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Nov 26, 2021

"The Great Resignation" has caught the imagination of many, and indeed for a reason. In September, a record 3% of the US workforce voluntarily left their jobs, taking the cumulative figure to over 20 million this year. Other regions are not far behind, with nearly 14 million quitting from the OECD region.

So, what’s driving the exodus? People are re-evaluating what they want to do with their lives and what work means to them. Some are resigning lest they catch the virus, while some have made a killing from the stock market and crypto boom. But the vast majority, largely mid-level employees in their mid-30s and early 40s, are quitting due to burnout, low pay, or they're just looking to explore other opportunities. Hospitality & Leisure and the Education industries are worst hit. Still, the Professional and Business services are also not far behind.

The ongoing saga may paint a gloomy picture, but it is indeed not. The hiring in September was at 6.5 million, which is over 2 million more than the quit rate indicating the job market looks strong in the US. Yet, employers have a lot at stake, with some estimates suggesting the cost of replacing employees is ~1.2x more than that of finding and training new ones. Companies need to adapt quickly and offer solutions that make employees feel valued and cared for to avoid situations going out of hand.

While it can be debated whether the ongoing trend is transient or permanent, one thing is sure: the pandemic has changed the way we think. As they say, our experiences shape our choices, and the pandemic has changed how we look at our lives

Nov 22, 2021

The word 'Metaverse' caught people’s imagination after Facebook changed its corporate identity to Meta Platforms. However, the term Metaverse isn’t that new and dates back to 1992, when it was coined by author Neal Stephenson in his Sci-fi novel “Snow Crash.” So, what exactly is Metaverse? To begin with, it means a seamless shared virtual reality, offering experiences identical to those we find in the real world. Metaverse is the next generation of the internet powered by augmented and virtual reality. And we may see a fully formed one in a decade.

The key features of such a space are real-time persistency (to continue functioning even when the user has left), economies (users can earn and spend in digital and fiat currencies), and communities. But also, digital avatars, immersion (engaging user’s all senses), multi-device compatibility, inter-operability (open architecture instead of closed ones), and the existence of multiple metaverses at the same time. That may seem quite futuristic. However, some early forms of Metaverse already exist in today’s world in the form of social media, NFTs, blockchain technology, and online gaming platforms like Roblox, etc.

Metaverse is often seen as a big tech revolution that could reach approximately a trillion-dollar opportunity by 2024 from USD 500bn in 2020. However, it also comes with its own set of concerns such as data privacy, separation of human beings from the real world, societal changes, etc. In the end, its impact depends on how we put it to use, just like other technological innovations.

Nov 12, 2021

Crypto mining is highly energy-intensive and generates a lot of heat. That's because it involves solving complex algorithms with accuracy, high speed, and efficiency using specialized high-performance machines housed in big data centers. To run the machines efficiently, the data centers are required to have an effective cooling mechanism. Air and water cooling are common, but they are far from ideal. According to estimates, data centers consumed over 660 billion liters of water in 2020 alone. That, along with high energy intensity, makes it far from sustainable, despite the crypto-mining industry using more renewable energy to run operations (from 3% in 2Q21 to c.58 in 3Q21).

Immersion Cooling Technology, however, has the potential to make mining more sustainable. Immersion cooling involves submerging mining ASICs (Application-Specific Integrated Circuit) into a specialized fluid that absorbs and recycles heat from data centers. The fluid dissipates 1600x more heat than air. The technology is expected to help increase the hash rate by 25-55% and ASIC’s performance by 50%. It is estimated that the technology can help reduce heat and noise by 95%. In fact, 40% of the heat absorbed can be reclaimed to generate power. The capital intensity for the same output level can be brought down by as much as 50%.

With plenty to offer, immersion cooling technology can be a game-changer for the crypto-mining industry. It could help the industry achieve carbon neutrality by 2030.

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Following the Federal Reserve’s latest monetary policy meeting in January, the Fed is set to embark on its rate hike cycle with the first hike coming as soon as March to tame stubbornly high inflation. Concerns about an impending rate hike sparked volatility across assets classes, including US high-yield bonds. However, if history is a guide, US high yield performed well in the rising interest rate environment. The ICE BofA US high yield index outperformed with an average return of 16.2% during the Fed rate hike cycles since 1994 and delivered positive returns in 4 out of those 5 instances with the exception in 1999-2001, which coincided with the dot-com bubble burst. That said, the economic background behind the rate hike cycle this time around looks different. The US inflation rate is nearly at a 40-year high of 7%, while the unemployment rate of 3.9% is just shy of the Fed's goal of maximum employment than the previous rate-hike cycles. These factors could cause the Fed to get even more aggressive. Moreover, the Fed has doubled the pace at which it is scaling back bond purchases, putting it on track to conclude the program by March 2022. It has also hinted at shrinking its balance sheet post hiking rates, with market participants expecting it to start in June 2022. Nevertheless, the corporate balance sheets had improved substantially in 2021 to weather the aftermath of monetary tightening. Most of the companies are in the recovery or expansion phases of the credit cycle. Additionally, the high-yield index has near-zero exposure to the technology sector (highly sensitive to change in real interest rate) and short duration (around 5 years), making them stand pat against the rate hikes.

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Last Wednesday, the European Commission proposed a highly divisive policy, calling for the energy derived from natural gas and nuclear to be labeled as “sustainable” investments if they meet certain criteria.

While admitting that the proposal was not perfect, EU Financial Services Commissioner, Mairead McGuinness, claimed it struck a balance between differing opinions. The move has subjected the European Commission to criticism, with environmental groups and climate activists accusing the EU of “greenwashing." They claim that labeling natural gas and nuclear as green energy would slow down the adoption of renewable energy. But proponents supporting the move counter that such incentives would aid underdeveloped countries to transition from coal to cleaner alternatives. The decision, however, is not final. The European Parliament and council of heads have four months to consider the proposal. Could the move hurt The Union's credibility? Was the proposal well-thought-out for an entity as influential as the EU, a beacon of climate action? Could it really accelerate the world's transition to a low-carbon future? What do you think?