I love owning exchanges because they're a less risky way to bet on macro trends. Generally, if asset classes grow in value or importance, it benefits the exchange that owns that market.pic.twitter.com/flwd5oC0hT
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I love owning exchanges because they're a less risky way to bet on macro trends. Generally, if asset classes grow in value or importance, it benefits the exchange that owns that market.pic.twitter.com/flwd5oC0hT
Example #1 - if rates go up, $CME volumes & revenues go up.
If rates DON'T go up, $CME can still grow their Treasury business as the *size* of the market grows via more outstanding US debt.
$CME is a *naturally hedged* bet on higher rates.pic.twitter.com/irpNzKKr09
Example #2 - if cold weather causes gas prices to pop, $ICE benefits from higher volumes.
If we DON'T see prices rise, $ICE benefits from globalization as foreign economies grow and LNG infrastructure deepens.
$ICE is a *naturally hedged* bet on energy demand.
Example #3 - if credit spreads widen & rates rise, $MKTX and $TW benefit from higher volumes.
If rates DON'T rise they benefit from more debt issuance growing market size AND electronification of those markets.
$MKTX & $TW are *naturally hedged* bets on rising rates.
I view exchanges as "gold miners" of their respective asset classes. They win if their products rise in price, but are profitable & stable when the market is quiet.
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