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Global Web3 metaverse and tax initiatives continue in the face of a market meltdown

Web3 developers, institutional investors and regulators preparing to tax metaverse profits remain stable despite all the turbulence in the digital assets…

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Web3 developers, institutional investors and regulators preparing to tax metaverse profits remain stable despite all the turbulence in the digital assets market.

In her monthly Expert Take column, Selva Ozelli, an international tax attorney and CPA, covers the intersection between emerging technologies and sustainability, and provides the latest developments around taxes, AML/CFT regulations and legal issues affecting crypto and blockchain.

In 2021, nonfungible tokens became the biggest disrupter in art, with artists minting, exhibiting and auctioning them and investors buying, selling and trading them. But by May 2022, NFT sales had dropped 92% from the market peak. According to data aggregator Layoffs.fyi, more than 17,000 technology laborers lost their jobs in May. The recent downturn is similar to 2018, when leading cryptocurrencies like Bitcoin (BTC) and Ether (ETH) fell by 80% or more.

Related: 2021 ends with a question: Are NFTs here to stay?

Immune to the digital asset market’s manic depressive volatility, Web3 developers, institutional investors, and regulators preparing to tax metaverse profits are calmly continuing with business as usual across the world.

The NFT bear market might have cautioned high-level financiers at the World Economic Forum in Davos, Switzerland, as central banks start to tighten monetary policy against a backdrop of slowing economic activity. And gone are the days when central bankers fretted hedge fund managers — they are more concerned about the new crowd at the door, the “Metaversians,” who are digitizing various aspects of life in 3D with artificial intelligence.

Canada

The digital asset market meltdown was foreseen by Brian Shuster, founder and CEO of Canada-based Utherverse, who has developed more than 100 patents and pending patents for core internet technologies and the Metaverse. He told me: “There’s a ton of companies out there building out the Metaverse, and frankly, most companies claiming to offer properties and tokens have dangerously underestimated the complexity of the task at hand.” He continued:

“The digital asset market meltdown is healthy for those companies which offer viable and sustainable Web3 products and technologies such as Ethereum and Avalanche to continue on. I will be launching my Utherverse utility token during 3Q of 2022.”

Meanwhile, Calgary-based Accelerate Financial Technologies announced it would establish the Accelerate Non-Fungible Token (NFT) Fund, targeting high-net-worth investors willing to take a risk on Web3 investment products and digital collectibles available on the blockchain.

Related: Crypto in Canada: Where are we today, and where are we heading?

China

With the floor price of some major NFT collections crashing over 50% over the past month amid broad sell-offs, the digital asset market meltdown has not slowed down infrastructural investment into the Metaverse in China, with NFT investment funds and fund of funds popping up every day.

Yifan He, CEO of Red Date (Hong Kong) Technology — a Chinese state-backed blockchain company — told me: “Blockchain-based Service Network (BSN) will launch the national NFT infrastructure in China. The NFT is a digital certificate or a unit of data being stored on the blockchain. Owing to their uniqueness and indivisibility, NFTs are widely used in digital art and copyrighted content. However, their potential use cases go well beyond what we see today in the art world. Technically, an NFT can be applied to any scenario where proof of interest is required, from collectible ownership and IP of creative works to documentation such as ID cards, academic certificates, real estate licenses, etc. The technology can be used to verify the authenticity of documents while also preventing them from being tampered with or stolen, as well as facilitating verification, confirmation and tracking.”

He added: “However, most NFTs today are minted on public chain technologies that are not allowed in the Chinese market. To support NFT technology development in China, the BSN has modified the public chain technologies to ‘open permissioned blockchains’ (OPBs) to overcome the regulatory hurdles in China by replacing cryptocurrency with fiat currency to pay gas fees and requiring permission for node deployment. To decouple the natural association with public chains and cryptocurrency, NFT is renamed Decentralized Digital Certificate, or DDC for short.”

According to He, “BSN-DDC is a digital certificate infrastructure network on BSN China that includes 10 OPBs. BSN-DDC offers network access, core APIs, and SDKs — a one-stop shop for businesses to develop user portals or apps for all types of NFT applications. All payments and transaction fees are paid in fiat currency via BSN-DDC portals. BSN-DDC encourages digital certificate usage beyond the field of art and entertainment collectibles with support for all types of digital certifications, documents, tickets, identification, intellectual property and more.”

“The BSN-DDC network currently is the most diverse, transparent, affordable, user-friendly blockchain infrastructure that supports the legal deployment of NFTs within China. It will officially launch by the end of January 2022 to support the mass adoption of NFTs in China,” concluded He.

Related: Chinese Blockchain-Based Mobile Payment Revolution: How the Biggest CO2 Polluter Is Becoming the World’s Leading Producer of Solar Panels

France

The film industry is tapping NFTs for funding movies, with nonfungible tokens making a big splash at the Cannes Film Festival.

In France, the movie Plush, which is set to be released in 2023, will be co-produced by the investing community through the sale of NFTs. NFT holders will receive a share of the film’s profits and be granted attendance at special screenings, and they may even see their beloved NFTs come to life in the movie.

India

Harshavardhana Kikkeri, founder and CEO of HoloWorld — a metaworld that hosts “phygital” (physical and digital) metaverses in education, sports, robotics and security — has designed HoloSuit, which contains 40 embedded sensors to track the movements of a wearer’s arms, legs and fingers, presenting them digitally to enhance interactions in the phygital world.

Japan

Japanese multinational company Sony intends to be a leader in the metaverse and AI spaces by leveraging “the unique strengths provided by its diverse businesses and expertise in game technology, which will form the basis of entertainment experiences going forward.”

The company has partnered with Manchester City FC and plans to create “new entertainment experiences” around live sporting events, and it’s also looking into the music industry and the potential of offering live virtual performances from Sony Music artists. As Sony’s CEO, Kenichiro Yoshida, explained:

“The metaverse is at the same time a social space and live network space where games, music, movies and anime intersect.”

Singapore

Riaz Mehta, founder and CEO of Singapore-based Ritestream, explained to me: “We are the team behind the leading watch-to-earn platform, Ritestream — a film and TV launchpad to fund, monetize and distribute content through leveraging blockchain technology. On the interactive app, you can watch your favorite shows and get rewarded in $RITE coin; enjoy metaverse cinemas and virtual date nights; and support content, actors and celebrities by purchasing limited edition NFTs. Not only can these NFTs help fund the shows, but they also allow users to buy and own part of them, giving them producer credits and future earning potential should the shows become popular. We have an exclusive deal to issue NFTs for the upcoming film Stealing McCloud, inspired by John McAfee, the controversial software mogul who was found dead in a Spanish prison cell in 2021 [where he was being held] for U.S. tax evasion. We’re excited to be revolutionizing how we all consume and fund content with an app where it quite simply pays to watch.”

Metacurio VS Singapore, a new joint venture between Metacurio and VS Media, will be the exclusive home for VS Media and its intellectual property, spanning segments like creating, marketing and distributing NFTs. Metacurio will offer its experience in Web3-focused creative and NFT collectability strategies and more. It will also bring its client base, having relationships with over 70 top talents and brands.

Persistence is building an ecosystem of multichain Web3 products for retail and institutional users, allowing for the creation and exchange of NFTs across chains and building products to generate opportunities and address challenges around the proof-of-stake consensus mechanism in a multichain environment.

Related: Why Singapore is one of the most crypto-friendly countries

South Africa

Nelson Mandela, a revolutionary and anti-apartheid leader who served as the first democratically elected president of South Africa from 1994 to 1999, entered the Metaverse with the first Mandelaverse NFT — a collaboration between the Mandela family, TinyWins, Phoenix James Art Haus and Range Media Partners. The charitable Web3 project includes four NFT collections whose proceeds benefit the Mandela Education Program, an initiative to expand access to books to children in Africa and beyond and revolutionize how philanthropy can work.

Related: South African President Steps Down as Banks Embrace Blockchain Technology

Spain

Following Avalanche’s first-ever summit in Barcelona, the first Spanish Ethereum conference will be held in the same city from July 6 to 8. This comes as Ethereum co-founder Vitalik Buterin is calling for Federal Deposit Insurance Corporation-like protection for small crypto investors in the face of the recent market meltdown.

Roberto de Arquer, co-founder and chief metaverse officer of Spain-based Gamium, explained:

“We are building the first decentralized social metaverse and the digital identity of humans.”

Gamium World is a 3D, fully immersive environment that allows users to access Gamium’s decentralized social metaverse. Player avatars create the world and can build experiences through the Gamium software development kit, including buying and selling land.

Elsewhere in the Metaverse, holders of NFTs related to video game real estate have lost thousands to millions of dollars from transaction fees, phishing attacks, rug pulls and more. In a Reddit comment, u/MDKAOD recently explained the virtual real estate business: “Entropia Universe (formerly Project Entropia) has had land deeds since the early 2000’s. John ‘Neverdie’ Jacobs is the big name DJ who owns an entire space station in that game and now there are whole ‘partner planets’ owned (at least in history) by Lemmy from Motorhead, Michael Jackson’s estate (at least was in talks at one point, I don’t know if it ever materialized) and at least one other big profile name that escapes me.” He continued:

“Virtual real estate has always been unobtainable and as far as I’m concerned has always been a way to launder money.”

Related: Spain tackles corruption with blockchain AI and amendments to its anti-corruption laws

Turkey

Mehmet Eryilmaz, founder of Turkey-based Faro, explained to me: “Faro is a tokenized entertainment company that produces films and TV content, owns music catalogs and IP, and manages live entertainment and Web3 representation rights. The company leverages peak interest in local content, soaring production budgets, Turkey’s content export success and post-COVID live entertainment demand with forward-looking Web3 themes of collective ownership and fan-based utility-focused new businesses. Faro’s operations are backed by physical world recurring revenue media assets. Faro tokenholders can invest and profit from revenue rights from all Faro productions and assets. Furthermore, they get access, utility and generate revenues from all fan-centric NFT offerings.” He added, “Faro wants to scale its business across emerging markets with the same model.”

Refik Anadol, the first artist to use artificial intelligence in an immersive public artwork — and whose work was featured at the Museum of Modern Art in New York — has been unphased by the NFT market downturn. During April and May, he continued to sell his NFTs. The sales for his “An Important Memory for Humanity” collection totaled $6.2 million, and a one-of-one NFT titled “Living Architecture: Casa Batlló” fetched $1.38 million via his first auction at Christie’s.

Related: Crypto and NFTs meet regulation as Turkey takes on the digital future

United Arab Emirates

Lokesh Rao, CEO and co-founder of Trace Network Labs — which has offices in the United Arab Emirates — explained to me that his platform “enables brands, especially fashion, to create new categories of unique digital products which can be used to exchange product details with various Web2 and Web3 platforms.” Recently, Gucci, Dolce & Gabbana, Louis Vuitton, Tribute Brand, The Fabricant, Institute of Digital Fashion and Red DAO showcased fashion NFTs at the Decentral Art Pavilion in Venice and discussed the future of the industry.

By 2030, metaverse technology is expected to contribute $4 billion to the economy of Dubai and support the creation of 42,000 virtual jobs.

Related: The United Arab Emirates’ green digitization vision

United States

Popular NFT collection Bored Ape Yacht Club, created by United States-based Yuga Labs, saw its floor price plunge to 88 Ether (ETH) (about $153,000) on May 27, down from 138 ETH (over $390,000 at the time) a month prior.

In a Reddit comment, u/Dr_Eastman shared their market analysis for the severe drop in prices:

“Seriously why the fuck would I want to buy a receipt of a monkey pic for higher than what the first buyer bought it for?”

This is particularly salient given that U.S. courts say computer- or AI-generated art and music has no copyright protection.

Nevertheless, Bill Starkov, founder of the Apocalyptic Apes NFT project, thinks “a correction is super healthy for the crypto/NFT space,” as he told me. The project’s female-led Queen Ape collection and second NFT drop raised over $1.5 million and sold out in under three hours, just before the downturn. Investors in the space are now using this downturn to go NFT shopping like it’s Black Friday. 15 Queen Ape NFTs were recently revealed to be one-of-one music NFTs, paired with songs by emerging music artists. “This is a huge opportunity for emerging artists to push forward their careers through Web3 by attaching themselves and promoting their music to an already established, loyal and passionate NFT community,” said Starkov. “In addition, we’re giving a generous revenue share of 45% streaming to the holders of these Queen Ape music NFTs. This is an opportunity for emerging artists to be introduced to thousands of people who will be incentivized to promote them.” Other female-led NFT projects include DeadFellaz and Gutter Cat Gang.

PolyientX, a Web3 innovator providing tools to gain more value and utility from NFTs, launched a product allowing NFT holders of selected projects to claim weekly rewards. “In the years we have been innovating in the NFT space, two things have become painstakingly clear,” said PolyientX’s head of product, Nick Casares.

“NFTs have tremendous growth potential and NFT communities want additional value. PX Drops serves to merge these opportunities.”

Thirty years after releasing her infamous book Sex, pop icon Madonna collaborated with digital artist Beeple to create three charitable NFTs portraying her nude avatar with environmental themes. Hip-hop legend Jim Jones teamed up with Mogul for an NFT, while musical legend Katy Perry offered her De Soi NFTs via FlickPlay — “a social metaverse platform that is interoperable with Tik Tok-like engagement, Pokemon Go-esque gameplay, and AR camera features built to offer real-world utility to digital NFT accessories,” Pierina Merino, FlickPlay’s founder and CEO, explained to me.

In the world of sports, baseball living legend Miguel Cabrera partnered with FlickPlay, basketball stars Andre Drummond and Ty Jerome partnered with Chibi Dinos, former basketball champion and fashion icon Dennis Rodman partnered with Jeff Hood of MetaCurio, while the McLaren Formula 1 Team and McLaren Shadow esports team partnered with OKX to launch their NFTs.

In the world of games, “NiftyChess, a Web3 startup, established Treasure.Chess.com in partnership with Chess.com to create the first NFT marketplace enabling the purchase, sale, creation and collection of NFTs of chess games, including by chess masters, without needing to buy cryptocurrency first,” explained co-founders Patrick Gallagher and Joseph Schiarizzi.

But you need not be a legend, icon, star or master to get noticed in the metaverse, believe Akbar Hamid and Simone Berry, founders of People of Crypto Lab (POC) — a creative and innovation lab dedicated to increasing diversity, participation and representation in Web3. Its mission is to build the metaverse blueprint for inclusion across Web3 by developing, investing and promoting brands with diverse stories, teams and projects. Berry explained:

“I firmly believe that Web3 can only scale if diversity and inclusion are rooted in the foundation of what is being built. Black and brown women, people of color and LGBTQIA+ people have combined spending power and unprecedented cultural influence that dwarfs the influence of any other community. Culture drives commerce, which is why we need to actively educate and onboard these communities in order to ensure an equitable, profitable future for Web3.”

Microsoft, Apple and Meta lead in developing metaverse technology. Web3 game developer Epic, which hosted pop star Ariana Grande’s metaverse concert, has shown unprecedented global scale and revenue during the pandemic. It is also embroiled in a patent infringement lawsuit with Utherverse and has said it will fight Apple and Google to keep the Metaverse open.

Fidelity launched two exchange-traded funds to invest in metaverse Web3 technologies, while a16z rolled out its fourth fund, worth $4.5 billion.

Vietnam

Regarding Vietnam, Tri Pham — co-founder of KardiaChain and founder of Whydah — told me: “KardiaChain is the first decentralized interoperable and self-optimized blockchain infrastructure. We aim to create a unified platform that combines all participants’ collective strengths to lay the foundation for global blockchain mass adoption.”

OECD’s digital asset public consultation document

Digital assets and businesses established in the Metaverse are among several issues presenting challenges for countries relating to cross-border tax, money laundering, consumer protection and personal data legislation. For this reason, the Organization for Economic Cooperation and Development (OECD) published a public consultation document on March 22 on a new global framework for fiscal transparency that would allow the presentation of reports and the exchange of information regarding crypto assets. It also covers proposed amendments to the Common Reporting Standard (CRS) for countries’ automatic exchange of information regarding financial accounts.

The new framework would increase the ability of participating countries’ tax authorities to monitor the transactions residents make on foreign cryptocurrency exchanges. Most, if not all, of the 100-plus countries participating in the CRS are expected to adopt it.

The U.S. has already adopted measures requiring taxpayers to report digital asset tax information.

Related: Tips to claim tax losses with the US Internal Revenue Service

At a public consultation meeting on May 23, the crypto industry urged the OECD to implement the framework in phases.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Selva Ozelli, Esq., CPA, is an international tax attorney and certified public accountant who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.

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Stocks for a recession: which companies have historically done well during recessions or are likely to this time?

Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects…

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Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects inflation to hit 13% by the end of the year just months after reassuring that it didn’t expect more than modestly high figures.

Having belatedly acknowledged the extent of the inflation problem, admittedly exacerbated by the impact on energy and food prices the war in Ukraine has had, the UK’s central bank’s nine-member Monetary Policy Committee voted to raise interest rates. Thursday’s 0.5 percentage points rise, which took the BoE’s base rate to 1.75%, was the biggest single increase in 27 years.

The European Central Bank and USA’s Federal Reserve have also taken aggressive measures on rates, with the former also raising rates by 0.5% to 0%. It was the ECB’s first rates rise in 11 years. The Fed went even further, raising rates for the fourth and largest time this year with a 0.75 percentage points hike to between 2.25% and 2.5%.

Aggressive interest rate hikes alongside high levels of inflation tend to result in recession with the combination referred to as stagflation. With inflation expected to remain high next year and not dropping back towards the target 2% before 2023, we could be in for an extended period of recession.

Why stock markets fall during a recession but not all stocks do

Stock markets historically do badly during recessions for the simple reason they are a proxy for the economy and economic activity. When economic activity drops, people and companies have less money or are worried about having less money, so they spend less and companies earn less. Investors also become less optimistic about their prospects and valuations drop.

But the kind of drop in economic activity that leads to recessions is not evenly distributed across all areas of an economy. When consumers cut back on spending, they typically choose to sacrifice some things and not others, rather than applying an even haircut across all costs. And there are goods and services that people spend more on rather than less when tightening their belts.

So while the net impact of a recession has always historically been the London Stock Exchange and other major international stock markets losing market capitalisation, or value, that doesn’t mean all the stocks that constitute them go down. Some go down by more than others. And some stocks grow in value because the companies sell the categories of goods and services people spend more on when they are either poorer or worried about becoming poorer.

Should we be investing “for” a recession?

This surely means all investors need to do to mitigate against a recession is to sell out of the stocks that do badly during an economic slump and buy into those that do well? In theory, yes. In practice, doing that successfully would mean being sure a recession will take place some time before it becomes a reality and timing its onset, then the subsequent recovery, well.

That is of course far easier said than done which is why even professional fund managers don’t attempt the kind of comprehensive portfolio flip that would involve. Some investors will make big bets on events like the onset of a recession or inflation spiralling out of control.

They are the kind of bets that make for dramatic wins like those portrayed in the Hollywood film The Big Crash, which tells the story of a group of traders who predicted and bet big on the 2007 subprime mortgage implosion that triggered the international financial crisis. But as the film relies on for its dramatic tension, the big winners of The Big Crash very nearly got their timing wrong. Another few days and they would have been forced to close their positions just before market conditions turned in their favour and lost everything.

The reality is the big, risky bets that result in spectacular investment wins when they come off are usually far more likely to go wrong than right. Which is why regular investors, rather than high risk traders using leverage, shouldn’t take them. At least not with their main investment portfolio if they don’t have the luxury of being able to justify setting aside 10% to 20% of capital for highr isk-high reward bets.

If you have a well-balanced investment portfolio with a long term horizon and you are happy with the overall quality of your investments, you may choose to do nothing at all to mitigate against the recession that is almost certainly coming. If you have ten years or more until you expect to start drawing down an income from your portfolio, your investments should have plenty of time to recover from this period.

But if you do want to rebalance because you feel your portfolio is generally too heavily weighted towards the kind of growth stocks particularly vulnerable to inflation, higher interest rates and recession, you might want to consider rotating some of your capital into the kind of stocks that might do well in a recession.

How to pick stocks that will do well in a recession?

There are two ways to highlight stocks that might do well in a recession. The first is the most obvious and simplest approach – look at which did well in previous recessions. We had a very brief recession at the start of the Covid-19 pandemic and a much more significant one in 2008/09 in the wake of the international financial crisis. Which companies did well over those periods?

The second approach is to add a layer of complexity into the equation and consider how and why the coming recession might differ from the two most recent historical examples. The 2020 recession was extremely unusual in its brevity. Within a couple of months, stock markets were soaring again as people under quarantine and social distancing restrictions spent more in the digital economy and generally on services and products to enhance their experience being couped up at home.

The 2008/09 recession was also different because it was caused by a systemic failure in the financial sector. Unemployment leapt which is not expected to happen this time around with an especially tight labour market one result of the combination of the pandemic and Brexit. Many households also have higher levels of savings built up during the pandemic which a significant number of analysts believe is softening the impact of inflation.

While there are likely to be constants throughout recessions, there are also differences that should be taken into account. Normally energy companies do badly during a recession as lower economic activity means less energy being used. But energy companies are currently posting record profits because of sky-high energy prices which are one of the major factors behind the expected recession. They should continue to do well while the recession lasts as energy prices dropping again is likely to be one of the catalysts behind the recovery.

The online trading company eToro recently published two baskets of “recession winning stocks” – one made up of Wall Street-listed companies and the other companies listed in the UK. The stocks in each basket were selected because they were the biggest gainers during the last two recessions. Interestingly, they also did well during the intervening period between 2009 and 2020, as well as in the aftermath of the coronavirus crash.

The portfolio of US stocks beat the S&P 500 index of large American businesses by 60 percentage points through the financial crisis between 2007 and 2009 and by 9 percentage points during the Covid crisis in 2020.

The portfolio of UK stocks beat FTSE-100 by 35 percentage points during the financial crisis and by 17 percentage points in the Covid crash. Since 2007, the US portfolio has gained 834%, more than twice the return of the Nasdaq and about five times that of the S&P 500. The UK portfolio’s 129% return is eight times more than the FTSE 100’s, excluding dividends.

eToro says:

“Well represented segments included discount and everyday-low-price retailers as consumers trade down, like Walmart (WMT), Ross Stores (ROST) and Dollar Tree (DLTR).”

“Fast food McDonalds (MCD) is related. Similarly, home DIY, like Home Depot (HD) Lowe’s (LOWE), and auto repair parts stocks Autozone (AZO) and O’Reilly (ORLY). Health care and big biotech is well-represented as inelastic non-discretionary purchases, like Abbott (ABT), Amgen (AMGN), Vertex (VRTX).”

“Also, domestic comforts from toys (Hasbro, HAS) to candy (Hershey, HSY), and getting more from your money and tax (H&R Block, HRB), and educating yourself (2U, TWOU).”

The UK portfolio included the drug makers AstraZeneca and GlaxoSmithKline, which did well because spending money on healthcare and medicines is essential and families don’t tend to cut back even when struggling financially.

The cigarette makers British American Tobacco and Imperial Brands also don’t usually see any downturn in demand because they benefit from a customer base addicted to their products. Both companies pay high and rising dividends. Consumer goods firms such as Unilever and Premier Foods also typically do well because they own strong brands that people bought even after price rises have been passed on.

Proactive Investor also picks out a range of London-listed stocks it expects to do well over the next year or so. In the energy sector that is doing so well at the moment it highlights Harbour Energy as a “core sector stock” and Diversified Energy Company as having “one of the lowest-risk free cash flow profiles in the sector”, while Energean (a client) provides “excellent visibility on multi-decade cash flows”.

Another difference to recent recessions could be how miners do during the one expected from autumn. Normally lower economic activity reduces for demand for commodities but the sector is also facing supply constraints that should see prices supported or rebound quickly.

Copper, mineral sands and diamonds look among the commodities most constrained in terms of supply, with limited supply growth under development. Mining and commodity stocks to look at are suggested as:

“Atalaya Mining (AIM:ATYM, TSX:AYM), Central Asia Metals, Kenmare Resources, Petra Diamonds and Antofagasta, with Tharisa PLC (LSE:THS, JSE:THA) tagged on as platinum group output to be in focus as automotive sales recover.”

“Gold stocks are seen as outperforming the market during the pullback phase, as in March 2020 and in the initial stages of a rebound, with top picks currently Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF), Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF), Wheaton Precious Metals and Yamana Gold (TSX:YRI, LSE:AUY).”

Credit Suisse has also picked out stocks that have historically outperformed during recessions, highlighting:

“London Stock Exchange Group PLC (LSE:LSEG), RELX PLC (LSE:REL), Experian (LSE:EXPN) PLC, Microsoft Corporation (NASDAQ:MSFT) and Visa Inc (NYSE:V).”

Don’t panic

While there is nothing wrong with doing some periodic portfolio rebalancing and potentially rotating more assets into stocks seen as likely to thrive in a recession, don’t panic. Recessions have always come and gone as part of the economic cycle and stock markets traditionally go on to greater heights during the subsequent recovery.

That means the chances are your portfolio will regain its losses and add new gains over the years ahead. Buying cheap growth stocks seen as likely candidates to flourish again during the recovery could be seen as just as sensible a tactic as rotating into recession-proof stocks. But if you do decide to reposition to some extent, look for stocks that have not only historically done well during recessions, or could be expected to during this one ahead, but are also healthy companies you would expect to keep doing well when markets recover. Then your success won’t come down to the fickle fate of whether or not you get your timing right.

The post Stocks for a recession: which companies have historically done well during recessions or are likely to this time? first appeared on Trading and Investment News.

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TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022

A weekly stock market preview and the data that will impact the tape. Sunday Evening Futures Open – Stock Market Preview Weekend News And Developments…

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A weekly stock market preview and the data that will impact the tape.

Sunday Evening Futures Open – Stock Market Preview

Weekend News And Developments

Berkshire Hathaway dramatically slowed new investment in the second quarter after setting a blistering pace at the start of the year, as the US stock market sell-off pushed the insurance-to-railroad conglomerate to a $43.8bn loss.

China’s southern island province of Hainan started mass Covid-19 testing on Sunday, locking down more parts of the province of over 10 million residents, as authorities scramble to contain multiple Omicron-driven outbreaks, including the worst in capital Sanya, often called “China’s Hawaii”.

Cuba: 17 missing, 121 injured as fire rages in oil tank farm in Matanzas City

Equity positioning for both discretionary and systematic investors remains in the 12th percentile of its range since January 2010, according to Deutsche Bank published last week.

Fisker Inc. (NYSE:FSR) unveils a process for qualifying US-based reservation holders of the Fisker Ocean all-electric SUV to retain access to the existing federal tax credit. The current $7,500 tax credit would be unavailable should Congress pass the Inflation Reduction Act of 2022 and President Biden signs the legislation into law.

Former Labour prime minister Gordon Brown has called for an emergency budget before the UK hits a “financial timebomb” this autumn. Mr. Brown said millions would be pushed “over the edge” if the government does not address the cost of living crisis.

Israel said Sunday it killed a senior Islamic Jihad commander in a crowded Gaza refugee camp, the second such targeted attack since launching its high-stakes military offensive against the militant group just before the weekend. The Iran-backed militant group has fired hundreds of rockets at Israel in response, raising the risk of the cross-border fighting turning into a full-fledged war.

NexJ Systems (TSX: NXJ) announced financial results for its second quarter ended June 30, 2022.

Rhine river hit by drought conditions, hampers German cargo shipping. According to reports, transport prices have shot up as drought and hot weather have affected water levels in the river Rhine in Germany leading cargo vessels to reduce loads during transportation.

Taiwan’s defense ministry said it had detected 66 Chinese air force planes and 14 Chinese warships conducting activities in and around the Taiwan Strait on Sunday, Reuters reports. Thursday’s drills involved the live firing of 11 missiles.

Unifor: 1,800 members from across the country arrive in Toronto this weekend before Monday’s start to the union’s 4th Constitutional Convention, where delegates will elect a new National President and vote on key priorities and initiatives. Unifor is Canada’s largest union in the private sector, representing 315,000 workers in every major area of the economy. 

U.S. rate futures have priced in a 69% chance of a 75 bps hike at its September meeting, up from about 41% before the payrolls data. Futures traders have also factored in a fed funds rate of 3.57% by the end of the year.

What The Analysts Are Saying…

Anybody that jumped on the ‘Fed is going to pivot next year and start cutting rates’ is going to have to get off at the next station, because that’s not in the cards. It is clearly a situation where the economy is not screeching or heading into a recession here and now.” — Art Hogan, chief market strategist at B. Riley Financial

“It is not a market bottom, things are not going to go up consistently from here because we are going to be buying low tech products for a while, so everyone has something to make up as COVID demand = pre-COVID​, there are fewer units for this. Reality check – unlike ‘Big Tech’, consumer discretionary related companies are offering more cautious guidance.”Morgan Stanley analyst commentary on a potential market bottom

The fact of the matter is this (Aug. 5 nonfarm payroll report) gives the Fed additional room to continue to tighten, even if it raises the probability of pushing the economy into recession. It’s not going to be an easy task to continue to tighten without negative repercussions for the consumer and the economy”. — Jim Baird, chief investment officer at Plante Moran Financial Advisors

“We are surprised to not see investors start to chase upside calls in fear of underperforming the market. People are just watching.” — Matthew Tym, head of equity derivatives trading at Cantor Fitzgerald

What We’re Watching

Psychedelic Sector Gaining Momentum: What started out as bottoming action after a protracted multi-quarter decline has now morphed into a tangible bullish impulse. We believe Netflix new docuseries How To Change Your Mind has played an important roll in the creation of critical mass awareness for the sector—and a rebound in broad market risk assets hasn’t hurt. At the tip of the spear for this sentiment shift is COMPASS Pathways plc (CMPS), which has risen 62.64% since  the docuseries debuted on July 12. Price on the benchmark Horizons Psychedelic Stock Index ETF has now breached the 20-day MA/EMA.

We are watching to see if investor sentiment shifts into laggard names such as Cybin Inc. and MindMed, which has continued to fall following a proposed 15-1 reverse stock split initiative announced this year. Many Tier-2/3 names still 90%+ off their highs…

Revive Therapeutics (RVV:CSE, RVVTF:OTC): This has been on our radar for the last couple of weeks, and remains on our watch list. The company has already confirmed that their statistician is in possession of 210 unblinded patient data for its Phase 3 clinical trial to evaluate Bucillamine to treat COVID-19. The company is currently attempting to revise endpoint data from a hospitalization/death focus to a symptoms focus. If they are to achieve this, it will mark a material event in the course of the trial.

YTD performance (+33.09%), Revive Therapeutics (RVVTF); Red line = 7day EMA

We believe an endpoint decision, either positive or negative, is imminent and will have cause a material price action event.

Consumer Price Index, August 10: Consumer inflation expectations for July are released by the New York Fed, while the University of Michigan’s preliminary survey of consumers for August is on tap. Taken together, these should give investors a better picture of how consumers are feeling about current economic conditions. 

As of June, it’s running at 9.1% on an annual basis. Investors, economists and consumers will be watching to see if price increases are easing as everything from gasoline to food is elevated.

Given the mixed signals on the overall state of the economy (i.e. indications of recession vs. this week’s strong nonfarm payrolls number), CPI will be in-focus by market participants. Scotiabank expects 8.9% y/y (9.1% prior) and 0.4% m/m for headline CPI; ex-food-and-energy: 6.1% y/y led by a 0.6% m/m gain.

Pot stocks earnings continue, with several Tier-1/Teri-2 names reporting including Curaleaf Holdings, Trulieve Cannabis, Marimed Inc., Cronos Group, TerrAscend Corp. and more. Last Wednesday, Green Thumb Industries allayed fears somewhat that this earnings season would be a write-off, producing solid numbers which beat expectations on several key metrics. An additional strong report or two will go a long way to help improve sentiment for a sector that’s been decimated over the past six quarters.

U.S. Economic Calendar

TIME (ET)REPORTPERIODMEDIAN FORECASTPREVIOUS
Monday, August 8
11:00 AMNY Fed 3-year inflation expectationsJuly3.60%
Tuesday, Aug. 9
6:00 AMNFIB small-business indexJuly89.589.5
8:30 AMProductivityQ2-4.30%-7.30%
8:30 AMUnit labor costsQ29.30%12.60%
Wednesday, August 10
8:30 AMConsumer price indexJuly0.30%1.30%
8:30 AMCore CPIJuly0.60%0.70%
8:30 AMCPI (year-over-year)July-8.70%9.10%
8:30 AMCore CPI (year-over-year)July6.10%5.90%
10:00 AMWholesale inventories (revision)June1.90%1.70%
2:00 PMFederal budget (compared with year earlier)July-$302 billion
Thursday, August 11
8:30 AMInitial jobless claimsAug. 6265,000260,000
8:30 AMContinuing jobless claimsJuly 301.42 million
8:30 AMProducer price indexJuly0.20%1.10%
Friday, Aug. 12
8:30 AMImport price indexJuly-0.80%0.20%
10:00 AMUMich consumer sentiment index (preliminary)Aug.5352
10:00 AMUMich 5-year inflation expectations (preliminary)Aug.2.90%

Meme Of The Week

Key Earnings (US Markets)

DateCompanySymbolEarnings estimate
Monday, August 83D SystemsDDD$0.00 per share
BarrickGOLD$0.22
BioNTechBNTX$7.08
EnergizerENR$0.76
News Corp.NWSA$0.08
NovavaxNVAX$5.18
Palantir TechnologiesPLTR$0.03
Take-Two Interactive SoftwareTTWO$0.86
Tyson FoodsTSN$1.97
UpstartUPST$0.08
Tuesday, Aug. 9Akamai TechnologiesAKAM$1.31
AramarkARMK$0.24
Bausch HealthBHC$0.91
Carlyle GroupCG$1.07
CoindeskCOIN-$2.68
Cronos GroupCRON-$0.07
EbixEBIX$0.58
EmersonEMR$1.29
GlobalFoundriesGFS$0.45
Grocery OutletGO$0.24
H & R BlockHRB$1.24
Hilton Grand VacationsHGV$0.88
Hyatt HotelsH$0.03
IAC/InterActiveCorpIAC-$2.35
iRobotIRBT-$1.55
Maxar TechnologiesMAXR$0.12
Norwegian Cruise LineNCLH-$0.83
Plug PowerPLUG-$0.20
Rackspace TechnologyRXT$0.16
Ralph LaurenRL$1.71
RobloxRBLX-$0.26
Spirit AirlinesSAVE-$0.46
Super Micro ComputerSMCI$2.35
SyscoSYY$1.11
The Trade DeskTTD$0.20
TTEC HoldingsTTEC$0.85
Unity SoftwareU-$0.21
Warner Music GroupWMG$0.20
World Wrestling EntertainmentWWE$0.55
Wynn ResortsWYNN-$0.97
Wednesday, August 10AppLovinAPP$0.50
CoherentCOHR$2.13
CoupangCPNG-$0.10
CyberArk SoftwareCYBR$0.01
Dutch BrosBROS$0.07
Fox Corp.FOXA$0.77
Franco-NevadaFNV$0.98
Jack in the BoxJACK$1.42
Manulife FinancialMFC$0.76
MatterportMTTR-$0.14
Pan Am SilverPAAS$0.14
Red Robin GourmetRRGB-$0.16
SonosSONO$0.21
TraegerCOOK$0.04
Wendy’sWEN$0.22
Wolverine World WideWWW$0.65
Thursday, August 11AerCapAER$1.42
BaiduBIDU$10.92
Brookfield Asset ManagementBAM$0.69
Canada GooseGOOS$2.98
Cardinal HealthCAH$1.18
Dillard’sDDS$2.88
Flower FoodsFLO$0.27
IlluminaILMN$0.64
LegalZoomLZ$0.02
Melco Resorts & EntertainmentMLCO-$0.44
NioNIO-$1.36
PoshmarkPOSH-$0.25
Rivian AutomotiveRIVN-$1.63
Ryan Specialty GroupRYAN$0.35
Six FlagsSIX$1.04
Solo BrandsSOLO$0.28
ToastTOST-$0.12
Utz BrandsUTZ$0.12
Warby ParkerWRBY-$0.02
W&T OffshoreWTI$0.37
Wheaton Precious MetalsWPM$0.32
Friday, Aug. 12Broadridge FinancialBR$2.65
Honest CompanyHNST$-$0.09
Spectrum BrandsSPB$1.42

FDA Calendar

None

Source: CNN Business – TDR’s stock market preview sentiment indicator

Past Week What’s Hot… and What’s Not

Source: TradingView – TDR’ stock market preview what’s hot this past week

Top 12 High Short Interest Stocks

TickerCompanyExchangeShortIntFloatShares O/SIndustry
BBBYBed Bath & Beyond Inc.Nasdaq46.38%61.57M79.96MRetail (Specialty Non-Apparel)
ICPTIntercept Pharmaceuticals IncNasdaq43.76%23.62M29.71MBiotechnology & Medical Research
MSTRMicroStrategy IncNasdaq39.29%9.32M9.33MSoftware & Programming
BYNDBeyond Meat IncNasdaq37.91%56.79M63.54MFood Processing
SWTXSpringWorks Therapeutics IncNasdaq37.51%31.64M49.41MBiotechnology & Medical Research
BIGBig Lots, Inc.NYSE37.37%26.49M28.92MRetailers – Discount Stores
EVGOEvgo IncNasdaq35.65%67.76M69.00MUtilities – Electric
UPSTUpstart Holdings IncNasdaq35.60%72.32M84.77MConsumer Lending
BGFVBig 5 Sporting Goods CorpNasdaq34.65%20.85M22.33MRetailers – Miscellaneous Specialty
SRGSeritage Growth PropertiesNYSE34.38%23.58M43.68MReal Estate Operations
NKLANikola CorporationNasdaq32.77%265.95M421.14MAuto & Truck Manufacturers
BLNKBlink Charging CoNasdaq32.54%33.98M50.20MUtilities – Electric

Tags: stock market preview, stock market preview August 8, 2022.

The post TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022 appeared first on The Dales Report.

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Regen BioPharma Inc (OTCMKTS: RGBP) Breaking Out as Biotech Files Patent on Dendritic Cell Technologies to Augment Efficacy of Survivin mRNA Cancer Immunotherapeutic Vaccine

Regen BioPharma Inc (OTCMKTS: RGBP) is making a powerful reversal rocketing back into penny land on Friday up 46% on $1.6 million in dollar volume. RGBP…

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Regen BioPharma Inc (OTCMKTS: RGBP) is making a powerful reversal rocketing back into penny land on Friday up 46% on $1.6 million in dollar volume. RGBP has a massive following of shareholders, many of them international that are jumping on board and accumulating heavily now that RGBP has reversed. Several weeks ago, the Company announced the filing with the United States Patent and Trademark Office of a provisional patent application covering utilization of dendritic cell technologies to augment efficacy of its patented survivin mRNA cancer immunotherapeutic vaccine.  RGBP CEO Dr. David Koos stated: “We are proud of our collaborators and colleagues who have worked on our first issued survivin patent, which was filed in 2015, before the world realized the potency of modified-mRNA technology that was first successfully commercialized with the COVID-19 vaccines by Moderna and Pfizer. The currently filed application discloses means of significantly increasing efficacy by combining modified-mRNA with unique cellular immunotherapy as well as adjuvant approaches.  We chose this strategy to maximally protect our intellectual property around this potentially very valuable mRNA cancer immunotherapy vaccine.”  

Microcapdaily has been reporting on RGBP since early last year. The last time we covered the Company we stated among other things: “RGBP is one of the most followed stocks in small caps with a huge investors base and it has a long history of big moves skyrocketing to 8 cents plus twice over the past 12 months. There are also plenty of buyout rumors on RGBP; notably in the July PR Dr. koos stated: “We are proud of our collaborators and colleagues who have worked on our first issued survivin patent, which was filed in 2015, before the world realized the potency of modified-mRNA technology that was first successfully commercialized with the COVID-19 vaccines by Moderna and Pfizer. Rumors are circulating that Dr. Koos has offers for either a B/O or potential joint ventures, licensing, partnerships, or a merger. He wants to get the best offer out there. Regen owns a valuable intellectual property portfolio including 8 issued patents and 13 published patent applications, these patents address enormous billion-dollar markets. RGBP has not seen the kind of volume and interest it showed on Friday in a long time and looks to be preparing to embark on something substantial here.  

Regen BioPharma, Inc. - HomeRegen BioPharma Inc (OTCMKTS: RGBP) is focused on the immunology and immunotherapy space. The Company is focused on rapidly advancing novel technologies through pre-clinical and Phase I/ II clinical trials. Currently, the Company is focused on mRNA and small molecule therapies for treating cancer and autoimmune disorders.  

Regen owns a valuable intelectuable property portfolio including 8 issued patents and 13 published patent applications. Zander Therapeutics, Inc. (a company under common control) has been granted an exclusive license to develop and commercialize IP controlled by the Company for non-human veterinary therapeutic use. Regen has granted an exclusive license to Oncology Pharma, Inc. to develop and commercialize “Antigen specific mRNA cellular cancer vaccines” for the treatment of pancreatic cancer and KCL Therapeutics, Inc. has granted an exclusive license to Oncology Pharma, Inc. to develop and commercialize certain intellectual property for the treatment of colon cancer. 

The Company is led by CEO David Koos who has over 30 years of investment banking and venture capital experience.  He has a deep knowledge of startup businesses, public markers and SEC reporting companies.  Dr. Koos has extensive relationships with large and small financial institutions, hedge funds and entities that Regen BioPharma expects to leverage for company growth. Dr. Koos has a Ph.D. in Sociology and a Doctor of Business Administration with an emphasis in finance.  Additionally, he has authored / co-authored numerous peer reviewed journal articles. Dr. Koos worked hard to get the filings up to date and get the Company compliant which has recently been completed with RGBP now “pink current”  

Earlier this year RGBP announced a program to accelerate the clinical development of its NR2F6 therapies. The Company intends to combine modified mRNA technology with Regen’s existing siRNA (small interfering RNA) intellectual property targeting the NR2F6 nuclear receptor which has been identified as a potentially very important immune cell inhibitor (an immune checkpoint) and cancer stem cell differentiator. mRNA is a single-stranded molecule that carries genetic code from DNA in a cell’s nucleus to ribosomes (the cell’s protein-making machinery).    

Regen has filed an Investigational New Drug Application (IND#16928) for their drug termed tCellVax   with the U.S. FDA. tCellVax is intended to utilize siRNA to silence NR2F6 activity in human immune cells thereby activating these immune cells in such a way that they can attack cancer cells. The Company believes that adding new intellectual property utilizing modified mRNA will profoundly simplify the drug development process and thus speed development. Dyo Biotechnologies has been contracted to assist Regen with the development of the above-mentioned technology. 

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On July 26 RGBP announced the filing with the United States Patent and Trademark Office of a provisional patent application covering utilization of dendritic cell technologies to augment efficacy of its patented survivin mRNA cancer immunotherapeutic vaccine.  

In 2021 the Company was granted US patent # 11,090,332 on composition of matter of survivin modified-mRNA useful for teaching the immune system to kill cancer. In the current patent, specific types of dendritic cells, means of generating specialized dendritic cells, and the planned formulation that will enter clinical trials have been granted patent protection. 

Immunotherapy of cancer represents a very large market which is currently being led by the class of drugs called “checkpoint inhibitors” and “CAR-T” cells.  To date there is no mRNA immunotherapy available for treating cancer. This patent application protects the use of our patented survivin mRNA both as a stand-alone vaccine and as an immunotherapy. 

RGBP CEO Dr. David Koos stated: “We are proud of our collaborators and colleagues who have worked on our first issued survivin patent, which was filed in 2015, before the world realized the potency of modified-mRNA technology that was first successfully commercialized with the COVID-19 vaccines by Moderna and Pfizer. The currently filed application discloses means of significantly increasing efficacy by combining modified-mRNA with unique cellular immunotherapy as well as adjuvant approaches.  We chose this strategy to maximally protect our intellectual property around this potentially very valuable mRNA cancer immunotherapy vaccine.” 

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Currently trading at a $55 million market valuation RGBP has 5,024,517,324 shares outstanding and a debt load that has caused significant dilution in the past. But RGBP is an exciting story developing in small caps, at current levels the selling pressure that decimated the share price from over $0.08 to half a penny is gone and buyers have stepped in and are accumulating heavily at current levels. RGBP is no stranger to big moves and has runner in its blood skyrocketing to $0.0819 not once but twice in the past year alone. Several weeks ago, the Company announced the filing with the United States Patent and Trademark Office of a provisional patent application covering utilization of dendritic cell technologies to augment efficacy of its patented survivin mRNA cancer immunotherapeutic vaccine.  RGBP CEO Dr. David Koos stated: “We are proud of our collaborators and colleagues who have worked on our first issued survivin patent, which was filed in 2015, before the world realized the potency of modified-mRNA technology that was first successfully commercialized with the COVID-19 vaccines by Moderna and Pfizer. The currently filed application discloses means of significantly increasing efficacy by combining modified-mRNA with unique cellular immunotherapy as well as adjuvant approaches.  We chose this strategy to maximally protect our intellectual property around this potentially very valuable mRNA cancer immunotherapy vaccine.” Rumors are circulating that Dr. Koos has offers for either a B/O or potential joint ventures, licensing, partnerships, or a merger. He wants to get the best offer out there. Regen owns a valuable intellectual property portfolio including 8 issued patents and 13 published patent applications, these patents address enormous billion-dollar markets. RGBP has not seen the kind of volume and interest it showed on Friday in a long time and looks to be preparing to embark on something substantial here. We will be updating on RGBP when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with RGBP.

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Disclosure: we hold no position in RGBP either long or short and we have not been compensated for this article

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