📈 40-year high

Changpeng Zhao becomes Asia's richest person, US inflation hits record 7%, Coinbase enters crypto derivate market, and more.

Jan 13, 2022

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First up,

Market Recap 📈

Indian benchmark indices ended the session on a positive note, with mild gains led by oil and gas, metal, and IT stocks. Following a choppy day, US stocks also moved in green as investors digest the not-so-surprising inflation report.

Sensex: 61,235.30 (+0.14%) ↑

Nifty 50: 18,257.80 (+0.25%) ↑

Dow Jones: 36,290.32 (+0.11%) ↑

Nasdaq 100: 15,905.10 (+0.38%) ↑

Bitcoin: $43,727.63

Top Stories 📰

1. US inflation surged 7% in December

The number 7 is considered lucky in many cultures, but not this time.

According to data released by the Bureau of Labor Statistics, the consumer price index rose 7% in December 2021 from the year earlier, marking the fastest inflation jump the nation has ever seen since 1982. Back then, it was falling from its peak of 14.8% in 1980 when the US economy was affected by two energy crisis that pushed up oil prices and hindered growth.

What's causing it now? The coronavirus pandemic and its subsequent impact on global supply chains, food, employment, real estate, construction, semiconductors, and the automobile industry—for context, prices for used cars soared more than 37% in last year alone!

Federal Reserve Chairman Jerome Powell, who's up for a second term, stated during a confirmation hearing that the economy needs tighter monetary policy despite being healthy enough.

Following the report, several Wall Street banks revised their predictions, expecting the Fed to increase interest rates four times instead of the previously estimated three times this year.

Why it matters? While economists aren't necessarily worried about inflation as the economy continued to grow, albeit at a disappointing rate, in 2021. What concerns them is the interest rates that the Feds could be rapidly forced to hike to tackle inflation, which would increase borrowing costs and stifle recovery.

2. CZ is now Asia's richest person

A former McDonald's cook has dethroned our mota bhai Mukesh Ambani to become Asia's richest person.

Binance CEO Changpeng "CZ" Zhao is now the world's 11th richest person, with an estimated net worth of at least $96.9 billion. His fortune is now below Meta CEO Mark Zuckerberg and Google founders Larry Page and Sergey Brin.

The assessment accounts for Zhao’s 90% ownership in Binance, revenues from advertising fees, and spot and derivatives trading volumes. But Bloomberg estimates that his net worth could be much bigger considering that it doesn't track his crypto holdings and Binance's token, Binance Coin (BNB), which rose around 1300% in 2021.

His closest crypto rivals are FTX founder Sam Bankman-Fried and Coinbase CEO Brian Armstrong, each with a fortune of $15.4 billion and $8.9 billion respectively.

Despite regulatory probes over money laundering and tax evasion, major outages that caused hundreds to lose millions, and several other controversies, Binance reported over $20 billion in revenue last year. Additionally, it has the largest trading volume in spot markets ($26 billion) and derivatives markets ($80 billion).

Why it matters? Binance's success reveals the enormous potential of the high-speed, high-volatility world of virtual currencies. And while the company has made significant strides in the US, Binance still has to find a way to deal with global regulators, especially in countries with tighter restrictions such as the UK, Canada, and India.

Deal Street 🤑

GTA creator to buy Zynga
Take-Two Interactive is planning to acquire mobile gaming giant Zynga for $12.7 billion in a cash and stock deal, making it one of the biggest acquisitions in video game history. The deal values Zynga at a 64% premium price of $9.86 per share—$6.36 in Take-Two's common shares and the remaining $3.50 in cash. Take-Two is known for its iconic consoles and PC games such as Grand Theft Auto and NBA 2K, while Zynga has created hits like FarmVille, High Heels, and Words With Friends. With this acquisition, Take-Two will be able to market its mobile games to a wide audience and continue to make new hits using Zynga's expertise. Its also expected to save Take-Two around $100 million in annual cost synergies after two years. The transaction, anticipated to close in 2023, is yet to receive shareholder and regulatory approval.

Coinbase to offer crypto derivates
Coinbase is acquiring Chicago-based derivates exchange marketplace FairX as it plans to venture into crypto futures. In a blog post, the world's second-largest crypto exchange platform said that it plans "to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem." Launched in 2020, FairX is a designated contract market authorised to offer derivate products in the US and has secured brokerage partnerships with TD Ameritrade, E*Trade, and 18 others. The announcement comes amid a heated battle among financial exchange operators to dominate the crypto futures market. Coinbase's rivals like FTX and Crypto.com have already made similar purchases in the derivates market, which exceeded $2.9 trillion in trading volumes in December.