MORNING READS
- Without a Covid Narrative, China’s Censors Are Not Sure What to Do
- Zelenskiy Wins Applause, Aid in Half-Day Dash Through Washington
- Investors Trapped in Russian Bonds Find Saviors in Kazakh Buyers
- How Changing Diets Leave Us Exposed to War, Extreme Weather and Market Turbulence
- Oil Prices Rise, Extending Rally, After Decline in U.S. Inventories
- Japanese Homeowners Face An Unfamiliar Headache: Higher Mortgages
- Home Sales Dropped 7.7% in November
- Biden and Congress Still Haven’t Made Inflation Central in Budget Matters
- Fed’s Balance Sheet Drawdown Could Sunset Next Year
- Bankman-Fried Associates Flip as FTX Co-Founder Arrives in NYC
- All The Ways That Crypto Broke in 2022
- A New Chat Bot Is a ‘Code Red’ for Google’s Search Business
- Microsoft Gambles on ‘Nice Guy’ Strategy to Close Activision Megadeal
- Tesla Dangles $7,500 Discount in Rare Move to Boost Deliveries
- Elon Musk’s Distraction Is Just One of Tesla’s Problems
- The End of Netflix Password Sharing Is Nigh
- Sports and Fashion Won Big Together This Year
- What Will Happen in 2023: All the Latest Predictions for Next Year
Futures
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Caroline Ellison, the former CEO of Alameda Research, and Gary Wang, an FTX (FTT-USD) co-founder and former chief technology officer, both of whom have close ties to former FTX CEO Sam Bankman-Fried, have pled guilty to federal criminal fraud charges.
In a Wednesday night statement posted on Twitter, US Attorney for the Southern District of New York Damian Williams said that the duo were charged due to "their roles in the fraud that contributed to FTX's collapse." Ellison and Wang are also cooperating with the Southern District as the feds build their case against Bankman-Fried.
Williams also sent a warning to others. "If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving quickly and our patience is not eternal." He added that Bankman-Fried is now in FBI custody and en route to the US from the Bahamas.
On Dec. 12, SBF was charged by a federal court in New York with multiple charges including wire fraud, securities fraud, money laundering, and violations of campaign finance laws. He could make a US court appearance as soon as today.
The SEC complaint against Ellison and Wang alleges that Ellison, under direction from Bankman-Fried, manipulated the price of FTT, an FTX-issued exchange crypto security token, by buying large amounts on the open market to artificially inflate its price. The SEC alleges that Wang created FTX's software code that allowed Alameda to divert FTX customer funds, and that Ellison misused these funds for Alameda’s trading activity.
"When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag," SEC Chairman Gary Gensler said in a statement. (12 comments)
Micron Technology (MU) said that it will cut its workforce by 10%, and keep tightening its financial belt in 2023 as it foresees more negativity across the semiconductor market. Micron gave its business assessment along with its fiscal first-quarter results after the market close. The company missed slightly on the top and bottom lines.
Based on its recent employee numbers, Micron would be cutting almost 5,000 workers in the year ahead. The memory chipmaker said that for its fiscal second quarter, it expects to lose between 52 cents and 72 cents a share, excluding one-time items, on revenue in a range of $3.6B to $4B. Micron said that "over the next few months", it expects "gradually improving demand trends for memory as customer inventory levels improve further, new CPU platforms are launched, and China's demand starts to grow as its economy reopens." Still, Micron was quick to add that it expects "industry profitability will remain challenged" throughout 2023.
In a statement, Micron Chief Executive Sanjay Mehrotra said that the company is "taking decisive actions to cut our supply and expenses" and that it expects improvements in customer inventories to improve and enable revenue to start growing in the second half of next year. (22 comments)
Goldman Sachs chief economist Jan Hatzius says he doesn't expect the Federal Reserve to cut interest rates in 2023, mostly because he's more optimistic than most about the economy's ability to sidestep a recession.
Speaking to CNBC, Hatzius predicted that a recession will likely be avoided as tighter financial conditions and tighter monetary policy constricts the labor market and cuts into GDP growth - but not enough to trigger a downturn. This will, in turn, keep the Fed from reducing interest rates during the year, as the lack of a recession will lower the pressure for stimulus.
"I think the hurdle for (the Fed) to cut (interest rates) in a non-recessionary environment with inflation still above the target, I think it's going to be relatively high," he said. "As I look forward into 2023, even with additional hikes, we have an extra 75 basis points of hikes in here, similar to the Fed's forecast, I think the drag from financial conditions will be smaller." (87 comments)
Daniel Loeb, the billionaire leader of hedge fund Third Point, took a shot at Cathie Wood, saying that a recent market memo from the CEO and CIO of ARK Invest should be used as a dissertation to understand the mindset approach of “stonk hodlers.”
Within Wood’s Ark’s Disruptive Innovation and Profitability memo, she highlighted that Ark Invest takes positions in stocks that sacrifice short-term profits in order to take advantage of the “exponential growth and highly profitable opportunities” that a handful of innovation platforms are producing.
“Companies catering to short-term oriented investors and leveraging their balance sheets to pay dividends or manufacture earnings with share repurchases do not seem to us to be investing enough to catch these waves of innovation,” Wood said. “As a result, we believe many are likely to be disrupted, if not destroyed.”
Loeb answered back with a tweet: “Anyone teaching a value investing class or one on investment psychology should use this memo as a treatise to study the mindset of stonk hodlers. Note the disparaging comments on luddites who look at archaic measures of value like cash flow as short term traders.” (142 comments)
Today's Markets
In Asia, Japan +0.46%. Hong Kong +2.71%. China -0.46%. India -0.27%.
In Europe, at midday, London +0.38%. Paris +0.10%. Frankfurt +0.02%.
Futures at 6:30, Dow +0.02%. S&P +0.06%. Nasdaq +0.09%. Crude +1.62% to $79.56. Gold +0.01% to $1825.55. Bitcoin -0.18% to $16,856.
Ten-year Treasury Yield -4.3 bps to 3.641%.
Today's Economic Calendar
8:30 GDP Q3
8:30 Initial Jobless Claims
8:30 Chicago Fed National Activity Index
8:30 Corporate profits
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
4:30 PM Fed Balance Sheet
What else is happening...
Will 2023 be another rough year for trillion-dollar market cap techs?
Activision Blizzard (ATVI), Meta (META), Google (GOOG, GOOGL) are among Baird's top tech picks for 2023.
Six Flags (SIX) is being pressed to sell its real estate assets - watch these REIT players.
Apple (AAPL): Six reasons why its shares could rise, not including the Apple Car.
Some hedge funds, flush with cash, plan to return some profits to clients.
CVS (CVS), Walgreens (WBA), Teva (TEVA) in opioid agreements with Washington attorney general.
Six Flags (SIX) confirms talks with activist investor about real estate assets.
Justin Bieber nearing deal to sell music rights to Blackstone (BX)-backed investment firm.