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Five Bargain Funds For Black Friday

Some funds have had a very bad time recently Will we look back and think investing now was like picking up a bargain? If so, what are some potential options to consider With the Black Friday sales coming up, here are five funds that have had challenging periods of performance, but that the analysis team […] Some funds have had a very bad time recently Will we look back and think investing now was like picking up a bargain? If so, what are some potential options to consider With the Black Friday sales coming up, here are five funds that have had challenging periods of performance, but that the analysis team continue to have conviction in. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. Hal Cook, Senior Investment Analyst, Hargreaves Lansdown: “There are times when funds face macro-economic or market headwinds outside of their control. Once these pass however, it can mean their performance improves again. One trend that has dominated the market in the last year is the underperformance of growth-style equities. This style got particularly hammered in the first few months of 2022. Growth-style investing means buying companies that you think have potential to grow at a quicker pace than the rest of the market. This often means you are looking at companies that have potential to increase revenues and profits way into the future. When interest rates expectations changed to the view that they were going to rise significantly, this had a particularly bad impact on these companies share prices. This meant a number of funds lost a lot of value, and lost it quickly. But these are not necessarily bad funds or bad fund managers, this was a market adjustment that was out of their hands. Therefore, there is potential for these funds to rebound once things calm down and future expectations on interest rates become clearer. Smaller companies funds suffered a similar fate in 2022. This was due to higher costs of borrowing to fund growth and potential for weakened consumer demand due to inflation, higher debt repayments and a potential global recession. This is not unusual during difficult economic times because investors tend to flock toward bigger companies that have larger balance sheets and a perceived better chance of surviving any potential recession. But let’s be clear, there are still loads of very good smaller companies that will make it through the current challenges and come out stronger on the other side. Finally, let’s look at bonds. Bonds have had a terrible year across the board. Yes, some have lost less value than others, but broadly, losses have been significant in all parts of the bond market. Investing in bond funds now means you can expect to be receiving a higher yield than you would have done 12 months ago. This not only gives you some income and a buffer if there are further capital losses from here, but it also gives rise to greater upside potential than the bond market has seen in years. Bargain Funds For Black Friday So, what are some potential options for investors from these beaten-up sectors? Rathbone Global Opportunities This has been a long-term success story under manager James Thomson, and since 2014, co-manager Sammy Dow. They are pure growth-style investors who have shifted their portfolio in 2022 for a higher inflation, higher interest rates world. They own some of the world’s best known companies and focus on investing in developed markets like the US, UK and Europe. Performance over the 12 months to end of October was -17.20%. Barings European Select The team managing this fund have a very strong long-term track record investing in smaller companies listed within Europe. Historically, investing in smaller companies within Europe has led to greater long-term returns than their larger counterparts too. Performance over the 12 months to end of October was -23.63%. Baillie Gifford Managed Growth-style investment house Baillie Gifford has had a very difficult year. This is a growth-style offering, which invests in mainly in company shares but also some of the fund is invested in bonds has delivered over the long-term however. Within the equities allocation, there is often a good amount invested in mid-sized companies which gives them even bigger growth potential. The team at Baillie Gifford have a long and successful track record of picking companies that do achieve outsized growth. Performance over the 12 months to end of October was -29.08%. Jupiter Strategic Bond A globally invested bond fund that has the freedom to invest across a large part of the bond universe. Ariel Bezalel has a very long track record of success and Harry Richards joined him on this fund in 2016. They often have a large part of the fund invested in higher yielding bonds, which have lower credit ratings. Performance over the 12 months to end of October was -16.51%. The fund has a distribution yield of 4.59% as at the end of October 2022. Artemis Corporate Bond Another globally invested bond fund but with a focus on bonds with better credit ratings as well as those issued by companies rather than governments. While the fund was only launched in October 2019, lead manager Stephen Snowden has a long and successful track record going back much longer than that at Aegon and Old Mutual. Performance over the 12 months to end of October was -17.23%. The fund has a yield to worst of 6.3% as at the end of October 2022.”.....»»

Category: blogSource: valuewalkNov 22nd, 2022

Von Greyerz: As West, Debt, & Stocks Implode; East, Gold, & Oil Explode

Von Greyerz: As West, Debt, & Stocks Implode; East, Gold, & Oil Explode Authored by Egon von Greyerz via GoldSwitzerland.com, “The risk of over-tightening by the European Central Bank is nothing less than catastrophic” says Prof Kenneth Rogoff . At Davos he also said: “Italy is extremely vulnerable. But this could pop anywhere. Global debt has gone up massively since the pandemic: public debt, corporate debt, everything.” Rogoff believes that it is a miracle that the world averted a financial crisis in 2022, but the odds of a major accident are shortening as the delayed effects of past tightening feed through. As Rogoff said:  “We were very fortunate that we didn’t have a global systemic event in 2022, and we can count our blessings for that, but rates are still going higher and the risk keeps rising.” But lurking in the murkiness is also the global financial assets/liabilities which is almost $500 trillion including the shadow banking system at 46% of the total. The shadow banking sector includes  pension funds, hedge funds and other financial institutions which are largely unregulated. Shadow banking is not subject to the normal mark-to-market rules. Thus no one knows what the real position or losses are. This means that central banks are in the dark when it comes to evaluation of the real risks of the system. Clearly, I am not the only one harping on about the catastrophic global debt/liability situation. And no one knows the extent of total global derivatives. But if they have grown in line with debt and also with the shadow banking system, they could easily be in excess of $3 quadrillion. Cultures don’t die overnight, but the US has been in decline since at least the Vietnam war in the 1960s. Interestingly, the US has not had a real Budget surplus since the early 1930s with a handful of years of exception. But when you, like the US, live on borrowed time and borrowed money, it becomes increasingly difficult to keep up appearances. In 1971, the pressures on the US economy and currency became too great.  Thus Nixon closed the Gold Window with the dollar having lost over 98% in real terms since then. This is of course a total catastrophe and a guarantee that the remaining 2% fall to ZERO will come in the near term future, whether it takes 5 or 10 years for the dollar to reach oblivion. Remember that the final 2% is 100% from today! The US, EU and Japan have now reached the stage when no one wants their debt. So sovereign debt of these nations is no longer a question of “passing the parcel” but keeping the parcel. When every third party holder of these debts is a seller, who will buy? These three countries will end up holding their own debt. Japan already holds over 50% of its debt. Before the Western Ponzi scheme comes to an end, these three nations will virtually hold 100% of their own debt. At that point, the bonds will be worthless and interest rates will have reached infinity. Not a pretty prospect! US – PERFECT RECIPE FOR DISASTER The final phase of all empires always includes excessive deficits and debts, inflation, a collapsing currency, decadence and war. And the US qualifies perfectly in all those categories. Ernest Hemingway stated it superbly: The first panacea of a mismanaged nation is inflation of the currency; the second is war.Both bring temporary prosperity;both bring a permanent ruin.But both are the refuge of politicaland economic opportunists.  The US has failed in every war since the Vietnam war, including the Yugoslav Wars, Afghanistan, Iraq, Syria and Libya. The results have been massive casualties and destruction of the countries, often leading to economic misery, anarchy and terrorism. The Ukrainian war is not between Ukraine and Russia but between the US and Russia as I discussed in a previous article (Link). The clear proof that there is no desire for peace from the US is that they are sending money and weapons to Ukraine in the $100s of billions and “encouraging” an increasingly suffering Europe to do the same. But they are not sending any peace negotiators to Russia in an attempt to end the war. This is very ominous. The geopolitical situation is now on a knife edge with two major nuclear powers fighting about a relatively insignificant country. This is how major wars normally start. Let us hope that the current conflict does not lead to a major nuclear war since that would be the end of the world. Thus not worth to speculate about the outcome of this high risk scenario. But the economic war and the collapse of the US dominated financial system is not just  inevitable but also catastrophic for the Western economies. A COMMODITY DOMINATED WORLD As the hegemony of the US is coming to an end, the dominance of the decadent West is moving quickly to the East and South. Commodity based countries like the enlarged BRICS will dominate for the next few decades and probably longer. Oil and gas will form the base of this shift but also many other commodities including gold which is now starting a new era. It is likely that 2023 will be the first year of many when we will see a strong rise in gold just like 2000 – 2011 which saw a 7.5X gain. The end of the Western debt based cycle and the rise of the Eastern and Southern commodity cycle is well illustrated in the graph below OIL, GOLD TO GO UP > 9X AGAINST STOCKS The S&P Commodity Index relative to Stocks has recently made a 50 year low. Just to return to the mean, the index would need to go up 4X. But when long term cycles turn up from a historical low, they tend to trend higher and longer than anyone expects. So a move past the 1990 high of 9 is very likely. This would mean that commodities, and especially oil and gold, relative to stocks would move up more than 9X! This  9X move  would obviously involve a combination of falling stocks and rising commodity prices. The expected move of the index confirms the shift from the West, based on an unsound and debt infested system, to the East & South, based on commodities. Much of this move is based on the fossil fuels of the countries involved – to the chagrin of the climate movement zealots. In today’s woke world, there is a tendency to believe that we can change all the laws of nature and science. This is the case both in the economy and climate.  Bankers and governments are confident that they can create permanent prosperity by printing worthless pieces of paper believing that these represent real and lasting value and wealth. Well surprise, surprise, these people will soon have the shock of a lifetime as all that printed money returns to its intrinsic value of ZERO. A debt based economy eventually becomes a self-fulfilling prophecy. The higher the debt, the more the debt needs to grow in a never ending vicious circle. In the end the debt cycle becomes a perpetual motion Ponzi scheme……. UNTIL IT ALL CRASHES! The debt feeds on itself and the more that is issued, the more needs to be issued. As inflation rises, the escalating interest cost on the debt leads to more debt. Next is defaults, both private and foreign. Then the $2-3 quadrillion derivatives, a great part of which is in the shadow banking system, comes under pressure. This leads to massive further debt creation by the Fed and other central banks, desperately trying to save the system. This will eventually lead to what von Mises called:  “…. a final and total catastrophe of the currency system involved.” But remember that we are here talking about the Western financial system. The economic sun in the East will rise strongly and eventually be the guiding light for the world economy. The debt based US and West will to quote Hemingway decline “first gradually and then suddenly.”  So due to the $2+ quadrillion size of the problem, the biggest part of the decline is unlikely to take more than 10 years and it could be a lot faster, especially at the end. But the climate zealots  will have to wait to 2050 to learn that through their actions they didn’t manage to limit the increase in temperature to 1.5 degrees. But with a lot of luck, climate cycles might be on their side and make the weather much colder. Personally I believe that cycles determine the climate and not humans. The climate cycle graph below covering 11,000 years shows that there has been numerous periods with warmer temperatures than currently. At the peak of the Roman Empire 2000 years ago, Rome had a tropical climate. Fossil fuels produce 83% of the world’s energy today. According to forecasts this percentage is unlikely to come down significantly in the next 50 years. Partly due to the increased cost of producing energy, fossil fuel production will fall by 26% by 2048. Increases in nuclear and renewables will not compensate for this decline. If the world stops using fossil fuels, the world economy would totally collapse. Sadly the climate activist movement does not seem to worry about such disastrous consequences. So it seems fairly clear that for a very long time, the world will be dependent on fossil fuels in order for the economy and population not to collapse. For the above reasons, the commodity based countries will soon dominate the world and that for a very long time. The constellations of commodity rich nations are forming rapidly. Firstly we have the BRICS countries which currently consist of Brazil, Russia, India, China and South Africa. Many countries are in the process of joining BRICS including Saudi Arabia, Iran, Algeria, Argentina and Turkey. It is the enlarged BRICS aim to bypass the dollar and create their own trading currency. Many talk about the Petroyuan replacing the Petrodollar but what would everyone do with the Chinese currency since it isn’t freely convertible. Better then to have a currency linked to several commodity countries like Special Drawing Rights. This would create more stability and usability. The Credit Suisse analyst Pozsar calls this Bretton Woods III. There is also the EAEU or Eurasia Economic Union with Russia leading plus China, India, Iran, Turkey and UAE involved. The SCO – the Shanghai Cooperation Organisation headquartered in China is also an important force. The SCO is a political, economic, international security and defence organisation. It includes many Eurasian nations like China, Russia, Uzbekistan, Kazakhstan etc. All the economies involved in this important development are commodity based. For example, commodities are 30% of Russian GDP. Their target is to expand gold mining to 3% of GDP and become the biggest gold producer in the world. Russia has the world’s largest commodity reserves at $75 trillion and produces 11 million barrels of oil per day. Russian friendly provinces produce another 14M totalling 25M. China produces 5m barrels and the Middle East Oil going through the Strait of Hormuz is 22M barrels.  So in a conflict with the US, Russia, China and Iran  could decide to close the Strait of Hormuz which means they would have control over 50% of global oil supply. As Goldman Sachs has stated, oil would then be in the $1000s. If we take Russia, Iran and Venezuela, they control 40% of the global oil supply. The point I am making is that these various constellations of commodity countries will be the dominant economic power of the future as the US and Europe decline. So for Russia, gold and oil are two strategic commodities which will play an important role not just for Russia but for all of these Eastern/Southern countries. And no one should believe that the US and European sanctions are working. Russia and Iran are selling oil and gas to China at a discount. China then exports this, including refined products, to Europe at premium. So the sanctions are a farce which totally kills the European economy. Interestingly, the relationship between yellow gold and black gold has been stable for decades as this chart shows: GOLD / OIL RATIO 1950 – 2023 GOLD – THE VITAL WEALTH PRESERVATION ASSET FOR 2023 AND BEYOND Gold was the best performing asset class in 2022 but the investment world didn’t notice since it is hanging on to the declining bubble assets of stocks, bonds and property. Let’s look at gold’s performance in various currencies in 2022: The chart shows gold up 15% against Swedish Kroner on the right and for example up 11.6% in pounds, 6% in Euros and virtually unchanged in US$. Bearing in mind that most asset markets, including bonds, have fallen by 20-30%, this is an outstanding performance by gold. But no one must believe that gold is going up. All gold does it to reflect the total mismanagement of most economies. The chart above should be turned upside down to reflect the loss of purchasing power of all paper money. As has been the case since 1971, this trend of falling currencies will continue but not at the same steady pace. With the debt infested Western economies collapsing, their currencies will implode one after the other. So please firstly acquire as much physical gold as you can afford and then some more. And when you own your gold, don’t measure the value in collapsing currencies. Just measure your gold in ounces, kilos or grammes. Also please don’t keep it in the country where you live, especially if that country has a tendency to grab assets. I don’t need to tell you which countries you can’t trust. The problem is, there are not many you can trust. BEWARE – A GOLD CUSTODIAN DISAPPEARED WITH CLIENTS’ METALS Also if you store your gold with a gold custodian, ensure that only you can release it by having the Warehouse Receipt in your name. A custodian gold company disappeared last year with the major customer assets in spite of the gold being stored with a major vault company. The weakness was that the gold company could release the gold without the client’s approval. This is not an acceptable way to store your wealth preservation asset.  Finally remember that gold is not just your most important wealth preservation asset but can also be beautiful. TUTANKHAMUN’S DEATH MASK 1327 BC Tyler Durden Sat, 01/28/2023 - 11:30.....»»

Category: worldSource: nytJan 28th, 2023

Futures Drop After Horrific Intel Guidance, Brace For PCE Data

Futures Drop After Horrific Intel Guidance, Brace For PCE Data US futures dropped after yesterday's meltup, led lower by semiconductor stocks and traded in a tight range on Friday after a catastrophic earnings report and guidance from (former?) chip giant Intel, while investors awaited key inflation figures for clues on what the Fed will do next week. Nasdaq 100 futs were down 0.3% by 7:30 a.m. ET while S&P 500 futures dropped 0.2%. Europe’s Stoxx 600 index was 0.1% higher, building on its 0.4% gain from Thursday. The Bloomberg Dollar Spot index was modestly higher, while most Group-of-10 currencies remained under pressure amid muted trading. Treasuries were on the back foot, mirroring moves in German and UK bond markets. Oil and gold rose, while Bitcoin fell for a second-straight day. Focus today will be on the latest reading of the core personal consumption expenditures index, the Fed’s preferred inflation data. Before the Intel report on Thursday, the S&P 500 index achieved its highest close in more than a month and the Nasdaq 100 rose 2% to a four-month high. Yesterday’s rally began with Tech earnings and then accelerated with macro data both a showing a resilient economy but one whose metrics are approaching Fed-preferred levels. Yesterday’s 7Y auction was strong, making 8 of 8 auctions this year where demand was strong enough to move yields lower. Data on Thursday also showed US gross domestic product expanded at a faster-than-forecast pace into the end of 2022. That encouraged hopes the world’s biggest economy can achieve a soft landing, but could temper expectations of a Federal Reserve pivot towards rate cuts later this year. “Stronger data may negate the argument for recession, but then, it means the Fed has to be more hawkish,” Boardman-Weston said. “Markets are in a bit of a Catch-22.” “You are seeing more and more companies turn cautious about the earnings outlook,” said Dan Boardman-Weston, chief investment officer at BRI Wealth Management. “If there is a recession, earnings will have to decline and price-to-earnings ratios have to come down.” Another dampener was the continued rout in companies linked to Indian billionaire Gautam Adani. His corporate empire has shed some $50 billion of market value in less than two sessions following an explosive report from short seller Hindenburg. The losses dragged India’s Nifty 50 index to three-month lows. In premarket trading, Intel shares plunged 11% after the chipmaker issued one of its weakest ever quarterly forecasts as a slump in personal-computer sales hits the business. Analysts say they were surprised by the magnitude of the weakness in the forecast. Visa shares rise as much as 1% in US premarket trading after the payments company’s earnings beat expectations, prompting analysts to raise their targets on the stock in the hope that the firm will be able to weather a weaker economic environment as travel rebounds and foreign exchange pressures ease. Bank stocks were lower in premarket trading, putting them on track to snap a two day winning streak. In corporate news, Wells Fargo kept Chief Executive Officer Charlie Scharf’s pay at $24.5 million for 2022. Meanwhile, South Korea’s financial regulator has fined US-based Citadel Securities almost $10 million over its use of high-frequency trades that allegedly disrupted the market. Here are some more notable premarket movers: Buzzfeed shares jump as much as 28% in US premarket trading, set to extend yesterday’s 120% rally on the digital-media firm’s plans to use OpenAI. Eastman Chemical’s results missed expectations and the chemicals group’s outlook implies an improvement across 2023 that may be viewed as ambitious, analysts say. Eastman shares fell 3% in extended trading after the update. Hasbro shares sink as much as 5.3% in US premarket trading after the toy and game maker reported weaker 4Q sales that fell short of analyst estimates. Jefferies says the quarter is just a “painful period” in the firm’s transformation, which will see it cut 1,000 jobs and reshuffle management. Truist Securities says the results raise concerns around the firm’s ability to grow in 2023. L3Harris outpaced estimates in its 4Q results and its outlook is good enough to match low expectations, analysts say. Shares in the aerospace and defense group rose 3% in after- hours trading. KLA Corp shares declined 5.5% in extended trading on Thursday after the semiconductor capital equipment company gave a third-quarter revenue forecast that was below expectations at the midpoint. Despite Friday's weakness, US stocks remain on track for their best month since July, while the Nasdaq 100 is on course for its fourth straight week of gains - its longest such streak since mid-August - as investors bet signs of easing inflation will prompt the Fed to ease the pace of rate hikes.  While the Fed is set to hike interest rates by 25 basis points next week — shifting away from last year’s bigger moves — hopes for end-2023 rate cuts are “a step too far” and may end up being frustrated, according to Erick Muller, head of product and investment strategy at Muzinich & Co. Ltd. “We will probably see the Fed say ‘we are entering the final phase but listen carefully guys: we will continue to raise rates,” Muller said. “A lot of volatility in rates will depend on the path of inflation from here.” Victoria Scholar, head of investment at Interactive Investor, said Friday’s declines also suggested some profit taking after the strong run of gains. “On top of that, there’s growing caution ahead of the PCE price index, which could provide some clues into the US inflation outlook at the Fed’s next move,” she said. Meanwhile, a note from Bank of America showed investors continued to prefer non-US equities in the week through Jan. 25. European stock funds had $3.4 billion of inflows, the note said citing EPFR Global data, while US funds saw just $300 million. And speaking of Europe, the continent's equity indexes were slightly higher on the day and on course for a weekly gain as earning season continues in earnest. The Stoxx 600 is up 0.1%, led by outperformance in the energy, construction and consumer product sectors. Travel and retail fall. The Stoxx index has gained almost 7% so far, but caution has seeped in as company earnings trickle out. Here are some of the biggest European movers on Friday: LVMH rose to a fresh record high, up 0.8% in early trading as the market focused on the prospects of the Chinese market reopening for the luxury behemoth rather than its weak 2H operating profit margins SSAB gains as much as 11% as the Swedish steelmaker’s higher-than-forecast dividend and plans for a buyback offset its 4Q earnings miss, according to analysts Husqvarna rises as much as 16% after Germany’s Bosch said it would acquire shares in the Swedish lawn-care and outdoor equipment firm, increasing its stake to about 12% Sainsbury climbs as much as 6.5%, the most intraday since November, after convenience-store operator Bestway Group said it has acquired or agreed to acquire a 3.45% stake in the grocer JCDecaux gains as much as 6.6% after reporting better- than-expected 4Q revenue, even though the outdoor advertising firm’s China business was hit by a drop in mobility Adidas rises as much as 2.5% after the sportswear brand was upgraded to buy at Warburg, which said the company’s low starting point will ensure earnings will improve Hennes & Mauritz drops as much as 7.9%, the most since May, after the clothing retailer reported fourth-quarter gross margin that missed analyst estimates Remy Cointreau falls as much as 3.2% after the premium spirits maker’s US inventories overshadowed 3Q organic revenue that beat the average estimate Scor drops as much as 8.2%, the most intraday since July, after Chief Executive Officer Laurent Rousseau resigned less than two years into the role Vestas pares declines of as much as 5.6% as analysts said external challenges continue to weigh on the firm, but that there are signs of improvements Earlier in the session, Asian stocks advanced for a sixth straight day, supported by mild risk-on sentiment ahead of US consumer spending data that would offer further clues on the Federal Reserve’s policy path. The MSCI Asia Pacific Index climbed as much as 0.6%, headed for its highest close since April. India’s benchmarks fell the most in the region, dragged by Adani Group shares. Hong Kong’s Hang Seng Index climbed despite increasing restrictions against China’s semiconductor industry. The gains in broader Asia track overnight moves in US markets, where stocks jumped as data showed that America’s economic growth is cooling somewhat and as tech shares rallied. Investors are awaiting data on US personal income and consumption as well as home sales later in the day, among the final set of data the Fed will analyze before setting rates next week. “The disinflation impulse is likely to stretch further, as has been evident from CPI releases lately, likely continuing to build a case for a 25bps rate hike by the Fed next week,” Saxo Capital Markets strategists wrote in a note. With Friday’s gains, the MSCI Asia gauge is set to cap its fifth weekly advance. Shares in South Korea were among the top gainers in the region while Vietnam’s stock measure jumped in a catch-up rally as traders returned from the Lunar New Year holidays. Mainland markets reopen Monday.  Next week is set to be one of the busiest this earnings season in Asia with over 200 companies reporting, according to Bloomberg-compiled data. Traders will assess the impact of higher interest rates and slowing demand on corporate profits in the region, with China’s reopening expected to provide some reprieve Japanese equities posted modest gains after a tech rally drove peers higher in New York, with investors assessing the implications of the latest economic data including a slowdown in US economic growth.  The Topix Index rose 0.2% to close at 1,982.66 in Tokyo, while the Nikkei advanced 0.1% to 27,382.56. Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix Index gain, increasing 2.7%. “US GDP data showed that interest rate hike is slowly taking effect, and concerns about further hikes have receded,”said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. Indian stocks declined for a straight second session on Friday as a selloff in Adani Group shares deepened after a damaging report from a short-seller.  The S&P BSE Sensex shed 1.5% in Mumbai as traders returned from a one-day holiday, while the NSE Nifty 50 Index extended its drop to 1.6%. Friday’s drop was biggest single-day plunge since Dec. 23 for both gauges while their two-day slide was most since Sept. 26. For the week the indexes slipped more than 2% each and are more than 6% away from their all-time high level seen early December. The India VIX Index, a measure of volatility expectations, rose 18%, the most since Feb. 24, tracking plunge in the benchmark. S&P BSE AllCap Index, India’s broadest gauge by number of companies, saw 1006 companies declining while 158 advanced.  Adani Green Energy, Adani Transmission and Adani Total Gas all slumped 20% in the second trading session after US investment firm Hindenburg Research released a report alleging financial malpractice.  The fresh bout of selling happened as market participants evaluated the impact of US short-seller Hindenburg Research’s report on Adani Group, Nishit Master, a portfolio manager with Axis Securities said in note.  Markets will likely stabilize over the next few days as investors opt for bargain buying as good stocks with history of free cash flow generation are available at reasonable valuations, he added. Foreign investors have been sellers of Indian shares this month, taking out $1.6 billion through Jan. 24, after net selling $167 million in December.  The Dollar Index is flat ahead of US PCE data later today, trading mixed against its Group-of-10 peers, though currencies largely consolidated recent moves. The yen led gains and the pound and the Swedish krona were the worst performers and the pound underperformed its G10 rivals. The euro traded in a narrow 1.0866-1.0900 range. Volumes were 60% above recent averages Thursday as traders position for next week’s meetings by the Fed and the ECB. European bonds slipped, led by the belly, and 10-year German yields headed for their biggest weekly increase so far in 2023 The pound and gilts slipped, with the UK currency heading for its first week of losses against the dollar since the start of the year. BOE also meets next week The yen strengthened after Tokyo inflation data beat estimates, adding to expectations that the Bank of Japan may tweak its ultra-loose monetary policy. Tokyo consumer prices excluding fresh food rose 4.3% y/y in January, fastest pace since 1981; estimate 4.2% gain New Zealand dollar was steady after paring an earlier advance. Business confidence index rose to -52 in January from -70.2 in December, according to ANZ Bank New Zealand In rates, treasuries were pressured lower, following losses across core European rates with Italian bonds notably underperforming over the London session. US yields were cheaper by up to 6.5bp across 10-year sector which leads losses on the day, cheapening 5s10s30s fly by 2.6bp and steepening 2s10s by 3bp; in 10-year sector bunds lag by additional 1.5bp on the day while Italian bonds trade 5bp cheaper. US session focus switches to data with US personal spending and PCE deflator expected. In commodities, oil prices extended gains, benefiting signs of a resilient US economy and China’s continued recovery; WTI added 1.2% to trade near $82.00. Analysts at Goldman Sachs predicted crude prices to head to $100 a barrel later this year from current levels just above $80. Spot gold is little changed at $1,928/oz. Gas markets were pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week. EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. Bitcoin is little changed and holding around the USD 23k mark, with fresh catalysts limited and focus on upcoming key US data. Looking at the day ahead, data releases from the US include personal income, personal spending and the Fed's preferrered inflation indicator, the core PCE, as well as December’s pending home sales and the University of Michigan’s final consumer sentiment index for January. Over in Europe, there’s also French consumer confidence for January, the Euro Area money supply for December. Lastly, earnings releases include American Express, Charter Communications and Chevron. Market Snapshot   S&P 500 futures down 0.3% to 4,061.25 MXAP up 0.4% to 170.70 MXAPJ up 0.2% to 560.17 Nikkei little changed at 27,382.56 Topix up 0.2% to 1,982.66 Hang Seng Index up 0.5% to 22,688.90 Shanghai Composite up 0.8% to 3,264.81 Sensex down 1.5% to 59,300.13 Australia S&P/ASX 200 up 0.3% to 7,493.83 Kospi up 0.6% to 2,484.02 STOXX Europe 600 up 0.1% to 454.54 German 10Y yield little changed at 2.25% Euro little changed at $1.0884 Brent Futures up 1.4% to $88.67/bbl Gold spot down 0.1% to $1,927.47 U.S. Dollar Index little changed at 101.84 Top Overnight News from Bloomberg Back-to-back interest-rate increases of 50 basis points are approaching from the European Central Bank, whose battle with persistent inflation will see it hike borrowing costs until May, according to a Bloomberg survey of economists The IMF said Sweden might have to require banks to hold more capital and increase funding for the financial regulator, as risks rise in the country’s property sector Japan and the Netherlands are poised to join the US in limiting China’s access to advanced semiconductor machinery, forging a powerful alliance that will undercut Beijing’s ambitions to build its own domestic chip capabilities, according to people familiar with the negotiations Nearly a year into an invasion that was supposed to take weeks, Vladimir Putin is preparing a new offensive in Ukraine, at the same time steeling his country for a conflict with the US and its allies that he expects to last for years Putin demanded his government to come up with a plan for re-jigging Russia’s oil levies in a move to offset the effects from western energy sanctions on the nation’s budget revenues A more detailed look at global markets courtesy of Newsquawk APAC stocks traded with a positive bias after the mostly strong US data releases, albeit with advances capped as participants also digested earnings including disappointing results from Intel, and firm Tokyo CPI data. ASX 200 was marginally higher on return from holiday with the index propped up by tech and financials. Nikkei 225 lacked decisiveness following firm Tokyo CPI data in which core inflation rose at its fastest pace since 1981 and further added to the pressure for the BoJ to rethink its ultra-easy policy. Hang Seng was choppy and struggled to sustain early gains after data showed a wider contraction in Hong Kong’s exports and with Japan and the Netherlands set to join the US’s chip curbs on China. Top Asian News Japan and the Netherlands agreed to join the US on China chip curbs with US, Dutch and Japanese officials set to conclude talks as early as today, while the Netherlands is to expand restrictions on ASML (ASML NA) and Japan will set similar limits on Nikon (7731 JT), according to Bloomberg and Reuters. Hong Kong Dollar Bears Stage a Comeback as Funding Costs Slide India Regulator to Study Hindenburg Report on Adani Group: Rtrs Apple’s iPhone Dominated China Last Quarter Despite Disruptions European bourses are near unchanged levels, Euro Stoxx 50 +0.3%, though a very mild positive skew is seen in quiet post-earnings newsflow. LVMH slips with attention on lower margins, Intel (-9.5% pre-market) lags after a miss on the headline metrics and a weak market outlook. US futures are lower across the board with the NQ -0.5% lagging post-INTC; focus for the session ahead is firmly on US PCE before next week's hefty Central Bank docket. Top European News UK Chancellor Hunt says the best cut in tax right now would be a cut in inflation, today's announcement is more of a general plan/guide, will need to wait for budgetary events for further details. Should aim for the most competitive tax regime of any major nation but sound money needs to come first. Need restraint in public spending. Unlikely that we will have the headroom to cut business taxes in March. 7 EU nations Finance Ministers have sent a letter to Trade Commissioner Dombrovskis have pushed back on plans for "permanent or excessive non-targeted subsidies" in response to the US green subsidies/Inflation Reduction Act, via Politico. IMF Article IV review of Sweden: mild recession likely, 2023 growth -0.3%. HICP expected to moderate to 6.5% in 2023. Strong employment is a positive, should somewhat offset household burden from rates/inflation Vestas Sees More Pain Ahead for Beleagured Wind Industry Sainsbury Rises After Bestway Group Buys Stake, May Add More Libya Says More Deals to Follow Eni’s $8 Billion Gas Investment Ionos Owners See IPO Proceeds Raising Up to €543 Million FX DXY is firmer but somewhat mixed vs peers, with the index sub-102.00 as the JPY outperforms after hot Tokyo CPI. At best, USD/JPY tested but failed to move below 129.50 to the downside, and remains towards the lower-end of a 129.51-130.26 range. Overall, EUR, CAD and CHF are little changed awaiting impetus from the afternoon US data docket with specific developments elsewhere limited; pivoting, 1.0880, 1.3320 and 0.92 respectively. GBP is the main laggard for no obvious/specific reason, Cable has struggled to make any move above 1.24 stick, with EUR/GBP above 0.8800 at best though the move stalled ahead of the 0.8811 21-DMA. Fixed Income Core benchmarks have continued to slip despite a limited early-doors bounce/ any positivity from another well-received US auction. Bunds have given up a handful of touted interim levels during their descent to a 137.09 low, with the associated yield above 2.25%, though shy of the 2.27% 11th January best. Gilts fell to a 104.30 trough, but remain above recent lows, while the UST decline has seemingly paused for breath above 114.15 ahead of US PCE. Commodities WTI and Brent March futures have been moving higher since the European cash equity open, with the former back above USD 82/bbl (vs low USD 81.08/bbl) and the latter north of USD 88.50/bbl (vs low USD 87.55/bbl), in limited fresh newsflow. Gas markets are pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week. EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. Strikes at TotalEnergies (TTE FP) sites have been suspended, will be proposed again on January 31st, via CGT Union. Spot gold is little changed in narrow sub-15/oz parameters with any potential upside capped by the firmer USD, base metals are mixed but contained overall. Geopolitics Japan is to impose additional sanctions against Russian individuals and entities, while it will impose an additional export ban on military-related items to Russia as part of sanctions. according to Reuters. US Event Calendar 08:30: Dec. Personal Income, est. 0.2%, prior 0.4% Personal Spending, est. -0.1%, prior 0.1% Real Personal Spending, est. -0.1%, prior 0% 08:30: Dec. PCE Deflator MoM, est. 0%, prior 0.1% PCE Deflator YoY, est. 5.0%, prior 5.5% PCE Core Deflator YoY, est. 4.4%, prior 4.7% PCE Core Deflator MoM, est. 0.3%, prior 0.2% 10:00: Jan. U. of Mich. Sentiment, est. 64.6, prior 64.6 Current Conditions, est. 68.6, prior 68.6 Expectations, est. 62.0, prior 62.0 1 Yr Inflation, est. 4.0%, prior 4.0%; 5-10 Yr Inflation, est. 3.0%, prior 3.0% 10:00: Dec. Pending Home Sales YoY, est. -35.4%, prior -38.6% Dec. Pending Home Sales (MoM), est. -1.0%, prior -4.0% 11:00: Jan. Kansas City Fed Services Activ, prior -5 DB's Jim Reid concludes the overnight wrap I’m relieved to nearly make it to the end of the week in one piece. Whilst my fever has gone I’m still weak and at home there’s 2 sets of penicillin being taken, one perforated ear drum, and a wife who went to bed at just after 7pm last night. In the olden days there would be a big cross on our door. We are supposed to be going to a containment room tonight, where you get locked into a room for an hour and have to find a way out by deciphering all the clues with your team. Sounds like hard work! Markets deciphered a lot of mixed clues yesterday and, after some cause for concerns, decided that it was easier to shrug it all off and drive equities to fresh 2023 highs. Earnings also helped the mood, to be fair. The S&P 500 closed up +1.10% (YTD highs), just as credit spreads tightened and oil prices recovered from their losses earlier in the week. We still think we are in a positive sweet spot but there was certainly stuff to worry about in the US data yesterday. It depends on whether you saw the glass half full or half empty element of it. When it came to those data releases, an important one was the Q4 GDP release from the US, which showed the economy grew by an annualised +2.9% at the end of last year (vs. +2.6% expected). That’s certainly some distance from a recession and there was lots of focus on it being above consensus. However, a key point of caution is that 1.5pp of it was attributable to inventory growth, with net exports and the government adding 0.6pp each. Final sales to private domestic purchasers was soft and showed signs of grinding to a halt. So the details weren’t as flattering as the headline number might suggest at first glance. In the meantime though, the report also offered confirmation that inflation was slowing down, with the PCE price index that the Fed targets up by an annualised +3.2% in Q4, the slowest since Q4 2020, whilst core PCE was up +3.9%, the slowest since Q1 2021. It wasn’t just the GDP release that aided hopes of a soft landing, however, as the weekly initial jobless claims for the week ending January 21 came down to 186k (vs. 205k expected). That’s their lowest level since April, and this isn’t just a blip either, since the 4-week moving average fell beneath 200k for the first time since May. Continuing claims were up to +1,675k (survey +1,658k) though so a bit mixed. Net, net the market took the more positive side of the ledger though and investors moved to price in slightly more central bank rate hikes over the coming months. For instance, the rate priced in by Fed funds futures for the December meeting was up by +3.8bps to 4.47%. Similarly, the ECB rate priced for December was also up +4.7bps. That led to a noticeable rise in sovereign bond yields, with the 10yr Treasury yield up +5.3bps on the day to 3.495%, followed up by a +3.13bps move overnight in Asia to 3.53%. The US dollar (+0.19%) also advanced into the afternoon before giving back some gains toward the end of the US session. In Europe it was much the same story, with yields on 10yr bunds (+5.8bps), OATs (+7.7bps) and BTPs (+8.6bps) all posting a solid increase as we approach next week’s round of central bank meetings. More details on that equity rally now. It was a big roundtrip for the S&P 500, which had been up +0.91% in the first 15 minutes of trading, before being down nearly -0.1% on the day just 90 minutes into trading. Once all the data was absorbed risk rallied through the rest of the day right through the European close. In Europe the STOXX 600 came down from its own intraday high of +0.76% to end at +0.42%, but it missed out on the last lag of the rally last night. On a sectoral basis, energy stocks (+3.32%) were the biggest outperformer in the S&P, aided by a +1.89% rise in Brent crude oil prices that took oil back to $87.47/bbl and then another +0.4% higher to $87.82/bbl in early trading in Asia. Megacap tech stocks were another winner, with the FANG+ index up +3.02% to its highest level since September thanks to a surge in Tesla (+10.97%) after its earnings release. However, some of the more defensive sectors like consumer staples (-0.28%) lagged behind the broader index. Intel was down -9.7% in after-market trading following its earnings announcement. The chipmaker surprised investors by offering a negative earnings forecast for Q1’23 and the lowest quarterly revenue target since 2010. The company has pointed to poor PC sales as the main driver of the expected weakness. Visa was trading +1.1% higher in post-market trading despite seeing purchase volumes rise less than expected in Q4’22, and expectations that higher prices will slow consumer demand. Against that backdrop, US stock futures are indicating a negative start with contracts tied to the S&P 500 (-0.29%), as well as the NASDAQ 100 (-0.61%), ticking down. Asian equity markets are struggling to gain traction this morning despite that strong tech-led handover from Wall Street overnight. Across the region, the KOSPI (+0.70%) is leading gains with the Nikkei (-0.03%) and the Hang Seng (-0.05%) slightly below the flatline. Elsewhere, markets in China are closed for the Lunar New Year. In early morning data, Tokyo’s CPI for January came out with an upside surprise as headline inflation advanced to +4.4% year-on-year (vs. +4.0% expected), hitting a four-decade high. It followed a downwardly revised +3.9% increase in the previous month. Meanwhile, the Japanese Yen (+0.15%) is positively responding against the dollar, trading at $130.03 as the stronger inflation data reinforced market expectations that increasing quickening inflation could push the Bank of Japan to move away from its ultra-easy policy. Looking at yesterday’s other data, US durable goods orders were up by +5.6% in December (vs. +2.5% expected), although excluding transportation they were much as expected at -0.1% (vs. -0.2% expected). Otherwise, new home sales in December came in at an annualised 616k (vs. 612k expected), with a downward revision in November’s figure to 602k (vs. 640k previously). Lastly, the Kansas City Fed’s manufacturing activity index beat expectations at -1 (vs. -8 expected), which is the first increase in that measure in 6 months. To the day ahead now, and data releases from the US include personal income, personal spending and PCE for December, as well as December’s pending home sales and the University of Michigan’s final consumer sentiment index for January. Over in Europe, there’s also French consumer confidence for January, the Euro Area money supply for December. Lastly, earnings releases include American Express, Charter Communications and Chevron. Tyler Durden Fri, 01/27/2023 - 08:07.....»»

Category: blogSource: zerohedgeJan 27th, 2023

"The Pain Has Just Begun" For Risk Assets Heading Into 2023

"The Pain Has Just Begun" For Risk Assets Heading Into 2023 Submitted by QTR's Fringe Finance I’m extremely excited to bring you today a substantive and engaging look at the world of macro from one of my favorite commentators on markets, Harris Kupperman. Harris released his fund’s Q4 2022 letter over the weekend, and it contains a wealth of thoughts and ideas - not only on Harris’ individual positions - but on the state of markets and macro in general. In this quarter's letter, Harris reflects on 2022, which was a historically difficult year for most investing strategies. He discusses his fund’s approach to inflection investing, winners and losers and how their Event-Driven strategy generated considerable Alpha for investors in a challenging environment. For those that don’t know him, Harris is the founder of Praetorian Capital, a hedge fund focused on using macro trends to guide stock selection. Mr. Kupperman is also the chief adventurer at Adventures in Capitalism, a website that details his investments and travels. I find Harris’ opinions - especially on macro and commodities - to be extremely resourceful. I’m certain my readers will find the same. I was excited when he offered up his latest thoughts to Fringe Finance, published below. Photos and bold emphasis added by QTR and not in the original letter. Please also read full disclaimer available here.  Please also make sure to read the disclaimer at the bottom of this post. As 2022 is now complete, I’d like to focus on the five core trends that we were invested in during the year, zeroing in on the fact that not a single one of them worked—which is something of a rarity during my career. To start with, our “Russian Adventure” (for lack of a better term) has been a disaster, costing us approximately 770 basis points net of fees. While I’m hopeful that this may be reversed at some future date, there is zero clarity on when or if we will ever have this capital returned to us. Our exposure to legacy media (primarily print and radio) transitioning to the digital space was also rather disappointing. While these businesses made considerable progress in terms of growing their digital businesses, declines in their legacy businesses accelerated in some cases. Meanwhile, fears of an advertising recession during 2023 hurt the share prices of our investments. Our four current positions have declined between 24% to 46% during the course of 2022—though we did not own two of them at the start of the year. Clearly this performance was far from ideal—despite the strong underlying trends toward a digital transformation remaining intact. Moving on, I was quite bullish on US housing, yet housing doesn’t really “work” with mortgages rates moving into the 7% range like they did during the year. Our largest housing position, St. Joe (JOE – USA) declined by approximately 26% during the year, while our housing materials businesses saw their end markets vaporize during the fourth quarter. Fortunately, we were able to exit our housing materials exposure for a small net gain, as we purchased them quite cheaply and traded around them adroitly. As an inflection investor, I know that I’ll frequently get the thesis wrong. Therefore, discipline on valuation and speed on the exit when the macro turns is paramount. I’m particularly proud that we were able to earn a small return on what turned out to be a mistaken investment thesis. When employed correctly, inflection investing works, and the slight positive performance of our materials names, despite getting the thesis wrong, is proof of it. At the same time, the trend towards net migration to Florida picked up steam during the year, with Florida becoming the state with the most net migration in the nation. Clearly this is a long-term positive for JOE, even if interest rates remain a short-term headwind. As a result, we used weakness in the share price to dramatically increase the size of our position in JOE, mostly at prices below where the shares ended the year. Now, let’s go to our largest exposures at the start of the year, oil and uranium. Oil effectively roundtripped during the year, with Brent Oil increasing from $78 to $86 during the year, after peaking out at $139. Our oil exposure has mostly consisted of two core investment genres—long-dated oil futures and futures call options, and oilfield service providers. In the case of oil, despite a lot of movement, the price ended only 10% higher than where it started, and we experienced minimal net movement on our long-dated oil positions. Fortunately, our oilfield services positions appreciated dramatically, becoming one of the few victories in the portfolio during 2022. While I’m proud of the performance of the services names, it’s worth being intellectually honest here. I thought that oil would end the year much higher than it did. However, as I’ll discuss shortly, I think this performance has simply been deferred into 2023. Finally, spot uranium prices appreciated moderately from $42 to $49. Yet, once again, we suffered in this thesis. Kazakhstan is slowly being dragged into the Russian and Chinese orbit, which has not been a positive for Kazakh asset valuations, mostly priced amongst Western investors. This was further compounded by a rather messy power change during January, as long-time strong-man, Nazarbayev, was replaced with Russian help. As you can imagine, this was a negative for our sizable position in Kazatomprom (KAP – LI), and it declined from $36.75 to $28.14 during 2022. However, Sprott Physical Uranium Trust (U-U – Canada) did appreciate by 6% in US Dollar terms during the year. Once again, I had a thesis on uranium, and it didn’t quite work out as I had expected. Even worse, our only producer got caught up in unexpected geopolitical turmoil, leaving our portfolio with a black eye. In summary, this was a rather miserable performance for our portfolio’s core positions, made worse by how concentrated the portfolio has been over the past few quarters. When I think back on 2022, quite honestly, nothing worked—four out my of our five core themes went nowhere, while our Russian positions completely detonated. That said, we still made it through the year with a small net gain and I want to focus on this gain to explain why I remain such a strong believer in the power of inflection investing. How did we show a positive result when our core themes failed us? To start with, outside of our “Russian Adventure,” we did not suffer any catastrophic losses. Losses are the bane of an inflection investor as you must first overcome losses before showing gains. In this regard, my rigorous focus on balance sheet strength, cash flow generation, and most importantly valuation, helped to ensure that when we got a theme wrong, we suffered only slightly—or in the case of housing materials, earned a small positive return. Secondly, I successfully traded around positions to mitigate losses, earn some yield on short option positions and work to constantly lower our cost basis when possible. Thirdly, I was fast to exit inflecting themes when the strength of the macro faded. Inflection investing, at its core, utilizes the strength of a macro tailwind, overlaid upon deeply distressed valuations. Value stocks can stay cheap or even become cheaper. It is the macro tailwind which serves to unlock the valuation. Hence, when the tailwind turns downward, the speed of the exit is critical. Finally, our Event-Driven book was the gift that kept on giving. Even during 2022 when Event-Driven returns were sedate, they were still rather consistent, allowing us to generate cash that was deployed for de-levering or adding to positions when appropriate. Warren Buffett has famously merged an insurance business with a securities portfolio. During most years, this has allowed him to generate consistent underwriting gains and continue to add to his portfolio, without having to use portfolio leverage in the form of broker margin. As a result, he can ignore market conditions, harvest cashflow, and frequently make large purchases during distressed periods in the markets. Instead of insurance, I prefer to use Event-Driven strategies to generate this cash, also adding to our positions during moments of stress. While insurance is frequently not correlated with stock market cycles, our Event-Driven book’s returns tend to be inversely correlated with the markets. During periods of increased volatility, the EventDriven book tends to do better, whereas during periods of benign market activity, the Event-Driven book tends to produce minimal returns. This effect frequently offsets the depreciation of the core portfolio, becoming something of a hedge to overall volatility, while offering a tool for me to take advantage of market dislocations. I naturally believe that Warren Buffet’s model is superior to simply owning a static portfolio of CUSIPS, waiting for them to appreciate. Having an active business tucked inside of a portfolio, earning cash flow, is an amazingly powerful tool. We’ve emulated that approach, with great success thus far, in the Event-Driven arena. Of course, just as with insurance underwriting, we will occasionally suffer large losses on the Event-Driven book. As a result, I tend to size the positions in a manner that is intended to ensure that no one position can cost us much more than 1% of our capital under normal circumstances. Should we ever experience a larger loss, it would be the result of multiple Event-Driven positions becoming correlated. While this is quite possible, it tends to be a rare occurrence. It is notable that even during the peak turmoil of the March 2020 Covid collapse, the Event-Driven book produced astonishingly strong short-term returns for us, allowing us to continue averaging down when other funds had fully utilized their capital reserves long before the markets had bottomed. While the Event-Driven book will remain somewhat unpredictable in terms of the rate of return, it has thus far been a great boon to our overall returns. My expectation is that this will continue. However, there will be periods like during 2022 where results are tame and made worse by a conscious decision on my part to reduce exposure in the Event-Driven book as I await periods of heightened volatility. Finally, it goes without saying that we will have years where the portfolio declines in value. This is inevitable. However, my goal is to ensure that these declines are not due to permanent losses of capital—rather they are due simply to short-term volatility within the markets. In that regard, we have yet to experience a down year at the portfolio level—despite highly volatile and varied market conditions over the past four years. I am hopeful that we can continue to build upon this record. For most of the past decade, unusually easy monetary conditions allowed a bevy of Ponzi Schemes to expand to near biblical proportions. While the finance industry has always experienced waves of small stock promotes that retail investors would briefly fixate on, never before have so many of these Schemes grown to such a size and taken on such a relevance to the global economy. Over the past few years, millions of US citizens were employed by Ponzis that had no chance of ever showing economic profits. Fake currencies, backed (at best) by monkey JPEGs, grew to values in the hundreds of billions. Companies owned by venture capitalists, many of which did not even pretend to do anything productive, were supposedly valued into the tens of billions, despite the fact that a handful of insiders set the prices of each financing. The prevalence, size, and longevity of many of these Schemes warped investors’ minds, and investors came to believe that metrics other than cash flow ultimately mattered. That world is now changing, and fast. I’ve always said that Ponzi Schemes are inherently unstable. They are either expanding or collapsing; they rarely exist in a state of equilibrium. Once they begin to collapse, they rarely reinflate, and the rate of collapse tends to accelerate due to leverage and cash demands. While we’ve seen the values of various SPACs and green energy frauds rapidly collapse, the victims were mostly cloistered amongst the speculators and retail investors that often transfer their capital to professional grifters during bubbles. The next phase of collapse tends to focus on larger businesses, frauds that have become oddly respected due to their prolonged existence—we’re now midway through this phase. If history is a guide, there will soon be a period of introspection, followed by new waves of collapse. I wouldn’t be surprised if many prominent PE and VC funds show epic losses in the coming years. Their very existence has mostly been a house of cards, built on quicksand, fused together by low rates. Inflation and interest rate increases will rupture these unstable edifices—only compounded by the fact that so many of these businesses do sham transactions with each other. The past few decades have experienced a pronounced wealth effect, and this feedback loop has driven much of the consumption boom that we’ve come to think of as a normal state of affairs. As this all goes in reverse, I expect a lot of pain. 2023 will be a bad year for risk assets. It will be a bad year for many financial products. It will simply be a bad year—that is, until the Federal Reserve cannot take the pain. At some point, they’ll choose inflation over an economic collapse. That will be our signal to get long—very, very long inflationary risk assets. To date, we are exposed, but I intend to really press it when the time is right. That time isn’t today, but it is coming soon. I hope to be prepared, yet patient, in terms of when to gross up our exposure. Returning to our portfolio, having been critical of Ponzi Schemes for much of the past decade, I boldly chose not to invest in Ponzi Schemes during 2022. That decision saved us from a lot of grief. I realize that refusing to invest in fraud is rarely mentioned as a positive attribute of someone’s investing process, but for most of the past decade, such a refusal would have led to dramatic underperformance, as low interest rates and money printing turned much of the globe into a Ponzi economy. We rented some Ponzis at times during 2022, but we never invested. I remain mesmerized and befuddled by how many prominent and well-respected investors, after struggling with cash flow based investing during the Ponzi bubble, moved to the dark side and fully-embraced Ponzis. 2022 was the year when they all wished that they’d stayed disciplined. Fortunately, we do not confuse Ponzis with real businesses. While our performance was rather tame during 2022, we also managed to sidestep the carnage in Ponzis. While 2022 was a bad year for fraud investing, I think that 2023 will be lights-out for many of these entities as they are forced to liquidate their Schemes and terminate their employees. The pain has just begun. On the flip side, I remain unusually bullish on energy and believe that it will be the core market theme over the next few years. We’ve covered the reasons for my bullishness in prior letters. Rather than rehash old material, I’d like to focus on why my thesis has not panned out thus far. To start with, oil is a global commodity that is governed by supply and demand. During the second half of the year, that supply increased as the US and other OECD countries released hundreds of millions of barrels of oil onto the commercial markets. On the demand side, China continued to try to control the spread of germs through arbitrary lockdowns. These two factors now appear to be reversing. On the supply side, not only are strategic petroleum reserves depleted, but Russia along with some OPEC countries appear to be experiencing production declines. Meanwhile, on the demand side, China is now reopening at a time when many other countries are experiencing explosive demand growth caused by their populations entering their respective S-Curves, compounded by an acceleration of gas to liquids switching for electricity generation. In broad numbers, I believe that while the oil market was slightly oversupplied during the second half of 2022, it will swing to a substantial deficit by the end of 2023. In rough numbers, that swing will be comprised of: 2-3 million of increased Chinese demand, 1 - 1.5 million of SPR release abatements, 1 million of Russian energy production declines, and 1 - 2 million of other global demand increases, all offset by roughly 1 million in further global supply growth, mainly from US shale. Overall, this tallies to a swing of between 4 and 6.5 million bbl/d. Of course, such a swing would be massive by any historic measure and likely lead to an energy crisis like we have not witnessed in many decades. Just to be clear, my expectation is that the deficit will not end up being 4 to 6.5 million bbl/d, but that is only because the price will spin out of control and the demand side will suffer. Such a scenario likely only accelerates the collapse of non-energy risk assets, particularly as Central Bankers panic to raise rates and quell inflation. In summary, 2023 will be a maelstrom, but I like to think we’re positioned as well as we can be for what’s coming. Continue reading this letter and read Harris' top five position reviews of his individual positions here.  Tyler Durden Tue, 01/24/2023 - 09:25.....»»

Category: blogSource: zerohedgeJan 24th, 2023

The Schools We Need For The New "Cognitive Economy"

The Schools We Need For The New "Cognitive Economy" Authored by Charles Lipson via RealClear Wire, We are in the midst of a post-industrial revolution as profound and disruptive as the tectonic changes that launched the West’s rise to prosperity, providing ordinary people with a cornucopia of goods and services. The latest economic revolution – built on tiny computer chips, enormous data, and ubiquitous connectivity – differs from its predecessors in at least one crucial way. Unlike the first revolution (cotton spinning) and the second (heavy industry, from oil and steel to autos), this one relies on a highly educated work force. The least skilled are being displaced by smart machines, which are built and programmed by a skilled and adaptive workforce. This rapidly changing environment might be called a “cognitive economy.” It requires workers who are not only literate but numerate. That means effective training in math and science and the skills to continue that learning over a lifetime. In the United States, we simply don’t have the schools to meet those needs. Our failing public education system doesn’t prepare enough students for this cognitive economy, whether the jobs involve writing code, analyzing data, developing artificial intelligence, or operating sophisticated machines. In city after city, our public schools are consigning most students – the ones who don’t get into selective, magnet schools – to the scrap heap of this job market. Soon, the only way to support them will be never-ending transfer payments. If students from the least-advantaged households are to grasp the American Dream, if our economy is to lead this global transformation, then these dismal results have to change. Bad schools are not solely responsible for students’ shortcomings. Their families and neighborhoods share the blame. Too many children are raised by single parents, who are poorly educated themselves. They live in neighborhoods where violence is pervasive, nutrition is spotty, and educational achievement is mocked. They enter school with serious deficits. All too often, they leave the same way. Instead of compensating for these deficits, our public schools often compound them with unruly classrooms, low standards, and lousy instruction. Standardized testing shows just how bad the results are. In Illinois, for instance, only 1 in 5 students performs at grade level in either math or English. In Chicago, the results are even worse, and those for black students are worst of all. Among Chicago’s African American students, only 1 in 10 performs at grade level. These results would have been damaging 50 years ago. In today’s economy, they are devastating. What can be done? The easy answer – more funding – is wrong. According to one study, Chicago spends $29,000 per student annually, which is not unusual for a big city. The problem is not how much we spend per student but how little we get for the money. The obvious solution would be for our schools to imitate the most successful parts of our economy. Our economy – the richest in human history – has historically been premised on the belief that competition is good, monopolies are bad, and failing organizations should either adapt or pay the price. Where there is genuine competition, consumers will choose the best options, and businesses will strive to provide them – or go under. Public schools don’t face those incentives and don’t pay a price for their failure. The rest of us do, especially the ill-served students, who will pay a terrible price for the rest of their lives. The best way to change this mess is to introduce competition and choice. Lots of it. That means letting school funding follow each student and letting families choose where to educate their children. For that to work well, state legislatures and local school districts must provide enough money to fully fund a student’s education. Otherwise, poor families are left out and richer ones will simply use the extra funds to top up their private tuition payments. It means students with special needs should be given extra funding. Equally important, full funding is necessary to create a vibrant marketplace, where new schools (both non-profit and for-profit) compete for those dollars. That funding should be flexible enough to permit parents to spend some money for tutoring and online courses, such as language training or advanced math. They should be allowed to roll over their unspent money into next year’s tuition and, eventually, into community college or four-year universities. The argument here is not that new schools or older parochial ones are inherently better. They may or may not be. The point is that competition forces all schools, public and private, old and new, to strive to improve so they can compete in the marketplace. It weeds out those that don’t provide what parents demand, just as competition killed off Yugo cars and Detroit’s old clunkers. Consumers turned to better-built Japanese cars and forced GM and Ford to improve – or go bankrupt. Competition will do the same for schools. To survive and prosper, they will be forced to provide what parents demand, whether that is advanced math or after-school activities (for parents with 9-to-5 jobs). Some will seek competitive advantage by hiring the best teachers, paying them accordingly, and firing the worst. In short, a competitive market will force schools to innovate, improve, and adapt to what parents want for their children. The biggest obstacle to these changes is obvious: the entrenched power of teachers unions and their leverage over politicians who control education policy. Political scientists have long known that concentrated, well-organized groups, like these public-sector unions, typically wield more power than diffuse groups, like parents. They know that highly motivated, single-issue constituencies, like these unions, typically wield more power than groups concerned with many issues, like all families. The good news is that the pendulum is finally swinging toward parents, as school failures become painfully obvious and political candidates seize the issue, as Glenn Youngkin did so effectively in Virginia. Some states, like Florida, Wisconsin, and Arizona, have moved aggressively to increase school choice, both to please current voters and to attract young families. If these “laboratories of democracies” succeed, other states will follow. Let’s hope so, both for the students’ sake and the country’s growth. Charles Lipson is the Peter B. Ritzma Professor of Political Science Emeritus at the University of Chicago, where he founded the Program on International Politics, Economics, and Security. He can be reached at charles.lipson@gmail.com. Tyler Durden Fri, 01/20/2023 - 21:40.....»»

Category: blogSource: zerohedgeJan 21st, 2023

Rep. George Santos"s office says he still intends to donate his entire salary to charity and will do so quarterly

Santos's office says he could donate his salary to an animal shelter as soon as April, following reports that he pocketed $3,000 and let a dog die. Republican Rep. George Santos of New York once pledged to give “every penny” of his salary to “the fight against Socialism.”Anna Moneymaker/Getty Images GOP Rep. George Santos has pledged not to accept his congressional salary several different times. On Friday, his office told Insider he plans to donate his entire salary on a quarterly basis. Questions remain about the congressman's personal finances, given his history of evictions. Over the course of two congressional campaigns, Republican Rep. George Santos of New York has repeatedly pledged to forgo the entirety of his $174,000 congressional salary.And according to his office, he still plans to do so.A spokeswoman for Santos's congressional office told Insider on Friday that Santos will be donating the entirety of his congressional salary, making quarterly donations to an organization "such as a soup kitchen, or animal shelter." The donation will be made during the first week of April, according to the spokeswoman.The possible contribution to an animal shelter is notable, given one man's accusation that Santos raised money through a GoFundMe for his dying dog, only to pocket the resulting $3,000. Santos has also claimed that he established a non-profit animal rescue organization, called Friends of Pets United, but the New York Times reported that the Internal Revenue Service couldn't find any evidence the group was registered. Santos called the accusation that he stole the $3,000 "shocking and insane" on Thursday, but did not outright deny that it had happened.—George Santos (@Santos4Congress) January 19, 2023 Santos is set to receive his first official paycheck at the end of this month, along with every other member of the House. Insider will follow up with Santos's office in April about where the congressman donates the funds.Questions remain about the Long Island congressman's financial situation, and whether he can now afford to forgo his official salary.Santos has faced numerous evictions through his life, and is once again being pursued by prosecutors in Brazil for stealing a checkbook in 2008.Yet Santos — who's fabricated much of his background and faces several ethics inquiries — was lent his congressional campaign roughly $700,000.In a recent appearance on Steve Bannon's "War Room" show, he repeatedly dodged questions from fellow Republican Rep. Matt Gaetz of Florida about where that money came from."I'll tell you where it didn't come from. It didn't come from China, Ukraine, or Burisma," he told Gaetz.Nonetheless, Santos publicly offered some version of the pledge several times in the last two years.In December of 2020, fresh off of losing his first congressional campaign to former Democratic Rep. Tom Suozzi, he said on Twitter that he "never intended" to accept a salary as a member of Congress and indicated that his salary was "designated" to be donated to the Department of Veterans' Affairs."I don't need to leech off the tax payer dime and I intend to keep it that way," he wrote.—George Santos (@Santos4Congress) December 8, 2020Santos continued to make that claim as he launched what would eventually become a successful second campaign."I will not accept a congressional salary at all," he wrote in a May 2021 tweet slamming Suozzi. "What I want is to serve you, the American people.—George Santos (@Santos4Congress) May 8, 2021In September 2021, upon receiving the endorsement of the New York Young Republican Club — an organization known for its ties to far-right figures — he also repeated a version of the pledge."I pledge to never take a salary," he said. "Every penny will go towards the fight against Socialism."And in a recently-uncovered Portuguese-language interview with Brazilian outlet Folha de S.Paulo that was conducted just last month, Santos said he would donate his salary to four non-government organizations (NGOs), though he declined to specify which ones.In that same interview, he claimed to have once been robbed of his watch, briefcase, and shoes in broad daylight on New York's busy Fifth Avenue — though the outlet was not able to find a police record that matched the incident."And before you ask, they weren't black," he told the interviewer in Portuguese, referring to his purported assailants. "They were white, as a matter of fact."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

Sam Bankman-Fried"s 2 mysterious bail sponsors ponied up a total of $700,000 to get the alleged fraudster out of jail

A federal judge said Friday that the identities of the two anonymous sponsors of Sam Bankman-Fried would remain under seal for now. Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, leaves following a hearing at Manhattan federal court in New York City, U.S. January 3, 2023.Andrew Kelly/Reuters In addition to his parents, Sam Bankman-Fried has two anonymous bail sponsors keeping him out of jail. They contributed $500,000 and $200,000 respectively, one of his lawyers disclosed in a court filing. The judge is weighing a request from media organizations, including Insider, to unseal their names. The two anonymous sponsors of Sam Bankman-Fried's bail posted a total of $700,000 to help get him out of jail, the lawyer for the FTX cofounder said in a court filing Thursday night.One of the two sponsors posted $500,000 while the other posted $200,000 to help guarantee the $250 million bond, which allows Bankman-Fried to remain under house arrest in his parents' California home while awaiting trial in a Manhattan federal court.In addition to the anonymous bail sponsors, Bankman-Fried's parents used their $4 million Palo Alto home as collateral to help secure the bond. If Bankman-Fried violates its conditions, he'll be on the hook for $250 million.Federal prosecutors in the Southern District of New York allege Bankman-Fried "orchestrated a years-long fraud" in which he diverted funds from his FTX cryptocurrency exchange to Alameda Research, a crypto hedge fund he controlled as well. In court, prosecutors estimated he defrauded more than 1 million customers.The prosecutors have secured guilty pleas from Caroline Ellison and Gary Wang, two of Bankman-Fried's top lieutenants at Alameda Research. Bankman-Fried has pleaded not guilty to the charges against him.Christian Everdell, one of Bankman-Fried's defense attorneys, disclosed the contributions of the two anonymous bail contributors so that US District Judge Lewis Kaplan, who is overseeing the case, would include them in the bail condition documents."We therefore respectfully request that the Court update the bail conditions to reflect that the two non-parent sureties will sign separate appearance bonds prepared by the Magistrate Clerk's office in the amount of $500,000 and $200,000, respectively," Everdell wrote.Earlier this month, several news organizations, including Insider, asked Kaplan to unseal the identities of the two anonymous bail sponsors, arguing it was in the public interest."Given Mr. Bankman-Fried's relationships and access to some of the most wealthy, powerful, and politically connected individuals, including elected officials, access to the identity of the bond sureties will bolster trust in the judicial process here," the news organizations wrote in the filing.Everdell argued in a separate filing on Thursday night that disclosing their names would present a security risk to them.He recounted an incident where a group of people drove up to the Bankman-Fried family's Palo Alto home and spoke to his security guards."Recently, the Bankman-Frieds had a security incident at their home when a black car drove into the metal barricade set up outside their home," Everdell wrote. "Three men got out of the car. When the security guard on duty confronted them, the men said something to the effect of: 'You won't be able to keep us out.' The men got back in the car and quickly drove away before the security guard was able to see the license plate."Kaplan said in a court filing Friday that the names "shall remain under seal" as he continues to weigh the arguments.A representative for Bankman-Fried declined to comment on the identity of the bail sponsors.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

Sam Bankman-Fried has serious beef with FTX"s new boss, John Ray III

Insider's Phil Rosen breaks down the latest barbs between Sam Bankman-Fried and FTX's new leadership. Good morning, Opening Bell crew. I'm Phil Rosen. At this point, maybe we should rebrand this newsletter to "FTX Watchers" or "SBF Fan Club," or something that conveys why we all seem so keen on watching the collapse and its aftermath in real time. But I get it — the drama just keeps coming. We're all rubbernecking.As our final send-off before the weekend, I'm breaking down how the two biggest players are still trading barbs about who did what with whose money, and why the other has no idea what they're talking about. If this was forwarded to you, sign up here. Download Insider's app here.John Ray, CEO of FTX Group, described a litany of amateurish business practices used to run the multibillion-dollar exchange.Tom Williams/CQ-Roll Call, Mario Duncanson / AFP1. This much we know for certain: Sam Bankman-Fried and FTX's new boss, John Ray III, are not each other's biggest fans. From their comments, we can see that they disagree on how to run a company, where certain cash went, and who can repay who. On Thursday, Ray gave the Wall Street Journal his first public interview since taking over FTX. He said he's mulling a potential revival of the crypto exchange, and that new leadership doesn't need to hold a dialogue with Bankman-Fried."He hasn't told us anything that I don't already know," Ray said.It doesn't take a stoic to make Bankman-Fried look chatty, given the extensive media tour he embarked on after FTX went under. But the founder didn't take kindly to what Ray had to say. "This is a shocking and damning comment from someone pretending to care about customers," Bankman-Fried said to the Journal via text message. He's maintained that the US branch of FTX is still solvent and can make customers whole again, but the company has denied this claim.In a Substack post last week, Bankman-Fried shared his estimation of what his crypto empire's books looked like over the last two years. But Ray pointed out that those calculations seem to include improperly diverted funds — meaning, in effect, Bankman-Fried's figures imply covering losses using customers' money."This is the problem," Ray said. "He thinks everything is one big honey pot."Here's Bankman-Fried's rebuttal to that comment: "Mr. Ray continues to make false statements based on nonexistent calculations. If Mr. Ray had bothered to think carefully about FTX US, he would likely have realized both that his interpretation is wholly inconsistent with bankruptcy law, and also that even if one were to subtract $250m from my balance sheet, FTX US would *still* have been solvent. Rather, Mr. Ray sees everything as one big honey pot—one he wants to keep."And strangely, as the boss and former boss duke it out, FTX's native token FTT is quietly skyrocketing again. It's possible that the crypto — which was invented by FTX and helped tank the whole enterprise with its massive plunge in value — is rallying as traders speculate on a potential reboot of the bankrupt exchange that Ray mentioned Thursday. The token is now up more than 160% from its December low. Three months into the saga, what are your thoughts on FTX? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know. In other news:Xinhua/Wang Ying/ Getty Images2. US stock futures rise early Friday, following a week of mixed economic data and slowing earnings. Here are the latest market moves.3. Earnings on deck: State Street Corp., Northern Technologies, and more, all reporting.4. This batch of stocks has high upside, according to Bank of America. Strategists said these 35 stocks are their best bets for 2023 and could soar as much as 20% on average. See the full list.5. Markets and the economy are staring down a meltdown in 2023 that could escalate into a new world war. That's according to a veteran strategist who called the dot-com bust. He warned that the Fed is on the brink of taking it too far with its interest rate hikes.6. The UAE and India are in talks to use rupees to trade non-oil commodities, marking another shift away from the US dollar. The move would build on an agreement signed last year, which aimed to increase trade excluding oil between the two countries to $100 billion. Get the details.7. Crypto broker Genesis has filed for Chapter 11 bankruptcy, becoming the latest casualty of the fallout from the implosion of FTX last year. Per CNBC, the company listed over 100,000 creditors in a "mega" bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion. Read the full story.8. The CIO at a $14.6 billion firm explained why hunting for bargain stocks right now could hurt investors in the long run. Yesterday's market leaders like tech could be overtaken by new companies, he explained. This is where to put your money instead.9. Goldman Sachs shared which stocks are most loved by mutual funds and hedge funds right now. In a stock picker's environment, it's good to know what the top stock pickers are looking at — here are 12 names they like most.CELSIUS stock price on Jan.20, 2023Markets Insider10. Celsius stock plummeted Thursday. The energy drink company was ordered to pay rapper Flo Rida $82 million in a breach of contract lawsuit. When he had first signed the endorsement deal, Celsius had a market valuation of about $10 million. Today it's worth roughly $8 billion. Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

Sam Bankman-Fried had a "security incident" when 3 men drove into a metal barricade outside his parents" multimillion Bay Area home, his lawyer said

Filings by Sam Bankman-Fried's lawyers detail the "harassment and threats" the former crypto mogul and his parents have faced since FTX's collapse. Filings by Sam Bankman-Fried's lawyers detail the "harassment and threats" the former crypto mogul and his parents have faced since FTX's collapse.om Williams/CQ-Roll Call Inc via Getty Images Sam Bankman-Fried's lawyer said the ex-crypto mogul and his parents had been subjected to harassment and threats. This includes a recent "security incident" at his parents' Bay Area home, the lawyer said. Three unknown men drove into the metal barricade outside their home, he said. Sam Bankman-Fried's lawyer said that the former crypto mogul had recently experienced a "security incident" at his parents' Bay Area home.Christian Everdell from New York law firm Cohen & Gresser detailed the incident in a letter to Judge Lewis Kaplan on Thursday, saying that Bankman-Fried and his parents had been targeted by "actual efforts to cause them harm."As such, Everdell asked Kaplan to reject the requests from various news organizations to unseal the two currently-unnamed parties who contributed to Bankman-Fried's $250 million bail."Recently, the Bankman-Frieds had a security incident at their home when a black car drove into the metal barricade set up outside their home," Everdell wrote. "Three men got out of the car. When the security guard on duty confronted them, the men said something to the effect of: 'You won't be able to keep us out.' The men got back in the car and quickly drove away before the security guard was able to see the license plate."Neither the car nor the people in it had been identified, Everdell said."This incident underscores the risk to the Bankman-Frieds' privacy and security," he said.Bankman-Fried, who faces multiple criminal charges tied to the collapse of FTX, was released on bail on December 22, shortly after he arrived in the US following his extradition from the Bahamas.While he awaits trial, Bankman-Fried is required to stay at the home of his parents, Stanford Law professors Joseph Bankman and Barbara Fried. Zillow estimates the value of the five-bedroom home at about $4 million, while Redfin's estimate is $3.1 million.FTX customers have been left frustrated after it was revealed that the crypto exchange used customer funds to prop up struggling sister company Alameda Research, despite previously emphasizing that the two were separate businesses. Individual investors say they've lost thousands of dollars.Earlier this month, Bankman-Fried himself told Teddy Schleifer, a reporter from Puck, that a citizen vigilante was stopped by security guards stationed outside his parent's house. He didn't provide further details.In a filing from January 3, attorney Mark Cohen had said that Bankman-Fried's parents "have become the target of intense media scrutiny, harassment, and threats." He said that they had received "a steady stream of threatening correspondence, including communications expressing a desire that they suffer physical harm."Everdell and Cohen said that revealing the names of the two additional parties who contributed to his bond could cause intrusions on their privacy as well as potentially lead to harassment."Given the notoriety of this case and the extraordinary media attention it is receiving, it is reasonable to assume that the non-parent sureties will also face significant privacy and safety concerns if their identities are disclosed," Everdell wrote in Thursday's letter.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

San Fran City Panel Urges Reparations Of $5 Million Per Black Adult

San Fran City Panel Urges Reparations Of $5 Million Per Black Adult In a spectacular display of what happens when woke politics intersects utter financial illiteracy, a San Francisco government advisory committee on reparations has recommended the city pay eligible black residents age 18 years and older $5 million apiece.  That's just the headline recommendation of the San Francisco African American Reparations Advisory Committee (AARAC), which was created by the city's board of supervisors amid 2020's nationwide racial tumult.  Tinisch Hollins, vice chair of San Francisco's African American Reparations Advisory Committee (via San Francisco Reparations) Next on the wish list: "a comprehensive debt forgiveness program that clears all educational, personal, credit card, payday loans, etc." The group said this measure will get blacks out of "an inescapable cycle of debt" so they can "build wealth."  Rivaling the $5 million payment as an eyebrow-raiser, the committee also wants a welfare program that targets a $97,000 annual income for low-income blacks for the next 250 years.  That's right: a quarter-millennium of near-six-figure per capita handouts. “Centuries of harm and destruction of black lives, black bodies and black communities should be met with centuries of repair,” AARAC chair Eric McDonnell told the San Francisco Chronicle.  As with every leftist agenda item, this one demonstrates a profound obliviousness to the influence of incentives on individual human action: There's no surer way of guaranteeing an individual will stay "low-income" than promising to round them up to $97,000.  But wait -- there's more: Those who qualify for reparations should also receive payroll tax, business tax and property tax credits, the panel says.  The city should also "create structures and pathways to mitigate tax consequences for recipients of reparations funds." Sounds like the board of supervisors will get to take a fact-finding trip to the Cayman Islands.   Never mind that California wasn't a slave state, says the committee:  “While neither San Francisco, nor California, formally adopted the institution of chattel slavery, the values of segregation, white supremacy and systematic repression and exclusion of Black people were legally codified and enforced." The Chronicle approvingly called it a "bold" plan, and said "what happens next will show whether San Francisco politicians are serious about confronting the city’s checkered past."  Stephen Williams at November's "Rally 4 Reparations" in Washington DC (Dee Dwyer for NPR) To its credit, the committee seems wary of a new California gold rush comprised of opportunistic reparations prospectors. To guard against a wave of black migrants cashing in, AARAC took a stab at incorporating time-in-residency prerequisites. Their fiscal border wall, however, has big gaps. Their list of criteria applies a "must meet at least two" approach, making it easier for new San Franciscans to sidestep the length-of-residency rules. For example, if you're a descendant of a slave, and you were personally or a direct descendant of someone incarcerated for breaking drug laws, you're in.  In a blow to the woke pillar of creative and flexible identity, AARAC shamefully stipulates that all applicants should have "identified" as "black/African American" for at least 10 years. Let's just hope there's no need for photo ID.  Financial acumen appears to be in short supply among the AARAC members. San Francisco's budget is around $14 billion and there were about 47,000 African Americans in the 2020 census. If just 10,000 residents qualify, the $5 million payment alone would cost $50 billion.  Diversity isn't a strength of the reparations committee either: All 14 members are black. However, there's a vacant seat right now -- available only to "an individual who has lived or is currently living in public housing." Tyler Durden Tue, 01/17/2023 - 10:45.....»»

Category: blogSource: zerohedgeJan 17th, 2023

Transcript: Jennifer Grancio, Engine No. 1

       The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is… Read More The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture.        The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, Jennifer Grancio was there at Barclays when the beginning of ETFs and passive indexing really took off on an institutional basis. She was one of the founding members when BlackRock bought iShares from Barclays and really helped drive broad adoption of passive and ETFs in the financial community. Today, she is the CEO of Engine No. 1, which focuses on the fascinating transitions that are taking place in broad strokes across the economy. There are numerous opportunities in energy, in climate, in robotics, in automation, and her firm helps invest in those spaces. Not quite an activist investor, but she has worked with a number of companies like Exxon and General Motors and Occidental, where the input of Engine No. 1 drove significant changes at those companies. They’re a longtime investor than a black hat activist where they’re looking to buy stock Forza, an exit of the CEO and sell once the stock pops, really fascinating story. I found it quite fascinating and I think you will as well. So with no further ado, my interview with Engine No. 1’s Jennifer Grancio. Let’s start out talking about the early part of your career. I’m really curious how you ended up in BlackRock. But before that, you’re working as a consultant. JENNIFER GRANCIO, CHIEF EXECUTIVE OFFICER, ENGINE NO. 1: Yes. I think like a lot of people in undergrad, I went to Stanford thinking I was going to do genetics and science — RITHOLTZ: Right. GRANCIO: — did an internship, pivoted, ended up doing international relations. Then as you head towards the end of college, you figured you’re going to save the world, then I’m going to go work for the World Bank. The World Bank wants you to take out more student debt and get a master’s degree. So like so many other bright-eyed graduates, I trooped off to, you know, one of the traditional professional services professions. But what’s kind of interesting for me about consulting was this idea that you almost apprentice with somebody that’s senior, and you run around and try to help companies and problems. So it seems like a good idea at that time. RITHOLTZ: At that time. GRANCIO: And that’s what I went off to do. RITHOLTZ: So how do you go from that? How do you end up at a place like BlackRock? iShares seems to have been almost an accidental business line from them. Am I remembering correctly, that was a post financial crisis Barclays’ purchase, something along those lines? GRANCIO: Yes, exactly. Yeah. So if you go back, so management consulting, moved back to California and decided I was going to be a California person, not a New Yorker, no offense to New York, spent a lot of time here, all those things, right? RITHOLTZ: Better weather. The geography is beautiful. Sure. GRANCIO: And so I went looking for what I thought would be the best asset management business, I focused on asset management within the consulting space. Like, this idea that somehow if you got portfolio construction and savings right, you help people over time. And so I joined what was Barclays at that time. The asset management business of Barclays Bank was this little firm called Barclays Global Investors based in San Francisco. RITHOLTZ: And that was not such a little firm at that time, was it? GRANCIO: No. It was growing very quickly. And that business was an institutional business. So as an institutional business, we did indexing. We thought indexing was cool. And the iShares and the ETF idea came from, we just had a fundamental belief it was a better mousetrap. So there’s something about an ETF and we could go into that another time. There’s something about an ETF that’s a better mousetrap than a mutual fund. And so for Barclays Bank, we pitched here’s a great idea. Let’s build this ETF business in the U.S. And it’s a way for Barclays to build in the United States. And so we launched the business in 2000. So we launched it right into the dot-com crisis. RITHOLTZ: So from the dot-com crisis to the global financial crisis, what were the circumstances surrounding BlackRock saying to Barclays, yeah, we’ll take that little worthless business off your hands for a couple of hours? GRANCIO: Yeah. And the interesting thing about an ETF business is that it takes a long time to build. And so to your question, around that time, you’re going into 2008, Barclays needed cash. And the index business was starting to take off in the form of ETFs, or at least we thought that, but it was still a relatively small business. And so who were the other people that probably looked at that acquisition included other big indexers, big asset managers who weren’t sure, was indexing going to be a thing or not? Because remember, at the time, ETFs and index were synonymous, but Larry, you know, was more forward-looking. RITHOLTZ: Larry being? GRANCIO: Larry Fink of BlackRock. RITHOLTZ: Who arguably, and I know who Larry is, I just want the audience to know, arguably the purchase of iShares by BlackRock from Barclays could be one of the great opportunistic distressed purchases in the middle of a crisis ever in financials. What is iShares up to now? Like $4 trillion, something insanely? GRANCIO: Enormous. RITHOLTZ: Yeah. And they picked it up for a teeny tiny fraction of that. So what was your experience like when BlackRock took over iShares? GRANCIO: Yeah. So we built the iShares business first within Barclays. And we were a, you know, small but mighty team doing ETFs. And the whole idea I remember of ETFs is to go and to challenge mutual funds and challenge active management. So that’s a big thing to take on. And so as BlackRock work through the acquisition of all of the BGI business, including iShares, we spent a couple of years then getting to know BlackRock, as a little iShares team, and talking about ETFs and fee-based advice and portfolio construction, and all these things that we thought were trends we could take advantage of and use to build the business. But then the business really just got from strength to strength after that acquisition. We came out of the financial crisis, few rocky years in the ETF industry overall. Vanguard decided to get into ETFs in a serious way. BlackRock and iShares launched that core series as a competitive business. So kind of responding to what was going on in the market, and the business continued to grow and grow. And then I think from an ETF industry perspective, we did some important work on trying to protect the category of ETFs. So we did a lot of work with the U.S. regulators, European regulators and run the business in Europe for a while as well, talking about the differences between like a passive index fund, for example, an ETF that’s got commodity exposure and ETF that’s leveraged or inverse, in terms of trying to protect the vehicle and protect the category. And really since then, there’s just been continued explosive growth. RITHOLTZ: In your wildest dreams, did you ever imagine back from the sleepy early days of passive and ETF at Barclays that would grow up to be just the dominant intellectual force in investing, and reach the size it’s reached? What is even after this year, BlackRock has something like $8 trillion? $9 trillion? GRANCIO: Yeah. I mean, the numbers are huge. I think we did, but maybe we were naïve. But our view was, it was a trend that was going to happen. And if you could own the trend, and if you could accelerate the trend, this was a better way to invest. A better way to invest is to have a low cost solution at the core of the portfolio, and then hire people that are deeply capable to deliver alpha. So I would say we thought it could be big. But you know, it’s pretty amazing. RITHOLTZ: So you talk about accelerating the trend. What exactly do you do to help accelerate that trend? How do you drive acceptance of both ETFs as a wrapper as opposed to traditional ‘40 Act mutual funds, and passive versus more traditional stock picking market timing, active investment? GRANCIO: Yeah. I think when the industry first started, so going back, you know, 20 years now, the two things were synonymous. But, you know, let’s take those one at a time. So from a passive perspective, the argument we made as an industry selling passive ETFs was you really had to take a look at what the portfolio is doing over time, total cost, total risk exposure. And when you did that, you often found that there was a way to get better long-term performance and cheaper, by having some index in a portfolio. So that was the story on indexing. And then we kind of kept driving that into this idea of models. So now, you know, there’s a model, a huge amount of money, you know, trillions of dollars sit in models in U.S. wealth. What does that mean? It means a big wire house. Your brokerage puts a model together, this much of Europe, this much U.S., this much small cap. And then you can use index products to fill all those allocations. And so that was the kind of the 20-year build of how did passive get so big. And then ETF as a wrapper, it’s just a great way to get the price at the moment if you’re buying into the public markets, number one. And number two, it’s a great way to manage tax, where if you buy something now and you sell it in 20 years, and the markets gone up, guess what, we have to pay tax on that. But the kind of annual capital gains gift you get from a lot of mutual funds, it can be managed very astutely in the ETF wrapper. And that’s great. Like, that’s great for all investors. RITHOLTZ: Meaning if you’re a mutual fund owner who’s not selling, but somebody else sells and generates a capital gain, that gets spread around to the other older (ph) — GRANCIO: Exactly. So even if you’re — RITHOLTZ: — which doesn’t make sense at all. GRANCIO: I mean, as somebody that’s been doing ETFs for a long time, I say it doesn’t make any sense, whatsoever, because there’s another way to do it. And we’re finally seeing that now. We’re finally seeing a lot of the big mutual fund companies start converting into ETFs. RITHOLTZ: The flows even in a down year like 2022, the flows have all been towards passive, towards ETFs, towards low cost. It seems like a much better mousetrap. GRANCIO: I think it is. RITHOLTZ: But I’m not going to get much of an argument from you on that. So you mentioned Vanguard, we’re talking about Black Rock. Let’s talk a little bit about the role of brand on in the industry. How important is that when you’re putting out either a low cost passive ETF at 3 or 4 BPS, or something more active or thematic on the ETF side? GRANCIO: Yeah. I mean, the role of brand is pretty critical. And if you think about in the index business, if you’re managing it well, there’s not a lot of performance. It’s are you tracking the index? Yes or no. And so that power of the brand is massive. And my observation in this space is that the average investor, the average retail person that’s going out and investing or talking to an advisor, they don’t necessarily know one product provider or investor versus another. But they definitely know who they do business with or who they buy from. So that retail brokerage brand, their advisory brand has a huge impact on them. So to your question on Vanguard, like Vanguard is a brokerage firm, so you kind of know Vanguard. Vanguard does your 401(k), you’ve heard of Vanguard. And so for other people that enter the industry, and this is certainly what we did in the iShares business or what we do now at Engine No. 1, is you really have to be clear on who are you and what is your story because that brand matters a lot. RITHOLTZ: So you mentioned brokerage firms, and Vanguard does 401(k) brokerage. They do all sorts of obviously mutual funds and ETFs. How do you see some of the bigger custodians and actual brokers like Schwab and Fidelity in terms of ETF developments? We know it’s BlackRock, Vanguard and State Street at the top. These guys are no slouches either, are they? GRANCIO: No. I mean, I would say if we go back and we look at the history of ETFs and how they’ve developed, we see State Street, Vanguard and BlackRock. BlackRock iShares is very dominant, and they’re going to continue to be dominant in passive, period. They’re there. They’re big. They’re so big now. And we’ll come back to this later. I personally think there’s some problems with how big they are. But from an ease of buying decision-making perspective, they’re big. They’re dominant. The brokerages were late to get in the game. So Fidelity and Schwab got in much later. They don’t charge fees for those products. And so it makes it harder for them as a kind of a corporate organism to, you know, have that be a big part of their business. And then what we’re very excited about it Engine No. 1, and what you’re seeing with the mutual fund conversions, the big ones at DFA, at Franklin Templeton, and the list goes on, there are many, is that we’re now ready to move active funds into the ETF structure. And that I think is very exciting. But that’s new, that’s very new development. RITHOLTZ: So let’s talk a little bit about Engine No. 1. First, how did you get there from Black Rock? What led that transition? GRANCIO: Yeah. So I left BlackRock very large. I wanted to do a little bit more innovation. And I think sometimes the biggest firms are great, but they can’t always lead from an innovation or change perspective. RITHOLTZ: Right. GRANCIO: So I spent a couple of years, I built an advisory firm, and took a couple years to decide on, you know, what was the next move? And I did some great work with a number of large wealth and IRA firms that were going through an M&A or selling themselves process, did some work on impact investing, actually led me to Ethic and joined the MannKind board, but decided I was definitely going to be a builder, that there was this opportunity to do something different than traditional mutual fund and passive ETF. And so I started looking for what would be the thing I wanted to build with partners, and then I met Chris James. RITHOLTZ: And did you launch Engine No. 1, or did you join him when it was already existing? GRANCIO: We launched it together. Going back, you know, before we started the firm, so Chris James is our founder at Engine No. 1. And Chris’ background is hedge fund and private fund investments. And what he’s really known for, he’s known for taking an extremely long view on something and doing the work to let’s say, where is the opportunity as you go through a huge transformation or transition? So Chris was hard at work on this and wanted to reach into the wealth space. So rather than just doing products that were private and you could help institutions invest, what could we do that was broad and into the wealth space? So I joined him to collaborate, given my background on that side of the business. And the idea of Engine No. 1 is just to help people benefit from these huge transitions and transformations that are very much not the backwards-looking. Look, Google and Amazon got great. You know, our portfolios have a lot of growth in tech, great. There’s a lot of money to be made in the energy transition, transportation, agriculture. And so really, the idea of the firm is to be able to look forward, find mispricing, and make money as we go through these huge changes. RITHOLTZ: The firm’s name is intriguing. Where does Engine No. 1 come from? GRANCIO: The first firehouse in San Francisco is actually a couple of blocks from our office. And in talking about what we were trying to do, which is maybe it’s grandiose, but if you think about it like capitalism works. And what we were agitated about is we saw the market, you have ESG over here, very small. We think old school ESG does not work. We have a strong view on that. We’ll come back to that. Indexing, too many shares are locked up in indexes. Index don’t vote their shares. And then maybe most important of all, we’re going to need a General Motors and Ford to actually be able to do this huge transition from internal combustion to battery electric vehicles. And so, you know, actually, the firehouse is the center of the community, right. And if you think about how a community survives, the firehouse is the center of the community. It takes care of itself. A well-run business really should be as simple as sort of taking care of the environment, it’s in being aware of it. And in public markets, that means you also have to be able to adapt and manage their change. RITHOLTZ: So tell us a little bit about the strategies you guys employ. What are your key focuses? How do you deploy capital? GRANCIO: Yeah. As a business, we run an alts business, and then we run the ETF platform. So if you think about it very simply, these huge ideas about transition and transformation and how to make money are very common across what we do. But we have two businesses. And the big ideas are these transitions and transformations, and how do you take advantage. And so when we look at public companies, we look at every single company, and we look at what their path is through time. So I think this is one of the problems with a lot of investment strategies right now is they’re looking to short term. And then we build the impact or externality data, we just build it into the financial model, right? Because the data is out there particularly on governance, particularly on environmental issues. And when we do that, in the sectors that are in transition, let’s take energy, for example. If you’re an oil and gas company, and you don’t account for the emissions that you’re dealing with and you don’t decrease them over time, you’re going to have a problem. And we saw this when we started building the business that a lot of these companies were heading towards zero terminal value. So let’s take Exxon, for example — RITHOLTZ: Okay. GRANCIO: — where if you take Exxon, and Exxon keeps doing long-dated fossil fuel projects, and has no plan to reduce emissions at any point in time, and has no plans to develop a green business. Well, that’s not very good for Exxon stock when we get to 7 or 10 years out. And so we see a lot of these opportunities where like it’s just math. The capitalist system is supposed to have the company govern itself, so that it’s making money through time. It has a longer duration of business, and it has a higher value. And that’s the kind of the way that we work in everything that we do. RITHOLTZ: So you mentioned environmental issues and impact. You mentioned governance. This sounds a lot like two-thirds of ESG. GRANCIO: Yeah. We think the way people use that label is a little bit problematic. So people often use that label looking backwards. RITHOLTZ: Flash that out a little more — GRANCIO: Yeah, yeah. RITHOLTZ: — because when I hear someone mentions ESG, I typically think of an investor and for the most part, as we go through this generational wealth transfer, you do surveys of investors, husband passed away, the wife tends to be much more empathetic with issues of equality and environmental concerns. And the next generation is much more concerned. So it seems like there is a desire to express those beliefs in their portfolios. Why does that not work with ESG? GRANCIO: Yeah. I mean, I guess our view on that would be, you can always express values in a portfolio. But if you’re going to express values in a portfolio, say that I am expressing my values in the portfolio, which is different than the core concept of managing money over time generally, for the person that’s doing the managing is to be a fiduciary — RITHOLTZ: Right. GRANCIO: — and drive good outcomes and strong returns. And in general, for the investor, is to drive returns over time. And so the way we think about it is, really, you can do that. And any business that is going to survive over time has to be sustainable, has to address or basically cover their impacts, right, after the cost of capital so that they can be profitable over time. So instead of thinking ESG means it’s values based, I don’t like the company, they’re bad, I’m going to screen them out of my portfolio. We don’t think that’s a great way to manage your core portfolio over time. We think the better way is you simply have to engage with the companies to make sure that their most material impacts that’s financial data, right? That’s risk data if you don’t manage your emissions as an oil and gas company. And so let’s build that into just investing to make returns as opposed to this special class, which, you know, it devalues base and ESG tends to kind of infer value over performance, right, or divesting from companies that you don’t like. And we don’t think that’s a great way to invest. RITHOLTZ: So let me push back a little bit on the low carbon strategy. It seems like it’s half of the economic equation because people seem to be approaching entities like ExxonMobil and others, the suppliers of the carbon-based fuel. What is that doing if you’re ignoring the other half, the consumers? So every other company that is not a carbon energy producer is likely to be a carbon energy consumer. They’re running factories. They’re shipping goods. They’re having offices. Why focus on one half of the equation and not the other? GRANCIO: Yeah. I mean, I think that’s the right question. And we focus on both. And so let’s take for a minute the energy industry, and then the transportation or auto industry. That’s an example of that kind of handshake or handlock, right? So in the case of the car companies, that’s consumption. So if we’re consumers and we’re driving cars, which we still do and people are planning to do in the future, the car company can switch from encouraging the behavior of driving internal combustion engines, which have very high emissions, or the car company can know that the consumer demand is shifting a little bit and they can build a car that is an awesome battery electric, reasonably priced vehicle. And then they can capture that shift in demand. And that’s really good for the car company. So actually, we a hundred percent believe that this has to primarily be driven on the consumer demand side and on my first piece of that. So if I’m a consumer, I buy a car, you’ve got to start with the car company. However, if you look at global emissions, you know, 34 percent of that today comes from the energy companies. So at the same time in parallel, there’s still an opportunity to work with those companies on, as battery electric comes up, as fossil fuel comes down, how do those companies make a lot of money 9 or 10 years from now as we go through that transition? RITHOLTZ: Explain that 34 percent. Because, again, it’s that someone is a buyer, someone is a seller. They’re not burning 34 percent of the fossil fuels, they’re selling it to consumers — GRANCIO: That’s right. RITHOLTZ: — who were burning it. Like, there are some low carbon ETFs. I just don’t understand. It’s why the war on drugs failed, if you’re only going to interdict the supply but ignore the demands, you’re not going to be successful. GRANCIO: Yeah, that’s right. I mean, and we think from an investment perspective, if you want to solve this problem on how do you take emissions down, we think that problem can be solved and you can make money by owning the people that are going to win. So you asked before, like, what do we do? What strategies do we run in the ETF business? Our active team, it’s effectively hedge fund investors. So they’re very concentrated portfolios. We believe we’re right. There’s a handful of names, like under 30 names today in the portfolio. Ticker is NETZ, Transform Climate (NETZ), and what that portfolio holds is it holds companies that have emissions. But we believe that the companies in the portfolio are the companies that have the right strategy to, if I’m an energy company, I’m producing energy. There’s demand for energy, that’s what I do. But I’ll tell you my emissions, I’ll do methane third-party monitoring. I’ll do all the right things. So that from a social license to operate perspective, I’m at the top of my peer group. And in all cases, they have a strategy whereas fossil fuel demand declines, not today, but in 7, 10 years, they have a strategy to actually make money and still have value. So we’re picking the top best performing energy companies. We’re not saying energy is bad. Energy is essential, and we need that energy in the transition. And the portfolio then also holds the car companies that we think win. RITHOLTZ: So let’s talk about a couple of names. So a couple of energy names from NETZ and a couple of core companies from NETZ. GRANCIO: Yeah. And so one of the names we had in the portfolio, which is actually so highly valued, it goes in and out, depending on if it’s overvalued — RITHOLTZ: Right. GRANCIO: — it’s an active fund, is Occidental (OXY). And that’s an example, they were really the leader in the space. So they had started to develop greener businesses so that as fossil use comes down, they have another business and they’re competitive. That’s great for long-term value of the company. And — RITHOLTZ: What are their green businesses? Things like solar and wind or — GRANCIO: They have a range of things that they do in that space, but think of it as committing early to find ways to make money, having these people on staff, on the board that know how to run green businesses. And then from an emissions perspective, also, they were very early on telling us, being very transparent on Scope 1 and 2, and agreeing to oil, gas, methane partnership emissions with third-party monitoring of emissions, which we think is critical because again, methane emissions leaking, that’s probably the biggest thing. RITHOLTZ: Especially with natural gas. But with pretty any form of car being — GRANCIO: That’s right. RITHOLTZ: — capture, your carbon removal from the ground, that’s a big risk. Methane is even worse than CO2 in the atmosphere, right? GRANCIO: That’s right. And that’s right, and that’s some of the active ownership work we did on that portfolio, where Conoco and Devon are companies that we worked with, to join the methane third-party verification partnership this past summer. And that’s when we talk about Engine No. 1 as active owners, it’s not always, you know, the black hat activist. We actually haven’t done that other than Exxon. But the ability to really understand their business and go in and work with them. And actually, having them methane verified is a big deal, because then people understand what you’re doing in that part of the business. And it gives you license to operate because we need that energy source. RITHOLTZ: What are the car companies that are in NETZ? GRANCIO: General Motors is in NETZ. Ford has been, it goes in and out of the portfolio, based on how they’re doing, managing some of their supply chain constraint issues. And then Tesla is in the portfolio. But GM is at a much larger weight than Tesla. And then Tesla went out of the portfolio for governance reasons. RITHOLTZ: Because? Give me more specific. GRANCIO: Twitter. Because of Twitter. So the way that we manage that portfolio, basically what NETZ is, is you’re holding some of the biggest emitters, and you’re holding this 1.8 metric tons of emissions a year, so not low carbon, high carbon. And then what we expect is that those companies are going to take that number down to less than half within a decade. And so if you care about impact or sustainability, yeah, that’s great. That’s a huge win. You’re holding the companies, watching them. They’re taking emissions down. But if you want to make money, you’re holding the companies that are providing energy, but doing it in a way that they have a social license to operate. And then sort of come back to your Tesla example, all of this starts with governance. And so if a public company is going to make money over years and years, it’s all about governance. And do you understand your markets? Do you understand how things change? And so if you’re running Tesla and you have a huge job to do in terms of scaling that business, but you’re also doing other things at the same time — RITHOLTZ: Assess. GRANCIO: — and saying you don’t have time to run Tesla, well, that’s kind of a governance issue. RITHOLTZ: So when I looked at the acquisition of Twitter which started out as a lark, $44 billion, the market drops, wild overpayment. The bigger issue is if you think about who’s Tesla buyers, they seem to not be the people who Elon is playing to on Twitter. And in fact, as much as there are a lot of fanboys and I think you have to give Elon full credit for moving the entire auto industry to EVs, I think all the legacy-makers looked at him and said, we can’t let Elon do to us what Bezos did to the book industry and the booksellers and a dozen other industries. But it seems like he’s alienating that core middle left, all those liberals we’re going to own on Twitter. He seems to be chasing away a lot of his future buyers of Tesla’s. GRANCIO: He may be. That’s good news for GM NASA. We’re okay. We’re covered on that one. RITHOLTZ: And to say nothing about valuation issues and other assorted things — GRANCIO: Right. RITHOLTZ: — I’m assuming this is in strictly an ESG checklist. You looked at the usual — GRANCIO: Not at all. Yeah, we looked at the usual things and that’s maybe our main point, which is the people get in our industry in particular. They get stuck in old frameworks, right? An ETF is an index fund. An activist is somebody that comes in short term and fires the CEO. So I think we need to be careful of those sort of short ways and shorthand ways of thinking in investments. Our point of view is that there’s a lot of data available now. We have a huge amount of data. Take the climate and environmental-related issues. We have a lot of data on carbon, and we can estimate carbon prices. And so in a basic fundamental financial model, you can start with your old traditional financial model. But you can add in, we do this, we can add in the monetization of those emissions. And then as you build out your financial model, you can look at how the company reduces them over time. And we see those as purely financial metrics, right? That large externality for a company is a risk or financial measure. It’s not some separate ESG dot bubble rating system. It’s just their numbers, it’s math. It should go into the long-term valuation of the business. RITHOLTZ: Let’s talk about the Exxon situation. You accumulated a relatively small number of shares, and then reached out to management. Tell us about the process and how they reacted to your overtures. GRANCIO: Yeah. So from a team perspective, we started by making an economic case. So we did the work on here’s what we would do differently, here’s how we think the value of the business wouldn’t be higher if we did this. And the suggestions on what we would do differently included disclosure of emissions. It included better capital allocation decisions between this sort of short-term energy transition period. And we don’t know when it’s going to be, thanks to, you know, Putin and the Ukraine, longer than we thought a year ago. RITHOLTZ: Right. Right. GRANCIO: But at some point, we’re going to start to really pivot into an energy transition. And so what’s your best thinking, Exxon as a company, on what your business looks like, and your capability at a board level to extend the duration of the business, do things that may be renewable, or whatever they may be. What is it that you can do that’s in that area? And so those were the things that we requested. RITHOLTZ: They were receptive to that? GRANCIO: They were not receptive to that. But those are the things that we requested, which is usually how these things start. RITHOLTZ: So .02 percent of outstanding shares doesn’t exactly put the fear of God into them. Why a toe in the water and not a more substantial stake? GRANCIO: Exxon, going back to when we started the proxy campaign — RITHOLTZ: They were giant, right? GRANCIO: They were giant, but also they were a giant in terms of the big asset managers had not been able to get them to pivot from a governance perspective. So there were known concerns about governance. A lot of the big investors take a slower approach to work with management, not cause too much change, request changes. And there just hadn’t been any progress in this case. So we were able to have conversations. And the team did a huge amount of work with investors and passive investors, and active investors, walking through our economic case. If these things happen, better governance, better economic performance, and that, we think, is what allowed us to rally support. And as we were rallying support, as you see in this situation, I’m sure Exxon was talking to some of those investors as well. And so as we went through the campaign process, we saw some of these changes, changes in capital allocation decisions, and intention to launch a green business. So some of these changes started even before the proxy vote where new directors were elected onto the board. RITHOLTZ: So we talk a lot about specific companies. How do you look at the macro environment and geopolitics? You mentioned Putin’s invasion or the Russian invasion of Ukraine. Arguably, that’s going to accelerate the greening of Europe in particular, and the move to alternative energy sources, not dependent on Russia, which is all carbon. GRANCIO: Yeah. And I think to some extent, you can’t control what is the moment in time where the energy transition happens, right? However — RITHOLTZ: Right now. Right. Aren’t we more or less in the midst of this today? GRANCIO: We are in the transition. Absolutely. But we think that if you wanted to not use fossil or carbon intensive now, it wouldn’t possibly work. RITHOLTZ: Right. GRANCIO: We’re not ready to be transitioned. We are in the transition. And so the way we think about it is we have to be very savvy about where do you have a brown business? Where can that brown business be gray? Where does it start to use green techniques? Natural gas is a great example. We need natural gas. So how do you move natural gas in a way where you’re looking at methane. You don’t have methane leaks. You’re using green energy and electric sources to process the natural gas. There are a lot of things we can do even while we’re using fossil to be cleaner, nd to put the people that are cleaner and doing fossil in a better position to sell versus their competitor, because we are seeing these changes. And we do have a lot of people looking at carbon footprint as they’re buying or investing in companies. RITHOLTZ: So my colleague, Matt Levine mentioned your win. And now says, when they see you coming, you are no longer presenting as a scrappy, small startup. You’re bringing some receipts to the table. Hey, Exxon knuckled down. Now, you and I have a conversation. How has that changed since that win? GRANCIO: Yeah. We started with Exxon effectively. And so I wouldn’t say the next day, it was a sea change in a positive way. I would say it’s complicated, because after you’ve done that, the board and the CEO are a little bit worried about what our intentions are and it takes time to build those relationships. And Chris does a lot of this work directly with the CEOs and the companies that are in the portfolios. And it takes time to build trust. But our relationship with them is basically having modeled their business ourselves and modeled all their competitor businesses, and have gone to kind of up and down the supply chains. And once we get to know each other, we’re giving them what they find is actually some very helpful point of view on if I like your business, I think this, you know, consumer demand is going to flip sooner, you’re going to miss it, or how organized are you on supply chain? What are your bottlenecks? And so it’s become really very constructive with a lot of the companies that we work with. RITHOLTZ: It sounds like your early training in the consultant world wasn’t for naught. This is almost a hybrid between activist investing and consultants. GRANCIO: And just investing, right, high quality investing means you really have to understand what a company strategy is and what are the bottlenecks, what are the places where they may miss. If you understand those, you can make those faster, shorter, better, less risk. Then that’s really positive for being more sure that the company increases in value. RITHOLTZ: So let’s talk a little bit about your toolbox. You mentioned proxy voting, you mentioned modeling. What else does Engine No. 1 bring to the table as ways to get management to see the world from your perspective? GRANCIO: Yeah. And part of it is the data science work that we do around the sizing of emissions, comparative emissions, monetization of emissions, so call that our total value approach to looking at the externalities of these companies. So we bring that. We’ve done the modeling all the fundamental work that we do. And then it’s very active engagement, where we want to stay engaged. That’s part of where the alts business came from. If there’s something in the private markets that could work differently to help a big public company move, can we make connections? Can we help that move along? And then proxy voting is important. So most of what we do is this kind of very intense active engagement. And we’re active owners of the company, not always an activist in a traditional meaning. We also launched an index product. So you know, our view is that you really have to hold these companies if you want to own the winners over time. And if you want to drive change, you also have to hold the companies, you can’t divest. A problem in the dominance of the current index providers is that they’re big and it’s complicated to vote shares, because you have people on different sides of every issue. So while we’re at it, put a new index product out on the market, that ticker is VOTE, which is pretty simple. It’s literally an index. We vote the shares in line with our economic outcomes, and we post them as soon as we vote. So a little option for people that still want to use index instead of active. RITHOLTZ: That’s really interesting. We’ve talked about Exxon so far, and Tesla and Ford. Tell us about your involvement in General Motors, what attracted you to the company, and what sort of positioning do you have with it. GRANCIO: Yeah. And General Motors, it’s going to take some time, right? So General Motors has been in the portfolio since we launched NETZ and still is, and has stayed there. And when we work with General Motors, a lot of our work has been about how do we accelerate the transition to battery electric vehicles for them as a manufacturer, and not for an ideological reason, purely because we think the consumer demand is shifting more quickly. RITHOLTZ: That’s where the market is going. GRANCIO: Right. That’s where the market is going. RITHOLTZ: That’s where the consumer demand is moving. GRANCIO: Again, this is an economic argument for us in working with General Motors, that the faster you get to all battery electric, which means you need to build the battery plants, you need to build them bigger, you need to build them faster, you need supply agreements locked up for the rare metals, and then you need to work on bringing the cost of batteries down. Because as all of that happens, GM makes 8 to 9 million cars a year. And so if those cars are all battery electric vehicles and the battery cost comes down, you know, what’s Tesla’s multiple, right? They have the opportunity to go from where the GM multiple is today, which is very low, very depressed value stock, all the way up to what producing BEVs at scale is going to look like. And that’s a huge value creation opportunity. RITHOLTZ: Let’s talk about what’s going on in the world of ESG and greenwashing and wokeism. There’s so many things happening here and I think people don’t really use these buzzwords appropriately. Let’s start out with greenwashing. Tell us your view of it and why it’s problematic. GRANCIO: Well, I think if you could do everything from scratch, I get this a lot from people that run large asset management companies, they’re like, gosh, I wish I could just start everything from scratch again in this environment. So I think the reality is, if you’re running a strategy and you don’t care, or you don’t have risk metrics on, let’s say, the environment and your strategy, it’s very hard to fit them on top. And I think a lot of people get caught in that from a greenwashing perspective. What we do is we start from scratch. We think about these material impact things as financial data, and it’s just part of our process. And so there’s no greenwashing there. But for people that were investing in something and now want to take advantage of a moment in time, or people that are investing and actually don’t really understand how environmental risk factor into the portfolio, I do think you just have to take a timeout and go back to basics and better articulate what the strategy is and what you’re actually doing to the market. And if it’s not a green strategy, you kind of have to say that. RITHOLTZ: It seems like a lot of this has just been on the hot buzzword of the day. GRANCIO: Well, a lot of our society right now has been on the buzzword of the day. So I think we need to be very careful about that when it comes to investing. RITHOLTZ: So let’s talk about wokeism. You’re describing ESG as sort of a risk management tool to filter out certain potential problems down the road. But if I pick up the Wall Street Journal or the New York Post and flip it to the editorial section, all I hear is woke capitalism and this is what Disney is doing, and this is what Apple is doing, and this is what Nike is doing. Is this really woke capitalism? Tell us what’s happening in that space. GRANCIO: Yeah, I think we have to remember what capitalism is. And then I’m not sure what we mean by woke, which is part of the problem. So your capitalism is meant to be you in public markets kind of, you know, put that in the private markets as well. It’s meant to be you have a set of financial shareholders, you have other stakeholders. You’re making money for the shareholders over time. That’s the definition of capitalism. It’s really hard to make money for shareholders, the financial shareholders over time if you don’t treat your workers well or you destroy the community in which you live. That’s just kind of good business or doing business the right way. I think we sometimes get confused when we talk about values or practices, and you can’t link it directly back to financial returns. So, listen, when it comes to climate, we feel like we can do a pretty good job with the data out there, to link how a company handles climate and environment with how they perform as a stock over time. You know, there’s not enough data on the social side. The research is spotty. I really hope there’s better data. I hope the research gets better. I hope we have causality there. But I think as investors, we have to be careful what we’re talking about. If the company has less emissions, they get credit for trying to do the right thing and the stock price goes up. That’s capitalism. Where from a values-based perspective, we want to ask a company to do something, that’s a little bit different. So I think that distinction is really important. RITHOLTZ: And it’s pretty robust then on governance, if you — GRANCIO: Yes, it did. RITHOLTZ: — elevate women to senior members, if you have people on your board that are diverse. Those companies historically have outperformed the companies that have not. GRANCIO: Yeah. And the board, for a minute, is another one that’s very hard to reduce into one stat. So if you think about all the research that’s been done on boards, in Engine No. 1, we do a lot of work with academics. So we’re always trying to look for these places where we’ve got data and causality, and we can link it to economic outcomes. And when it comes to boards, what a lot of the research would tell us is if a board is deeply non-diverse, that first, if you add one diverse person or thinker, they may actually have worse performance. But if a board starts to have multiple varieties of diversity, and the board listens to the diverse points of view, those are the boards where we get the real outperformance. And then remember, it’s a board. So it’s not just diversity of thought, it has to be diversity of capability. Because as these companies go through change, you know, you need other CEOs that have been successful through change. You know, if you’re an old school media company, you need people on the board that are successful with where the puck is going. So I think we have to look for both of those kinds of diversity. And boards that listen to each other, have diversity and have that important diversity of capability, absolutely, those are going to be the highest performing ones. RITHOLTZ: So we talked about Exxon. We talked about GM, and Ford, and Tesla. What other companies are you looking at as being on the cutting edge of change to take advantage of this transitional moment? GRANCIO: Yeah. I mean, one of the things we’re excited about, I can’t talk about the product because we’re not through the SEC with it yet — RITHOLTZ: Right. GRANCIO: — although it’s in filing. But from a theme perspective, we’re super excited for the U.S., from a U.S. competitiveness perspective. What happened during COVID is supply chains were too global, too fragile, and they broke. RITHOLTZ: Right. GRANCIO: And so what we’re already seeing, and we’re going to see a lot more of this in the next few years, is we’re seeing a huge resurgence of manufacturing jobs in the U.S. and it’s going to be great for a lot of these communities. So we see semiconductor plants. We see battery plants, Michigan, Tennessee, Kentucky. RITHOLTZ: Arizona is starting a big chip — GRANCIO: — Texas. Exactly. So it’s happening already. There’s a huge increase in manufacturing. And then as that happens, if you build a manufacturing plant, there’s a huge job multiplier. You have people come in to build the plant, and people work in the plant, and people work to move goods in and out of a plant. And we’re going to see a huge growth, we believe, in railroads. So if you’re going to increase manufacturing in the North America, guess what, you don’t need to ship things overseas. You need better, more effective railroad, continuing to strengthen the lines and the movement of goods around the U.S. And then automation, so good and bad is, you know, we have less birthrate and less people coming to the U.S. And we’re going to have a huge number of quality jobs. And so companies like Rockwell Automation, that high quality jobs and brand new factories, with automation to assist in the manufacturing. It’s going to be pretty awesome from an investment team perspective. RITHOLTZ: So Rockwell just isn’t terrifying us with YouTube videos of robots that are coming to kill jobs (ph)? GRANCIO: No. The high quality blue collar, if you will, workers and all these new plants, they’re not going to be enough of them. And they’re going to be happy that robots are there to help them RITHOLTZ: Really quite interesting. So let’s talk a little bit about some of the political pushback to the sort of investing you do. Maybe Florida is the best example, passing laws to punish a specific company, Disney, who objected to Florida’s anti-LGBTQ sort of legislation. Is the environment changing for this sort of proxy voting and criticism and working with companies? Or is Florida just Florida and you know, it’s kind of a one-off? GRANCIO: Listen, I think companies have consumers. And so if I’m a company, if I’m Disney and I have consumers, and I feel like my company needs to stand for something because it allows me to serve my consumers to say my brand has value, that’s something that Disney is going to have to push for. So I think, first of all, when it comes to public companies, some of them have one audience, some of them have another audience, and they may need to behave in ways to make their audience feel good so they can be in business and sell their product. And I think, separately, if we talk about proxy voting, successful proxy votes should be economic. So back to the kind of fiduciary concept we were talking about earlier. So if a proxy vote says, you know, can you please disclose more information about your workforce? That’s helpful to investors. Great. That often makes sense to us. If the proxy vote says, I don’t like this thing you do, please don’t do it. But there’s no economic causality. RITHOLTZ: Right. GRANCIO: I think it’s hard for that to be a proxy voting issue versus a values-based conversation with the company. So our belief is proxy votes matter. We should all use our vote. But proxy voting is a tool to drive kind of long-term economic performance with companies. Sometimes there are just value-based issues that shouldn’t be tackled through proxy votes. RITHOLTZ: I know I only have you for a limited amount of time. So let’s jump to our favorite questions that we ask all of our guests starting with, tell us about your early mentors who helped to shape your career. GRANCIO: Yeah. It’s funny, I don’t have a lot of mentors where it was that one guiding light. I found that I picked up little bits and pieces from different people. So Condi Rice was a provost when I was at Stanford. RITHOLTZ: Really? GRANCIO: And so it was that inspiration that sort of sent me off down the international relations path. There was just a level of smarts and confidence that I really appreciated, that I picked up from her. And then a professor in business school who said women can definitely have it all. But you’re kidding yourself if you think you can have it all at the same time. So, like, pace yourself, Like, go after it, but pace yourself. You can’t literally do it all at the same time, which is good advice. And then I think there are a lot of people for me, where I learned one or two lessons from different people. And now, I do a lot of mentoring of other people. And that is my overarching suggestion on this is you got to ask a lot of questions. And you don’t always have to have a lifetime relationship with everyone, but get any nugget you can get and run with it. RITHOLTZ: I like it. Let’s talk about books. What are some of your favorites and what are you reading currently? GRANCIO: So Maya Angelou is actually a favorite of mine. I find it relaxing and it’s so different than what I do every day, and kind of American and lyrical. Harry Potter, one of our kids is younger, so working our way through Harry Potter. And then the Daniel Kahneman Thinking Fast and Acting Slow, I read that last year. I like that a lot because you got to remember sometimes how our brains work. And the fact that we rush to things and we shortcut, and we group things. And so I find that helpful sometimes and just being calm about how else can we solve a problem, or why is somebody reacting the way that they do. RITHOLTZ: What sort of advice would you give to a recent college graduate who is interested in a career in either impact ESG activist, whatever you want to call it, type investing, or ETF and passive investing? GRANCIO: Well, first, I’d say those are great areas to go into. You should go into it. And definitely learn how to invest, learn how to be an investor. Don’t stick to one fad or one mousetrap. If you can learn how to be an investor, or how investors think, that will serve you so well in our business. And I guess to new graduates, I would say don’t give up hope. It’s going to be a bad job market. So take those internships, be a little bit scrappy, and just learn from whatever that first job is, two years in, because you’ll pick up a phenomenal amount of information. And if it’s not what you love, great, then go do something else after it. But it’s a great place to build a career. RITHOLTZ: Really interesting. And our final question, what do you know about the world of investing today that you wish you knew 30 or so years ago? GRANCIO: I think it’s that the overall portfolio construction matters, right? So as an investor, thinking about when you build, like when we build Engine No. 1, we built products or we put strategies out into the market, the more you can make them balanced and with some duration. So if somebody puts something in the portfolio, they sort of understand what it’s going to do, and what the return stream looks like and what the risk looks like, as we’re investing and then selling to other people. I think that ability to build products that are durable, and it’s clear what they do is really, really important. It lets you build your brand. It lets you build trust with the investors. RITHOLTZ: Really interesting. Thank you, Jennifer, for being so generous with your time. We have been speaking with Jennifer Grancio. She is the CEO of Engine No. 1. If you enjoy this conversation, well, check out any of our previous 450 interviews. You can find those at iTunes, Spotify, YouTube, wherever you get your favorite podcasts. Sign up from my daily reads at ritholtz.com. You can follow me on Twitter @ritholtz. Check out all of the Bloomberg podcast @podcast. I would be remiss if I did not thank our crack team who helps put these conversations together each week. Sarah Livesey is my audio engineer. Atika Valbrun is my project manager. Sean Russo is my head of Research. Paris Wald is my producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END ~~~   The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureJan 17th, 2023

Steve Bannon has ghosted his "We Build The Wall" defense lawyers for months in what prosecutors call a delay tactic

A visibly impatient Manhattan judge ordered Bannon to pick new lawyers before his next court date on February 28, or stick with his current ones. Former White House Chief Strategist Steve Bannon enters the restroom as he leaves the New York State Supreme Court after a hearing in New York City, U.S. January 12, 2023.REUTERS/Eduardo Munoz Steve Bannon was in Manhattan court Thursday for a hearing in his border wall charity scam case. His lawyers told the judge that Bannon has refused to talk to them for months. Bannon now has a deadline and an ultimatum: Choose new lawyers in 6 weeks or keep your current ones. Right-wing agitator Stephen Bannon has been ghosting his defense lawyers in his "We Build The Wall" charity scam case for months, those lawyers said in a court appearance in Manhattan state court Thursday.Prosecutors and the judge presiding over the case complained in court that Bannon's ongoing refusal to speak directly to his previously-chosen legal team risks delaying the case, which has sputtered along in the months since his September arraignment on charges of money laundering, conspiracy, and scheme to defraud.David Schoen, one of Bannon's current lawyers, asked the judge to let him and another lawyer, John Mitchell, stop representing Bannon immediately.The judge instead gave a typically rumpled-looking Bannon a deadline and an ultimatum: Either chose new lawyers before his next court date on February 28, or return to court with his current ones.If Bannon persists in not getting a new legal defense team one may be appointed for him by the judge.Bannon, who served as a 2016 campaign official and top White House advisor to Donald Trump, is facing six charges brought by the Manhattan district attorney's office, including money laundering and conspiracy.Prosecutors allege he helped orchestrate a scheme through a nonprofit that claimed to be raising private funding to build a wall on the US-Mexico border.The nonprofit raised $15 million from thousands of donors across the country with the false promise of building the wall as envisioned by former President Donald Trump, prosecutors said in a September indictment. In reality, prosecutors said, Bannon and others laundered funds through third-party entities to line the pockets of people running the organization.'A direct breakdown in communications'Bannon has pleaded not guilty to the charges. He walked into the courtroom in downtown Manhattan Thursday wearing his typical getup of a waxed olive jacket layered over a black button-down shirt, which was layered over a black polo shirt, along with tuxedo pants.At the court conference, Schoen told Judge Juan Merchan that Bannon was no longer speaking with him or Mitchell. Both asked without success to be allowed to withdraw from the case."There has been a direct breakdown in communications," Schoen said, calling their differences over defense strategy "irreconcilable."Since September, Schoen said, Bannon has only communicated with him and Mitchell through a third attorney, Adam Katz. Katz didn't show up to the Thursday hearing.Despite their stated communication breakdown, Schoen and Bannon whispered to and smiled at each other while seated at the defense table only moments later, as a lawyer representing the wall-building fundraiser discussed discovery issues with the judge.After the hearing, Schoen told Insider that he and Mitchell disagreed with Bannon about what defense to make, and how to prepare for the case. "It's cordial — we're very friendly," Schoen said. "We just disagree about the case."Former White House Chief Strategist Steve Bannon points as he leaves New York Supreme Court after a hearing in New York City, U.S., January 12, 2023.REUTERS/Shannon StapletonProsecutors didn't oppose Schoen and Mitchell's attempts to withdraw from the case, but opposed delaying the case's schedule — a point the judge ultimately agreed with."The law gives the court great discretion to move a case along in the public interest," Merchan said.Merchan said the Manhattan District Attorney's office should "set aside" discovery evidence for whichever lawyers Bannon hired. He also allowed letters that were previously submitted to the court by Bannon's current lawyers, and which lay out their disagreements with Bannon, to remain under seal.In August 2020, federal prosecutors in Manhattan brought a similar set of fraud charges against Bannon and three other people who they said had misused funds from the nonprofit to enrich themselves. But then-President Trump pardoned Bannon shortly before he left office. Trump didn't pardon Bannon's three codefendants in the federal case, who were referred to as unindicted coconspirators in the Manhattan district attorney's indictment. Two pleaded guilty to their role in the scam, and the third was found guilty at trial.Bannon was found guilty in July of contempt of Congress for defying subpoenas issued by the panel investigating the January 6, 2021 attack on the Capitol. A Washington, DC, federal judge ordered him to serve four months in prison, but Bannon has staved off the sentence as he appeals the verdict.On his way into the courthouse Thursday, Bannon was met by a small group of protesters demanding he be jailed for his role in the Capitol attack. As he left, he was heckled by a lone protester.—Laura Italiano (@Italiano_Laura) January 12, 2023If Bannon's conviction in DC is upheld, it could weigh against him if he's also found guilty in the border-wall case, as the judge would be able to consider his criminal history.The judge overseeing the case, Merchan, recently oversaw a trial in which the Trump Organization was found guilty of tax fraud. He's scheduled to sentence the company on Friday.Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 12th, 2023

A software engineer borrowed an idea from "Office Space" to steal funds and goods worth about $300,000 from his company

Ermenildo Valdez Castro is accused of making a "series of malicious software edits" to divert funds from an e-commerce company, court papers showed. Ermenildo Valdez Castro is facing two charges of theft and one of identity theft.Getty Images A Seattle software engineer is accused of stealing more than $300,000 from his former employer. Court documents stated Ermenildo Valdez Castro was inspired by the cult 1999 movie "Office Space." He is charged with two counts of theft and one count of identity theft.  A software engineer inspired by the movie "Office Space" has been accused of stealing funds and goods worth more than $300,000 from his company, court documents show. Ermenildo Valdez Castro, 28, from King County in Washington, is facing two charges of theft and one charge of identity theft, according to court documents seen by Insider. Castro is a former software engineer for the e-commerce site Zulily that's based in Seattle, Washington. He joined the company in 2018 and was fired in June 2022.Court documents stated he was directly involved in writing code for the customer checkout process. He allegedly created "three types of malicious code in the checkout process at Zulily."He is accused of stealing $302,278 by editing code to divert shipping fees to his personal Stripe account, stealing $261,885 in electronic payments and merchandise worth $40,842. The company's fraud team found that Castro changed the code about May last year. He purchased 1,294 items, valued at $41,096, at a discounted rate of $253 in total. A document called "OfficeSpace project" was found on Castro's work laptop, according to a report by the Seattle Police Department that was attached to the court documents. After being arrested on June 21, 2022, he told police he "named his scheme to steal from Zulily after the movie."In "Office Space", Mike Judge's 1999 black comedy starring Jennifer Aniston, workers introduced a computer virus into their company's IT system to steal money in retaliation for cost-cutting and bad management. Castro admitted to placing the orders that were delivered to his home. He said they were part of a testing process that Zulily knew about, but claimed that "there was a script that was to be run shortly thereafter that would essentially cancel the order and ensure the orders did not process."The police report also said that when Castro was asked why he hadn't returned the items, he said his view was "f*** 'em" after being fired.When Castro returned his work laptop, Zulily's cybersecurity found the "OfficeSpace project" document, which included the coding he used for his scheme. Castro is due to appear in King County Superior Court in Seattle on January 26.He and Zulily didn't respond to requests for comment from Insider.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 12th, 2023

A top strategist explains how to invest in a pivotal year for markets, policy, and the economy

Insider's Phil Rosen talks to iCapital's Anastasia Amoroso about how to position your portfolio as the Fed continues to raise rates. "Good morning sunshine (Or, if you're like me and spent the entire weekend binging Netflix in bed, good morning dark and gloomy world)."I'm Phil Rosen, and I hope you didn't think that was too funny of a sentence, because I didn't write it. A robot did. ChatGPT, OpenAI's buzzy artificial intelligence tool that launched in November, was just banned in New York City schools, and Microsoft is weighing a potential $10 billion investment in it. While this probably does nothing for my job security, I asked ChatGPT to write a stock market story — and it immediately spat out an even-handed, convincing article devoid of typos. You can read it here.The tool is increasingly proving itself on everyday tasks of varying complexity. My colleague Jordan Parker Erb even asked the AI to answer messages on a dating app for her. But one thing a bot can't do (yet) is have a conversation with Wall Street's top strategists. So I caught up with iCapital's chief investment strategist for her 2023 strategy. If this was forwarded to you, sign up here. Download Insider's app here.iCapital1. This year is going to be a "story of two halves," according to Anastasia Amoroso. Last year saw valuations for asset classes across the board tumble in a big way, she explained, but that gives investors a cheap entry point for the new year.The first half of the year will likely see markets trade flat or move lower as the Fed continues to tighten monetary policy. "Any sort of rally will likely be capped by a Fed that's still trying to get to 5% and stay there," Amoroso told me, talking about the Fed's interest rate increases aimed at cooling down inflation.But in her view, June will bring a key pivot point for the economy and markets. At that point the terminal rate will be higher than core PCE inflation, which should give the central bank leeway to hold rates steady or cut them, which markets will cheer. "The times you want to invest is when economic data is falling apart, not surging," Amoroso said.That means investors should look to capitalize in the first half of the year to prepare for the coming rebound. "Whether you look at equities, or the reset likely to occur in private market valuations and real estate, I would use the next 3-6 months to be deliberate and methodical about adding to those positions," Amoroso said.Early outperformers in stocks so far include the semiconductor and consumer discretionary sectors, but she noted that alternative assets also offer opportunities. "We like private credit because amid the pullback in public markets, the banks are not as eagerly lending to companies," Amoroso maintained. "So a lot of the attention turns to private credit managers, who can be a source of capital, and they're able to secure better terms for investors."Read the full story on my conversation with iCapital's chief investment strategist - and see what she has to say on crypto. How are you positioning your portfolio for 2023? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.In other news: REUTERS/Jonathan Ernst2. US stock futures are up early Wednesday, as investors await Thursday's consumer inflation data. Meanwhile, both the Nasdaq and gold are rising for the fourth session in a row. Here are the latest market moves.3. On the docket: ASOS plc, Bang & Olufsen, and Life Corp, all reporting.4. These are the top 33 bargain stocks to buy right now. Morningstar strategists listed the names they like as 2023 kicks off and equities are presenting buying opportunities: "Stocks look downright cheap."5. FTX bankruptcy documents show a list of investors that are set to be completely wiped out. The equity-holder list includes Wall Street elite hedge funds and growth investors — as well as top celebrities like Tom Brady and Robert Craft.6. A former Fed president said the current Fed is embarrassed about its inflation mistake. Richard Fisher said the central bank blew it on inflation, and now it will raise rates too far. But JPMorgan's Jamie Dimon also cautioned that the Fed might have to hike rates up to 6% to get inflation under control.7. Russia could face two new price caps for refined petroleum products. The next EU embargo is looming less than a month away, and Bloomberg reported that the new measures would be aimed at Russian exports that trade both above the price of crude and those that sell at a discount.8. Homebuyers are getting more deal sweeteners in certain areas around the US. According to Redfin, buyers seem to be finally gaining the upper hand in the housing market as mortgage rates throttle competition. Here's a list of 16 cities where buyers get the most concessions.9. Chart patterns suggest that these investments are about to skyrocket while the rest of the market struggles. This veteran chart master pointed out six key sets of data that could help investors skirt a market crash and buy into attractive investments. Here's his list. Coinbase stock price Jan. 11, 2023Markets Insider10. Coinbase stock jumped to a one-month high on Tuesday. The crypto exchange was in recovery mode after it saw more than an 80% slump in 2022. The rally followed the company's announcement that it plans to slash 20% of its staff.Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 11th, 2023

Escobar: Bye Bye 1991-2022

Escobar: Bye Bye 1991-2022 Authored by Pepe Escobar, The hard work starts now. Welcome to the New Great Game on crack... 2023 starts with collective NATO in Absolutely Freak Out Mode as Russian Defense Minister Shoigu announces that Russian Navy frigate Admiral Gorshkov is now on tour – complete with a set of Mr. Zircon’s hypersonic business cards. The business tour will encompass the Atlantic and the Indian Ocean, and of course include the Mediterranean, the Roman Empire’s former Mare Nostrum. Mr. Zircon on the prowl has absolutely nothing to do with the war in Ukraine: it’s a sign of what happens next when it comes to frying much bigger fishes than a bunch of Kiev psychos. The end of 2022 did seal the frying of the Big Ukraine Negotiation Fish. It has now been served on a hot plate – and fully digested. Moscow has made it painfully clear there’s no reason whatsoever to trust the “non-agreement capable” declining superpower. So even taxi drivers in Dacca are now betting on when the much- vaunted “winter offensive” starts, and how far will it go. General Armageddon’s path ahead is clear: all-out demilitarization and de-electrification on steroids, complete with grinding up masses of Ukrainians at the lowest possible cost to the Russian Armed Forces in Donbass until Kiev psychos beg for mercy. Or not. Another big fried fish on a hot plate at the end of 2022 was the 2014 Minsk Agreement. The cook was no other than former chancellor Merkel (“an attempt to buy time for Ukraine”). Implied is the not exactly smokin’ gun: the strategy of the Straussian/neo-con and neoliberal-con combo in charge of U.S. foreign policy, from the beginning, was to unleash a Forever War, by proxy, against Russia. Merkel may have been up to something telling the Russians, in their face, that she lied like crypto-Soprano Mike Pompeo, then she lied again and again, for years. That’s not embarrassing for Moscow, but for Berlin: yet another graphic demonstration of total vassalage to the Empire. The response by the contemporary embodiment of Mercury, Russian Foreign Ministry’s Maria Zakharova, was equally intriguing: Merkel’s confession could be used as a specific reason – and evidence – for a tribunal judging Western politicians responsible for provoking the Russia-Ukraine proxy war. No one will obviously confirm it on the record. But all this could be part of an evolving, secret Russia-Germany deal in the making, leading to Germany restoring at least some of its sovereignty. Time to fry NATO fish Meanwhile, deputy chairman of the Russian Security Council Dmitry Medvedev, visibly relishing his totally unplugged incarnation, expanded on the Fried Negotiation Fish saga. “Last warning to all nations”, as he framed it: “there can be no business with the Anglo-Saxon world [because] it is a thief, a swindler, a card-sharp that could do anything… From now on we will do without them until a new generation of sensible politicians comes to power… There is nobody in the West we could deal with about anything for any reason.” Medvedev, significantly, recited more or less the same script, in person, to Xi Jinping in Beijing, days before the zoom to end all zooms – between Xi and Putin – that worked as a sort of informal closure of 2022, with the Russia-China strategic partnership perfectly in synch. On the war front, General Armageddon’s new – offensive – groove is bound to lead in the next few months to an undisputable fact on the ground: a partition between a dysfunctional black hole or rump Ukraine on the west, and Novorossiya in the east. Even the IMF is now reluctant to throw extra funds into the black hole. Kiev’s 2023 budget has an – unrealistic – $36 billion deficit. Half of the budget is military-related. The real deficit in 2022 was running at about $5 billion a month – and will inevitably balloon. Tymofiy Mylovanov, a professor at the Kiev School of Economics, came up with a howler: the IMF is worried about Ukraine’s “debt sustainability”. He added, “if even the IMF is worried, imagine what private investors are thinking”. There will be no “investment” in rump Ukraine. Multinational vultures will grab land for nothing and whatever puny productive assets may remain. Arguably the biggest fish to be fried in 2023 is the myth of NATO. Every serious military analyst, few Americans included, knows that the Russian Army and military industrial complex represents a superior system than what existed at the end of the U.S.SR, and far superior to that of the U.S. and the rest of NATO today. The Mackinder-style final blow to a possible alliance between Germany (EU), Russia and China – which is what is really behind the U.S. proxy war in Ukraine – is not proceeding according to the Straussian wet dream. Saddam Hussein, former imperial vassal, was regime-changed because he wanted to bypass the petrodollar. Now we have the inevitable rise of the petroyuan – “in three to five years”, as Xi Jinping announced in Riyadh: you just can’t prevent it with Shock’n Awe on Beijing. In 2008, Russia embarked on a massive rebuilding of missile forces and a 14-year plan to modernize land-based armed forces. Mr. Zircon presenting his hypersonic business card across the Mare Nostrum is just a small part of the Big Picture. The myth of U.S. power The CIA abandoned Afghanistan in a humiliating retreat – even ditching the heroin ratline – just to relocate to Ukraine and continue playing the same old broken records. The CIA is behind the ongoing sabotage of Russian infrastructure – in tandem with MI6 and others. Sooner or later there will be blowback. Few people – including CIA operatives – may know that New York City, for instance, may be destroyed with a single move: blowing up the George Washington bridge. The city can’t be supplied with food and most of its requirements without the bridge. The New York City electrical grid can be destroyed by knocking out the central controls; putting it back together could take a year. Even trespassed by infinite layers of fog of war, the current situation in Ukraine is still a skirmish. The real war has not even started yet. It might – soon. Apart from Ukraine and Poland there is no NATO force worth mentioning. Germany has a risible two-day supply of ammunition. Turkey will not send a single soldier to fight Russians in Ukraine. Out of 80,000 U.S. troops stationed in Europe, only 10% are weaponized. Recently 20,000 were added, not a big deal. If the Americans activated their troops in Europe – something rather ridiculous in itself – they would not have any place to land supplies or reinforcements. All airports and seaports would be destroyed by Russian hypersonic missiles in a matter of minutes – in continental Europe as well as the UK. In addition, all fuel centers such as Rotterdam for oil and natural gas would be destroyed, as well as all military installations, including top American bases in Europe: Grafenwoehr, Hohenfels, Ramstein, Baumholder, Vilseck, Spangdahlem, and Wiesbaden in Germany (for the Army and Air Force); Aviano Air Base in Italy; Lajes Air Base in Portugal’s Azores islands; Naval Station Rota in Spain; Incirlik Air Base in Turkey; and Royal Air Force stations Lakenheath and Mildenhall in the UK. All fighter jets and bombers would be destroyed – after they land or while landed: there would be no place to land except on the autobahn, where they would be sitting ducks. Patriot missiles are worthless – as the whole Global South saw in Saudi Arabia when they tried to knock out Houthi missiles coming from Yemen. Israel’s Iron Dome can’t even knock out all primitive missiles coming from Gaza. U.S. military power is the supreme myth of the fish to be fried variety. Essentially, they hide behind proxies – as the Ukraine Armed Forces. U.S. forces are worthless except in turkey shoots as in Iraq in 1991 and 2003, against a disabled opponent in the middle of the desert with no air cover. And never forget how NATO was completely humiliated by the Taliban. The final breaking point 2022 ended an era: the final breaking point of the “rules-based international order” established after the fall of the U.S.S.R. The Empire entered Desperation Row, throwing everything and the kitchen sink – proxy war on Ukraine, AUKUS, Taiwan hysteria – to dismantle the set-up they created way back in 1991. Globalization’s rollback is being implemented by the Empire itself. That ranges from stealing the EU energy market from Russia so the hapless vassals buy ultra-expensive U.S. energy to smashing the entire semiconductor supply chain, forcibly rebuilding it around itself to “isolate” China. The NATO vs. Russia war in Ukraine is just a cog in the wheel of the New Great Game. For the Global South, what really matters is how Eurasia – and beyond – are coordinating their integration process, from BRI to the BRICS+ expansion, from the SCO to the INSTC, from Opec+ to the Greater Eurasia Partnership. We’re back to what the world looked like in 1914, or before 1939, only in a limited sense. There’s a plethora of nations struggling to expand their influence, but all of them are betting on multipolarity, or “peaceful modernization”, as Xi Jinping coined it, and not Forever Wars: China, Russia, India, Iran, Indonesia and others. So bye bye 1991-2022. The hard work starts now. Welcome to the New Great Game on crack. Tyler Durden Sun, 01/08/2023 - 14:50.....»»

Category: smallbizSource: nytJan 8th, 2023

I made $740,000 on Airbnb last year. Here"s my best advice for beginner hosts to maximize success and avoid common mistakes.

Michael Elefante bought his first short-term-rental property in Nashville, Tennessee, in November 2019. Michael Elefante, a property investor, and the luxury cabin in Gatlinburg, Tennessee, he and his wife bought in 2021.Michael Elefante Michael Elefante and his wife built a portfolio of six vacation rentals in Tennessee and Florida. They bought their first short-term-rental property in 2019 and scaled while working full time. Here are Elefante's best pieces of advice for people looking to get into short-term-rental investing. This as-told-to essay is based on a conversation with Michael Elefante, a real-estate investor and an Airbnb Superhost. It has been edited for length and clarity.My wife, Jill, and I bought our first short-term-rental property in November 2019 after moving to Nashville. I thought it would be a lucrative investment now that we lived in a tourism hot spot. By March 2020, only three months after putting our property on Airbnb, we were set to make $7,000 in profit. Although COVID-19 cancellations dented that goal, the income potential from investing in STR properties was clear.We continued to work full time while scaling our short-term-rental portfolio. In May 2020, we liquidated our retirement funds to purchase our second Nashville property. Three months later, we used savings from our salaries and cash flow from our properties to put a deposit down on a cabin in Gatlinburg, Tennessee.We now own and manage six Airbnb properties that generate up to $118,000 a month, and I run a successful online STR coaching business. In 2022, our bookings came to $740,000.I think we've been so successful because we focus on selling an experience, not just a place to sleep, but it's been a learning curve. These are my best pieces of advice for beginners to avoid common pitfalls when investing in short-term-rental properties. 1. Conduct basic market-research analysis of the area in which you're looking to buy or rentThe first thing prospective investors should do is look at travel trends in the area they're considering investing in. Then research the area's local laws and regulations regarding short-term rentals — local government sites usually have these details.If I'm unsure about a property, I call the city or county zoning office to ask if the address can legally be a short-term rental.2. Leverage as much local knowledge as you can by reaching out to people already in the industry Finding a profitable short-term rental is different than hunting for traditional real estate.To avoid investing in an area that won't be lucrative, find a real-estate agent who works with investors or has experience with short-term vacation rentals in the area where you're looking to buy. They will know which locations are the best for STRs and why people are willing to pay more to stay in a specific ZIP code. 3. Do a thorough investment analysis before you invest in a propertyIf you're considering investing in an STR, always do a complete investment analysis first. I use an Excel spreadsheet to help me visualize where my money will go and the potential outcomes of a new short-term-rental investment. When I first looked into investing in real estate, I did online research and used investment calculators on sites such as Bigger Pockets to work out the purchasing costs, operating costs, potential earnings, and costs of additions like furniture or decorations. I then conducted market research on other short-term-rental properties in the area that were similar to the property I wanted to pursue and compared their prices and characteristics. I would also look at AirDNA to see what I could expect for daily rates and occupancy in a given market or ZIP code.With all this information, I crafted my investment-analysis template on Google Sheets, which I use to analyze properties to this day. 4. Always plan for the worst-case scenarioI always use conservative numbers when I evaluate potential properties in my Google Sheet template. I input slightly lower-than-expected daily rates and occupancy and slightly higher-than-expected operating expenses.Once I have a subject property that matches my return-on-investment criteria, I then "stress test" the investment. I rerun the numbers to see what the break-even point is and what the best potential profit could be. Running these numbers gives me a lot of confidence when buying a property. I've only had one major unforeseen cost crop up. One of our Florida homes has a pool heater, and the electricity and general-maintenance costs have been higher than expected most months. Our monthly cash flow is lower, but it hasn't been detrimental to the investment overall.5. Invest in property-management softwareI currently use Guesty and pay $31 a month for it. Property-management software allows you to manage multiple properties across sites such as Airbnb, VRBO, and Booking.com. You can have one synchronized calendar and centralized correspondence for check-in and check-out messages.This software can prevent you from making rookie errors that can hurt your ratings, such as double booking locations. 6. Use dynamic smart-pricing softwareEveryone should be leveraging smart-pricing software such as Price Labs or Wheelhouse. These applications automatically adjust the nightly rates of your rental in line with market conditions. Using software can help you increase occupancy and find the best rate for a property faster when you're unfamiliar with a market.  7. Automate and outsource cleaning and maintenanceOne of the biggest mistakes people make is cleaning their properties themselves. It may be cost-effective in the short term, but it's not scalable.If you want to build your portfolio, you need to learn how to outsource. Consider hiring cleaners as an efficiency boost to your business. Tools like TurnoverBnB and ResortCleaning help to automate calendar syncing. 8. See what your competitors are offering and one-up them Use AirDNA to find the top-performing properties in your area and consider what makes people want to book those places. What are their design features? Do they have pools, games rooms, or hot tubs? Do they have accent walls? Use that knowledge to choose and build your vision for your property. Our first property was in Nashville, where you can find murals across the city. We commissioned an artist to create a mural at our property, which attracted guests to our place and separated us from the pack. 9. Don't underestimate the earning power of good design Many people don't focus on design because they don't understand the return on investment when it comes to design and STRs. If you don't have a big budget for furniture and design, my advice is to look for a smaller property that costs less to furnish. You can bargain hunt for furniture and decor. It can be more time intensive than shopping online but will save you money and make your property stand out. Once you start turning a profit, you can spend more updating the design or hiring an interior designer, ultimately boosting your future revenue and cash flow. 10. Use a professional photographerPhotos are everything. Even the best property can get passed up by thousands of potential guests if the first photo on your listing is poor quality.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 7th, 2023

The Winklevoss twins have a rock cover band called Mars Junction where concert-goers get a free NFT and are serenaded by the 41-year-old billionaires who play Blink-182, Nirvana and other "soundtracks" from their childhood

Tyler Winklevoss doesn't care if you don't like his singing. The band's frontman is just trying to play songs from the "soundtrack of [his] youth." Tyler and Cameron Winklevoss started a rock cover band called Mars Junction.Instagram / Vagabonding Media The Winklevoss Twins perform in a rock cover band called Mars Junction.  The 41-year-old crypto billionaires play Blink-182, Pearl Jam, and Journey.  Frontman Tyler Winklevoss says he doesn't care if you don't like his singing. He's just trying to have fun.  The Winklevoss twins are known as many things: Olympic rowers, the Harvard grads who sued Mark Zuckerberg for stealing the idea for Facebook, and crypto moguls who started a $7 billion digital asset exchange.Tyler and Cameron Winklevoss added another notch in their (most likely) expensive belts over the summer when clips surfaced of the two men performing Journey's "Don't Stop Believin'." In the video, Tyler is seen on stage belting the 1981 classic, sporting a wallet chain, while his brother Cameron is shredding the guitar at Wonder Bar in Asbury Park, New Jersey."Come rock with us," Cameron said on Twitter before the show. The 41-year-old billionaires weren't up for an impromptu jam session. The two were on tour as Mars Junction, billed as their "newly-formed hard-hitting rock band." The Winklevii, accompanied by four other bandmates, play covers of Pearl Jam, Blink-182, and Nirvana. Their shows are 90 minutes long with around 25 songs, and concert-goers get a free NFT, or non-fungible token. The band has merch too, peddling black t-shirts, hoodies, and tote bags. The Asbury Park video garnered lots of online attention with some describing the performance as akin to "drunk karaoke but with a live band." —Arch Nem (@arch_nem) June 10, 2022Tyler says he doesn't care if you don't like his rock cover band, according to a 3,179-word blog post he wrote in response to a slew of unflattering media reports about Mars Junction."Admittedly, the Asbury show was a tough night for me. Our band has a big sound and the drums were up my ass. Even though I have in-ears, my mix was overpowered and I couldn't hear where I was," he said in June. "As a result, I missed a few pitches, went a little sharp here, a little flat there. Big fucking deal. Maybe next time I'll get it."Tyler added: "Am I any good? I have no idea, but that's not the point! Am I improving? I think so. Am I trying? Very much so. But the contract I made with myself was that this was going to be about having FUN, first and foremost."Mars Junction InstagramMars Junction began as a pandemic project in 2020 for the Winklevoss twins.Tyler said quarantine "provided that silver lining of an opportunity" to create some "personal space outside of work and linear accomplishment." The Winklevii grew up playing music, learning classical piano from ages six to 18. Tyler started off playing keys for Mars Junction, but later pivoted to being the group's lead singer. He even hired a voice coach. "[The piano] seemed like a logical starting point and ending point. But over time I felt like I should challenge myself more," he said. "Our time is short on this earth." Tyler said Mars Junction was also started as a way to feel closer to their late sister, Amanda Gesine Winklevoss, who died in 2001 at just 23 years old. She was a performer and the lead in school plays and musicals growing up."And as much as I tell myself this is about challenging myself in a new way, which it is, I am coming to terms with the fact that this is very much a way for me to feel closer to my big sister," he added.In 2021, Mars Junction had their first performance at the Knitting Factory in Brooklyn, New York. Being in the band has been one of the most "exhilarating, terrifying, vulnerable, rewarding, and fun experiences.""It was a major highlight of my life," Tyler said. "One that I will marvel at on my deathbed and one that ranks right up there in my mind with any other thing I've ever done in my life."Mars Junction did not immediately respond to Insider's request for comment. Elsewhere, the Winklevoss' are facing heat over their cryptocurrency exchange Gemini.The firm is trying to recoup $900 million of customer funds from crypto brokerage Genesis, and is facing a lawsuit from investors over the exchange's interest-bearing product.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 6th, 2023

Thought last year was bad for crypto? From FTX to Silvergate, the red flags are flying for the year ahead.

Insider's Phil Rosen breaks down developments with Silvergate Capital and other crypto-friendly banks feeling the pain from FTX's fallout. Ready for the weekend? Phil Rosen here, writing to you from behind a cup of joe in California. It's no accident coffee's among the world's most traded commodities. It's got a distinct taste and aroma, and people rely on its energizing effect.That's almost the opposite of crypto, which can hardly be said to "exist" at all. Investors are realizing that, behind all of the marketing intrigue, there isn't much there. The only thing propping up prices may just be the Greater Fool Theory – there's always someone willing to buy at a higher price.Those realizations came to head repeatedly in 2022 as crypto hacks and a wintry bear market crescendoed with the collapse of Sam Bankman-Fried's FTX. While my boring black coffee's worth only a couple bucks, it hasn't lost anywhere near the value tokens have in recent months. If this was forwarded to you, sign up here. Download Insider's app here.NurPhoto/Getty Images1. Red flags for digital assets continue to emerge, and Thursday served as a good reminder that the rock-bottom mood in the cryptosphere is still here. As Insider's Matt Fox writes, confidence continues to shrink amid the FTX fallout. On a macro level, persistent recession fears make speculative assets such as tokens or tech stocks less enticing.Coinbase stock is one alarm ringing loudly. Shares of the crypto exchange dropped near an all-time low yesterday, and remain roughly 92% lower from its record high reached in April 2021."Coinbase's monthly trading volumes have seen a fairly consistent drawdown each subsequent month since November 2021," Cowen analyst Stephen Glagola said in downgrading the stock. "[T]here remains low visibility into either a stabilization or rebound in retail trading volumes over 2023 given the macro backdrop and FTX contagion risks on crypto asset prices."More notable is crypto bank Silvergate's nearly 50% plunge Thursday, and the company's announcement it would cut 40% of its staff.The stock crash came as the Wall Street Journal reported that FTX's implosion sparked a bank run on Silvergate, and the firm was forced to sell assets at steep discounts to cover some $8.1 billion in withdrawals.The $718 million Silvergate lost selling debt far exceeds its total profits from the past decade. Now the bank is under fire from a cadre of US senators demanding answers from CEO Alan Lane for its business dealings with FTX and Alameda Research."Silvergate appears to be at the center of the improper transfer of billions in FTX customer funds. Americans need answers," Senator Elizabeth Warren said in a statement. "Those guilty of wrongdoing must be held accountable."Other crypto-friendly banks have followed in kind. Since October, Signature Bank is down about 30%, Customers Bancorp is roughly 15% lower, and Metropolitan Bank Holdings has notched a 12% dip.What's the most likely outcome for the crypto sector in 2023? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.In other news:Elaine Thompson/AP2. US stock futures are trading mixed early Friday, as investors await the December jobs report, due out today at 8:30 a.m. ET. Meanwhile, WWE shares jumped 10% after former CEO Vince McMahon announced a surprise comeback. Here are the latest market moves.3. On the docket: Top Glove Corporation, Greenbrier Companies, and more, all reporting.4. Goldman Sachs said these 20 stocks are poised for up to 50% upside over the long term. Sticky, high prices are set to cool down in the coming months, and this batch of names could benefit from the Inflation Reduction Act, according to the bank. Get the full list.5. Sam Bankman-Fried contributed to a $25 million funding round last year for the buzzy news startup, Semafor. But, according to TheWrap, the media company helmed by former NY Times columnist Ben Smith is going to return the money. Semafor has said Bankman-Fried never held any editorial influence.6. Job cuts at Amazon and Salesforce signal the first necessary step in staging a turnaround for tech stocks. To Wedbush Securities, management teams are doing what investors want in preserving margins and bottom-lines. All told, analysts predict layoffs could catalyze a 20% rally for tech stocks in 2023. 7. The old era of investing is coming back and buying on any dip is no longer the reality. That's what JPMorgan Asset Management's Gabriela Santos said Thursday. Investors now should be preparing their portfolios for the "end of free money" in these three ways.8. UBS strategists explained how to invest in China in 2023. With Beijing's zero-COVID policies coming to a dramatic end, markets are whipsawing in response and the domestic economy is gearing up for revival. Find out what the firm said it means for investors. 9. This 30-year-old built a seven-figure net worth. He recommends investing in what you know, as that's what he did to become a self-made millionaire. These are four of his investing principles that anyone can follow to build wealth.BED BATH & BEYOND INC. stock price on Jan. 6, 2023Markets Insider10. Bed Bath & Beyond cratered Thursday. The company said it's considering a slate of options to move its faltering business forward — and that includes filing for bankruptcy. Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 6th, 2023

Sam Bankman-Fried Pleads Not Guilty

Sam Bankman-Fried Pleads Not Guilty Update (1500ET): FTX founder Sam Bankman-Fried has pleaded not guilty to criminal charges, and is set to face trial in October. Appearing on Tuesday in US District Court in New York, US District Judge Lewis Kaplan set a trial date of October 2nd for the disgraced crypto king, after US prosecutors said they expect to submit all of their evidence in the case over the next month, Bloomberg reports. While the plea was not unexpected, it buys the 30-year-old more time, legal experts say. Bankman-Fried will get a better idea on the evidence prosecutors have against him and plan his next move. The plea puts the case on track for a lengthy trial, which could last at least four weeks. Bankman-Fried emerged from a black SUV into a crowd of photographers and TV crews Tuesday, ahead of a 2 pm hearing scheduled in New York. In December, US prosecutors in Manhattan revealed eight criminal counts against him, including wire fraud and campaign finance violations. -Bloomberg Prosecutors have accused the 30-year-old of stealing billions of dollars of customer funds from FTX, and defrauding investors and lenders to Alameda Research, his trading arm. He also allegedly made millions of dollars in illegal campaign contributions funded by Alameda. SBF has previously said he didn't 'intend' to commit Fraud, but acknowledged making mistakes. *  *  * FTX founder Sam Bankman-Fried has asked a judge to conceal the identities of two people who will help secure his bail in addition to his parents' house in Palo Alto, California, Bloomberg reports. Sam Bankman-Fried departs from court in New York, on Dec. 22, 2022.  Photographer: Stephanie Keith/Bloomberg "If the two remaining sureties are publicly identified, they will likely be subjected to probing media scrutiny, and potentially targeted for harassment, despite having no substantive connection to the case," wrote SBF's lawyers in a letter filed on Tuesday seeking redactions of the names of the two individuals who intend to sign as sureties to his bail. "Consequently, the privacy and safety of the sureties are “countervailing factors” that significantly outweigh the presumption of public access to the very limited information at issue," the letter continues. Bankman-Fried's $250 million bail package - granted in his first appearance on US soil since his arrest in the Bahamas, was secured by his parents' Palo Alto home, which is worth nowhere near that amount. The judge in the case also required that two people of "considerable means," at least one of whom cannot be a relative, also sign the bond. Bankman-Fried was granted a $250 million bail package in December, one of the largest in US history. The personal recognizance bond approved by the judge was secured by the equity in Bankman-Fried’s parents home in Palo Alto, California, which is almost certainly not worth anywhere near that amount. But outsized bonds are more a means of establishing harsh financial consequences for bail-jumping and are often backed by assets worth only around 10% of the stated amount. -Bloomberg The two individuals have not yet signed the bond but intend to do so by the Jan. 5 deadline, according to the letter. Bankman-Fried is set to appear in a Manhattan federal court on Tuesday to face charges on eight criminal counts ranging from wire fraud to conspiracy to commit money laundering, to conspiracy by misusing customer funds, CNN reports. He is expected to plead not guilty. He faces 115 years if convicted on all charges. Tyler Durden Tue, 01/03/2023 - 20:08.....»»

Category: worldSource: nytJan 3rd, 2023

Greater Memphis Chamber and Ikea U.S. Community Foundation award grants to local black-owned firms

The local funds granted are part of the Ikea Foundation's national $3 million Black Business Initiative......»»

Category: topSource: bizjournalsJan 2nd, 2023

Southwest Airlines grew to become the US"s largest domestic carrier by offering free checked baggage, easy-to-change tickets — and still sticks to unassigned seats

Southwest prides itself on bringing "LUV" to its operation. But it's faced delays and cancellations this holiday season. Here's how it grew so fast. Southwest Airlines flight attendants in an undated historic picture.Southwest Airlines Southwest Airlines, the US's largest domestic carrier, experienced an operations meltdown in this holiday season. Despite its problems, Southwest celebrates its customer- and employee-focused mission. The airline found success using unconventional marketing strategies focused on humor, booze, arm wrestling, and go-go boots. Southwest Airlines is the US's largest domestic carrier, serving over 100 destinations across the country. The carrier has been in operation since 1971 and just celebrated its 51st anniversary in June.Stephen M. Keller/Southwest AirlinesSource: SouthwestWith Southwest's immense size, it has a lot of systems at play to keep it running efficiently and on time. But, sometimes a nasty winter storm can derail even the best carrier's operations.Elliott Cowand Jr/ShutterstockBut, Southwest suffered from more than just the weather in the holiday season of 2022.Canceled flight travelers line up in front of Southwest Airlines sign at Denver International Airport.Hyoung Chang/Getty ImagesCaptain Mike Santoro, vice president of the Southwest Airlines Pilots Association, told Insider the storm was the catalyst of the meltdown, but "outdated" scheduling software created the snowball.Southwest Airlines cabin.Thomas Pallini/InsiderFrustrated Southwest pilot and union rep says the airline's flight meltdown was caused by outdated scheduling softwareSouthwest confirmed to Insider that its systems were unable to handle the "magnitude" of disruptions, which amounted to over 7,000 from Christmas to December 28 alone.Travelers wait at a Southwest Airlines baggage counter to retrieve their bags after canceled flights at Los Angeles International Airport on December 26, 2022.Eugene Garcia/AP PhotoSource: FlightAwareThe company acknowledged its software needs an update, with a spokesperson saying, "we are focused on making investments in technology upgrades to work toward that solution."Passengers line up at the Southwest ticket desk at San Francisco International Airport on December 26, amid widespread delays and cancellations for the airline.Tayfun Coskun/Anadolu Agency via Getty ImagesDespite its operations issues in the holiday season of 2022, Southwest prides itself on being a customer- and employee-focused airline, bringing "LUV" to its operation, and keeping safety, hospitality, and customer service at the forefront of its mission. (LUV is its stock symbol.)Southwest AirlinesAccording to financial information company BrightScope, Southwest has one of the highest-rated employee 401k plans. Meanwhile, J.D. Power reported in May that customers ranked Southwest as having the best economy product in North America.The grieving owner is planning to sue the airline.MARK RALSTON/AFP via Getty ImagesSource: BrightScope, J.D. Power ranked airlines across 3 fare classes according to its annual customer satisfaction survey — see the resultsHaley Woods, founder of Girls LOVE Travel — a Facebook group with over one million members — told Insider that when her flight was canceled over the holiday week, she encountered the most "professional" and "upbeat" Southwest employees.V_E/Shutterstock"While this disruption might derail others from using SWA in the future — their customer kindness has reminded me that I will absolutely be looking past this and onward for future adventures," she said.Passengers wait in line to check in for their flights at Southwest Airlines service desk at LaGuardia Airport, Tuesday, Dec. 27, 2022, in New York.Yuki Iwamura/APWhile it's could still lose some trust from customers, Southwest is likely to eventually bounce back. See how the airline has grown over the years to be the powerhouse it is today.Jonathan Weiss/ShutterstockSource: Southwest AirlinesSouthwest started as a small carrier based in Texas and only operated intra-state routes between three cities, San Antonio, Houston, and Dallas. The airline, which was originally called Air Southwest, was dreamt up by Rollin King and Herb Kelleher on a cocktail napkin in 1966.Herb Kelleher (left) and Rollin King (right)Southwest AirlinesSource: SouthwestKing mapped the network he envisioned, making a triangle between the three key cities. He explained to Kelleher that operating solely in Texas would make the company exempt from the Civil Aeronautics Board's federal regulations, which controlled fares, routes, and schedules.Rollin King's "Texas Triangle"Southwest AirlinesSource: SouthwestFrom 1938 to 1978, the airline industry was federally regulated under the CAB as means to ensure major carriers like United and Pan Am were profitable. Fares were sky-high and only business travelers and deep-pocket leisure customers could afford the luxury of flight. The downside was that a lot of the time, planes flew half-empty.Convair 880 club cabinBettmann/Getty ImagesSource: Smithsonian National Air and Space MuseumBecause Air Southwest was certified under the state's aviation regulator, the Texas Aeronautics Commission, it was not bound to federal rules — a clever loophole King unapologetically copied from California carrier Pacific Southwest Airlines.Rollin KingSouthwest AirlinesSource: SouthwestThe loophole allowed Air Southwest to fly freely in Texas and undercut competitors' fares, offering more customers the option to fly instead of drive in the large state. The business model was game-changing and a threat to legacy airlines.Herb Kelleher with model of Southwest aircraftSouthwest AirlinesSource: SouthwestIn 1967, three airlines operating under federal rules, Braniff, Trans-Texas Airways, and Continental Airlines, took legal action against Air Southwest, saying it does not have the right to fly in Texas.Lady Bird Johnson, wife of President Lyndon Johnson, steps off Braniff Airways jetHarvey Georges/Associated PressSource: Companies HistoryThe lawsuit took three years to resolve, and in 1970, the Texas Supreme Court ruled Air Southwest could fly in the state. The three airlines then took the case to the US Supreme Court, which declined to review it.Herb Kelleher (left) Lamar Muse (second from left) and Rollin King (center)Southwest AirlinesSource: Companies HistoryAir Southwest's right to fly in Texas was finalized in December of 1970. The carrier officially changed its name to Southwest Airlines in 1971 and commenced operations on June 18 of the same year.Southwest flight attendant points to scheduleSouthwest AirlinesSource: Companies HistoryThe carrier launched with two routes from Dallas Love Field to Houston and San Antonio using three new Boeing 737-200 aircraft. Flights between Houston and San Antonio commenced in November 1971.Southwest Airlines Boeing 737-2T4 at Los Angeles International Airport in 1991.Torsten Maiwald/Airliners.netPart of Southwest's immense success was due to Kelleher's focus on unconventional marketing and unique corporate culture.Herb Kelleher on Southwest tailSouthwest AirlinesSource: SouthwestKelleher used Pacific Southwest Airways' idea of "Long Legs And Short Nights" for hostesses, as they were called at the time, keeping with the theme of hiring attractive women to work Southwest flights.Southwest Airlines flight attendants in an undated historic picture.Southwest AirlinesSource: Companies HistoryThe airline's first flight attendants were described as long-legged dancers and were handpicked by a committee that included the same individual who picked the hostess on Hugh Hefner's Playboy jet.Southwest Airlines first flight attendant uniformsSouthwest AirlinesSource: Companies HistoryKelleher dressed the flight attendants in a bright orange top, orange hot pants, a white belt around the hips, and white side-laced go-go boots. He also pushed for a laid-back, casual inflight experience and only hired female hostesses who were fun, engaging, and had a sense of humor.First Southwest Airlines hostess classSouthwest AirlinesSource: Texas MonthlySouthwest also provided a winter version of the uniform, which included orange and white striped hot pants, a blazer, a white top, and an ascot.Southwest winter version of hot pants uniformSouthwest AirlinesSource: Texas MonthlyKelleher continued the playboy theme by creating a "love" culture at Southwest. The carrier was called the "love airline,” automatic ticket dispensers were "love machines," inflight snacks were "love bites," and drinks were "love potions."Southwest "love" adSouthwest AirlinesSource: Texas MonthlyThe airline also crafted its own special inflight cocktails, which were free for passengers. A few were appropriately named Kentucky Matchmaker, the Pucker Potion, and the Lucky Lindsay.Southwest Airlines flight attendant preparing beverage orders in the galleySouthwest AirlinesSource: Texas MonthlyHe even went on to create ads centered around humor and attractive women. In the context of the 1970s, using attractive female flight attendants to gain customers was an industry norm.A 1968 photo of three flight attendants for Southwest AirlinesAlan Band/Keystone/Getty ImagesSource: Texas MonthlyIn 1972, Southwest made a game-changing, innovative marketing move. The company introduced the "two-tier" fare system, which established two separate price points aimed at different types of travelers.A Southwest Airlines Customer Service Agent checks in a Customer at the gateDavid Woo/Southwest AirlinesSource: SouthwestThe fares were the regularly priced "Executive Class Service" at $26 one-way and the "Pleasure Class" at $13 one-way or $25 roundtrip. "Pleasure Class" fares were available after 6:59 p.m. on weekdays and all day Saturday and Sunday.Southwest airlines customer service agents with customers at the ticket counterSouthwest AirlinesSource: SouthwestThe two-tier structure was a wild success, with Southwest increasing its average passenger load from 17 before the move to 75 after.Southwest pilotsSouthwest AirlinesSource: SouthwestIn 1973, the company launched a $13 one-way "half-fare" sale on all flights to San Antonio. Southwest's rival, Braniff, responded with its own "get acquainted sale" with $13 fares between Dallas and Houston. This was the start of the $13 Fare War.Southwest’s ad declaring war against Braniff’s fare cutSouthwest AirlinesSource: SouthwestSouthwest knew $13 fares on its only profitable route would run it straight into bankruptcy, so King quickly came up with a marketing campaign that would put Southwest on top. "Nobody's going to shoot Southwest out of the sky for a lousy $13," read the bold ad.Southwest ad against Braniff's $13 fare warSouthwest AirlinesSource: SouthwestSouthwest matched Braniff's fare between Dallas and Houston, which was met with praise and respect from customers. As part of the campaign, the airline also offered a free fifth of liquor for passengers who paid the full $26 fare.Ticket agent poses with a bottle of Chivas Regal in front of adSouthwest AirlinesSource: SouthwestBusiness travelers loved the promotion, and lucky for Southwest, three-fourths of its customers opted to pay full price and pocket the free booze. The airline soon became a fan favorite among many Texas business communities, and Braniff was fuming.Southwest customer holding advertisement and receiving free liquorSouthwest AirlinesSource: SouthwestBy the end of 1973, Southwest finally turned its first profit and would continue to profit for 47 years until the coronavirus pandemic ended the streak. Meanwhile, Braniff lost the battle and the war, ceasing operations in 1982.Braniff Airways aircraft in PeruCarl & Ann Purcell/Getty ImagesSource: Southwest, Braniff International Airways BoutiqueSouthwest's early challenges did not end with Braniff. In 1964, the Civil Aeronautics Board demanded the city of Dallas build an airport to serve the entire Dallas/Fort Worth area. In 1968, every air carrier operating out of Love Field agreed to move to DFW when it opened in 1974.British Airways Concord at DFW in 1973 after the airport was finished-/AFP via Getty ImagesSource: Encyclopedia.comHowever, Southwest was not a part of that agreement and filed suit that it would not move from Love Field when the new airport opened. The airline claimed there was no legal reason to end commercial traffic at Love Field and that the company made no written agreement to move its operations.Concord and Boeing 747 at DFW after the airport's completion in 1973-/AFP via Getty ImagesSource: Encyclopedia.comThe city and the DFW Airport Board sued Southwest, saying the CAB rule applied to the airline even if it was made before Southwest was officially founded. However, Southwest argued that its intra-state flights fell outside the jurisdiction of the CAB, so it did not have to leave Love Field.Opening day of new Love Field terminal in 2013Southwest AirlinesSource: Encyclopedia.comA federal district court agreed with Southwest and ruled that it could operate out of the airport as long as it remained open. When DFW opened in 1974, every airline except Southwest left Love Field.Southwest aircraft takes off from Love Fieldstock_photo_world/ShutterstockSource: Encyclopedia.comSouthwest continued to grow through the 70s, acquiring 10 aircraft and carrying its five-millionth customer by the end of 1977.Southwest's 3 millionth passenger Bob Pianta in 1976 (middle)Southwest AirlinesSource: SouthwestBy 1976, Southwest Airlines had been profitable for three years and proven that government regulation was not necessary for airlines to be successful. Deregulation was a top priority for Jimmy Carter's administration, and it passed the Airline Deregulation Act in 1978, effectively abolishing the Civil Aeronautics Board.President Carter signs the airline deregulation bill at the White HouseBettmann/Getty ImagesSource: National ReviewFinally, Southwest Airlines was free to operate interstate flights and the airline began to thrive. Meanwhile, major carriers like Eastern Airlines, Trans World Airlines, and Pan Am spread themselves too thin as they tried to rapidly expand.Southwest Boeing 737-300Southwest AirlinesSource: US Centennial of Flight CommissionUnlike major carriers, Southwest maintained a simple strategy for success after deregulation, like only operating one aircraft type, cleaning the aircraft before landing to allow for a quicker turn, and focusing on humor in marketing.Southwest flight attendant cleans the aircraftSouthwest AirlinesSource: USA TodayAnd its strategy worked. Southwest was prospering while other airlines like Pan Am and TWA collapsed. However, it was not long before the Wright Amendment put another wrench in the company's plans.Colleen Barrett with Wright is Wrong petitionsSouthwest AirlinesAfter deregulation, Southwest wanted to commence interstate flights from Love Field to New Orleans in 1979, but officials at DFW airport feared the increased traffic would hurt the airport financially. So, US Congressman Jim Wright drafted, sponsored, and helped pass a bill restricting passenger traffic at Love Field.Wright is Wrong signSouthwest AirlinesSource: SouthwestThe law, known as the Wright Amendment, was signed in early 1980 and amended the International Air Transportation Act of 1979. It restricted flying out of Love Field to cities in Texas and the surrounding states of Louisiana, Oklahoma, Arkansas, and New Mexico. The law was meant to keep Southwest from expanding operations out of Dallas.Wright Amendment protestersSouthwest AirlinesSource: The Dallas Morning NewsIt only applied to carriers that operated aircraft with more than 56 seats, which Southwest did. So, the airline had to rely on short-haul flights in the five-state area to bolster Love Field operations.Southwest employees protest the Wright AmendmentSouthwest AirlinesSource: The Dallas Morning NewsIn 1997, Kansas, Alabama, and Mississippi were added to the list of reachable states. In 2005, Missouri was also added.Southwest employees celebrate end of Wright AmendmentSouthwest AirlinesSource: The Dallas Morning NewsHowever, in 2004, Southwest CEO Gary Kelly launched efforts to repeal the Wright Amendment, using the slogans "Set Love Free" and "Wright is Wrong" in the campaign.Herb Kelleher with "Wright is Wrong" sloganSouthwest AirlinesSource: SouthwestIn 2006, an agreement was made between Southwest, American Airlines, Dallas, and Forth Worth to phase out the law. They agreed that in eight years, the amendment would be gone, but until then, carriers could fly to any US destination out of Love Field as long as at least one stop was made in any of the nine states under the Wright Amendment.Passengers sit in new Love Field terminalSouthwest AirlinesSource: Southwest, The Dallas Morning NewsOn October 13, 2014, at exactly 12:01 a.m., a countdown clock at Southwest's Headquarters in Dallas hit zero, officially ending the Wright Amendment. A few minutes after, the airline's first scheduled flight outside of the nine Wright states took off from Love Field to Denver.Wright Amendment endsSouthwest AirlinesSource: SouthwestThe deal also capped the number of gates at Love Field to 20, and the airport still only has 20 to this day.Southwest aircraft at gate 2 at Love Fieldstock_photo_world/ShutterstockSource: The Dallas Morning NewsWhile the Wright Amendment restricted expansion out of Love Field, Southwest was still able to bolster its network out of other Texas cities in the 1980s, 1990s, and 2000s.Customer service employee at Houston HobbySouthwest AirlinesThroughout the 1980s, the airline expanded north into cities like Tulsa, Oklahoma City, and Kansas City, and west to Phoenix, Las Vegas, Albuquerque, and California. The airline moved east in the late 1980s with flights to Nashville and into the Midwest with flights to Chicago Midway and Detroit.Southwest flight takes off from VegasSouthwest AirlinesSource: SouthwestThe airline also updated its livery in the 1980s. Southwest wanted to stand out in the skies and make its brand easily recognizable, so it wrapped its fuselage in desert gold and other warm colors. It received its first 737-300 jet in 1984, dubbed Spirit of Kitty Hawk.Herb Kelleher with Spirit of Kitty Hawk aircraftSouthwest AirlinesSource: SouthwestSouthwest's flight attendant uniform was also updated by the 80s. Instead of hot pants and go-go boots, the airline allowed employees to wear real pants and skirts.Southwest Airlines 90s flight attendant uniformsSouthwest AirlinesSource: RackedIn the 1990s, the network expanded further east to cities like Baltimore, Cleveland, Columbus, Tampa, Fort Lauderdale, Providence, Islip, and Raleigh-Durham. The airline also began its Pacific Northwest expansion with the acquisition of Morris Air in 1994.Southwest aircraft dedicated to Rollin KingSouthwest AirlinesSource: SouthwestIn 1991, the "Friends Fly Free" campaign was launched to battle the recession. The promotion allowed anyone 18 or older to bring a friend of any age free on their flight. It was so popular that Southwest offered the promotion for the next five years.Southwest's Friend Fly Free adSouthwest AirlinesSource: SouthwestIn 1992, Southwest's most infamous marketing stunt occurred between Herb Kelleher and Kurt Herwald, chairman of Stevens Aviation.Kelleher and Herwald at the Malice in DallasSouthwest AirlinesSource: SouthwestSouthwest had been using the slogan "Just Plane Smart" in its ads, but Stevens Aviation sent a letter to Kelleher noting its similarity to its "Plane Smart" slogan.Kelleher wearing "Just Plane Smart" sloganSouthwest AirlinesSource: SouthwestInstead of entering a legal battle over the phrase, a Steven Aviation executive suggested an arm-wrestling competition between Herwald and Kelleher. The victor would have full rights to the slogan.Herb and Herwald arm wrestle at the Malice in DallasSouthwest AirlinesSource: SouthwestKelleher marketed the event, dubbed the "Malice in Dallas," which received worldwide press coverage. "Smokin" Herb Kelleher and "Curtsy" Kurt Herwald put on a full show at the arena, which even earned a congratulatory note from President George Bush.Malice in Dallas artwork in Southwest HQSouthwest AirlinesSource: SouthwestAt the turn of the century, Southwest revealed the livery that most people know today. The Canyon Blue color scheme debuted in January 2001.Debut of Southwest's Canyon Blue livery in 2001Southwest AirlinesSource: SouthwestWhile many airlines opted to introduce fees for things like checked bags and flight changes to recuperate funds, Southwest refused. Instead, the airline launched its "bags fly free" campaign which allows customers two complimentary checked bags. Southwest has not gone back on the offer to this day.Southwest ramp crew promotes free bagsSouthwest AirlinesSource: SouthwestThroughout the 2000s, Southwest continued to focus on humor in its marketing. Its Wanna Get Away commercials proved successful, which promoted $49 one-way fares.Southwest Boeing 737-800Steven M. KellerSource: SouthwestBy 2010, Southwest added "Transfarency" to its brand. The airline would not have any hidden fees and would remain customer-focused with an emphasis on Hospitality and Heart. The recognizable tri-color heart was added to its airplanes and workplace.Heart OneSouthwest AirlinesSource: SouthwestIn 2011, Southwest acquired AirTran Airways, which opened slots up out of Atlanta and gave it more network expansion opportunities in Mexico and the Caribbean. The two were fully integrated by 2014.Southwest acquires AirTranSouthwest AirlinesSource: SouthwestAlso in 2014, the company's livery got another new look, with a harder focus on the heart, a new logo, and a sleek new color scheme.Southwest Airlines' updated 2014 liverySouthwest AirlinesSource: SouthwestIn July 2014, the airline officially became international with its first flight to Oranjestad, Aruba. In the same month, Southwest also started service to Nassau, Bahamas, and Jamaica.First international Southwest flight lands in Montego Bay, JamaicaStephen M. KellerSource: SouthwestThe company's flight attendant uniform got an update in 2017, marking the first time in 20 years the airline changed the look. Womenswear included two dresses, one black with blue and red stripes and the other gray with red and black stripes. Menswear included a black blazer, a gray shirt and pants, and a red tie.2017 Southwest flight attendant uniformsSouthwest AirlinesSource: Travel + LeisureIn October 2017, Southwest became the launch customer for the Boeing 737 MAX 8 jet, with its first revenue flight occurring on October 1. However, the aircraft was grounded in 2019 after two fatal accidents involved the MAX. The airline did not fly the plane again until March 2021.Southwest Airlines Boeing 737 MAX 8Southwest AirlinesSource: SouthwestIn 2019, Southwest reached its goal of operating flights to Hawaii with its inaugural service from Oakland to Honolulu.Passenger boards first Southwest flight to HawaiiSouthwest AirlinesSource: SouthwestIn 2020, Southwest ended its 47-year profit streak when the coronavirus pandemic hit. Since last March, the airline has remained focused on the health and safety of its customers and employees.Southwest flight attendant greets passengers during the pandemicStephen M. Keller/Southwest AirlinesSource: CNNWhile the pandemic was a major blow to Southwest's operation, the carrier has continued to grow with 18 new cities announced in 2020.Passengers board Southwest flight during covid-19Stephen M. Keller/Southwest AirlinesSource: SouthwestAnd, it is continuing to expand with new routes and destinations, thanks to newly-appointed CEO Bob Jordan, who took over in February 2022.Southwest CEO Bob Jordan.Southwest AirlinesBob Jordan is Southwest Airlines' new CEO. Experts outline a 100-day plan for keeping customers, employees, and investors happySince the pandemic, Southwest has become profitable again and, like other carriers, is trying to keep up with the surge in air travel.Southwest Heart OneSouthwest AirlinesSource: SouthwestDespite its operations meltdown over the holiday of 2022, the carrier has vowed to get its operation back on track, compensate passengers for their time and added expenses, and continue to bring low fares to customers.A Southwest Airlines Boeing 737 at a gate in Austin, TexasGeorge Rose/Getty ImagesRead the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 28th, 2022