The pressure is on in New York City amid a tense mayoral race featuring the former governor from 2011-2021, Andrew Cuomo (who resigned amid a sexual harassment scandal). And Zohran Mamdani, the up and coming self proclaimed democratic socialist who plans large reforms for the big apple. As I am not a resident of NYC I cannot vote in this election but I will enforce my preferred candidate… Zohran Mamdani. Mamdani is a well spoken young man (34 years old) with a high level of education. His highly articulate and straight to the point debate responses are a breath of fresh air amidst the rejecting and pushing away strategy of many politicians these days amid hard debate questions. Mamdani has a concrete plan for his goals instead of abstract and lofty statements with no real plans of advancement like many politicians these days. 

Mamdani is running mostly off of the campaign to “make NYC affordable again”. He plans on doing so by making bus fare fast and free, utilizing rent freezes to stabilize rising rents, making childcare free, and instituting government-run grocery stores. Let's start off with the costs… First up, fast and free bus fare, NYC buses are some of the slowest in the country. Mamdani estimates it will cost between 600-800 million dollars per year to upgrade the system and make it free. Next, universal childcare, Mamdani estimates providing this service will cost around 6 billion dollars annually. After that, five government run groceries (one in each borough), Mamdani thinks this will cost around 60 million dollars. Lastly, Mamdani's proposed four year rent freeze will save tenants around 6.8 billion, but it will cost landlords just as much.

Now you may be asking, “how does Mamdani plan to fund all this?” Well unlike many politicians he has laid out a concrete plan to raise almost 9 billion dollars for his various projects. First, raise the corporate tax rate from 7.25% (current level) to 11.5% bringing in around 5 billion in revenue. Second, he plans on raising the personal income tax rate for New Yorkers making a million dollars a year by 2%. Which he estimates will bring in 4 billion dollars of revenue.

Now let's do a bit of a deeper dive into one of Mamdani’s seemingly more socialist proposals: state run grocery stores. Food costs in NYC are rising, there has been a YoY increase of 9% in poultry and eggs and 5% in dairy products to name a few affected goods. Mamdani aims to put a government run grocery store in each of NYC’s five boroughs. This will allow grocers to keep food prices low as rent related expenses will be lower compared to private run grocers. These lower rents will allow grocers to sell goods at lower prices, helping beat back inflationary increases. A concern for this proposal is that bodegas and privately owned stores will be undercut by government-run stores on prices and lose valuable business, thus becoming insolvent with time. To rebuke this concern I must say, it is highly unlikely that Mamdani's small number of just five state-run stores will be enough to hurt small businesses in any major way. 

Equity Insights 

↑Lynas Rare Earths (LYSDY): An Australian rare earths mining company was involved in a deal on Monday between president Trump and the Australian PM Anthony Albanese to export rare earths to America. This deal is aimed at ending the U.S’s current reliance on China for rare earths (which the U.S. uses in many of their consumer goods). This would end China's use of their high rare earths production as a bargaining chip on the U.S in trade deals.

↑General Motors (GM): The automotive manufacturing company released and beat earnings expectations by a wide margin on Tuesday. Bypassing investors expectations for tariff related damage. EPS beat by 20% and revenue by 7%. The stock price shot up Tuesday from $57-$67, enriching those early enough to benefit.  

Theme of the Week

Tokenization is a topic of much intrigue and mystique in 21st century finance. At its core, tokenization is the process of representing the ownership rights of real-world or digital assets as digital tokens on a blockchain. Blockchain technology enables secure, peer to peer payment systems and is a secure public ledger of all transactions. It is seen by many as the future of financial technology. 

These digital tokens can be bought or sold like other assets. These tokens represent a fractional or whole ownership stake in the underlying asset. In essence, tokenization is the digital representation of assets. As the concept gains traction, more and more assets are being converted into tokens on blockchains. A prime example of this growing trend is BlackRock–the world's largest asset manager–which has embraced tokenization by converting their iShares ETFs into digital tokens. Thus making them accessible to any investors with digital wallets. This move expands product reach and democratizes investing opportunities for those traditionally underserved by banks.

A powerful benefit of tokenization is enhanced liquidity. Illiquid assets like real estate and buildings can be transformed into easily traded tokens. Let's walk through an example: 

1) A beachfront hotel is built.

2) The owner tokenizes the property for one million dollars (one million tokens at one dollar a piece). 

3) Investors can purchase these tokens with digital wallets, bypassing traditional intermediaries like agents and excessive paperwork.    

This process democratizes ownership, permitting individuals to become fractional or full owners of the beachfront property. It also increases liquidity and makes trading more efficient and accessible to all.

Real Estate is not the only asset that can be tokenized. Stocks, land, commodities, art, and even currencies are some of the other assets that can be tokenized on blockchains.

Tokenization is one of the many ways in which investing is being democratized for current day investors. At first there was commission-free trading; now, tokenization empowers retail investors to access markets that have long been only for the uber wealthy/institutional investor. We advise all investors to beware and be-ready, the tokenization of all assets is well on the way.    

About This Newsletter 

This newsletter shares insights into our complex current day economic/geopolitical situations and provides clear, actionable equities insights as well. Whether just getting into the game or a seasoned veteran, this newsletter is your edge.