Question: which person’s comments can shift an entire asset class?
The most obvious answer is US Federal Reserve chair Jerome Powell. But a strong second choice would be Elon Musk.
The South African billionaire electric vehicle maker/self-promoter has gleefully manipulated the value of Bitcoin this year, likely to his own benefit.
In late January, Musk added the hashtag #bitcoin to his Twitter bio, and two weeks later, on February 8, Tesla told the Securities Exchange Commission it had invested $1.5 billion into Bitcoin and would accept them as payment. The digital currency soared from $38,100 to around $46,000 within a week.
Then on May 12 Musk changed his tune, announcing that Tesla would no longer take bitcoin over concerns that mining for the crypto could encourage more fossil fuel usage (hardly a secret – see page 20 for more). Bitcoin’s price collapsed from $72,000 at the time to $32,449 by May 24.
Musk then reversed again on June 13, saying Tesla could take bitcoins from miners who source half their energy renewably; the crypto duly hopped up from $35,716 to over $40,000 the following day.
Musk has also boosted Dogecoin, a cryptocurrency that was created as a joke; its value soared from $0.00971 on January 3 to $0.6576 on May 5, up 67-fold – then collapsed to $0.3182 on June 16.
It’s not the first time people have been suckers for get-rich-quick schemes (think: South Sea bubble, Tulip bubble, dotcom bubble. Spoilers – they all popped). And people who bought into Bitcoin and some crypto peers have made fortunes.
For those with money for a flutter, buying some digital currencies may appeal – even when based on a dog. But caution should be the watchword for any asset that can be so easily influenced by publicity-seeking celebrities.
If the value of cryptos collapses, Musk will still be a multi-billionaire. Not many others can make similar claims.
“Everywhere except in Asia, coal is a dying or dead industry. While you generally wouldn’t fully exclude fossil fuels, for sure you need to review your investment portfolio and take out the most problematic participants, such as coal”
A senior ESG research executive at a global index provider thinks coal companies are swiftly heading for pariah status among international investors.
COVID AND CRYPTOS
Major sporting events offer a curious insight into nations’ conflicting impulses.
On the one hand, hosting a FIFA World Cup or Summer Olympic games is chest-thumpingly appealing to political leaders and populations alike. On the other, the events costs astronomical sums and they tend to leave behind a host of under-utilised sporting facilities or stadia.
On top of that, Tokyo can add the impact of Covid-19.
With typically meticulous planning, the capital city of Japan has prepared for the Olympics for years. It was set to go off without a hitch until the onset of a global pandemic. The games were quickly delayed a year from 2020, and recently opened, on July 23.
The trouble is, large scale audiences were banned. Indeed, there have been concerns about allowing too many athletes to mingle - and a few cases of Covid-19 among athletes and their support teams have emerged since the games began.
These precautions have had the unfortunate effect of dulling down an extremely costly spectacle. Ahead of the games, many sponsors contemplated pulling out to avoid the potential stigma of being associated with a pale shadow of a regular Olympic Games.
The result is that the event will cost Tokyo around $15.4 billion, and yet the city won’t get much of the tourism and supporter benefits that typically come from hosting it.
It may not be the only international sporting event affected. Covid-19 is unlikely to fully recede until the world has broadly been immunised – something that is likely to take until 2024 in certain areas of Africa and central Asia. The pandemic is already impacting qualifying games for the FIFA World Cup 2022, set to take place in Qatar. Even the next Summer Olympics, set to take place in Paris in 2024, could feel the late ramifications.
More broadly, the pandemic underlines the risk of hosting expensive multi-national sporting events. It is hard enough to prepare the logistics and infrastructure for thousands of visitors and sports teams; add in outbreaks of disease, and the risks swiftly begin outweighing the benefits.
Will a legacy of the pandemic be a growing reticence towards hosting these multi-billion-dollar sporting events? It’s possible. Then again, there is rarely a dearth of ambitious politicians or country leaders wanting to splash some cash to burnish their statesman credentials.
As long as people like sports and politicians like popularity, countries will want to host them. It’s always easier to envisage the prize than the risk.