Taxes are for losers
Semiconductor boost, FB's ambitions, and women victory.
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Market summary: 📊
Indian investors showed much welcome restraint on Wednesday, pulling the markets back a bit. US had another mixed day as meme stonkers returned to muddy the waters.
US:
S&P 500 - down 0.18%
Nasdaq - up 0.03%
India:
Nifty 50 - down 0.67%
Sensex - down 0.64%
What’s brewing hot? ☕
✅ Semi wars got a big push—Biden cleared way for $250 billion to be invested on war footing to help the US accelerate R&D in critical tech such as AI, ML, Cybersecurity, with nearly $50 billion earmarked to boost domestic semiconductor production. The ongoing semi shortages have made the US and its allies (including India) a puppet in the hands of China and other SE Asian countries that control a large portion of the critical supply chain.
✅ Robinhood’s got problems—Robinhood’s IPO is being delayed because regulators have problems with the “unstable” ways in which the company makes money. Basically, part of the company’s income comes from something called “payment order flow”, which is $$ paid by specialized trading firms on Wall Street for info on who’s buying what. Surprisingly it's legal, but RH clearly took it to the next level, and when the regulators are sniffing out dirt in your living room, clearly not a good time to be out raising $$.
Honestly, turning out to be quite a dead week news wise—summer heat keepin’ westerners on their beaches, while monsoons making Indian markets a bit lazy. Let’s do a quick rundown of the lil things...
Lol bro, you paying taxes? 🙄
What happened—investigative journalism outlet ProPublica accessed some secretive tax returns documents and did a pretty damning piece on how much taxes billionaires end up paying each year. Clearly not a lot.
Warren Buffett, Jeff Bezos, Elon Musk, Michael Bloomberg were some of the most notable “hero” billionaires mentioned in the report—each paid well under 4% of a “true” tax rate, as a percentage of the wealth growth they witnessed for most part of the last decade.
The caveat—simplest rebuttal for the argument is that taxes are paid on reported “income”, not appreciation in wealth, which is what the article gets totally wrong. Bezos for example makes most of his wealth just by holding Amazon stock which is flying through the roof, which isn’t legally “tax evasion”.
But the idea behind the analysis is to stoke concerns and raise a “sentimental” question on why those who have the most pay so low, while average families are taxed at 30-40% each year, around the world.
Bottomline—IRS is investigating how ProPublica got its hands on the report in the first place. But far as action goes, the world has seen 100 reports like this in the past, and once the “journalists” get their views, it all cools off pretty soon.
Quick look down Venture Street 💰
Refyne, an early-pay fintech platform, raised a sizable $16 million Series A round from DST Global, Jigsaw VC, QED and a bunch of others.
Replicating a globally popular model, Refyne basically replaces payday lending apps by working with companies to allow employees to cash out their salaries upto a week in advance—helping employees take care of their bills which many times don’t match corporate payment. Traction has been solid, with 100+ enterprises and 300K+ end users using the company’s services.
Big picture—advance paycheck apps like Dave, Earnin, have shown the model is quite scalable in foreign markets, and with India’s payday lending market still largely obscure and opaque, the opportunity is quite bright.
Facebook advanced its gaming ambitions 🎮
What happened—Facebook is buying yet another gaming company called Unit 2 games, which builds a turnkey gaming engine capable of delivering media-rich, high-fidelity modern gaming experiences, beefing up FB’s gaming assets.
The company, which competes with Roblox and Unity Software, basically makes a game-creation platform that allows independent game developers to easily build end experience and not worry about rewiring mundane functionality like social connections, authentication, and game discovery.
FB’s Game plan—of the last 11 acquisitions Facebook made, 8 are related to gaming, beefing up tech for the Oculus platform or gaming content assets—all directional bets on the metaverse as the next frontier for social-network innovation (a digital simulation that combines reality and interactive virtual world).
Big picture—with the advent of 5G, which is expected to boost bandwidths, drop latency, and open up mobile devices to 10x immersive applications, Zuck’s ambition to dominate media of the future is unrivaled.
Closing out—key performance indicators to ponder 🤔
With Sensex and Nifty circling all time highs, shrewd investors are trying to read the room for hints on when the music stops… Here’s two data points shedding some light:
Inflows are spiking—big money keeps flooding the stock markets, with net capital inflows into equity mutual funds topping ₹10,000 crores in May, the highest since March 2020, right before COVID shit hit the fan. Could be two reasons here—we’re seeing a generational shift in financial literacy and interest from consumers, or FOMO chasers are back trying to turn hay into gold on the back of the recent rally
Auto debits are failing—UPI’s auto-debit transaction feature saw nearly 30% of transactions failing for the month of May—an expansion of 2.7% vs. last month. This could be because of more technical glitches, OR users’ savings accounts are drying up with discretionary spend on pause, which in the backdrop of the economic carnage is a more believable cause.
Big picture—these hiccups, along with bad-loans warnings by big banks, are running counter to the market's recent rally. Nervous.
What else are we snackin’ 🍿
👩 Women victory - Zomato added its longtime CFO Akriti Chopra, who had been with the company since 2011, as the company’s latest cofounder, ahead of its scheduled IPO.
💪 Get some more - Uber will be adding 250 engineers at their BLR and HYD offices and data centers, in anticipation of a ride hailing boom post the second wave.
Hit that 💚 if you liked today’s issue.
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