Welcome to your Sunday digest…my breakdown of the things we’re thinking about and talking about in the Global Intelligence world.
First up this week…the Nasdaq stock exchange is making big moves into crypto.
On Sept. 20, the second-largest U.S. stock exchange launched a new group to offer digital asset services to institutional investors.
For the moment, these crypto services are primarily custodial. Basically, the Nasdaq is helping institutional investors store their bitcoin and Ethereum. But it has far bigger plans in the works…
In an interview with Bloomberg this week, Tal Cohen, executive vice president at Nasdaq, confirmed that the company is also considering launching a crypto exchange to enable trading of digital assets. This wouldn’t be an exchange to rival Coinbase. Rather the Nasdaq exchange would be aimed at institutional investors.
As Ira Auerbach, the head of Nasdaq’s digital assets unit, said “We believe this next wave of the [crypto] revolution is going to be driven by mass institutional adoption.”
Nasdaq is eager to pursue these plans. However, the company is holding off for the moment due to the lack of regulatory clarity around crypto in the U.S.—yet another example of how the Treasury Department and Securities and Exchange Commission are holding up the development of crypto by failing to agree clear industry rules.
Yet despite this, other big institutional investors are pushing ahead with plans to move into crypto.
Last month, Fidelity Investments, one of the leading mutual funds in the U.S., announced it would begin offering retail investors access to bitcoin trading by November. And in August, BlackRock, the country’s single largest asset manager, launched a private trust to give institutions access to bitcoin.
The message from all this is clear… More institutional money is preparing to move into crypto. That’s very good news for us as early adopters.
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Next up…U.S. debt passes a grim milestone.
Earlier this week, America’s gross national debt surpassed $31 trillion.
I’ve said this before and I’ll say it again: This is an amount so large that it can never be repaid.
That was true before the start of this year…but it is doubly true now that the Fed is raising interest rates at breakneck speed to tame inflation.
Those rate hikes increase the cost of the borrowing for you and me…for businesses…and for Uncle Sam.
Prior to those rate hikes, bankers and politicians had become complacent about borrowing. With rates at or near historic lows for years, they figured that America could continue to borrow indefinitely at a low cost.
Now, they’ll have to face up to the grim reality.
In May, the Congressional Budget Office forecast that the U.S. would spent $8.1 trillion servicing interest payments on the national debt this decade. If rates continue to rise, that number could rise by $1 trillion more.
The U.S. simply cannot afford that. The Fed will have to back off raising interest rates…which means inflation will be allowed to spiral…which means we all need to own some gold and bitcoin as inflationary hedges.
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Finally this week, expect higher gas prices.
After declining in recent months, prices at the pump are rising again…with a gallon of regular averaging about $3.83 on Wednesday, according to energy-data firm OPIS.
That same day, OPEC+, a group of oil-exporting countries that includes Russia, announced that it was cutting production by 2 million barrels per day.
This cut, the largest since the start of the pandemic, marked an unprecedented, collective effort by the world’s biggest oil producers to help Russia with the political and economic problems it brought on itself by launching its senseless war in Ukraine.
Russian oil-production capacity has fallen by 1 million barrels per day due to the war. And it’s facing the prospect of a European Union oil embargo.
The overall cut by OPEC+ countries will help Russia weather this storm by increasing prices globally.
This means prices are almost certain to rise in the U.S. We may not see $5 per gallon prices again, given that oil demand tends to be lower in winter. But prices will rise from here.
This move by OPEC+ highlights the need for Western nations to expand their own production capacity until such time as renewable energy is ready to take over. It will take years, or even decades, before renewables are ready. But until that time comes, it’s better to increase nuclear energy output and produce oil and gas here at home than to make our economy beholden to foreign dictators and tyrants.
That brings us to the end of this week’s digest. Many thanks for being a subscriber. And if you have any feedback or questions, reach out through the contact form on the Global Intelligence website.
Enjoy the rest of your Sunday.
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