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Alexander Stahel 🌻 Profile picture
@BurggrabenH
Nov 12, 2022 • 21 tweets • 12 min read • Read on X
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TAM mirage + crabbing market share + nerdy talk is how money is destroyed fastest.

What is unacceptable is that quality VCs still fail to DD investments properly while having zero macro process. They deserve to be sued by LPs.

@sequoia @FTX_Official @SBF_FTX
Back door
Enron comp
Inside job - not sure why that is even a debate.
Marc Cohodes explains a thing or two
Filings showed that Alameda has more than 100,000 creditors.
First comes the draw down, then comes the sell down

@WifeyAlpha @DrastikThomas
Optimistic, but John Ray seems to see some „assets“ for now…which of course allows him to pay out his salary

@WifeyAlpha @DrastikThomas @kittysquiddy
Why? FTX’s biggest asset as of Thursday was $2.2bn worth of a cryptocurrency called Serum. Serum’s total market value was $88m on Sat, acc to CryptoCompare. Personally I doubt 10cent on $ will be returned to creditors in some years.

@DrastikThomas @WifeyAlpha @kittysquiddy
Bankman-Fried personally seems to own shares in Robinhood.

Some value there to be recovered for FTX creditors in a lengthy court process but by now it’s obvious the guy used FTX funds to finance his personal holdings.

@DrastikThomas
He wanted to sell at a 20% discount - too little too late

@DrastikThomas
Given how young this unregulated space is: (a) assume more „FTX issues“ to come to light soon; (b) expect most retailers wanting to liquidate their coins (if they even can) to buy safe $ bills 💵 (oh the irony); which (c) pushes all coins (much) lower in coming weeks.

#Bitcoin
Lesson 1:

If an exchange goes bust, its users’ „digital assets“ (funny name I know) will go into the bankruptcy estate that lawyers & advisors divvy up: Creditor rankings for payouts means „customers“ come last. Watch & learn with laser eyes…!

wsj.com/articles/a-cry…
Lesson 2:

The only thing that matters for any asset when trust vanishes is liquidity. For an exchange however, it always was the only thing that mattered. An exchange going bust & lawyers taking over for years is the mother of “self-feeding” coin value destructions.

#Bitcoin
Lesson 3:

In a bankruptcy process, the administrator is by definition a destress seller which makes it hard to recover fair value even for the best trophy assets.

Now take a look at the asset & liability table of FTX…

@DrastikThomas
d1e00ek4ebabms.cloudfront.net/production/7ab…
First, imagine being the administrator and receiving an excel scribble like this for an Enron-like size filing!

Let’s look at the liability side first:
USD 5.1bn in debt (likely in form of client deposits or 3rd party lending) is a pretty good starting point.

#FTXbankruptcy
The list divided assets into liquid, less liquid & illiquid.

SRM (Serum) is the largest single asset at $2.2bn valued. We don’t have ownership no but SRM is distressed (-27% as I write this) with a total market cap of $67m for 100% of tokens. Assume nil value!

@DrastikThomas
Next: Solana (SOL).

Again, we don’t know how many Alameda owned but at least there seems a $5bn market cap left, although that is falling quickly…I suspect some value is recoverable here but never the quoted $900m. Perhaps $50-100m ?
Next: FTT was FTX/Alameda’s own token: a zero buy definition - not $550m - although the market hasn’t fully priced that yet (market cap still $230m for 100% tokens).

@DrastikThomas
And MAPS, quoted at $616m value? Well, the whole token cap is $3m while the coin is -28% as we write this.

Prima vista #FTX is a likely write off for 100,000 depositors (creditors) after studying the 4 largest positions as stated by mgmt.

@DrastikThomas @BobgonzaleBob

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More from @BurggrabenH

Alexander Stahel 🌻 Profile picture
Nov 3
Let's talk China: Episode 5 of 7

In this episode, we discuss China's 2nd of 5 economic paths it can follow.

This episode will also focus on Xi the leader. To understand Xi means to better understand China's economic path forward.

1/n #China Image
Can China replace malinvestment with more consumption?

Answer: Maybe a little bit & over a long time frame, but President Xi does not want to focus on this path. Instead, he wants to implement his socialist utopia.

2/n Image
Yes, China’s rising entrepreneurs were welcomed by the Communist Party for at least two decades. But all of that is in reverse.

Under Xi Jinping, China has moved full circle: from low growth & low freedom in the pre-reform era back towards something similar today.

3/n Image
Read 7 tweets
Alexander Stahel 🌻 Profile picture
Oct 29
Let's talk China, shall we? Episode 4 of 7

In this episode, we discuss China's investment-led growth model & the first of 5 economic paths China can follow.

As you would expect, also this episode is full of Chinese characteristics!

1/n #China Image
Starting in 1990s, China’s economic engine has been fueled by capital investments.

Its central planning bureau defined GDP targets, picked winners and drove growth from debt-driven capital formations (green line).

2/n Image
Has any other nation tried this before, ever? Not to our knowledge.

We checked at ALL G20 economies and their respective growth models for past 70 years. 45% capital formation share is a unique experiment in economic history.

3/n Image
Read 6 tweets
Alexander Stahel 🌻 Profile picture
Oct 20
Let's talk China, shall we?

Over the past 3 years, we made some controversial calls in commodities. We decided to exit our oil holding in Aug 2022, we went short natgas in early 2023 or called for copper to go lower in May.

Why? Because we have an egde on China.

1/n #China Image
Yes, mainstream media picked up pace on important issues facing China today.

Most came to understand that the property bubble burst, that the economy is slowing, that geopolitical frictions are emerging, that there is too much debt.

But do they understand the underlying forces that drive these issues?

2/n
While the majority of these facts are known, most Western observers, investors & industrialists do not fully appreciate their interdependence & the structural changes that are unfolding in China today.

For too long, the CCP had their back.

3/n
Read 10 tweets
Alexander Stahel 🌻 Profile picture
Sep 21
Pre-2020, Gold had one marginal buyer, that being gold-backed ETFs.

Today, gold has at least 3 marginal buyers that can overlap or alternate each other. They are:

- Gold backed Western ETFs (which buy, sell or hold based on US real rates);

- Central Banks seeking higher gold reserves (China; India; Thailand; Vietnam; Qatar, KSA or even Poland) for geopolitical & other reasons;

- Chinese & other Asian wholesale or retail market participants and professional speculators;

Who bought most last? India!

Why? The government cut import duties on gold by 9% at end of July, triggering a renewed surge in demand. “The impact of the duty cut was unprecedented, it was incredible,” said Philip Newman, managing director of Metals Focus in London. “It really brought consumers in.”

At least for now, there seems to be always somebody.

1/nImage
Note however that Chinese retail buying has slowed down recently, as best illustrated by the Shanghai gold premium over international prices.

I will elaborate on the Chinese retail clients more soon.

2/n Image
However, professional Chinese speculators have increased their futures positions somewhat again. Who is the better indicator of what comes next, retail or the pros? IDK

3/3 Thx Image
Read 5 tweets
Alexander Stahel 🌻 Profile picture
Sep 4
In 2023, I said I will tweet less about oil and I will stick to this promise but today I make an exception and will break the promise as we enter a period of more volatility for oil...

So let's talk about OPEC and Saudi market share. It's decision making time.

1/n
Step by step:

The Saudis decided to keep oil from falling <$75 for 2y by cutting overproportionally in their OPEC+ quota context.

They have cap for 12mbpd but produce 9mbpd. It was 10.5mbpd in 2022. Pick a number but they are 15-20% below their fair share.

2/n Image
Why did they do so?

Likely because of bad advisers. There is a whole crew of supply gloomers out there charging clients money to claim the Permian or US shale is about to roll over.

Well, it isn't.

3/n US weekly DOE crude oil Image
Read 14 tweets
Alexander Stahel 🌻 Profile picture
Jun 18
Let me share some real time data on the EU natgas market that are hard to get.

European gas consumption for 28 countries matches last's years to the cubic meter (Oct 2022 - Oct 2023 = Year 2022).

However, consumption remains 17% below 2019/20 season.

Is there a supply issue? Rubbish. The global LNG market is oversupplied from every corner; EU storages will be filled by end of Aug where we sit. We have too much gas.

#TTF 1/4 (in mcm/day and YTD)Image
Three factors matter why there is less consumption vs 2019/20 season:

1) Milder weather: 70% of total consumption is temperature related. Temperatures are milder, thus Europe consumes 14% less vs 2019/20.

Is that permenant? It sure looks like a trend where I sit. But climate scientists can answer that best.

Households Consumption; 2/4Image
2) Less power generation: Europe replaces more and more natgas in the grid with solar & wind and in the case of France with better capacity utilisation of its nuclear fleet. That adds up...!

Selected Power Consumption: 7 countries; 3/4 Image
Read 4 tweets

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