All We Have Is Data In The Wind
Welcome to Fed Fridays, Great Ones! Where digital currencies are made up, and the basic appeals of blockchain don’t matter!
We’re going to keep things snappy today for … reasons. But we do need to talk about the Fed’s flirtation with digital currencies.
And as far as the Fed is concerned, we’re just talking about digital currencies today … not cryptocurrencies exactly. The Fed made that painfully clear yesterday when it announced that it’s still dabbling with the idea of launching a U.S. digital dollar.
Powell and the bunch plan to put together a paper over the summer that outlines the Fed’s “current thinking” on a central bank digital currency, or CBDC. Again, not a crypto, mind you — just a digitized form of the U.S. dollar that the Fed issues.
A regular ol’ digital dollar. No blockchain on the backend. No funny crypto business. No replacing physical cash. Just plain-Jane vanilla digital currencies … issued by the Fed.
For the most part, I can’t help but think that the Fed’s constant thumb-twiddling about CBDCs and digital payments and the overall crypto space is just … a big fat nothingburger.
Folks who are gung-ho about digital currencies already know that the Fed is behind the ball on this compared to Sweden, China and Japan, which are already testing digital currencies.
I commend the effort to catch up with the times … but the Fed’s gotta pack more heat than this if it, too, wants to brave the new digital world. The Fed’s been “exploring a move to a CBDC” for ages — who do they think they’re hyping up here?
Crypto diehards and purists aren’t that interested in the Fed’s developments to begin with — what’s the point of a digital currency not based on the ultra-secure blockchain? Why have your currently decentralized cash placed back under the control of giant institutions?
And everyone who hears “digital dollar” and freaks out about their cash disappearing into the virtual ether is truly making much ado about nothing … which just underlines my main point here: From the sound of it, the Fed’s digital currency plans aren’t anywhere near as revolutionary as Powell makes them out to be.
Unless you’re one of the greenback-loving holdouts still stuffing cash into your mattress … how much of your money do you actually touch? It’s all just ones and zeros on some database somewhere, isn’t it?
We were already shouting about how “paper currency will be dead!” waaay back in January. Back then, even Elon took time off from influencing commenting on crypto prices to proclaim that “Money is just data that allows us to avoid the inconvenience of barter.”
And he’s right: The digital dollar is already here. Surprise … it’s the dollar.
Digital currency is already in your life, all up in your interwebs. What comes next is about the efficiency of access — especially for the country’s underbanked folks. More or less: Do you want your money centralized with digital currency … or decentralized in crypto?
That’s for you to decide. And if the Fed was paranoid about losing that centralized control … you wouldn’t know it from how slow it’s moving. But what do you think?
Let me know your thoughts right here: GreatStuffToday@BanyanHill.com.
And now for your Friday Four Play — right after this quick word from our sponsors!
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No. 2: Pet Shop Boys
Despite its late arrival to the e-commerce game, Petco Health & Wellness (Nasdaq: WOOF) had a bang-up quarterly report that walloped analysts’ expectations on both fronts. Per-share earnings nearly doubled the Street’s predictions for $0.09, while revenue grew 27% year over year and also topped estimates.
The pandemic-fueled pet explosion — hang on, let me rephrase that. With virtually everyone adopting pets while on lockdown, pet suppliers are making out like bandits — who knew?
Now, Petco’s cool and all for those last-minute runs where online ordering won’t do — Did you forget to order dog food? Fudge, I’ll be back. — but for my money, Chewy (NYSE: CHWY) has everyone beat out of sheer convenience and cost-savings. But Petco’s report shows that it’s won’t just sit, lie down and roll over and take the online-shopping L either.
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No. 3: SNAP, Crackle, Phhbbbt
Snapchat parent Snap (NYSE: SNAP) fell further down the augmented reality (AR) rabbit hole today, buying out an AR parts maker called WaveOptics for $500 million. This comes off the back of Snap’s announcement yesterday for Spectacles — AR glasses that “overlay computing on the world” and let you interact with filters. But in, like … real life, man!
While the specs are only available to “creators” for now — whatever that entails — the good news is that this has distracted (some) investors from Snap’s narrow earnings beat a month ago. I, on the other hand, have reservations. Negative Nancy today, I see, Joe…
Besides Snap’s infatuation with making AR happen, I’ve said that I don’t quite understand where Snap goes from here. I don’t think Snap knows either. Is it a social media company? Is it an AR innovator? Can you truly straddle the line of both without it coming across like Facebook’s (Nasdaq: FB) halfhearted flings with virtual reality?
Investors at least want Snap to incorporate AR in a way that brings in cash and not just gimmicks. And no … this is not me asking for real-life ads in AR. My house doesn’t need to be a billboard. Stop it, Snapchat. I know that dystopian future is coming someday, but please, not today.
No. 4: Kansas City — Hey Hey Hey!
Kansas City Southern (NYSE: KSU) is done with all that railroad courtship and finally said “yes” to Canadian National Railway’s (NYSE: CNI) merger proposal.
Everyone in the railroad investing community (there are dozens of us, I swear) held our breath wondering if Kansas City Southern would take Canadian National Railway’s offer $30 billion … or if former suitor Canadian Pacific (NYSE: CP) would pony up more than the $25 billion that it offered.
I’m a-freight not: Canadian Pacific has had enough of the dramatics and isn’t about to start a bidding war over its lost love. The company will still get $700 million as a “breakup fee” for its troubles because apparently, all’s fair in romance and railroads. Though, I’d imagine many a “sorry” was uttered between the two Canadian competitors.
Next, Kansas City Southern and Canadian National will merge and form the first Canada-U.S.-Mexico railroad … as long as regulators OK the massive deal, which might become another tangled saga in itself.
That about wraps it up for today, Great Ones, but don’t think the fun stops here: If you’re in the mood to ramble or rant away, we’re in the mood to listen in!
Write to us at GreatStuffToday@BanyanHill.com with your thoughts on Snapchat’s grasp on augmented reality, Kansas City’s revolving door of railroad suitors … or whatever topic gets your fingers flying over your keyboard with fury.
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Until next time, stay Great!
Editor, Great Stuff