NFT Excitement

The digital-art frenzy is showing little sign of slowing down.

Non-fungible tokens, essentially unique digital collectables, have boomed this year as endorsements from the likes of actress Lindsay Lohan, musician Grimes and Dallas Mavericks owner Mark Cuban helped them gain wider acceptance and pop-cultural cachet. Just last week, an investor paid $69.3 million for a mosaic of 5,000 artworks. 

Elon Musk is the latest to stoke the craze, saying he’d sell a song he posted on Twitter as an NFT — before saying a day later it didn’t feel “quite right” to sell.

Regardless of Musk’s apparent change of heart, the market is on a tear. Shares in Hong Kong-Based Takung Art Co., which operates a platform for artists, art dealers and investors, rose 277% on Wednesday. Entertainment stocks such as video game company Liquid Media Group Inc. and virtual reality-focused Integrated Media Technology Ltd. have likewise rallied off potential to tap the NFT space.

What’s next? The numbers might seem astronomical, but don’t be too hasty to denounce it all as a fad. “If the internet really is changing everything, why should the art world be immune?” Tyler Cowen wrote for Bloomberg Opinion. 

Electric Rivalry 

Volkswagen AG stepped up efforts to unseat Tesla Inc. as the world’s dominant electric-car maker. On Monday, the automaker said it would build six battery factories in Europe alone, part of its plans to add about 50 purely battery-powered vehicles to its lineup by 2030.

Investors responded positively to the news: Preference shares rose 11% on Wednesday in Frankfurt, surpassing SAP SE to become Germany’s most valuable public company. Volkswagen’s common shares are now up more than 73% this year while the more liquid preference shares are up more than 49%.

The moves might set off a German electric vehicle arms race. On Wednesday, BMW AG set a goal for roughly half of total sales to be all-electric by the end of the decade.

What’s next? Volkswagen is “poised to overtake Tesla’s battery-electric vehicle (BEV) crown in 2023 and catch up on software by 2025, a view the market is only now developing,” said Bloomberg Intelligence analyst Michael Dean. He thinks the new Macan, made under the Porsche brand, could drive the company’s share of the BEV market to 30% by 2022. 

Easy Money

U.S. interest rates are still set to remain close to zero through the end of 2023, according to the latest projections from Federal Reserve Chair Jerome Powell and his colleagues announced Wednesday.

While forecasts for growth, inflation and the labor market were upgraded, Powell reiterated it was still no time to be talking about tapering policy. And the uptick in inflation is expected to be temporary, the central bank said. 

Stocks rose, the dollar fell and gold surged, having touched a nine-month low early last week as inflationary fears made holding the non-interest bearing metal less attractive. While rising long term yields are likely to limit the upswing, the latest messaging certainly gave it a boost.

What’s next? “Easy money is not going away anytime soon,” Edward Moya, an analyst at Oanda, said. “The bottom is firmly in place for gold.”

Biotech Focus

Cathie Wood’s flagship ARK Innovation ETF (ARKK) has been the darling of Wall Street over the past year, but a new upstart is lapping its gains so far in 2021: the Direxion Moonshot Innovators ETF (MOON) has risen 33% this year, compared with a 3.6% loss for ARKK.

ARKK gained notoriety thanks to big bets on tech companies that thrived during the pandemic, driving returns of more than 200% in the past 12 months and helping to spur a loyal following around Wood. But the funds large stakes in firms like Tesla, Square Inc. and Roku Inc. dragged it down in the past month.

The relatively small MOON, with about $220 million in assets compared with ARK’s $24 billion, has instead tied its fortune to biotech firms: Its largest holdings, laser-scanning company MicroVision Inc. and Vuzix Corp., an optical goods manufacturer, have advanced 196% and 163% respectively this year.

What’s next? MOON’s mix of upstarts in sectors like clean energy, genetic engineering, and wearables might be attractive to investors willing to trade long-term stability for upside. “These are higher risk, higher reward segments and even the leading companies remain in the early stages of development,” said Todd Rosenbluth, head of ETF and mutual fund research for CFRA Research.

“I think the fund is more of a satellite position in a portfolio and whoever is buying the product should realize has the potential to be dealing with a lot of volatility in holding this product,” Bloomberg Intelligence analyst James Seyffart said. “But flows tend to follow performance so if it continues to do well I’m sure we will see more flows directed its way.”

Greek Return

Debt investors lapped up Greece’s first 30-year bond issuance in over a decade.

More than 26 billion euros ($31 billion) of orders were placed for 2.5 billion-euro sale, making it the most oversubscribed deal in Europe for over a month.

It’s a sign of just how far Greece has come since the euro debt crisis. In 2012, yields on 10-year debt soared to 44% as the country was effectively locked out of international markets. Now those yields are below 1%.

What’s next? “It’s proof that Greece is back,” Greek Prime Minister Kyriakos Mitsotakis said in an interview with CNN TV. “It’s just one additional step we take in the direction of leaving our legacy and our past decade once and for good.”

— With assistance by John Ainger, and Christoph Rauwald