Happy Monday, Munchers! 🙏

The sunrays of summer are starting to spread over Dubai… and we’re all ready to crank the AC up to max.

As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 58 seconds.

Over the weekend, a16z splashed cash on AI startups, EVs gave their bank accounts a shock, and crypto kings turned into paupers. 🔥

Let’s dive in.

What’s hot, what’s not?

Market Commentary

• Global markets are up! Stocks across most of the world have had their best day since Valentine’s. Most portfolios need a lot of love, so a rally goes a long way.

• The great minds of the macro world are feeling a little frisky too, with big bets being placed on interest rate cuts coming soon. It’s almost like we didn’t learn our lesson. 🤷🏻

• Europe is packing on LNG imports as the competition for fuel heats up - since the fattest rat is the warmest. They bought 58% more fuel in 2022 than 2021, and that trend looks to continue.

Story Roundup

1 - a16z splashes tons of cash on some AI chatbots. 🤖

The whole world has been texting away to chatbots, and it's minting cold hard cash for the AI companies at the top.

Andreessen Horowitz (probably the most iconic Silicon Valley investor) just spent $250 million on buying a 25% stake in a little-known company called Character.ai.

Character.ai lets you create characters.

That’s literally it.

If you wanna talk to Mario, Batman, or the Cookie Monster - no worries, you can have it all.

These folks launched less than 6 months back and have impressively raced to a plus $1bn-valuation since then.

That’s crazy when you think about how bad of a time it’s been for the big-name VCs, who’ve been spending time crying over a bleeding portfolio of crumbling businesses.

The “smart money” wants to be chasing more proven bets, and less experimental ones.

AI is getting quite cozy with the big boys! 🧠

2 - Crypto’s big bankers get stuck in a bind. 😵

Silvergate Bank is the world’s largest crypto-only bank, and they were once the backbone of the industry’s golden boys.

They started as a friendly neighborhood mortgage lender - but their CEO started thinking about other plans when he discovered crypto.

Cut to 2021, and Silvergate’s clients were rubbing shoulders with the crypto elite.

FTX, Coinbase, Crypto.com, you name it.

Silvergate created networks for crypto companies to convert "real" money (fiat) into digital currencies, enabled banking in crypto-assets, and made life a LOT easier for kombucha-guzzling crypto bros.

What’s more - they were the first regulated company to do this.

Their share price 25Xed in less than 2 years.

Growth seemed endless.

But 2022’s crypto winter forced a big freeze on their biggest clients’ bank accounts - who decided to slowly withdraw their cash.

Clients were knocking on doors and asking for their bucks back.

And it became a classic case of a bank run.

Customers withdrew money because they were worried that Silvergate might go under - but that only added more fuel to the fire.

The cherry on top? 🍒

Silvergate warned that their days might be numbered. They might not even file their annual report because of how much their financial position has deteriorated.

Their stock got chopped up and fell by 60%.

Not so Silver-great. 💀

3 - EV nightmares electrify investors. 😱

Remember SPACs?

They are the gift that always keeps on giving.

Embark Trucks was an electric truck company that went public in 2021 at a $5.2 billion valuation.

Today?

The company is worth a mere $70 million and is on the brink of bankruptcy.

Investors are getting pretty angry, which is why some serious cost-cutting is in store.

First order of business? Layoffs.

Tech bros once used to receive million-dollar bonuses for their 10 hours of weekly work, and today, they’re the first to be given the sack.

After Embark fires an expected 80% of their workforce (quite the Elon Musk move), they’re gonna be shutting down offices.

Their 2 biggest locations will no longer be having the lights on, since any remaining cash needs to be spent very wisely.

If all of that wasn’t enough, Embark is gonna try selling their assets.

In short - markets think that Embark is as good as done.

Electrifying. ⚡

4 - China sets the bar low. 🚧

It looks like the golden days of China are well beyond it.

Xi Jinping just set growth targets for the country, and they’re pretty mediocre.

China will be aiming for GDP growth of 5% this year, the lowest target in 35+ years.

The government’s single and only goal this year is to prioritise economic stability, because the Chinese economy is relying on a lot of crutches right now.

Their SMB sector has been blown out of the water because of the COVID lockdowns and the manufacturing sector has been shaken up because of how badly supply chains have been destroyed.

Time to say bye-bye to all that rip-roaring growth.

5 - Commodity traders rake in big bucks. ⛏️

If you wanted an industry that smashes it out of the park - rain, sun, or shine - look no further.

The 2022 earnings season is over, and commodity traders made a total of $115bn+ in cold hard profit.

Most of the guys that emerged as big winners had their own independent trading houses.

Volatility and choppiness in markets is generally a good thing for the big guys, since they can make money from both trading and market-making.

But as always, you can’t make money without the government demanding it’s (un)fair share of the pie.

Joe Biden accused commodity traders of “war profiteering” and demanded a 35% windfall tax.

Big leagues. 🛢️

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!

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Cheers, and have a lovely day. 🙏

- Aryaansh ⚡