What’s Going On Here?

This week in the crypto market, Silvergate, a crypto-friendly bank who has a ton of crypto clients, announced they’d be winding down operations and liquidating assets. The sudden shutdown left investors scratching their heads as the bank cited “recent industry and regulatory developments” as their reason for peacing out. A classic case of saying something without really saying anything at all. Silvergate has been in trouble since FTX went bankrupt in November. The price has been on a slow downward spiral since then from $54 down to $3, that is over a 90% drop – so not a huge surprise. Silvergate’s stocks have been heavily shorted since February in the range of 90% of their stock had been shorted making it the most heavily shorted US stock. Regardless of the reasons for Silvergate shutting down, the news triggered a sell-off in crypto majors Bitcoin and Ether, who are now trading at around US $20,000 and US $1,400 respectively.

What Does This Mean For You, a North American Investor?

While crypto investors are no strangers to crypto firms disappearing out of thin air, Silvergate’s voluntary liquidation has definitely soured investor sentiment to some degree. Crypto is still such a new asset class and all of these firms going out of business represent growing pains. There’s risk associated with any investment, but given the current landscape of the crypto market, investors need to be prepared for anything, both good and bad. It’s debatable whether this will result in short term pain with long term gain or if it results in an increase in the spread between fiat and cryptocurrencies. This remains to be seen as many players are involved in this asset class, including financial giants such as Fidelity and BlackRock.

​

Commodity Craze

What’s Going On Here? The Ontario government has approved a plan by the Marten Falls First Nation to build a road to the Ring of Fire mineral deposit. The road is expected to provide access to the remote area and unlock the potential of the mineral deposit, which is estimated to contain $60 billion worth of minerals. The Marten Falls First Nation will work with the provincial government and other First Nations to ensure the road is built in an environmentally responsible way. What Does This Mean For You, a North American Investor? As an investor, you may be thinking “why should I care that Ontario is building a new road?” It’s a fair question, but here’s the answer: The Ring of Fire is estimated to contain significant amounts of valuable minerals, including chromite, nickel, copper, and platinum, which has already attracted a ton of attention from mining companies all over the world. The development of the Ring of Fire region could also create jobs and economic growth in the area, which could have broader positive effects on the North American economy. However, the project will need to be developed in an environmentally responsible way, which could lead to increased costs and regulatory hurdles for investors. ​ Meme Stock Stalkers What’s Going On Here? Meme stock and Electric vehicle maker Rivian (NASDAQ:RIV) is in need of some cold hard cash! The EV manufacturer is planning to sell $1.3 billion in bonds to shore up capital as it prepares to start producing its smaller R2 family of vehicles later this year. The company’s shares fell by 6% after the announcement. The company, which is backed by Amazon and Ford Motor, has raised over $10 billion in funding so far, but currently loses money on every vehicle it builds… Needless to say, they’re going to have to do something to fix that. What Does This Mean For You, a North American Investor? First and foremost, Rivian’s plan to sell $1.3 billion in bonds indicates the company’s need for additional capital. While investors never want to hear that their investments are in need of extra moo–lah, this isn’t necessarily a large reason for concern as Rivian is still a relatively new company operating in the very new EV marketplace. Regardless, the news caused the company’s shares to fall by 6%, which suggests that investors are concerned about the potential dilution of their investments due to the new bond offering. This is because the bonds being offered are convertible bonds, meaning that the holder can convert into a specified number of shares of common stock. The end result is more shares, meaning that the value of each individual share goes down. ​ Moderate and Mellow Markets What’s Going On Here? Canadian grocery stores are playing the blame game! Earlier this week, CEOs from major grocery chains in Canada denied accusations that the current food price inflation is being driven by profit-mongering. The CEOs from Loblaw Companies Ltd., Empire Co. Ltd., and Metro Inc. all pointed to factors such as supply chain disruptions, increased transportation costs, and the impact of weather on crops, as reasons for the sharp increase in food prices. The executives also added that they are taking measures to mitigate the impact on consumers, including investing in supply chain infrastructure and absorbing some of the cost increases themselves. Forget about the big grocery stores though. The real crooks are the Girl Guides of Canada who just raised their prices by 20%! Girrrl! Get your hands out of my cookie jar! What Does This Mean For You, a North American Investor? While nobody likes to pay more than they have to at the grocery store, there’s no doubt that Canadian grocery store stocks have been a bright spot in a struggling stock market over the past year and a bit. While that is certainly something to smile about, investors of the sector should be wary of the scrutiny that these companies are facing right now. Potential regulatory and reputational risks associated with allegations of price gouging and profiteering should be taken into consideration before making any investment decisions. ​ ​ ESG: Environmental, Social, Governance What’s Going On Here? ​Royal Bank of Canada (TSX:RY) execs will have to focus on going green if they want to see some extra green bills in their wallets…RBC has linkedexecutive compensation to the bank’s progress towards climate strategy targets. The move aims to encourage senior management to focus on climate risks and opportunities. This is part of RBC’s larger climate goals which includes a commitment to achieving net-zero emissions by 2050. The announcement follows similar moves by other banks, including JP Morgan Chase, Citigroup, and HSBC. What Does This Mean For You, a North American Investor? This development means that Royal Bank of Canada (RBC) is taking climate change seriously and linking executive pay to its climate targets. This is good news for Rainmakers and other North American investors who are looking for companies that prioritize environmental sustainability and are committed to taking action to address climate risks and opportunities. ​ ​ Financial Jargon Word of the Week: Painting the Tape Painting the Tape Painting the tape is a form of market manipulation in which traders attempt to influence the price of a security by buying and selling it among themselves to create the appearance of substantial trading activity. The goal is to trick others in the market to buy up the security and drive its price higher. Oh, and it’s also highly illegal. ​ ​In a sentence, please! ​ ​“My buddy who works on Wall Street is in hot water with the SEC after he got caught painting the tape.“ ​ ​