Having risen by about 40% since last October, Gold is on a moonshot. Many investment professionals consider gold prices to be a macro barometer, measuring…
Having risen by about 40% since last October, Gold is on a moonshot. Many investment professionals consider gold prices to be a macro barometer, measuring the level of anxiety in the economy, inflation, currency, and geopolitics. Therefore, we must investigate what is and isn’t driving the price of gold higher.
The Divorce Between Gold and Real Yields
To help us figure out what may be driving the momentum in Gold, it is worth first considering that a trusty relationship that largely explained the movement in gold prices broke down about two years ago.
The graph below, courtesy of Matt Weller, shows the 15-year-old correlation between gold prices and real yields is not working. Real yields, or rates, are simply the current yield of a Treasury bond minus the rate of inflation or expected inflation.
It serves as a measure of how loose or restrictive monetary policy is. The higher the real yield, the more restrictive monetary policy is, and vice versa.
The graph below shows the current level of real yields, which is the highest in fifteen years. Accordingly, it’s fair to claim that monetary policy is very restrictive, regardless of how the Fed may have shifted its stance in recent months.
In our article The Feds Golden Footprint we discussed why the relationship between Gold and real yields exists.
The level of real interest rates is a sturdy gauge of the weight of Federal Reserve policy. If the Fed is treading lightly and not distorting markets, real rates should be positive. The more the Fed manipulates markets from their natural rates, the more negative real rates become.
The article shared our analysis, which divided the last 40 years into three periods based on the level of real yields.
As the Fed’s monetary policy became more aggressive in 2008, the relationship between Gold and real yields grew. Before 2008, there was no statistical relationship.
Per the article:
The first graph, the pre-QE period, covers 1982-2007. During this period, real yields averaged +3.73%. The R-squared of .0093 shows no correlation.
The second graph covers Financial Crisis-related QE, 2008-2017. During this period, real yields averaged +0.77%. The R-squared of .3174 shows a moderate correlation.
The last graph, the QE2 Era, covers the period after the Fed started reducing its balance sheet and then sharply increasing it in late 2019. During this period, real yields averaged 0.00%, with plenty of instances of negative real yields. The R-squared of .7865 shows a significant correlation.
Given our historical analysis and the current instance of high real yields, it is unsurprising that the relationship between the price of Gold and real yields has faded.
Therefore, without real yields steering the price of Gold, let’s consider a few possibilities for why it is rising so rapidly.
Fiscal Imbalance
The Federal government is running large deficits. As shown below, the annual percentage increase in federal debt is over 8%. Such significant deficit spending occurs as economic growth is running above its natural growth rate and pre-pandemic levels. Typically, deficits tend to be lower during periods of economic growth and bigger during recessions or economic slowdowns.
The recent increase in debt growth is significant, but not much more so than other non-recessionary peaks in the last ten years. Additionally, it is well below the debt increases associated with recessions. A $2+ trillion-dollar deficit sounds daunting, but the economy has grown by 33% or $7 trillion since 2020 and doubled in size since 2009. The graph below, showing the debt-to-GDP ratio, helps put more context on the rate at which the government borrows.
The upward trending debt to GDP ratio is not sustainable. However, the current ratio and slope of the recent trend align with the trend going back 20 years and even longer.
We have written many articles on the problem of debt growing faster than GDP and the economic damage it is doing and will do. However, when putting current deficits into proper context with the pace of economic activity, the recent growth is not glaringly different from other experiences of the last 20 years.
As such, we find it hard to believe that debt is responsible for the recent run-up in Gold.
Geopolitical
Geopolitical problems, especially regarding Ukraine and Israel, are indeed problematic.
Russia could deploy nuclear weapons or expand the war to other neighboring countries. An invasion of a NATO country would all but force involvement from the U.S. and European powers.
The Israeli-Hamas conflict appears to be a proxy war with Iran. While the theater of war is primarily in Gaza and, to a lesser degree, surrounding countries, the possibility of more direct involvement between Israel and Iran is problematic. Direct Iranian actions against Israel would likely be met with military force from the U.S. and other NATO powers.
Not to minimize the two geopolitical events and other less critical ones, but the U.S. and Europe have been in various wars in the Mideast and Afghanistan for most of the last 20 years. Is today’s global geopolitical situation much more frightening than in years past?
As we started writing this on April 4, 2023, a rumor circulated that Iran might be planning missile attacks against Israel. The S&P 500 fell by over 1% rapidly, and Gold promptly gave up $25. If geopolitical concerns are responsible for the recent gains, shouldn’t increasing tensions in the Middle East further add to Gold’s value?
Gold Predicts Inflation, Or Does It?
Some argue that Gold prices are warning that the lower inflation trends of the last 30 years are reversing.
If Gold is such a good predictor of prices, why did the price go nowhere when the Fed and government were raining money on the economy and supply lines were shut down? That period represents the most significant inflationary setup in over 40 years.
Dovish Fed In High Inflationary Environment
Since late last year, the Fed has flipped from an uber-hawkish tone to a more dovish one. Despite easy financial conditions (LINK), high and sticky inflation, and above-average growth, the Fed seems intent on cutting rates multiple times this year. Many would argue that a more prudent Fed would keep its hawkish tone and possibly raise the specter of increasing rates further.
As we showed earlier, monetary policy, while seemingly becoming easier, is still at its tightest levels in over 15 years. Compare monetary policy today to that in 2013 and 2014. The economy was growing then, yet the Fed had rates pinned near zero percent and was doing QE. As we share below, Gold languished during that period, despite complete monetary policy carelessness.
Crypto – AI Mania
Having discussed a few of the standard responses pundits are spewing regarding Gold’s ascent, we share one that may not be as popular with gold holders.
Gold is a speculative asset. Accordingly, it can rise and fall, and at times violently, based solely on the whims of traders and speculators.
Might the current surge in Gold be less a function of the issues we raise above and more about the speculative mania flowing through many markets? Consider the five graphs below. The graphs show a solid visible and statistical correlation over the last two years between Gold and Bitcoin, Nvidia, Meta, Eli Lily, and the S&P 500.
Summary
The previous few sections share some typical rationales to justify higher gold prices. While they sound like legitimate reasons for Gold to soar, when taken into context, they are not that different from other periods in the last twenty years when Gold was flat or trending lower in price.
The price of Gold can provide valuable insights at times. But other times, Gold can give false signals warped by irrational market behaviors. We think Gold is getting caught up in a speculative bubble, and its price is not presenting us with a warning of fiscal, monetary, or geopolitical crisis.
Gold is likely to have a more reliable and sustainable run higher when the Fed returns to its careless ways with real yields near 0% or even negative, and QE is again in operation.
CMS121 mitigates aging-related obesity and metabolic dysfunction
“[…] CMS121 applicability could be expanded from a geroneuroprotector drug to a metabolic drug […]” Credit: 2024 Dafre et al. “[…] CMS121 applicability…
“[…] CMS121 applicability could be expanded from a geroneuroprotector drug to a metabolic drug […]”
Credit: 2024 Dafre et al.
“[…] CMS121 applicability could be expanded from a geroneuroprotector drug to a metabolic drug […]”
BUFFALO, NY- April 9, 2024 – A new research paper was published inAging (listed by MEDLINE/PubMed as “Aging (Albany NY)” and “Aging-US” by Web of Science) Volume 16, Issue 6, entitled, “CMS121: a novel approach to mitigate aging-related obesity and metabolic dysfunction.”
Modulated by differences in genetic and environmental factors, laboratory mice often show progressive weight gain, eventually leading to obesity and metabolic dyshomeostasis. The geroneuroprotector CMS121 has a positive effect on energy metabolism in a mouse model of type 2 diabetes. In this new study, researchers Alcir L. Dafre, Saadia Zahid, Jessica Jorge Probst, Antonio Currais, Jingting Yu, David Schubert, and Pamela Maher from Salk Institute for Biological Studies, National University of Sciences and Technology (NUST) and Federal University of Santa Catarina investigated the potential of CMS121 to counteract the metabolic changes observed during the ageing process of wild type mice.
“This comprehensive analysis aimed to further understand how CMS121 influences the metabolic landscape, paving the way for potential therapeutic applications beyond its established geroneuroprotective benefits.”
Control or CMS121-containing diets were supplied ad libitum for 6 months, and mice were sacrificed at the age of 7 months. Blood, adipose tissue, and liver were analyzed for glucose, lipids, and protein markers of energy metabolism. The CMS121 diet induced a 40% decrease in body weight gain and improved both glucose and lipid indexes. Lower levels of hepatic caspase 1, caspase 3, and NOX4 were observed with CMS121 indicating a lower liver inflammatory status. Adipose tissue from CMS121-treated mice showed increased levels of the transcription factors Nrf1 and TFAM, as well as markers of mitochondrial electron transport complexes, levels of GLUT4 and a higher resting metabolic rate. Metabolomic analysis revealed elevated plasma concentrations of short chain acylcarnitines and butyrate metabolites in mice treated with CMS121.
“The diminished de novo lipogenesis, which is associated with increased acetyl-CoA, acylcarnitine, and butyrate metabolite levels, could contribute to safeguarding not only the peripheral system but also the aging brain. By mimicking the effects of ketogenic diets, CMS121 holds promise for metabolic diseases such as obesity and diabetes, since these diets are hard to follow over the long term.”
Read the full paper: DOI:https://doi.org/10.18632/aging.205673
Corresponding Authors: Pamela Maher, Alcir L. Dafre
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About Aging:
Agingpublishes research papers in all fields of aging research including but not limited, aging from yeast to mammals, cellular senescence, age-related diseases such as cancer and Alzheimer’s diseases and their prevention and treatment, anti-aging strategies and drug development and especially the role of signal transduction pathways such as mTOR in aging and potential approaches to modulate these signaling pathways to extend lifespan. The journal aims to promote treatment of age-related diseases by slowing down aging, validation of anti-aging drugs by treating age-related diseases, prevention of cancer by inhibiting aging. Cancer and COVID-19 are age-related diseases.
Agingis indexed byPubMed/Medline (abbreviated as “Aging (Albany NY)”), PubMed Central, Web of Science: Science Citation Index Expanded (abbreviated as “Aging‐US” and listed in the Cell Biology and Geriatrics & Gerontology categories), Scopus (abbreviated as “Aging” and listed in the Cell Biology and Aging categories), Biological Abstracts, BIOSIS Previews, EMBASE, META (Chan Zuckerberg Initiative) (2018-2022), and Dimensions (Digital Science).
Please visit our website at www.Aging-US.com and connect with us:
Grab, the Singapore-headquartered “Everyday Everything App,” is Southeast Asia’s answer to Uber, DoorDash, Instacart, and Venmo — all in a single platform.
Best known for its ride-hailing and delivery services, the Grab app also offers a wallet feature that allows users to make payments online and in person, send money to family and friends, finance purchases over time, and even buy travel insurance.
In essence, Grab is (attempting to become) the go-to digital toolkit for everyday life in the eight countries in which it operates — currently, that’s Cambodia, Indonesia, Singapore, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam.
The app has been called Southeast Asia’s answer to Uber, and, as of late 2023, Grab reportedly serves 35 million unique users each month according to the Business Times.
Much like Uber does in the U.S., Grab connects riders to drivers and diners to delivery people across eight countries in Southeast Asia.
Trading publicly in the United States on the Nasdaq exchange since its 2021 IPO, the company turned a profit for the first time during the fourth quarter of 2023 and shows no signs of slowing down.
Here’s what you need to know about Grab's features, its stock, and its ongoing quest to become Southeast Asia’s “one app to rule them all.”
How did Grab become the Uber of Southeast Asia? A short history of the app
Grab was born in 2012 at Harvard Business School, the brainchild of Anthony Tan (CEO) and Tan Hooi Ling (COO), both Malaysian nationals who earned their MBAs there the year prior. The pair launched their mobile app — then called “My Teksi” — using a $25,000 grant from the school along with an unknown amount of personal capital.
The purpose of the app was to connect taxi drivers with passengers via their smartphones in order to create a simple and orderly alternative to Malaysia’s then-chaotic (and sometimes unsafe, especially for female riders) ride-hailing environment.
In 2013, the company — by then called GrabTaxi — expanded, making its digital ride-hailing app available in the Philippines that summer, then in Singapore and Thailand before the year’s end. The next year, the company rolled out a fleet of 100 electric taxis in Singapore, expanded operations to major cities in Vietnam and Indonesia, and launched GrabBike, a ride-hailing service for motorbike rides.
Anthony Tan (CEO) launched grab with colleague Tan Hooi Ling (COO) in 2012 after the two graduated from Harvard Business School.
In 2015, the company launched GrabExpress as a package courier service. The following year, it rebranded (shortening its name to Grab and updating its logo) and introduced in-app messaging and translation for drivers and riders. It also created the GrabRewards program, through which users can earn points redeemable toward discounts on subsequent Grab services.
In 2017, the company launched GrabPay, its first financial technology offering, after acquiring an Indonesian payment company called Kudo. Next, it acquired Uber’s Southeast Asian assets and operations in early 2018, cementing Grab’s status as the dominant ride-hailing service in the region.
As a result of this acquisition, which included Uber Eats, Grab added food-delivery services to its suite of offerings, first in Singapore and Malaysia, and then in the remainder of its market before the year’s end.
As part of this deal, Uber received a 27.5% stake in Grab, and Uber CEO Dara Khosrowshahi joined the company’s board. So, the American-based ride-hailing and delivery giant now has a vested interest in seeing Grab succeed in its own market. Also as part of this 2018 acquisition, Grab agreed to go public by March 2023, a promise it kept with a little over a year to spare.
Business Insider reported the same year that Grab had become Southeast Asia’s first “decacorn” after securing more funding than any other tech startup in the region during the three years prior. (Unicorns are privately held companies worth more than $1 billion, while “decacorns” are privately held companies worth over $10 million.)
The company continued to make acquisitions in the fintech space, gradually expanding its in-app financial offerings to include money transfers, payments to merchants, microloans, insurance services for drivers and passengers, and buy-now-pay-later programs.
Anthony Tan (CEO) and Tan Hooi Ling (COO) are pictured here celebrating the company's 2021 IPO on the Nasdaq stock exchange.
By the time it went public on the U.S. stock market via a SPAC merger with Altimeter Growth Corp., the company had built a vast network of partnerships that allowed customers to hail car and motorbike rides, book travel, order food, pay for goods and services, send and receive money, and even obtain travel insurance policies.
In December 2021, Grab shares opened at $13.06 during the company’s first day trading on the Nasdaq, but they tumbled to around half that by the end of the day. Shares continued to fall, and for the next two years, they bobbed up and down in the $2.80 to $3.80 range.
In the fourth quarter of 2023, however, Grab moved into the black for the first time, posting a profit of $11 million on revenue of $653 million, up 30% from the 2022 fourth quarter.
So, what’s next for the Uber-backed “everything app?”
The market has known since late February 2024 that Grab became profitable during 2023’s final quarter and that it was initiating its first-ever share repurchase program (both of these are usually positives for a stock). That news, however, didn’t seem to do much to bolster the company’s stock price, which sat at around $3.16 then and hadn’t moved much by early April.
The company’s first-quarter 2024 earnings call is set for May 16, and any guidance the company issues on the call could be the catalyst that pushes the stock out of its limbo.
As of this article's last update, company insiders held about a quarter of Grab's stock, while institutional investors — including Morgan Stanley, Blackrock, Invesco, and Bank of America — held just shy of 55% percent. Short interest stood at 2.73%, indicating largely positive sentiment.
During the company’s last earnings call, CEO Anthony Tan said that Grab has grown to become the “largest on-demand platform in the region at a scale that is over 3x larger than [its] next-closest competitor.”
He also noted that, as pandemic-related travel hesitation has waned, the company’s “mobility revenues also increased by 26% YoY in Q4 and 36% YoY for the entire year, driven by an increase in tourist ride-hailing demand.”
During the call, Tan mentioned that the brand is increasing its focus on its travel segment. The travel business offers hotel booking and travel insurance services (more on these below), as non-local travelers tend to spend more than local customers in the markets where Grab operates.
All signs point to continued growth, but growth is expensive, so whether the company will continue to post profits in subsequent quarters will depend on how much it spends on acquisitions and partnerships vs. how much it leverages its current assets.
Because Grab operates in hundreds of cities across eight different countries, the services it offers vary by location. So, some of the features explained here may not be available in all markets.
For instance, Grab users in Vietnam, where motorbikes are ubiquitous, can order motorbike rides as a cheaper alternative to hiring a car, whereas in Singapore, where motorbikes are less popular, only car taxi rides are available.
Ride-hailing
Taxi-hailing was Grab’s first offering when it launched in Malaysia in 2012. The company’s mobility arm remains one of its most important, although it now ranks second to delivery in terms of revenue.
Functionally, Grab rides work much like those booked through Uber or Lyft in the U.S. Grab users can enter their destination and book taxi rides through the app with the cost shown up-front. Those willing to wait longer for a ride, share a car with other riders, or ride on the back of a motorbike can access lower fares.
All riders can view drivers’ details and ETA, and message drivers with instructions (the app can translate these messages if the rider and driver use different languages). Larger vehicles, pet-friendly cars, cars with booster seats for children, and luxury vehicles are also available at various price points.
Grab's food delivery service works much like Uber Eats or DoorDash does in the U.S.
Grab offers three types of delivery services: food, mart, and express. Together, these services account for more revenue than the company’s ride-hailing services.
GrabFood
Grab’s food-delivery feature is quite similar to DoorDash and Uber Eats. Customers can browse the menus of a variety of restaurants, ranging from street carts to fine dining, and order food for delivery, pick-up, or dine-in. Deliveries can be immediate or scheduled, and in-app discounts, coupons, and rewards are sometimes made available.
GrabMart
Grab’s mart delivery feature is similar to American apps like Instacart and GoPuff. Users can browse the wares of partner grocery, pharmacy, and convenience stores and order anything from food staples to toiletries. Deliveries can scheduled ahead of time or placed on an ASAP basis.
GrabExpress
GrabExpress is the company’s courier feature, which offers the types of services bike messengers provide in large American cities. A user requests a delivery and then hands off their parcel to a Grab partner, who immediately totes it to its destination, providing photographic proof of delivery upon completion.
This service can be used to send anything from a confidential single-page document to a 50 kg (110 lb) package, and all deliveries are automatically insured up to $500 (additional protection of up to $2,000 can be purchased for higher-value deliveries).
GrabPay allows users to pay for purchases online and in person using funds in the app's digital wallet.
Since around 2017, Grab has been expanding the financial side of its app via strategic acquisitions and partnerships with fintech companies. Its financial products vary depending on location, but most center around the GrabPay Wallet.
GrabPay Wallet
The GrabPay Wallet is a cashless payment system Grab customers can use to pay for Grab services, pay bills, send money to others, and make purchases online and in-person at merchants that accept GrabPay.
The GrabPay Wallet’s functionality is similar to that of Paypal or Apple Pay, and by using it, customers accumulate GrabRewards points that can be redeemed toward any of the services the Grab app offers.
Rider and driver insurance
Grab riders are automatically insured up to $20,000 in personal accident coverage whenever they hail a car or bike, and supplementary coverage of up to $100,000 can be purchased for an additional $0.30 per ride.
Grab drivers are also insured automatically up to $20,000 for accident-caused death or disability and up to $2,000 for accident-caused medical expenses.
Third-party liability insurance also covers drivers up to $200,000 for injury or property damage to others. Driver insurance also pays out up to $200 per day for 60 days of hospitalized medical leave or 14 days of non-hospitalized medical leave.
Travel
Grab also offers some in-app solutions for non-local travelers, although these are still somewhat limited.
Travel insurance
Grab users who are traveling can use the app to purchase travel insurance that covers things like medical expenses, delays, and lost luggage. Users enter basic information like their destination and trip duration, and the app provides an instant quote, with daily premiums starting at around $4.
Hotel booking
Grab users can book stays at millions of hotels directly through the Grab app, sometimes with Grab-exclusive discounts, earning Grab rewards as they do so.
Analyzing the impact of the pandemic on crypto and the explosive growth of DeFi, including Bitcoin’s third halving and the rise of NFTs.
The COVID-19 pandemic wreaked havoc on human lives and the world economy when it broke out in early 2020. The crypto world was battered as well, with the cryptocurrency market plummeting in March of that year. Bitcoin (BTC) lost 52% of its dollar value in a day, and Ether (ETH) lost 43%, shaking up decentralized finance (DeFi) as it fell.
The resulting lockdowns had a slower but more profound effect on crypto. As the world became housebound, screen time rose steadily, and interest in cryptocurrency soared, along with market capitalizations. Soon, emerging technologies were undergoing development and implementation at a pace previously unseen.
The first steps in DeFi were taken in 2017 with the development of smart contracts on the Ethereum blockchain. MakerDAO and Compound were early market leaders. In June 2020, Compound introduced yield farming, also known as liquidity mining, a method of arbitrage that shifted crypto assets to attain the highest interest, fees and rewards. It is now common practice.
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