Morning Reads

Morning Reads

Todays Open Interest Change




The Securities Exchange Commission is ramping up its crackdown on crypto, filing a lawsuit against Coinbase (NASDAQ:COIN) just a day after suing Binance. While the allegations are different - Coinbase centers around the registration of securities and market functions, while Binance includes fraud and efforts to evade - the two are similar in other ways. The cases should provide more clarity around crypto rules, as well as the scope and authority of regulators over crypto platforms.

Bigger picture: In the early innings of the crypto experiment or revolution (depending on who you ask), digital asset firms took a similar approach to traditional companies that make waves with innovation. In some respects, it was like the emergence of gig workers, or the gig economy, which steamrolled through tax and labor laws until things were eventually regulated. A similar view - that regulation would bend to innovation - was adopted early on in the crypto craze, but more recently it has become apparent that this is not going to happen.

"The investing public has the benefit of U.S. securities laws, crypto should be no different, and these platforms and intermediaries need to come into compliance," SEC Chair Gary Gensler declared. "Frankly, the public should really be more careful... We don't need more digital currency. We already have digital currency. It's called the U.S. dollar. It's called the euro or it's called the yen, they're all digital right now."

Back in March, Coinbase received a Wells notice for a potential enforcement action from the SEC, though the company said the agency refused to respond to its proposals regarding registration. In April, Coinbase even sued the SEC seeking to force a response on its rulemaking petition, while the CFTC subsequently accused Binance of breaching certain trading and derivatives rules. The latest lawsuits cement regulators' jurisdiction over the crypto industry using federal securities laws and investor protections, instead of an expansion of the rulebook or updated framework strongly sought out by crypto proponents.

Outlook: Investors sent shares of Coinbase (COIN) plunging 12% on Tuesday after considerable foreshadowing in the months prior. In the article, The Downtrend Could Be Stronger Than You Think, SA Investing Group Leader Danil Sereda called the extended slump - following the SEC enforcement action in March - and followed up with another piece Coinbase Stock: Don't Fight The SEC at the beginning of May. Coinbase's woes don't end with legal trouble. The company recently reported its fifth consecutive quarterly loss, while suffering nearly $1.3B of net customer outflows following yesterday's lawsuit. Overall, the stock is down 80% since its direct listing on the Nasdaq in April 2021. (8 comments)

Merger mulligan

Bringing an end to a bitter split in the golf world, the PGA Tour and upstart Saudi-backed rival LIV Golf have announced a merger to unify the sport and its players. Perhaps the most immediate commercial upshot of the deal is a boost to media coverage of the sport, with all its stars coming together as one. LIV Golf drew key players away from the PGA Tour, but then had serious trouble getting media organizations interested in paying it for its events: ESPN (NYSE:DIS), CBS (NASDAQ:PARA), NBC (NASDAQ:CMCSA) and Fox (FOX) all passed on covering the league, while some already had existing deals with the PGA Tour. Other broadcasters and golf-related stocks are also on watch. (132 comments)

Car thefts

New York City has joined other major U.S. cities in suing Hyundai Motor (OTCPK:HYMTF) and Kia (OTCPK:KIMTF). It alleges that the South Korean automakers were negligent and created a public nuisance by manufacturing vehicles "dangerously susceptible" to theft. The controversy surrounds immobilizers, and a failure to install them in their cars for much of the past decade. Around 977 Hyundai and Kia vehicles were reported stolen in NYC in the first four months of 2023, up ~660% when compared to the same period a year earlier. (9 comments)

Dam destruction

U.S. wheat futures in Chicago (W_1:COM) are on the move again amid fears of an escalation in the war in Ukraine. Torrents of water are flowing through a hole in the Russian-controlled Nova Kakhovka dam, which holds as much water as the Great Salt Lake in Utah, threatening hundreds of thousands of people with imminent flooding. Separately, Ukraine said an ammonia pipeline was damaged by Russian shelling in the Kharkiv region. The incidents add to wheat supply worries as dry weather occupies part of Europe and Russia, which helped lift U.S. and European futures earlier this week. (7 comments)

Today's Markets

In Asia, Japan -1.8%. Hong Kong +0.8%. China +0.1%. India +0.6%.
In Europe, at midday, London +0.1%. Paris -0.1%. Frankfurt -0.1%.
Futures at 7:00, Dow -0.03%. S&P +0.1%. Nasdaq -0.02%. Crude +1.1% to $72.56. Gold -0.1% to $1979.90. Bitcoin +3.3% to $26,606.
Ten-year Treasury Yield -1 bp to 3.69%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Goods and Services Trade
10:30 EIA Petroleum Inventories
3:00 PM Consumer Credit

Companies reporting earnings today »

What else is happening...

BlackRock: ‘We don’t see major central banks coming to the rescue’.

Goldman back to one-in-four chance of recession as SVB dust settles.

Boeing (BA) stock declines on delay in 787 Dreamliner airplane deliveries.

Ford (F) nears deal to sell its plant in Germany, Chinese automakers lead bids.

General Electric (GE) to sell stake in GE HealthCare (GEHCvalued at $2B.

Merck (MRK) sues U.S. government to halt Medicare drug pricing program.

Canopy Growth (CGC) booted from Canada's S&P/TSX Composite Index.

Shopify (SHOP) stock jumps after closing sale of logistics unit to Flexport.

Apple (AAPL) acquires AR start-up Mira as it pushes new headset vision.

Tingo (TIO) plunges amid new short report from Hindenburg Research.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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