| |  | TOGETHER WITH |  | | | Good morning.
According to fuel-price tracker GasBuddy, gas stations in several California regions — including the Bay Area, Southern California, and Yosemite — are charging at least $7.25 per gallon, comparable to the $7.25 federal minimum hourly wage.
Luckily for California residents, the state minimum wage is $14 an hour, meaning that they can relax, knowing that — no, wait a minute, that’s still a ridiculous amount to pay for a gallon of regular. | | | • | | Relax, the CBO is less worried about a recession than you are. | | • | | Andreessen Horowitz raised $4.5 billion to invest in crypto. | | • | | Foxconn’s Wisconsin plant continues to collect dust. | | | | |  | Macroeconomics | Latest CBO Projections Ease Recession Fears | | “Fed Minutes Show Officials Expecting to Raise Rates Three Times to Address Inflation.” “Fed minutes point to more rate hikes that go further than the market anticipates.”
Headlines like these from Wednesday would normally be enough to give any investor (after many months of pavlovian conditioning) the expectation of an immediate 4% selloff.
Yet buried in the Fed Minutes released yesterday was a hint that the central bank has some flexibility — more than enough, in fact, to send markets soaring on the day. Even the slightest dovish intonation in a central banker’s speech is good for a +2% move. | Minute Men | | Loud and clear in the latest minutes from the Fed's monetary policy-setting body were that markets should expect at least two more 50-point rate hikes. But they also show the Fed plans to become “data dependent” when weighing policy action. Data dependent — code for flexible — is exactly what the market wanted to hear.
“The one thing this Fed is very good at is being measured,” said Eric Merlis, managing director of global markets at Citizens. “I chose to see this as a recognition that they’re not going to go headlong along a path. They recognize things could change.”
In addition to favorable verbiage from the Fed, the CBO released data to suggest neither the economy, nor inflation, is quite as bad as some might believe: | • | | Inflation-adjusted GDP is expected to grow 3.1% year-over-year in the fourth quarter, the CBO estimates. That’s down from 5.5% last year, but up from 2019’s lackluster 2.6% GDP growth. Most importantly, it’s far from an economic contraction. | | • | | The CBO estimates inflation, measured using the consumer-price index, will cool to 4.7% in the fourth quarter, a welcome drop off the 8% annual inflation that's roiled the economy so far this year. | | | | Deficit Check: When it comes to the federal deficit, the CBO delivered some short-term good news, to go along with the long-term frightening news. Let’s start with the bad: by 2032, the deficit will increase to 6.1% of GDP. That’s only happened 6 times since 1946. The good: This year, it’ll drop to a cool $1 trillion, down from $2.8 trillion. It’s not much, but we’ll take it. | | | | | | Crypto | What Dip? Andreessen Horowitz Raises $4.5 Billion for Crypto’s “Golden Era” |  | | Recent news hasn’t exactly been kind to the crypto sector. Collapsed stablecoins TerraUSD and Luna turned out to be stable in name only. Bitcoin is down 37% for the year. Berkshire Hathaway’s Warren Buffett and Charlie Munger delighted in taking shots at cryptocurrency during the company’s latest AGM, saying it "doesn't produce anything" and is "stupid and evil."
So what is Andreessen Horowitz — the storied venture capital outfit with one the most successful records in tech investing — doing? Pushing its digital chips in. On Wednesday, a16z, the moniker by which the firm prefers to be known, announced it had raised $4.5 billion for a new crypto fund, the largest the sector has ever seen. | Interested Ape | | While their NFT apes (which AH is heavily invested in) may be bored, a16z is fully alert and plugged into the crypto space. It now has four crypto investment vehicles worth a combined $7.6 billion and is a backer of crypto leaders including Coinbase, OpenSea, NFT game developer Sky Mavis, and Bored Ape NFT creator Yuga Labs.
The new fund will invest in both crypto assets and the companies behind them. Investments could touch on games, social media, NFT communities, privacy firms, and more. But the volume of cash being thrown around harks back to concerns that the “web3” principles cryptocurrency represents are under threat: | • | | “Web3” was coined by Ethereum co-founder Gavin Wood, and holds that a decentralized version of the internet can empower users over Big Tech by employing technologies such as blockchain, a kind of public ledger powered by peer-to-peer computer networks rather than proprietary servers or algorithms. | | • | | Critics, including Tesla CEO Elon Musk and Square CEO Jack Dorsey, have dismissed Web3 as little more than a buzzword. “You don’t own ‘web3’,” Dorsey tweeted in December, “The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.” | | | | One example is ApeCoin, a digital currency launched in March by Yuga, 14% of the tokens in which were allocated to launch partners like Andreessen Horowitz, giving them significant power over its trading value. Software engineer Stephen Diehl has said Web3 is “pushed by the world’s largest investors who have deep bags of tokens to dump.”
The Decentralized Grass: Earlier this month, $600 billion in market cap was wiped from the digital-assets space in a single week, yet Andreessen Horowitz still sees dollar signs lining the road ahead. “Bear markets are often when the best opportunities come about, when people are actually able to focus on building technology rather than getting distracted by short-term price activity,” Arianna Simpson, a general partner at Andreessen Horowitz, told CNBC. Maybe they could get a headstart on building that technology by minting an NFT collection of bears. | | | | | | Sponsored by Public Rec | The Best Pants Money Can Buy | One of the many upsides to working from home is — without a doubt — the wardrobe perks. Indeed, long gone are the days of being forced into work slacks that compress and squeeze in all the wrong places. We have just one question — is your WFH wardrobe up to snuff? Public Rec makes a pair of pants they coined the “All Day Every Day” pant, and they were right on the money: | • | | Working from home — they’re as comfortable as sweats | | • | | Running an errand — these pants stack up in style vs. the fanciest of jeans | | • | | Even if you’re headed back to the office — you’ll arrive feeling like it was 2019 | | | TLDR: the All Day Every Day pant will simplify your wardrobe and have you feeling like a million bucks no matter where you are. They don’t normally do this, but Daily Upside readers get 10% off with the promo code “UPSIDE.” You’re welcome! | | | | Technology | Wisconsin Town Desperately Seeking Tenant For Foxconn Plant | | It may not have come with as much fanfare as Amazon’s HQ2, but iPhone assembler Foxconn’s high-tech plant was once destined to transform Mount Pleasant, Wisconsin into a high-tech manufacturing hub.
Five years later, locals are worried the five-square-mile facility could end up empty with taxpayers holding the bag. Who said public-private partnerships were easy? | The Foxconn in the Hen House | | Originally announced in 2017 in close collaboration with the White House, Foxconn’s plan to build flat screens in Wisconsin was a huge win for American manufacturing. Headlines included the promise of 13,000 jobs (supported by $3 billion in state tax credits) and the company kicking in $60 million towards land acquisition and acting as the backer of $300 million worth of bonds.
But not too long after — thanks to what it would cite as "high manufacturing costs" — plans for operations were put on ice. And while other initiatives were floated, so far, none have come to fruition: | • | | Foxconn considered producing both high-end coffee kiosks and ventilators at the site, but both initiatives failed to launch. After the company teamed up with EV startup Fisker, many speculated the plant could be used to create EVs — but Foxconn bought a former GM factory in Lordstown, Ohio instead. | | • | | Local leaders spent the past year courting Intel, WSJ reports, but Intel, too, opted to open a chip factory in Ohio instead. Buckeyes 2, Badgers 0. | | | | By year-end 2020, the plant had created a total of only 579 jobs, WSJ reports.
So What’s The Fallout? Hundreds of millions of dollars in infrastructure upgrades (water, sewer, and roads, primarily) have already been paid for. To service the construction bonds, the Taiwanese tech giant is eating an annual bill of $36 million. How long will they continue to pay? Kelly Gallaher, a local resident, told the WSJ “I think it’s foolish to believe that starting next year, they’re going to be willing to make us $30 million payments a year for the next 24 years so that we don’t default.” One to watch, for sure. | | | | | | Extra Upside | • | | Are you a routinely unsatisfied customer? Instacart may begin censoring out your feedback. | | • | | The City of Anaheim, California is canceling the sale of Angel Stadium to the MLB’s Los Angeles Angels after an FBI investigation into corruption led to the mayor and several public officials resigning. | | • | | Few Fish Facts: They’re the world’s #1 source of protein. They provide critical nutrients for our ecosystems. But dams, endangered habitats, and invasive species create nautical nightmares for our aquatic friends. That’s why Whooshh has developed innovative fish passage solutions to identify, sort, and route fish — think “Hyperloop for fish.” With 48 patents in tow, they're transforming fish passage and fish transport in the massive markets of fisheries, seafood processors, and dams worldwide. Plus, Whooshh reeled in over $5.5 million revenue at a 90% gross margin in 2020. Invest in a truly scalable solution here.* *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | Disclaimer | | | | The preceding post was written and/or published as a collaboration between The Daily Upside’s in-house sponsored content team. 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 17b disclosure linked in the campaign page for more information. | | | | | | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
