26th August 2023 – 1st September 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,515.77 | 14,031.81 | 13.09 | 34,837.71 | 2,476.06 | 16,091.79 |
| 2.50% | 3.25% | -16.52% | 1.43% | 2.68% | 2.06% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 19,435.30 | $1,966.20 | $24.55 | $88.99 | 82.72 | 89.16 |
| 0.88% | 1.18% | 1.07% | 5.56% | 0.24% | 0.08% |
Source: MarketWatch
Hello Saturday,
This week, Zepto becomes the first Indian unicorn in almost a year, the crypto industry cheers as a US court passes a landmark ruling, and automakers get $12 billion in funding for an EV transition.
- With a $1.4 billion valuation, Zepto achieves unicorn status, becoming the first Indian startup to do so in 2023; this is a particularly impressive feat given the overall slowdown in instant delivery startups.
- OpenAI launches ChatGPT Enterprise, with greater privacy and security for businesses; Google releases the beta version of SynthID, a tool to watermark and detect AI-generated images.
- The US Court of Appeals overrules the Securities and Exchange Commission’s rejection of Grayscale Investments’ spot bitcoin ETF, clearing a path for Bitcoin ETFs in the country.
- BRICS takes on six new members, increasing its global economic power and posing a threat to the dollar’s global dominance as the default currency for international trade.
- The Biden administration is set to give a $12 billion boost to the auto industry to help it retrofit factories and save thousands of jobs as the country transitions to a clean energy economy.
Taking stock | Unicorn delivered | The bot beat | CryptOK | Building BRICS | EVolve or die | Invest wisely
Taking stock
Stocks ended Friday mostly higher as the August jobs report showed a cooling labour market, increasing optimism about a pause in rate hikes. All major indices notched weekly gains — the S&P 500 gained 2.50%, the Dow rose 1.43%, and the Nasdaq added 3.25%.
Unicorn delivered
Instant grocery delivery startup Zepto has become India’s first unicorn this year — it hit a valuation of $1.4 billion after raising $200 million in a new funding round. This achievement comes at a time when quick-commerce startups are seeing a slowdown both globally and at home.
Globally, apps like Gopuff, Getir, Gorillas, and Instacart have been having a hard time with rapidly falling valuations, and have been either scaling back their operations or shutting shop entirely. In India, Zepto’s competitors, such as Blinkit and Dunzo, are also struggling. Dunzo has cut its workforce and deferred salary payments after trying to aggressively expand its dark stores. Blinkit’s losses have fallen since Zomato acquired it, but the pivot hasn’t helped as much as expected.
Zepto, while still a loss-making entity, is thriving on several fronts. It operates through dark stores in seven cities in the country and processes over 3,00,000 orders daily. Its year-on-year sales growth hit an impressive 300%, and it’s on track to achieve $1 billion in annualised sales over the next few quarters. Zepto aims to be profitable within the next 12-15 months and is preparing to launch an IPO in 2025.
The bot beat
On Monday, OpenAI launched ChatGPT Enterprise — the latest iteration of its generative AI chatbot that’s meant specifically for businesses. It offers enterprise-grade security and privacy, along with unlimited higher-speed access to GPT4, customisation options, and many other business-oriented features. The company stated that early adopters of ChatGPT Enterprise included industry giants like PwC, The Estée Lauder Companies, and Canva. This launch comes at a time when ChatGPT is seeing a decline in traffic, which fell by about 10% in both June and July.
In other AI news, Google DeepMind unveiled its tool for watermarking and identifying AI-generated images this Tuesday. The tool is called SynthID, and it’s capable of embedding an invisible, permanent digital watermark into the pixels of an AI-generated image. This watermark is not detectable by the human eye, only by an algorithm. SynthID will only be able to identify images that are created by Imagen, Google’s latest text-to-image generators. Such tools are becoming the need of the hour as deep-fake images and videos get more and more realistic.
CryptOK
Investment management companies have been trying to launch spot Bitcoin ETFs in the US for a while now. But they’ve had little luck, thanks to the Securities and Exchange Commission (SEC).
The regulator has rejected dozens of applications for spot Bitcoin ETFs over concerns regarding low levels of trading surveillance and the possibility of fraud and manipulation. Recently, it has also been pushing back decision dates for applications by several weeks, including applications filed by Invesco, WisdomTree, and Valkyrie.
But this week, the US Court of Appeals cleared the path for spot Bitcoin ETFs in a landmark judgement. The Court sided with Grayscale Investments and overruled the SEC’s decision to reject the firm’s application to launch a Bitcoin-focused ETF. The Court found the SEC’s rejection of Grayscale’s proposal ‘arbitrary and capricious’. After this ruling, Bitcoin prices rose 7%, while shares of crypto exchange Coinbase surged 15%.
The SEC still has 45 days to appeal the ruling. Hence, while the ruling doesn’t mean that Grayscale’s fund is automatically approved, it is definitely a big win for the crypto industry. Spot Bitcoin ETFs can be beneficial for retail investors as they will allow them to have exposure to Bitcoin without actually owning the digital asset.
Building BRICS
BRICS — Brazil, Russia, India, China, and South Africa — took the historic step of inviting six new countries for membership at a summit last week in Johannesburg. These six countries include Saudi Arabia, Iran, the United Arab Emirates (UAE), Argentina, Ethiopia, and Egypt.
Over the years, the West has typically downplayed the BRICS grouping’s significance as a rival force, even though the latter has been growing economically stronger. Even without the new members, the global GDP share of the BRICS countries is greater than that of the G7 countries as of 2023.
Source: Statista
And now, given this expansion, the US might be well advised to take BRICS seriously. One of the bloc’s objectives is to find an alternative currency to reduce reliance on the US dollar. About 88% of international transactions are conducted in US dollars, and the currency accounts for roughly 58% of global foreign exchange reserves. BRICS wants to move away from the dollar as the default for international trade, and each member nation will benefit from de-dollarisation.
The expanded bloc will be a lot more powerful, especially as it includes three of the world’s largest oil exporters, who are responsible for 42% of the global oil supply. The bloc would also control 75% of the world’s manganese, 50% of its graphite, 28% of its nickel, and 10% of its copper. However, experts in the US believe that the dollar is unlikely to lose its global dominance any time soon.
EVolve or die
This week, the US Energy Department announced a plan to provide up to $12 billion in grants and loans to automakers. This funding is intended to help automakers and suppliers retrofit their existing manufacturing facilities to produce electric and hybrid vehicles. The Biden administration wants the transition to EVs to take place as quickly as possible, and this expectation has drawn criticism from auto unions and companies; this funding may help the Biden administration fend off such criticism.
While a transition to EVs is required to achieve a clean energy economy, it also risks putting thousands of workers out of jobs, especially in states like Michigan, Ohio, Illinois, and Indiana. This latest set of grants and loans will help keep auto factories open, particularly those that have been built around communities.
Invest wisely
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Warm regards,
Another week
in the markets
