Office workers. Are the coming back in the new economy?
Elon Musk say employees working from home are like Marie Antoinette: Let them eat cake! (Like the folks who have to deliver your groceries every day and can't "work from home.")
Kevin O'Leary is great.
WATCH:
Hmm.
Let's see if these predictions hit gold.
At the Wall Street Journal, "More than two-thirds of economists at 23 major financial institutions expect the U.S. to have a downturn this year."
Probably, the most poorly managed major corporation in the country right now. They're close to going out of business.
My wife worked there briefly, years ago, but quit just a few weeks into the job. My wife's got 30 years of retail sales and management experience, so if she quit that job so fast, something was totally fucked up.
At WSJ, "Home-goods seller to lay off 20% of corporate, supply-chain workers":
Bed Bath & Beyond Inc. BBBY -21.30%▼ said it would close roughly 20% of its namesake stores, cut its workforce and bring in fresh cash to stabilize the business through the holiday season as the retailer confronts plunging sales. The home-goods seller is attempting to trim costs and raise money as it tries to correct recent operating missteps and navigate a challenging economic environment. It has been burning through its cash reserves for several quarters, and a shopper exodus has shaken investor and vendor confidence. On Wednesday, executives and directors attempted to assuage its uneasy partners. In a business update, they said the company secured commitments for more than $500 million in financing and could potentially sell as many as 12 million shares of common stock to raise money. They also pledged to overhaul the assortment of goods in the company’s stores, focusing more on national brands after spending millions to develop private-label goods. “While there is much work ahead, our road map is clear and we’re confident that the significant changes we’ve announced today will have a positive impact on our performance,” said Sue Gove, a board member who is serving as interim chief executive. Bed Bath & Beyond’s stock fell 21% in Wednesday trading, as the plan to sell shares could dilute the holdings of existing shareholders. The stock, a favorite among meme investors, has lost more than half its value over the past two weeks. As of Wednesday, the company’s market value was roughly $750 million. At its peak in June 2012, the company had a valuation of more than $17.3 billion, according to FactSet data. Founded more than 50 years ago, the Union, N.J., company had several decades of rapid growth as it became known for its big-box stores stockpiled with merchandise and 20%-off coupons. In recent years, it has wrestled with falling sales and shifting strategies. In 2019 activist investors ousted the chain’s founders and revamped the board, saying its leaders had failed to modernize the stores and capitalize on the rise of e-commerce. Mark Tritton, a former Target Corp. executive, joined the company in 2019 and sought to turn around the retailer by pushing deeper into private-label brands, among other initiatives. Those brands, however, weren’t well-received by shoppers and were hindered by pandemic-related supply-chain constraints. Bed Bath & Beyond’s board ousted Mr. Tritton in June and installed Ms. Gove, a retail-restructuring consultant, as interim CEO. The company is working with search firm Russell Reynolds Associates to find a permanent CEO, and said Wednesday that the search process is continuing. The retailer received another blow in August when billionaire activist Ryan Cohen sold his 10% stake in the company, about six months after acquiring his shares. The company’s stock, which had been rallying in previous weeks, slid after individuals followed Mr. Cohen’s selloff. The business update came just days after the end of the company’s latest quarter, which showed the issues facing the retail chain. Comparable sales—reflecting sales at stores open at least a year—fell 26% in the quarter ended Aug. 27. The company’s operations also burned through about $325 million of its cash reserves during the period. While the company plans to release its full second-quarter financial report on Sept. 29, preliminary results show that the money it is bringing in the door is leaving quickly. And the new financing only provides a short runway for the turnaround effort, analysts say. The more than $500 million infusion, led by JPMorgan Chase & Co. and asset manager Sixth Street Partners, includes $375 million from a new loan and the expansion of a credit line. The Wall Street Journal had previously reported the company was near a new loan deal. The new arrangement will reduce the debt exposure of the JPMorgan credit line by more than half while Bed Bath & Beyond retains access to about $800 million in borrowing capacity. The company said it ended the latest quarter with about $200 million in cash and investments...
From Douglas Murray, at the New York Post, "Undocumented, underhoused chestfed kids are not in a recession, say Dems":
“We should avoid a semantic battle” said Janet Yellen yesterday. “A what?” In short it seems what the Treasury Secretary means is that we should not use the word “recession.” That is a shame, because people, including Yellen’s boss, used to like to use the word a lot. In October 2020, when he was running for office, Joe Biden said “President Obama and I left Donald Trump a booming economy – and he caused a recession. He squandered it just like he has everything else he’s inherited in his life.” He said the same thing in September 2020, claiming that American was in a “recession created by Donald Trump’s negligence.” Fast forward a couple of years and The White House is now reframing the meaning of the word and warning us all not to use it. It is true that until yesterday it was generally agreed that two straight quarters of negative GDP growth was the common definition of a recession. But yesterday President Biden said, “That doesn’t sound like a recession to me.” This fact should surprise no one. Because re-naming things is one of the left’s favorite pastimes. If you cannot change the facts then you can at least change the language around the facts. By doing so you can massage the facts, make them less concerning and in the process wish reality away. For a time, at least...
Yes, the White House is "bracing" being attempting to redefine what a recession is.
At Politico, "White House braces for grim news on economy":
Bracing for impact: Even if Thursday's GDP report shows a second consecutive quarter of negative growth, you won't hear the Biden admin using the R-word.
— Jacqui Heinrich (@JacquiHeinrich) July 24, 2022
The Council of Economic Advisers is redefining what a recession is...🤔https://t.co/HHBYJKqP5V pic.twitter.com/gecR93vPPj
Senior administration officials are hitting the airwaves and arm-twisting reporters in private, imploring anyone who will listen that the economy is still healthy. The White House is scrambling behind the scenes and in public to get ahead of a potentially brutal economic punch to the face that could give Republicans the chance to declare that the “Biden recession” is under way. Wall Street analysts, economists and even some in the Biden administration itself expect a report on Thursday to show the economy shrank for a second straight quarter, meeting a classic — though by no means the only — definition of a recession. Senior administration officials are hitting the airwaves and arm-twisting reporters in private, imploring anyone who will listen that the economy — despised by majorities of both Republicans and Democrats fed up with inflation — is still healthy. But White House officials admit that changing people’s minds is a daunting task as the highest inflation in four decades severely cuts into wages even as the economy continues to churn out jobs and Americans keep spending. Economic Advisers and one of Biden’s longest-serving aides, said in an interview. “What we are trying to do is explain things in a much more nuanced way than most people are getting from the daily news flow.” Bernstein’s CEA and the Treasury Department are cranking out blog posts and studies arguing that the current post-pandemic moment — while strange and disconcerting to many Americans — is nowhere close to a recession. Treasury Secretary Janet Yellen showed up on NBC’s “Meet the Press” on Sunday and declared, “This is not an economy that is in recession.” On Monday, senior Biden aide Gene Sperling ventured into hostile territory on Fox News. The next day, National Economic Council Director Brian Deese joined the White House briefing to make the case. Aides are even quietly praising occasional White House nemesis Larry Summers, the voluble former Treasury secretary who on Monday said on CNN that anyone who says we are in a recession now is “either ignorant” or “looking to make political points.” Summers still believes a recession is likely in the relatively near term. Biden on Friday afternoon received a briefing from Yellen, Deese, Sperling, CEA Chair Cecilia Rouse, Energy Secretary Jennifer Granholm, Budget Director Shalanda Young and Amos Hochstein, coordinator of international energy policy at the State Department. The lengthy, remote session focused on just how much gas prices are dropping (a White House fixation), the impact of that decline on consumers and continuing geopolitical issues — mainly the war in Ukraine — that could still send oil and gas prices soaring again. White House press staff are also regularly convening background briefings with economics reporters and senior administration officials to talk up the economy’s strengths, no matter what the GDP numbers say this week. For their part, Republican leaders sense an opportunity to leverage their already big advantage on the economy as a midterm election issue and ride it to even larger gains in November than polls predict...
Folks see Musk as a free-speech savior, so it'd be a bummer if the deal doesn't go through. That said, frankly, Twitter's valuation was below $44 billion when Musk first made the bid. It's dropped precipitously since then, not to mention the market value of Musk's Tesla electric car company, whose stock was being used to leverage the deal.
We'll see, in any case. It's still awful bad on that hellsite.
At the Verger, "Twitter says it’s going to sue Elon Musk for trying to back out of the deal."
At the Wall Street Journal, "Investors gird for more volatility; almost everything—from stocks to bonds and crypto—falls to start 2022":
Global markets closed out their most bruising first half of a year in decades, leaving investors bracing for the prospect of further losses. Accelerating inflation and rising interest rates fueled a monthslong rout that left few markets unscathed. The S&P 500 fell 21% through Thursday, suffering its worst first half of a year since 1970, according to Dow Jones Market Data. Investment-grade bonds, as measured by the iShares Core U.S. Aggregate Bond exchange-traded fund, lost 11%—posting their worst start to a year in history. Stocks and bonds in emerging markets tumbled, hurt by slowing growth. And cryptocurrencies came crashing down, saddling individual investors and hedge funds alike with steep losses. About the only thing that rose in the first half was commodities prices. Oil prices surged above $100 a barrel, and U.S. gas prices hit records after the Russia-Ukraine war upended imports from Russia, the world’s third-largest oil producer. Now, investors seem to be in agreement about only one thing: More volatility is ahead. That is because central banks from the U.S. to India and New Zealand plan to keep raising interest rates to try to rein in inflation. The moves will likely slow down growth, potentially tipping economies into recession and generating further tumult across markets. “That’s the biggest risk right now—inflation and the Fed,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management. Ms. Nixon said she would be keeping a close eye on economic data to gauge how much rising interest rates are weighing on growth over the next few months. Her firm has kept money in U.S. stocks, wagering the economy will slow down but avoid a recession. It has also put money into companies focused on natural resources, a bet that should pay off if inflation persists for longer than it expects. “You don’t want to be whipsawed by the markets,” she said. The good news for investors is that markets haven’t always done poorly after suffering big losses in the first half of the year. In fact, history shows they have often done the opposite. When the S&P 500 has fallen at least 15% the first six months of the year, as it did in 1932, 1939, 1940, 1962 and 1970, it has risen an average of 24% in the second half, according to Dow Jones Market Data. One reason markets have often snapped back after big pullbacks: Investors have eventually stepped in, wagering prices have fallen too far. Fund managers currently have larger-than-average cash positions, smaller-than-average equities positions and a markedly high degree of pessimism about the economy, Bank of America found in its June survey of investors. Those factors, among others, make markets look “painfully oversold”—and thus potentially ripe for a rally, the bank’s strategists said in a separate report. But even those finding buying opportunities these days say they are focusing on specific companies, instead of buying broadly. They concede that the current economic environment—in which inflation is high, borrowing costs are rising and growth is expected to slow—makes it difficult to be enthusiastic about many parts of the market. Economists surveyed by The Wall Street Journal in June said they saw a 44% probability of a recession in the U.S. in the next 12 months, compared with 18% in January. History also has shown the Fed has seldom been able to pull off a “soft landing,” a scenario in which it slows the economy enough to rein in inflation but avoids tightening monetary policy to the point of causing a recession. The U.S. went into recession four of the last six times the Fed began raising interest rates, according to research from the Federal Reserve Bank of St. Louis that looked at monetary policy tightening cycles since the 1980s. “The runway for the Fed to manage a soft landing is not only narrow but also winding and bumpy,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments...
The fear is palpable.
At the Wall Street Journal, "Dow Drops Over 800 Points; S&P 500 Closes in Bear-Market Territory as Stocks Slide":
Investors raise bets on aggressive Federal Reserve interest-rate increases; cryptocurrencies decline. The stock-market selloff deepened Monday, with the S&P 500 entering a bear market, as investors took another look at Friday’s red-hot inflation data and liked it even less. Faced with rising chances of aggressive monetary tightening by the Federal Reserve, investors broadly unloaded risk. The S&P 500 slumped 3.9% as 495 of its 500 components ended the day lower. The declines left the U.S. stock benchmark down more than 20% from its January record, sending it into a bear market for the first time since 2020. Meanwhile, a rout in cryptocurrencies highlighted investors’ increasing unwillingness to hang on to their most speculative holdings. The price of bitcoin plunged below $23,000 before paring that loss to trade at 5 p.m. ET down 66% from its November high. The drop in cryptocurrencies accelerated Monday after interest-rate fears sparked a weekend selloff. Bitcoin, the biggest cryptocurrency, traded at 5 p.m. at $23,250.72, a drop of 15% from 24 hours earlier. Ethereum was down 16% from 24 hours earlier to about $1,243. Shares of Coinbase Global fell 11%, while Celsius Network said it was pausing all withdrawals, swaps between cryptocurrencies and transfers between accounts, citing “extreme market conditions.” Even rare bets that have worked in 2022 stumbled Monday. The energy segment, the only one of the S&P 500’s 11 sectors in positive territory this year, fell 5.1%, a steeper decline than that of the broad index. The utilities group, the second-best performer in 2022, also lagged behind the market with a daily drop of 4.6%. “We’re definitely seeing a risk-off atmosphere, a flight to quality,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “In that environment, people need to raise cash.” The S&P 500 fell 151.23 points, or 3.9%, to 3749.63. The Dow Jones Industrial Average dropped 876.05 points, or 2.8%, to 30516.74. The tech-heavy Nasdaq Composite declined 530.80 points, or 4.7%, to 10809.23, off 33% from its November record. Markets have swung wildly this year as investors scramble to decipher how rapidly the central bank will raise interest rates in an attempt to tame sky-high inflation. Rock-bottom rates and other stimulative policies helped keep the economy—as well as markets—afloat as the arrival of the Covid-19 pandemic idled businesses and threw people out of work. Now, the Fed is trying to tame surging prices by unwinding that easy-money policy. The Fed will begin its latest two-day policy meeting Tuesday, and most investors believe that the central bank will announce Wednesday it is raising its benchmark interest rate by half a percentage point...
Still more.
I don't have to take disbursement from my Roth IRA or my 403(b) until I'm 69, which is still a ways off. Hence my funds, with luck, will recover after the economy emerges out of the coming recession.
But folks who had immediate plans? They're fucked.
The last time Todd Jones heard this kind of panic in his clients’ voices, it was 2008 and the global financial system was on the brink of collapse. Mr. Jones, the chief investment officer at investment advisory firm Gratus Capital in Atlanta, now finds himself fielding similar calls. Two clients, both retirees, asked him this month to move their portfolios entirely to cash. Mr. Jones persuaded them to stay the course, saying the best way for investors to achieve their goals is to still be in the market when it eventually rebounds. “Those people were not in a good place,” said Mr. Jones, 43. “They had a lot of anxiety about goals and dreams and being able to live their lifestyles.” Stocks, bonds and other assets are getting hammered this year as investors wrestle anew with the possibility that the U.S. is headed toward recession. On Friday, the Dow Jones Industrial Average recorded its eighth straight week of declines, its longest such streak since 1932. The S&P 500 flirted with bear-market territory. Families are watching the investments they meant for down payments or college tuition or retirement shrink, day after day. They’ve seen big retailers like Walmart and Target record their steepest stock drops in decades this week, after earnings that signaled an end to the pandemic spending boom. The market turmoil has scared corporate chieftains away from taking their companies public. In Silicon Valley, dreams of multibillion-dollar valuations have been replaced by the reality of layoffs and recoiling investors. Stock prices have been hurt by forces that appear in nearly every cycle, such as rising interest rates and slowing growth. There are also idiosyncratic ones, including the rapid return of inflation after decades at a low ebb, a wobbling Chinese economy and a war in Ukraine that has shocked commodity markets. The Federal Reserve has raised interest rates twice this year and plans to keep doing so to curb inflation, but that makes investors worry it will slow the economy too fast or by too much. To investors it can feel there is no safe place. While the vast majority of individual investors are holding steady, that is in part because customary alternatives don’t offer much relief. Bonds, normally a haven when stocks are falling, have also been pummeled. The cryptocurrency market, pitched as a counterweight to traditional stocks, is sinking. For Michael Hwang, a 23-year-old auditor in San Francisco, the market’s tumble means he could wind up taking out loans to get an M.B.A. He has been hoping to pay his tuition out of pocket when he eventually goes back to school. For Arthur McCaffrey, an 80-year-old retired research scientist from Boston, it means wondering if he’ll live to see his investments recover. Rick Rieder, the head of fixed income at giant asset manager BlackRock Inc., likened the state of financial markets to a Category 5 hurricane. The veteran bond trader has been in the business for three decades and said the rapid price swings are unlike anything he has seen...
Shoot, another week like this one and the Dow will be in correction territory. My funds squeaked out of the first quarter with a mild $500 loss, but if this keeps going, I'll be taken to the cleaners --- and imagine how everybody else feels!
Oh boy this is going to be a rocky year, just in time for the November midterms!
At CNBC, "Dow plunges more than 900 points for its worst day since 2020, falls for a fourth straight week":
And at the Wall Street Journal, "Tech Rout Drags Nasdaq to Worst Month Since 2008":
Tech-heavy index slid more than 4% Friday, bringing its losses for month to 13%. An April rout in technology stocks deepened Friday, dragging the Nasdaq Composite to its worst monthly performance in more than a decade, as soaring inflation and rising interest rates fanned worries of a recession. The broad selloff has erased trillions of dollars in market value from the tech-heavy gauge, with investors souring on shares of everything from software and semiconductor companies to social-media giants. The Nasdaq dropped 4.2% Friday, bringing its losses for the month to more than 13%, its worst showing since October 2008. The index is down 21% in 2022, its worst start to a year on record. The broader S&P 500 has fallen for four consecutive weeks, shedding 8.8% in April and bringing its year-to-date losses to 13%. The Dow Jones Industrial Average fell 4.9% this month and is down more than 9% this year. Both indexes logged their worst months since March 2020. The punishing declines in tech and growth stocks mark a dramatic shift from recent years. Investors have ditched shares of some of the biggest tech companies, which had been stock-market darlings for much of the past decade and propelled the indexes’ gains from the pandemic lows. Within just a few months, some of the most reliable winners morphed into losers. Netflix dropped 49% in April. Nvidia fell 32%. And PayPal Holdings declined 24%. All three stocks are down more than 35% in 2022. Worries about the Federal Reserve raising interest rates, soaring inflation and the path of the economy have brought stocks sharply lower from the record levels at which they started the year. Many pandemic-era winners also have come falling back to earth as consumer tastes have evolved since 2020. And recently, earnings season has been dotted with some high-profile disappointments, delivering head-spinning one-day stock moves following the reports. “We’re going into a higher volatility regime, when fundamentals matter again,” said Aashish Vyas, investment director at Resonanz Capital. “It does seem like we are at a systemic shift.” The FAANG stocks, consisting of the popular quintet of Facebook parent Meta Platforms, Apple, Amazon.com, Netflix and Google parent Alphabet, have collectively lost more than $1 trillion in market value this month, the most since Facebook started trading in May 2012. Investors say they will be tracking the next batch of earnings results in coming days for signs of slowing growth from other companies. So far, corporate profits are on track to rise 7% for the quarter, according to FactSet, the lowest year-over-year earnings growth rate since the last quarter of 2020.... The latest gross domestic product data showed that the economy recently contracted for the first time since early in the pandemic. Meanwhile, inflation accelerated in March to its fastest pace since 1982, measured by the Federal Reserve’s preferred gauge. Despite higher prices, U.S. consumer spending for March increased 1.1% from the prior month, showing that American households are absorbing high inflation. Some investors say shares of some tech companies look attractive after the recent selloff, and that they would consider stepping in to buy shares. The Nasdaq is now down 23% from its high and trading at levels not seen since 2020. Friday’s losses in the stock market accelerated into the closing bell, which some traders attributed to technical factors such as hedging activity and trading by leveraged exchange-traded products. The Dow sank more than 900 points, or 2.8%, and the S&P declined 3.6%...
I hope my retirement accounts didn't take too drastic of a hit. I'm not getting any younger!
At WSJ, "Stocks Post Worst Quarter in Two Years Despite Strong Finish":
A head-spinning quarter came to a disappointing end, with major stock indexes suffering their worst performance in two years and other markets recording some of the most extreme moves on record. The action reflects a sense of dislocation shared by many traders and portfolio managers who are confronting challenges not seen in years. Yet their unease has been offset in part by a fierce determination among many investors to take advantage of any price declines to add to positions in stocks, bonds and commodities. Inflation has surged to its highest level in four decades, Russia’s invasion of Ukraine has rattled already stretched supply chains and the Federal Reserve has embarked on a rate-increase plan whose pace investors are struggling to handicap. All three major U.S. indexes declined more than 1.5% on Thursday, with losses accelerating in the final hour of the session as traders dumped stocks to end the quarter. The declines have dragged the S&P 500 down 4.9% over the past three months, snapping a seven-quarter streak of wins. The Dow Jones Industrial Average and Nasdaq Composite have lost 4.6% and 9.1%, respectively, this year. U.S. oil futures cleared $130 a barrel in early March, a level that flashed a warning signal for many economists. But the futures have since declined to around $100, a price that likely limits immediate economic damage but still marks the biggest quarterly gain since 2008. “There are different parts of this market that rhyme with history, but really not even that well,” said Eric Veiel, head of global equities at T. Rowe Price, which oversees $1.5 trillion in assets. “This is a truly unique time.” Underpinning the uncertainty that permeated the first quarter was the Fed’s plan to raise rates. In doing so, the central bank removed a historic wave of stimulus that had driven stocks to dozens of records over the past two years and fueled a rush into some of the most speculative investments in the market. That made the recent market downturn markedly different from the crash in 2020, which was abnormally short and severe. “The changes to our market views are just as dramatic as they were when the Covid-19 pandemic emerged two years ago,” Erik Knutzen, multiasset class chief investment officer at Neuberger Berman, wrote in a note to clients after the Ukraine invasion, adding that he is pessimistic about stocks over the next year. Few assets were left untouched by the volatility. Investors have dumped bonds, sending yields on corporate and municipal bonds as well as Treasurys sharply higher. The Bloomberg U.S. Aggregate bond index—largely U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—returned minus 6% in 2022 through Wednesday, headed toward the biggest quarterly loss since 1980. Wheat prices have climbed 31%, logging the best quarterly performance since 2010. The swings in nickel prices during the Ukraine crisis were so large that the London Metal Exchange closed trading in the commodity after a huge run-up in prices inflicted severe financial pressure on producers that sold nickel as a hedge. “That’s not rational behavior for an instrument, and that’s terrifying,” said Paul Britton, founder of Capstone Investment Advisors, an investment firm specializing in trading volatility. He says he expects the turbulence to continue the rest of the year. Adding to the pain for many investors was the decline among shares of big technology companies, the biggest market leaders of the past decade. Facebook’s parent company, Meta Platforms Inc., lost about $232 billion in market value in a single session after posting disappointing earnings, the biggest loss in market value for a U.S. company in history. The next day, Amazon.com Inc. recorded the biggest-ever one-day gain in market value. Meta had its worst quarter since its shares started trading publicly in 2012 and has been one of the biggest losers within the S&P 500. Other former market leaders also struggled. Netflix Inc. has lost 38% this quarter, its worst period since 2012. PayPal Holdings Inc. has also lost around 39%, its worst quarter on record, and Salesforce.com Inc. finished its worst quarter since 2011. The S&P 500 outperformed the tech-heavy Nasdaq Composite by about 4.2 percentage points, the greatest margin since 2006, according to Dow Jones Market Data. Other corners of the market have fared better. The S&P 500’s energy sector has soared 38% and notched its best quarter in history. Energy stocks like Occidental Petroleum Corp. and Halliburton Co. have skyrocketed more than 95% and 65%, respectively. Some optimism crept back into the market recently. After the Fed raised rates in March for the first time since 2018, a familiar pattern emerged. Investors piled back into stocks and stepped in to buy the dips in shares of tech and growth companies, as well as more speculative bets that had suffered to start the year. Bitcoin prices have rebounded in March. Meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc. have soared, gaining more than 30% for the month. Some analysts said individual investors appeared to be piling back into the market, driving some of the gains, a move reminiscent of last year...
This guy's getting slammed
Chelsea's a diamond on the football world and the team plays in the Premier League, the top division in England.
This is from yesterday at WSJ, "Russian Billionaire Roman Abramovich, Owner of Chelsea Soccer Club, Is Sanctioned by U.K."
And from this evening, "Roman Abramovich U.S. Hedge Fund Investments Are Frozen":
Hedge funds told to freeze Russian oligarch’s assets after he was sanctioned by the British government. A number of U.S. hedge-fund firms that have investments from Russian oligarch Roman Abramovich have been told to freeze his assets after he was sanctioned by the British government Thursday, according to people familiar with the instructions. A message from fund administrator SS&C Globe Op to one firm said, “Currently accounts attributed to Roman Abramovich are blocked from transacting, as such any distributions, redemptions or payment cannot be made and no subscriptions or contributions can be accepted.” SS&C, whose clients include hedge funds and other investment managers, said in the message it was monitoring the situation for guidance from the U.K. Treasury, the Office of Financial Sanctions Implementation and the Cayman Islands Monetary Authority. Other funds have received similar messages, according to people familiar with the matter. The guidance likely puts a stop to recent efforts by Mr. Abramovich to sell his interests in a slew of hedge funds, said people familiar with the matter. Mr. Abramovich, who for years has accessed hedge-fund investments through New York-based adviser Concord Management, had been trying to sell interests in funds including those managed by Empyrean Capital Partners in Los Angeles and Millstreet Capital Management in Boston, the people said. Mr. Abramovich had been seeking to sell the funds on the secondary market since at least late February, the people said. For at least some of the funds, the investor is Concord, with Mr. Abramovich or entities connected with him being the underlying investor, said people familiar with the matter. People familiar with the matter said Concord was a small investor in Millstreet. Mr. Abramovich also is invested through Concord in hedge funds including Millennium Management, Sarissa Capital Management and Sculptor Capital Management, SCU -2.09% formerly known as Och-Ziff Capital Management, said people familiar with the matter. It couldn’t be determined Friday if he had tried to sell his interests in those funds as well. Mr. Abramovich’s hedge-fund portfolio includes investments in many small funds betting on and against stocks, one person briefed on the matter said. A spokeswoman for Mr. Abramovich didn’t respond to requests for comment. Concord didn’t respond to a request for comment. The New York Times earlier reported Mr. Abramovich’s ties to Concord. The U.K. on Thursday froze Mr. Abramovich’s assets and prevented him from doing any business in the country or selling assets including soccer club Chelsea F.C. While managers in the past welcomed Concord’s money—the firm has a reputation for being a thoughtful, long-term investor in the hedge-fund industry–the relationship is proving delicate following Russia’s invasion of Ukraine and the cascade of sanctions it triggered. Managers would have welcomed a sale as a way to distance themselves from a sanctioned oligarch, and some had been thinking about forcibly redeeming Mr. Abramovich from their funds, said people familiar with the matter. One manager had been considering the possibility of replacing Mr. Abramovich with other investors, another person familiar with the matter said...
A big conviction.
The Theranos founder was convicted on three counts of wire fraud and one count of conspiracy to commit wire fraud.
At NYT, "Elizabeth Holmes Found Guilty of Four Charges of Fraud":
The verdict stands out for its rarity. Few technology executives are charged with fraud and even fewer are convicted. If sentenced to prison, Ms. Holmes would be the most notable female executive to serve time since Martha Stewart did in 2004 after lying to investigators about a stock sale. And Theranos, which dissolved in 2018, is likely to stand as a warning to other Silicon Valley start-ups that stretch the truth to score funding and business deals. The mixed verdict suggested that jurors believed the evidence presented by prosecutors that showed Ms. Holmes lied to investors about Theranos’s technology in the pursuit of money and fame. They were not swayed by her defense of blaming others for Theranos’s problems and accusing her co-conspirator, Ramesh Balwani, the company’s chief operating officer and her former boyfriend, of abusing her. They were also not swayed by the prosecutor’s case that she had defrauded patients. On Monday, jurors told the court that they were deadlocked on three of the charges of defrauding investors. Judge Davila pushed them to continue deliberating, but they were unable to agree. The verdict arrived in a frenzied period for the tech industry, with investors fighting to get into hot deals and often ignoring potential red flags about the companies they were putting money into. Some have warned that more Theranos-like disasters loom. In recent years, tales of start-up chicanery, from the bungled initial public offering of WeWork to the aggressive boundary-pushing tactics of Uber, have not slowed the flow of money toward charismatic founders spinning tales of business success. Those downfalls captured the public’s attention, but did not result in criminal charges. Yet the Justice Department under President Biden has renewed its focus on white-collar crimes. “We will urge prosecutors to be bold,” Lisa O. Monaco, the deputy attorney general, recently said in a speech. “The fear of losing should not deter them.” Ms. Holmes’s conviction sends a message to other founders and executives to be careful about their statements to investors and the public, said Jessica Roth, a law professor at Cardozo School of Law and former federal prosecutor in the Southern District of New York. It “shines a light on the importance of drawing a distinction between truth and optimistic projections — and keeping that clear in one’s mind,” she said. Ms. Holmes rose to prominence by mimicking the disruptive change-the-world chutzpah of Silicon Valley heroes like Steve Jobs — a playbook that has turned companies like Apple, Tesla, Google and Facebook into some of the most valuable in the world. In the process, she captured the attention of heads of state, top business leaders and wealthy families with idealistic plans to revolutionize the health care industry. She traveled the world on private jets, was feted with awards and glowing magazine cover stories and lauded as the world’s youngest self-made female billionaire. But she crossed into fraud when she lied about the accuracy, types and number of tests Theranos’s machines could do to raise funding and secure business deals. “That’s a crime on Main Street and it’s a crime in Silicon Valley,” Robert Leach, an assistant U.S. attorney, said in opening statements at the trial’s start...
Still more.
My retirement funds are getting bashed.
At WSJ, "Stocks, Oil Drop Sharply on Concerns Over New Covid-19 Variant":
Stocks, oil prices and government-bond yields slumped after South Africa raised the alarm over a fast-spreading strain of the coronavirus, triggering concern that travel restrictions and other curbs will spoil the global economy’s recovery. The Dow Jones Industrial Average fell 905.04 points, or 2.5%, to 34899.34. It was the Dow’s biggest one-day percentage drop since October 2020. The S&P 500 lost 106.84 points, or 2.3%, to 4594.62 and the Nasdaq Composite dropped 353.57 points, or 2.2%, to 15491.66. It was the worst Black Friday session on record for all three indexes. Markets closed early because of the holiday. U.S. crude oil tumbled 13% to $68.15. Traders fretted that lockdowns could reduce demand for transportation fuels. Bitcoin, following the path of other risk assets, skidded lower. “It’s not a great day to wake up on Black Friday and see news about a concerning variant,” said Jessica Bemer, a portfolio manager at Easterly Investment Partners. Investors reached for safe havens. The yield on the 10-year Treasury note tumbled to 1.484% from 1.644% before the Thanksgiving break, its biggest drop since March 2020. Gold, another perceived store of value when riskier assets retreat, rose 0.1% to $1,785.30 a troy ounce. The pullback created whiplash for markets that had, to a great extent, parked worries about coronavirus. Scientists say the new coronavirus variant, dubbed B.1.1.529, has a high number of mutations that may make it more transmissible and allow it to evade some of the immune responses triggered by previous infection or vaccination. Dozens of countries have already imposed travel restrictions to and from southern Africa. Investors feared the strain could set back months of efforts to revive the world economy and save lives. “For now, Covid is back on the table,” said Takeo Kamai, head of execution services at CLSA in Tokyo. Investors seemed to be following the playbook they pulled out early in the pandemic: sell travel stocks, buy work-from-home stocks. “This is a market that is well practiced in terms of reacting to Covid,” Ms. Bemer said. Delta Air Lines, United Airlines and American Airlines Group all dropped 8% or more, after the U.K., Israel and Singapore restricted travel from southern Africa. The European Union said it would propose stopping air travel from the region. Cruise stocks including Royal Caribbean Group were hammered, while Exxon Mobil fell 3.5%, or $2.23, to $61.25. Chevron fell 2.3%, or $2.68, to $114.51. Moderna rose 21%, or $56.24, to $329.63. Pfizer gained 6.1%, or $3.11. to $54. Netflix and DoorDash, which previously benefited from stay-at-home orders, rose 1.1% and 1.6%, respectively. The World Health Organization on Friday said the new strain was a “variant of concern.” Rising caseloads of other variants have already led some European countries to tighten rules for transportation, shopping and workplaces. Many U.S. investors had taken the day off, extending their Thanksgiving holiday. Ms. Bemer said she’d planned on working Friday, though she was staying with relatives for the holiday. “It’s a busier day than we expected,” she said. The combined trading volume on the New York Stock Exchange and Nasdaq was about 6.9 billion shares. The average Black Friday volume since 2007 has been 2.9 billion shares, according to FactSet. Oil prices experienced some of the biggest declines. Traders said money managers were rushing to unwind wagers that a mismatch between tight supplies and rising demand would push crude prices toward $100 a barrel. The swoon might encourage the Organization of the Petroleum Exporting Countries and a group of Russia-led allies to pause steps to pump more oil when they meet next week. “If the announcement is, the vaccine works on this, back up we go,” said Adam Webb, chief investment officer of Blue Creek Capital Management. “If the vaccines don’t work against it, then good night Vienna.” Money managers said that even if the variant proves more resistant to vaccines than earlier strains, there were reasons to think the economic damage could be contained. MRNA vaccines, such as those manufactured by Pfizer and Moderna, can be quickly updated, and businesses have adapted to containment measures, ensuring that the blow from each lockdown has lessened. However, elevated inflation could prevent central banks and governments from spraying economies with stimulus in the event of renewed widespread lockdowns...
It's AoSHQ.
Just head over there for your morning jolt, anyway, including this "flaming skull" bombshell post, "Kevin Clinesmith, the Corrupt FBI Lawyer Who Forged Documents to Frame an Innocent Man, Gets... NO JAIL TIME, HAS TO PAY A HUNDRED DOLLAR FINE," not to mention all the other tricks and treats the gang over there is wont to post from time to time, lol.
Have a great day, the proud but few "Band of Brothers" who continue to log on to visit my humble blog, lol.
I appreciate your support as readers, but I probably don't say that enough.
Have a great weekend.
This is the best, I'm telling you, lol!
At the Other McCain, "GameStop: The Best Story EVER!":
Oh, my! Oh, my! What a storm of hilarious schadenfreude has overtaken the stock market this week! The hero of this saga is a guy with a Reddit account called “DeepF**kingValue” who, in September 2019, accumulated $53,000 in stock in the retail chain GameStop. From any objective analysis, this was the Stupidest Investment Ever, because GameStop’s business model — selling physical copies of videogames and equipment in brick-and-mortar stores, mostly at shopping malls — is doomed in the online digital era. And yet . . . “DeepF**kingValue” had a hunch that GameStop was drastically undervalued when it was selling as low as 30 cents per share. His argument was that the retailer was shifting to online sales, competing with Amazon, while cutting costs by closing many of its brick-and-mortar stores. So he kept buying, and the share price kept going up, and as “DeepF**kingValue” shared his story on the Reddit channel WallStreetBets, a cult following developed. By December, with GameStop selling at $4 a share, “DeepF**kingValue” was a legit millionaire. God Bless America, land that I love! You can imagine every agent in Hollywood trying to get their client the lead role of “DeepF**kingValue” in The GameStop Story, a yet-to-be-made movie that will win every Academy Award. And the brilliant plot twist, the Second Act turn, is when actual corporate guys started to notice what was happening with this Reddit-driven phenomenon. Ryan Cohen, CEO of the online pet-supply business Chewy-dot-com, ploughed $82 million into GameStop at an average price around $9 a share (as much as 30 times what “DeepF**kingValue” had paid for his shares in 2019), which got Cohen a seat on GameStop’s board. Meanwhile, the Reddit crew on WallStreetBets discerned that hedge funds, which considered GameStop a sure loser, had gone short on the company, i.e., investing money on the proposition that its share price would go down. Billions. B-I-L-L-I-O-N-S — these hedge fund wizards were so sure that GameStop was overpriced that they shorted the stock to the tune of something like $13 billion. And they got screwed. Bad. Prison gang rape is the only metaphor that comes to mind for how badly the hedge funds got screwed on their GameStop shorts. How bad was it? So bad that NASDAQ intervened, so bad that Discord shut down the WallStreetBets chat channel, so bad that the Securities and Exchange Commission is now investigating the Reddit crew. The “creative destruction” of capitalism can be a beautiful thing to watch, and if I were asked to write the script for The GameStop Story, the closing scene would be when “DeepF**kingValue” (played by Seth Rogen with a neckbeard) drives up to Mar-a-Lago in his gull-wing Lamborghini, with a Swedish supermodel named Elsa in the passenger seat. Donald Trump comes out to greet him, personally...
Also, at Memeorandum, "Robinhood Stops Users From Trading GameStop Stocks, Other Reddit YOLO Picks."
On March 16, coronavirus brought the financial system to the brink. Few realized how close it came to going over the edge entirely. https://t.co/kGg568pU1D— The Wall Street Journal (@WSJ) May 20, 2020
An urgent call reached Ronald O’Hanley, State Street Corp.’s chief executive, as he sat in his office in downtown Boston. It was 8 a.m. on Monday, March 16.Still more.
A senior deputy told him corporate treasurers and pension managers, panicked by the growing economic damage from the Covid-19 pandemic, were pulling billions of dollars from certain money-market funds. This was forcing the funds to try to sell some of the bonds they held.
But there were almost no buyers. Everybody was suddenly desperate for cash.
He and the deputy, asset-management executive Cyrus Taraporevala, had spoken the night before, wrestling with how investors would respond to an emergency interest-rate cut from the Federal Reserve.
Now, they had their answer. In his 34 years in finance, Mr. O’Hanley had weathered plenty of meltdowns, but never one like this.
“The market is fearing the worst,” Mr. O’Hanley told him.
March 16 was the day a microscopic virus brought the financial system to the brink. Few realized how close it came to going over the edge entirely.
The Dow Jones Industrial Average plunged nearly 13% that day, the second-biggest one-day fall in history. Stock-market volatility spiked to a record high. Investors struggled to unload even safe bonds, like Treasurys. Companies and government officials were losing access to the lending markets on which they rely to make payroll and build schools.
Prime money-market funds that are owned by big institutional investors and buy a lot of short-term corporate debt—normally safe and boring—had outflows of $60 billion in the week ending that Wednesday, financial-data firm Refinitiv said, among the worst ever. Some $56 billion in client money fled bond funds.
Interest rates on short-term corporate debt surged, peaking on March 25 at 2.43 percentage points above the federal-funds rate—the highest it has been since October 2008, according to the Federal Reserve Bank of St. Louis.
The financial system has endured numerous credit crunches and market crashes, and memories of the 1987 and 2008 crises set a high bar for market dysfunction. But longtime investors and those who make a living on Wall Street say mid-March of this year was far more severe in a short period. Moreover, the stresses to the financial system were broader than many had seen.
“The 2008 financial crisis was a car crash in slow motion,” said Adam Lollos, head of short-term credit at Citigroup Inc. “This was like, ‘Boom!’ ”
A barrage of government programs has since pulled the system back from collapse. This account of what happened on one of the worst days the financial markets have ever seen, from many of the executives, money managers and Wall Street veterans who lived it, shows why the rescue effort was so urgent.
The Federal Reserve set the stage for the downturn on Sunday, March 15. Most investors were expecting the central bank to announce its latest response to the crisis the following Wednesday. Instead, it announced at 5 p.m. that evening that it was slashing interest rates and planning to buy $700 billion in bonds to help unclog the markets.
Rather than take comfort in the Fed’s actions, many companies, governments, bankers and investors viewed the decision as reason to prepare for the worst possible outcome from the coronavirus pandemic.
A downdraft in bonds was now a rout.
Mr. O’Hanley was in a good position to see the crisis unfold. His bank provides vital, if unheralded, administrative and bookkeeping services for most of the world’s biggest investors, and runs its own trillion-dollar money manager.
Companies and pension managers have long relied on money-market funds that invest in short-term corporate and municipal-debt holdings considered safe and liquid enough to be classified as “cash equivalents.” They function almost like checking accounts—helping firms manage payroll, pay office leases and move cash around to finance their daily operations.
But that Monday, investors no longer believed certain money funds were cash-like at all. As they pulled their money out, managers struggled to sell bonds to meet redemptions.
In theory, there should have been some give in the system. U.S. regulators had rewritten the rules on money funds in the wake of the 2008 financial crisis, replacing their fixed, $1 price with a floating one that moved with the value of their holdings. The changes headed off the panic that could ensue when a fund’s price “breaks the buck,” as one prominent fund had in 2008.
But the rules couldn’t stop a panicked assault like this one. Rumors circulated that some of State Street’s rivals would be forced to prop up their funds. Within days, both Goldman Sachs Group Inc. and Bank of New York Mellon Corp. stepped in to buy assets from their money funds. Both firms declined to comment.
This was bad news for not only those funds and their investors, but also for the thousands of companies and communities dependent on short-term loan markets to pay their employees. “If junk bonds back up, people can rationalize that away,” Mr. O’Hanley said. “There’s very little ability to rationalize trouble in cash.”
A debt-investing unit of Prudential Financial Inc., one of the largest insurance companies in the world, was also struggling with normally safe securities.
When traders at PGIM Fixed Income tried that Monday to sell a batch of short-term bonds issued by highly rated companies, they found few takers. And banks were reluctant to step in as intermediaries.
“The broker-dealer community was frozen,” said Michael Collins, a senior fixed-income manager at PGIM. “It was as bad as at any point during the great financial crisis.”
Across the country in Southern California, the head of the debt-trading desk at investment firm Capital Group Cos., Vikram Rao, tried to make sense of the dysfunction.
Mr. Rao, who was working remotely that Monday, walked down the 20 steps to his home office at 4:30 a.m. to discover the debt markets were already in disarray. He started calling the senior Wall Street executives he knew at many of the big banks.
Executives told him that Sunday’s emergency Fed rate cut had swung a swath of interest-rate swap contracts in banks’ favor. Companies had locked in superlow interest rates on future debt sales over the past year. But when rates fell even further, the companies suddenly owed additional collateral.
On that Monday, banks had to account for all that new collateral as assets on their books.
So when Mr. Rao called senior executives for an explanation on why they wouldn’t trade, they had the same refrain: There was no room to buy bonds and other assets and still remain in compliance with tougher guidelines imposed by regulators after the previous financial crisis. In other words, capital rules intended to make the financial system safer were, at least in this instance, draining liquidity from the markets.
One senior bank executive leveled with him: “We can’t bid on anything that adds to the balance sheet right now.”
At the same time, the surge in stock-market volatility, along with falling prices on mortgage bonds, had forced margin calls on many investment funds. The additional collateral they owed banks was also booked as assets, adding billions more.
The slump in mortgage bonds was so vast it crushed a group of investors that had borrowed from banks to juice their returns: real-estate investment funds.
The Fed’s bond-buying program, unveiled that Sunday, had earmarked some $200 billion for mortgage-bond purchases. But by Monday bond managers discovered the Fed purchases, while well-intentioned, weren’t nearly enough.
“On that first day, the Fed got completely run over by the market,” said Dan Ivascyn, who manages one of the world’s biggest bond funds and serves as investment chief at Pacific Investment Management Co. “That’s where REITs and other leveraged-mortgage products started getting into serious trouble.”
That Tuesday, UBS Group AG closed two exchange-traded notes tied to mortgage real-estate investment trusts. By Friday, a mortgage trust run by hedge-fund firm Angelo Gordon & Co. had warned its lenders it wouldn’t be able to meet its obligations on future margin calls...
....having fun. I was smiling as I looked up and around. The MANY reporters with me were smiling also. They knew the TRUTH...And yet when I saw the reporting, CNN, MSNBC and other Fake News outlets covered it as serious news & me thinking of myself as the Messiah. No more trust!
— Donald J. Trump (@realDonaldTrump) August 24, 2019
