Happy morning, Munchers! 🙏

As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 57 seconds.

Yesterday, McKinsey starts running lazy analysts, Silicon Valley sees less money flowing, and Coinbase dumps big. 🔥

Let’s dive in.

What’s hot, what’s not?

Market Commentary

• Investors are piling into bets that the ECB will raise rates to an all-time high. Service sector wages rose and inflation stayed high so chances are that Lagarde’s warriors will take interest rates to the moon.

• The bloodshed in US stock yesterday took a toll of almost $730 billion. Crazy big numbers.

• Fed minutes released early in the morning told us that stuff might get rocky soon. Seatbelts in, nice and tight.

Story Roundup

1 - Consultants start to face the chop. 🔪

McKinsey just did to themself what they’ve been advising clients for decades.

They cut about 2 thousand jobs and got ready to scale back tons of spending.

Even consultants are beginning to realise that they need to realign with the real world, and McKinsey is gonna be restructuring their backend so that non client-facing teams run differently.

All departments will be hit except for legal and compliance. Which is a must, when you’re McKinsey.

(In other news, here’s a very small list of scandals that they’ve been involved in)

Pretty telling! 👔

2 - Silicon Valley’s bankers face a squeeze in profits. 🤏

Silicon Valley Bank serves half of all US venture-backed tech companies and is one of America’s largest banks.

And the big wave that’s eating up their clients’ profits is now forcing SVB under some heavy microscopes.

Their core business comes from playing with the cash that freshly funded tech startups deposit.

During the 2021 boom, their customer deposits surged from $102bn to $192bn, leaving them awash with liquidity.

That number is dwindling fast, with almost $60bn leaving their coffers and a decent chunk yet to go.

Some poor business decisions have also been made.

Analysts have called out their decision to put $91 billion of assets into a poorly performing bond portfolio. That’s led to a $15bn unrealised loss and could lead to a lot more red to come.

All it takes to make your investors sob. 🤩

3 - Coinbase rakes in non-crypto revenues while volumes fall. 💸

Crypto bros have been more-or-less forced to hide their faces, and Coinbase is no different.

Their Q4 earnings laid everything bare, and they made $605mn in revenue during the last 3 months of 2022. That’s a MASSIVE drop from the $2.5 billion they saw in 2021.

This shrinking top-line also led to a pretty hefty hit on expenses, and Coinbase ran at a loss of $560 million for the last quarter.

Consumer trading volumes have all fallen by high double digits and nothing but woe seems to be in store for the kombucha guzzling tech bros that trade Bitcoins for a living.

Coinbase made a lot more money from subscriptions than trading - which will be an interesting trend to see as users shy away from crypto markets.

Not enough coin. 🪙

4 - China’s golden banker goes missing. 🤔

Renaissance Bank was literally responsible for some of the digital renaissance in China.

They brokered some of China’s biggest tech deals and raked in billions toward local companies

And one week back, their founder went missing.

The bank said that they couldn’t contact their Founder and CEO Bao Fan. Most of it seems to be a lost cause for now.

It was also discovered that he was trying to diversify his wealth away from China.

Bao ji had plans to set up a personal family office in Singapore to manage his wealth and move away from Jinping and co’s lockdowns that turned daily life on it’s head.

China’s politics hurt their wealthiest, which incentivizes them to move away.

Hurting the ones you love the most. 🙈

5 - South African vehicle middlemen rake in millions. 🚗

Planet42 is an interesting South African company that juggles vehicles to make millions.

They buy used cars from dealerships and then turn around and rent them out via subscriptions.

Naspers and a bunch of private equity cronies teamed up to give them a $100 million financing round, mix of equity and debt.

About $15 million was just straight cold cash from Naspers, and Rivonia Road gave them a $75 million credit facility with the rest of the debt being issued by a bunch of HNIs.

They’ve bought more than 12k cars and handed them out to people. This is a super cool model because about 70% of vehicle loan applications get rejected in South Africa.

Planet42 uses their own scoring algos to make sure that they don’t take on too many bad apples, and the customer handles the rest.

Safe and widespread access to transport is a cornerstone of a healthy emerging economy.

Solid.

Hope you enjoyed this issue of Market Munch. If you’ve got any feedback - good or bad (😏) you can hit reply to this email and I'll get a ping in my inbox. Thanks a ton for reading!

You might also wanna follow up on Twitter, Insta, or LinkedIn.

Cheers, and have a lovely day. 🙏

- Aryaansh ⚡