Market Pulse
Monday, August 14, 2023
Welcome to this week’s Market Pulse, your 5 minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
In this week’s edition we have:
Read the full Market Pulse below, or if you want to access it on the go, download the Sidekick app.
Cyril (CIO), and the rest of the Sidekick team.
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It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Last week Paypal, one of the world's biggest payment brands, announced they are launching their own stablecoin. Like the crypto market in general, the stablecoin market has been in the doldrums over the last few years. The total market cap of stablecoins has plunged more than 25% from its peak and investor confidence in stablecoins has taken a beating.[1] Last year TerraUSD failed and this year USDC, one of the most popular stablecoins, temporarily lost its peg to the US dollar when Silicon Valley Bank failed. Despite these headwinds Paypal’s management is confident this is the perfect time to make a move into this sector [2].
Paypal’s management believe they can leverage their more than 430mn customers, and the regulatory and compliance infrastructure they’ve built over the last two decades to compete successfully in the stablecoin market. They believe their stablecoin can help facilitate the development of faster international transfers and on-chain payments by making the on-ramp process, getting money from fiat to crypto, easier [3].
Paypal chose to launch their stablecoin at a sensitive time. US regulators are cracking down on digital assets and some well known brands, like Revolut, are exiting the US crypto market [4]. Given the size and reach of Paypal, regulators have taken note of their crypto plans. Maxine Waters, a member of the US House Financial Service Committee released a statement saying she’s “deeply concerned that PayPal has chosen to launch its own stablecoin while there is still no federal framework for regulation, oversight, and enforcement of these assets.”[5]
It’s not guaranteed that Paypal’s stablecoin (PYUSD) will be a success. Meta previously tried to launch a stablecoin and failed. If it does succeed, this could be a big step towards opening up some of the benefits of blockchain technology to a wider audience.
The way we go about our daily lives has changed dramatically over the last decade. We used to pay with cash or cards and could only prove our age by carrying around a passport or driving licence. Fast forward to today and things like physical bank cards or printed boarding passes are frequently replaced by our smartphones. Simply touch your device on the scanner and crack on.
Amazon wants to go one step further. They want to enable you to ditch your smartphone all together. Amazon wants you to be able to pay for goods and services, prove your age or enter venues by simply scanning your palm.
Amazon recently announced that by the end of this year, people in the US will be able to scan their palm to pay at more than 500 Whole Foods stores, access stadiums and concert venues and even grab a coffee at the local Starbucks. But electronic payments is a crowded space and Amazon isn't interested in just offering another way to pay for things. They want to be a one stop identity provider, linking palm scans to everything from bank accounts to office buildings and perhaps eventually even health records [6].
Amazon claims their palm scanning technology is 100x better than an iris scan. Amazon said that over more than 3mn scans, their palm reader has never mistakenly identified one person as another[7]. What does this mean for us as consumers? If Amazon can overcome privacy concerns we might soon be scanning our palms to enter our offices, pay for that latte or instantly share our health records at any healthcare facility. It might even help speed up queues at Wembley!
By now many have undoubtedly heard of the Danish insulin maker, Novo Nordisk, that is taking the weightloss world by storm. Last week the market value of Novo Nordisk surged to a record high as it increased by more than $60bn in a single day. The shares shot up on the preliminary results of a late stage medical trial. The trial showed that Novo’s best selling obesity drug, Wegovy, cuts the risk of heart attack and stroke by up to 20%.[8]
You might wonder why this news is getting investors so excited. In the US, some health insurance companies have been reluctant to cover the drugs because of their high cost and the sheer number of people who qualify to take them. The annual cost of Wegovy is more than $16,000 and obesity affects almost half of the US adult population. But with new data showing the drugs can save lives, many investors are now betting health insurance companies will be more inclined to pay for the drugs [9].
Connecting the dots, one might realise that while this is great news for drug makers like Novo Nordisk and Eli Lilly, it might not be the best news for the health insurance companies that might have to pay for it all. This could be expensive for services like the NHS and health insurance companies but it's important to take into account the long-term savings they could make on healthcare costs related to obesity, which according to the CDC, amounts to almost $200bn a year in the US [10].
According to analysts at Barclays the potential benefits of these drugs are only just starting to be understood. What started out as the newest fad in Hollywood might change society in a big way in the years to come. It’s certainly already changed the fortunes of Novo Nordisk [11].
[2] https://www.ft.com/content/fd072b20-f9c7-4e2b-b274-b2f13cbeae07
[4] https://fortune.com/crypto/2023/08/04/revolut-us-market-withdrawal-regulatory-uncertainty/
[8] https://www.ft.com/content/b8617703-2608-4d2e-8d39-6d4ab1176ffd
[9] https://ro.co/weight-loss/wegovy-cost/
[10] https://www.ft.com/content/81ca6f61-b945-4975-95ff-23ad0a4d8faa
[11] https://www.ft.com/content/81ca6f61-b945-4975-95ff-23ad0a4d8faa
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Sidekick is not yet regulated but has applied to the FCA for authorisation to operate. Prior to Sidekick becoming fully authorised, none of the information provided is intended as an invitation or inducement to apply for any Sidekick product or service.
Please remember, investing should be viewed as longer term. When we launch, your capital will be at risk — the value of investments can go up and down, and you may get back less than you put in.
