cities including Beijing and Shanghai started in the city of Urumqi on Friday night and followed a deadly apartment block fire that killed 10 people. Some placed blame on Covid-19 restrictions as the building was partially locked down, making the tragedy a focal point for Chinese citizens’ frustrations at President Xi Jinping’s Zero-Covid policy. The strict lockdown measures he’s imposed have failed to curb infections, which are hitting record highs even compared to 2020.

China’s hamstrung economy was already messing with the oil industry thanks to the Middle Kingdom being the world’s biggest importer of crude, and now the protests have added an extra concussive wave:

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Xi appears to be relaxing rules ever-so-slightly, with the government announcing Monday it will no longer barricade access to buildings with infections inside. It also said businesses in two cities including Urumqi would be allowed to open this week.

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However, law enforcement has cracked down with depressing predictability on protesters and foreign journalists. Meanwhile, Goldman Sachs has not altered its odds on how fast China will exit its lockdown purgatory, giving it a 30% chance of reopening before Q2 next year, but the investment bank warned it may be a “forced and disorderly” protest.

Censorspam: Twitter’s recently-gutted moderation team had to fight against Chinese accounts flooding the platform with adult content, the Washington Post reported. Although Twitter is banned inside China itself, videos and locations of the protests made their way onto the platform. In response, zombie Chinese-language accounts started sharing escort services and other sexual content alongside the names of cities where protests were taking place in an apparent attempt to drown out public dissent with creepy spam.

The House Always Wins: The protesters may not be able to let it ride, but at least Chinese gaming companies have a reason to smile. Stocks for casinos in Macau, China’s equivalent of Las Vegas, jumped Monday as the government said it would award licenses to casinos battered by a streak of lockdown measures. Not quite a royal flush, but still good news for beleaguered casino owners.

Cryptocurrency

Crypto Lender BlockFi Files for Chapter 11 Bankruptcy

Turns out, the house of non-fungible cards that Sam Bankman-Fried built FTX on may just share a few load-bearing foundations with another major crypto player.

BlockFi, a lender that forgoes credit checks and uses cryptocurrencies as collateral, has now become collateral damage from the FTX implosion. On Monday, the not-exactly-real-money company filed for very-real Chapter 11 bankruptcy.

More Tales From the Crypt

BlockFi started the year relatively strong, with $1 billion in venture funding and as much as $20 billion in consumer deposits. Then came the crypto winter — and a $100 million settlement with the SEC in February for failing to register loans as securities…and also for not registering as an investment company. Now, with FTX circling the drain, BlockFi is sinking fast. The two companies have a sordid codependency. After a pair of competitors — Celsius Network and Voyager Digital — folded this summer, BlockFi quickly accepted a $400 credit line to tap as needed from the seemingly-rock-solid FTX to avoid insolvency (the deal also granted FTX the right to acquire BlockFi outright). BlockFi also made loans to FTX’s now-infamous trading firm Alameda, which were partly (wait for it) secured by FTX’s FTT tokens. So when FTX began to teeter, BlockFi tottered — cutting off customer withdrawals earlier this month as it sorted through its FTX exposure.

BlockFi owes some $275 million to FTX, according to bankruptcy filings. But SBF’s floundering, quite possibly fraudulent crypto exchange is far from the only entity left holding the BlockFi bag:

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BlockFi has over 100,000 creditors and over $10 billion in assets and liabilities, according to court filings — far eclipsing the roughly $257 million in cash on hand to support its business through bankruptcy proceedings.

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Its top 10 creditors alone are owed around $1.2 billion, including $30 million still due to the SEC, its fourth biggest creditor, and a staggering $729 million owed to Ankura Trust Company, which often provides loans to distressed companies (seriously, could there be any more red flags?).

Next on the Chopping Blockchain: The company says it will significantly reduce its headcount to cut costs as it navigates bankruptcy. As of last year, it employed around 850 people, though about 20% were already laid off this summer, with others offered buy-outs. And there’s no word on when its roughly 45,000 retail customers can resume withdrawals. For an industry billed as decentralized, the FTX collapse sure seems like the fulcrum of a widespread crypto collapse.

Sponsored by Apis Cor

Is 3D Printing The Solution To Our Housing Needs?

Over the next 80 years, the world will need 2 billion new homes to keep up with demand.

Traditional building methods typically take anywhere from 7 to 12 months to build a house – and up to 8 weeks to get the walls up alone.

Safe to say, that just isn’t going to cut it.

But with Apis Cor’s 3D printing approach to construction, affordable housing is looking a lot more promising. This award-winning construction company is tapping 3D printing technology to bring building into the future, with:

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300% faster construction speed

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Up to 30% cheaper costs (without compromising on safety)

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A groundbreaking solution to the labor and material shortages plaguing the US market

Clearly their idea has support – Apis Cor already has 4 patents, 117 letters of intent from construction companies across the country, and a projection of 20,000 new houses annually by 2027.

And now, you can invest in them right here.

Their StartEngine has already raised almost half a million at a $134M valuation, and comes with a ton of investor perks (like behind-the-scenes construction visits, overnight stays in Apis Cor houses, Q&A’s with their directors, and more).

Get a peek inside the 3D printing construction world by visiting their StartEngine here.*

IPOs

E-scooter Biz Could be First Moscow IPO Since Ukraine Invasion

It’s not exactly a victory parade on Red Square, but on Monday an electric scooter company announced it’s considering listing on the Moscow Exchange, which would make it the country’s first initial public offering since President Vladimir Putin launched his invasion of Ukraine in February.

Don’t Forget a Helmet

Whoosh, Russia’s largest e-scooter rideshare company, is looking to get on the exchange in time to capitalize on a market that it projects to be worth nearly $1.6 billion by 2026. Whoosh is looking to raise $165 million to build its fleet and expand across Russia, Reuters reported.

Stocks on the Moscow Exchange plummeted after the invasion, and the ruble hit a record low. Fearing Western economic sanctions, investors sold shares at an extremely fast rate while hundreds of foreign companies ceased doing business in Russia. The exchange remained closed for roughly a month before reopening under heavy restrictions – foreigners couldn’t sell stocks and traders were barred from shorting – to prevent another massive sell-off.

Today, only foreign investors from “friendly” countries can sell stock on Russia’s exchange:

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Russian companies were actually booming going into 2022, attracting more than $7 billion in IPO and secondary listings across exchanges in Moscow, New York, and London. But this May, Putin made all but a handful of Russian businesses delist from foreign stock exchanges.

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The atmosphere was so bleak, some experts predicted it would be a long time before any new IPOs appeared in Moscow. One banker told Insider, “The next Russian IPO may be decades away in my future grandchildren’s lifetime.”

Make Way for Bitcoin?: The MOEX might not be doing so hot, but the State Duma seems to be all in on this newfangled thing called cryptocurrency…you might have heard a mention or two about this industry in the news lately. The Russian parliament is set to discuss legislative reforms that would unban cryptocurrencies as legal tender within the country and establish a state-run exchange. Sergey Altukhov, a member of the parliament’s Economic Policy Committee, has lamented that Russia is losing out on billions of rubles each year in untaxed crypto trades. We’d be glad to send him a few FTT tokens to make amends.

Extra Upside

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Jeep is giving away a ski trip to name its SUV.

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Kellogg’s needs to reinvent itself to kickstart cereal sales.

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Just For Fun

Under pressure.

Impressive.

Disclaimer

*The preceding post was written and/or published as a collaboration between The Daily Upside’s in-house sponsored content team and a financial partner of The Daily Upside. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The Daily Upside may receive monetary compensation from the issuer, or its agency, for publicizing the offering of the issuer’s securities. This content is for informational purposes only and is not intended to be investing advice. This is a paid ad. Please see 17(b) disclosure linked in the campaign page for more information.

Written by Isobel Hamilton, Griffin Kelly, and Brian Boyle.

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