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Unless you have been hiding under a rock for the last decade, you have witnessed the widespread use of emojis throughout social media, in both personal and business use cases. This week in a case against Dapper Labs, an NFT issuer popularized by the NBA branded “Top Shot” tokens, the court concluded that the emojis🚀📈💰, very commonly used in Crypto Twitter, constituted marketing that “objectively led purchasers to expect profits.” Since the ICO days of 2017, most cases brought against issuers have argued that they were involved in selling unregistered securities. Prosecutors have to show that the tokens at hand passed the Howey Test: “A transaction qualifies as a security if it involves the following four elements: An investment of money. In a common enterprise. With a reasonable expectation of profit. Derived from the efforts of others.” The judge in the Dapper Labs case said emojis in the tweets proved the Howie Test's third element. 🧐😳

One year of war

Today marks the first anniversary of Russia’s invasion of Ukraine. Looking back, few would have expected the war to have lasted this long; however, we face a more complex situation than before as China continues to figure out its role in the conflict. This week the US asserted that China was considering providing weapons to Russia, while Beijing attempted to project an image of a peacemaker. No one knows how things will develop from here; however, things seem less clear a year later than when they began. The continued uncertainty underpins inflation and the tail risk of bigger world conflict that markets do not seem to be currently pricing in.

Hot Data

The data across the board in 2023 has come in hot. From employment to manufacturing and inflation. It is unclear whether this is because of warmer-than-expected weather, seasonal adjustments, or a new trend. This comes after late 2022 data showed that inflation was moving in the right direction and the economy was moving to a more neutral level. The impact in markets has been greater expectations for Fed interest rate increases, with most expecting a Fed Funds rate north of 5% and staying there for longer. The equity markets have been slow to price in the new reality. The year started with a massive rally in the lowest-quality areas of the market, mostly driven by positioning and short covering. However, the new rates reality might mean those gains could be shortlived.

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