A Breath of Fresh Air

Shares of Inspira Technologies (IINN) tripled in value to open Thursday’s trading session following an announcement that the company had signed a strategic agreement with Innovimed. According to the agreement, Innovimed has committed to purchasing a minimum of 1,522 ART devices and 59,040 disposable units. The purchase order is valued at $108M and will take place over a 7-year period. $IINN closed the day off its high of $6.24 but still finished the day up a hefty +84%.

• Inspira Technologies is an innovative medical device company in the respiratory care industry.
• The company’s developmental ART device is “a cost effective early extracorporeal respiratory support system with an intent to function as an “Artificial Lung” for deteriorating respiratory patients.” Or, as my uncle puts it: “it helps you breathe good”.
• Innovimed is a skilled distributor of state-of-the-art medical devices in Eastern Europe, the Middle East, and Africa. They will be distributing Inspira’s products to hospitals and medical care centers in Poland, Czech Republic, and Slovakia.
• Minor detail, but Inspira’s ART device has yet to be tested on humans (I feel like they should do that) and has not yet been approved by any required regulatory agencies.

Today’s announcement is a step in the right direction for Inspira Technologies. Hopefully, more purchase orders will follow and regulatory agencies will start to take a look at the new technology. With Covid’s most serious symptom being respiratory distress, a device like Inspira’s ART could be a game-changer in the future. $IINN put in multiple highs in the $4.35-$4.45 range in early November. I would like to see a retracement to that area before considering a long position in the stock.

AntiTrust issues

Italian regulators delivered a spicy meatball on Thursday by fining Amazon 1.13B euro ($1.28B in real money) for abusing their power via anticompetitive practices. More specifically, regulators allege that Amazon gave preferential treatment to those who used their inhouse services over other logistics services by making those products more likely to appear as the default option on Amazon.com. AMZN, who plans to appeal the fine, has called it “unjustified and disproportionate”–which is kind of funny, because you could say the same thing about Amazon.

• Amazon can b*tch about being singled out all they want, but this is part of a larger trend. Other MAMAA companies like Apple and Alphabet have been put under increasing regulatory scrutiny in the past couple years for antitrust activity, too– which makes it less likely Amazon’s appeal will work.
• Nor does it help their odds that in 2019, Amazon had 5x as much market share as its closest competitor, which has only widened since then. Maybe they should be thankful they can only be fined up to 10% of their annual revenue.

Now that Italy’s drawn first blood, a regulatory feeding frenzy may be coming. For one thing, the EU, who has been cooperating with Italian regulators, has already filed their own antitrust lawsuit against Amazon. But if these are successful, more crackdowns could be on the way– see China’s nationwide crackdowns on tech and commerce (Rest In Peace Alibaba) and Latin America’s investigation of Mercado Libre. Amazon may be about to get a little less profitable.

I’ll Have a Grande Default Please,

Room for Cream

Bondholders to Evergrande, probably ^

Following up on a story from earlier in the week (almost like real journalists), the global bond markets were rattled Thursday when Evergrande and Kaisa, two Chinese real estate developers, officially defaulted on $1.6B of bonds due to foreign creditors. Fitch ratings confirmed the default as contagion spreads through the Chinese economy like a virus from a Wuhan wet market (cough, cough, lab, cough).

• Evergrande missed the first foreign bond payment last month, but the 30 day grace period ran out earlier this week, and Fitch has officially downgraded the firm to a restricted default rating. Next up is double secret probation.
• The Chinese government is attempting to restructure the massive Evergrande in orderly fashion so as not to cause a crash that could be disastrous to their domestic, as well as global markets. I for one take comfort in China’s exemplary track record in containing things that could be bad news for the world.
• China seems to be trying to balance becoming the dominant force in the world all while maintaining tight controls on businesses and preventing firms from becoming too big to fail. As we’ve seen with Evergrande and Alibaba, communists gonna communist, and Xi will drop the hammer of government on anything and everything.

We can’t help but wonder if it is just the real estate sector that is leveraged up higher than Seth Rogan, or if other parts of the Chinese economy are at risk. When it comes to the Chinese debt market, it’s probably best to employ the Bill Belichick strategy of run, run, and run some more.

Have a seat at the big boy table FTX.

FTX is all grown up, or at least dealing with voice cracks and shaving its upper lip every third day. The cryptocurrency exchange is the newest member of the International Swaps and Derivatives Association (ISDA) which is a major step toward being able to offer digital assets derivatives in the U.S. market, as it does in other countries.

• Standardization of the still-nascent crypto-derivatives market will be necessary to gain entry into the U.S. market where regulators are still figuring out how to deal with all things blockchain.
• FTX acquired LedgerX back in October and rebranded it FTX US Derivatives, which bought the firm CFTC licenses to offer futures, options, and swaps to traders.

Now that FTX can use the ISDA Master Agreement it can eliminate the need to create individual international agreements and increase speed to market. As we see with each passing week, more and more traders have a crypto strategy out of fear they’ll otherwise be relegated to old man yells at cloud status.

-Gary Gensler…probably ^

In an interview with NPR yesterday, SEC head honcho Gary Gensler said, “he’s aiming to announce tougher rules for SPACs by early next year.” SPACs or Special Purpose Acquisition Companies, are “blank-check” companies *read shell companies* that raise money in an IPO with the promise that they’ll find a “good” private business to acquire. Seems legit, kind of, so what’s the issue? The issue is with PIPEs, which are Private Placements in Public Equity, not the kind that J.R. Smith lays. PIPEs essentially give wealthy institutions or individuals stock at a discount, before the merger occurs, which provides an unfair advantage over the general public. Something shady happening on Wall Street? But don’t worry, G-Money’s staff is on the case.

• According to Gensler, there have been 181 SPAC mergers this year worth a combined $370B.
• Some well-known companies to go the SPAC route are Draftkings (DKNG) and Virgin Galactic (SPCE).
• On Monday, it was announced that SPAC, Digital World Acquisition Corp. (DWAC), which planned to merge with former President Trump’s social media venture, is under investigation.

So it only took 181 SPAC mergers for Gary Gensler to start taking a deeper look at them? Good work! SPACs will continue to be popular as long as there are wealthy individuals willing to invest with the “blank check” company. Eventually, we’re going to start hearing about multiple SPAC failures, and when enough investors get hurt, that’s when you’ll start seeing IPOs go the more conventional route. And by more conventional, I mean the general public getting screwed by the likes of Goldman Sachs rather than some Special Purpose Acquisition Company that you’ve never heard of.

Other News Link Roundup

• American Airlines cancels international flights as Boeing’s Dreamliners become a production nightmare (read) 
• “I haven’t felt this high in 40 years,” says inflation (read) 
• Don’t worry, tech bros will be crying again soon (read) 
• New Zealand to outlaw cigarette sales, make smoking even cooler (read) 
• Weekly job claims are lowest since ’69… niiice (read) 

The future is here, via @wallstmemes