Oregon biorefinery developer says it"s unfazed by SPAC collapse

Futures Tread Water As $4.2 Trillion Triple-Witching Opex Looms Following the largest ever S&P call-buying day in history... ... which sparked a marketwide gamma-squeeze that pushed the market higher for the 6th consecutive day to the highest level since April 2022, US equity futures and global stocks were headed for the best week in more than two months, buoyed by bets on Chinese stimulus and exuberance surrounding artificial intelligence firms. After closing above 4,400 on Thursday, S&P futures were up 0.1% at 7:40m ET, recovering from an earlier dip and trading near session highs. The MSCI World Index has climbed 3% this week, the most since the end of March. Asian stocks staged a broad rally on Friday and European equities climbed. Treasury yields climbed across the curve, most steeply at the shorter end on recession fears. The Bloomberg dollar index reversed earlier gains while gold prices rose. Oil prices were flat, while iron ore is also edging lower today despite being poised to climb this week. Whether the US rally extends to a 7th day will depend on how the market reacts to today's sizable $4.2 trillion triple-witching opex. According to Asym 500 founder and former Goldman derivatives strategist Rocky Fishman, today's OpEx, which is broken down into $2.5 trillion in options expiring in the morning and another $1.7 trillion at the close, is 20% more than a year ago. The opex will lead to a sharp drop in the "call wall", resulting in a so-called unclenched market,which could lead to a spike in volatility as gamma gravity is reduced and the market is free to move more aggressively. To Matthew Tym, the head of equity derivatives trading at Cantor Fitzgerald LP, traders are likely to roll out their call positions, particularly those that are still out of the money. But the overall event’s impact on the broader market is hard to predict. Speaking to Bloomberg, he said that “people are under-invested and need to get exposure,” adding that "there is a tremendous amount of options coming off tomorrow. However, I don’t have a good feel for what that does to the market.” We'll just have to wait and see. In premarket trading, Adobe shares rose as much as 3.9% in premarket trading after the software company reported second-quarter results that beat expectations and raised its full-year forecast. Analysts are positive on the report, seeing strong net-new digital media annualized recurring revenue as a highlight. There is also optimism about the company’s potential with artificial intelligence. Apple neared a record $3 trillion market capitalization. Here are some other notable premarket movers: Virgin Galactic shares jump 38% in premarket trading after the company announced it’s planning for its first commercial passenger space flight between June 27-30 Cava was 3.2% stronger in US premarket trading after the shares of the fast-casual restaurant chain almost doubled on Thursday in their debut. Nikola shares jump in US premarket trading on Friday, setting them up to more than double in value this week. The latest rally comes as its ousted founder Trevor Milton called for leadership change at the electric-truck maker. SoFi Technologies drops 4.3% in premarket trading after Piper Sandler downgrades the online personal finance company to neutral from overweight. The broker says some outperformance is warranted, though the rise in interest rates over the last two months will be an incremental near-term headwind. Lexicon shares jump as much as 18% in US premarket trading before paring some gains, after the drug developer said late Thursday that the US FDA has approved its oral tablet Inpefa to reduce the risk of heart failure. Millicom dropped 6% in postmarket trading after it says it terminated discussions with Apollo Global Management and Claure Group regarding a potential acquisition. Squarespace gained 7% in extended trading after it confirmed an agreement to buy Google Domains assets, according to a press release. The week's powerful rally was sparked by rising bets that the Fed will end its tightening cycle sooner rather than later after this week’s pause in interest-rate hikes, while expectations are also growing that China’s government will boost spending. That helped lift mining, energy and some luxury stocks in Europe trade Friday. “Theres a lot of cash on sidelines and we should not underestimate investors’ willingness to step in,” said Georgios Leontaris, chief investment officer for Switzerland and EMEA at HSBC Global Private Banking and Wealth. The tech-led rally has upended countless bearish analyst calls. Bank of America’s Michael Hartnett said he was wrong in the first half because the US economy has avoided a recession and a credit crunch, and called the AI-driven tech rally an “unanticipated event.” Still, he drew parallels to 2000 or 2008, warning of a “big rally before big collapse.”  In Europe, the Stoxx 600 rose 0.4% with utilities and consumer outperforming. Construction and mining names fall. LVMH contributed the most to the advance in the Stoxx 600 Index. Asos Plc rose as much as 7.8% after the fashion retailer’s sales update showed turnaround progress. Here are the biggest European movers: Asos shares rise as much as 7.8% in their biggest two-day gain since January after the online fast fashion retailer’s sales update on Thursday showed turnaround progress Swedish lenders lead gains on Stockholm’s large-cap OMXS30 benchmark after Barclays issued a review on the sector, upgrading Handelsbanken to overweight and SEB to equal weight MorphoSys gains as much as 14%, the most since April, after JPMorgan double-upgraded the German biotech to overweight from underweight, seeing at least about 40% upside to the shares Marlowe rises as much as 14%, with the company reportedly exploring a sale of its testing, inspection and certification division, the largest by revenue Mears Group gains as much as 7.2% after saying it experienced “strong trading” in the first five months of its financial year, with FY profits expected to be “materially ahead” of market expectations Applus Services rises as much as 11%, hitting the highest since March 2020, after Sky reported that Isquared Capital is preparing to launch a bid for the Spanish company as soon as next week Maersk falls as much as 4% after Handelsbanken initiated coverage of the shipping firm with a sell recommendation, predicting lower freight rates and lackluster volume growth Millicom declines as much as 8.5% after the telecommunications firm said it terminated discussions with Apollo Global Management and Claure Group regarding a potential acquisition Travis Perkins drops as much as 8.3% after the builders’ merchant warned that its full-year profit will be hurt by lower volumes. Other UK homebuilders and building-product suppliers also fall Interroll slumps as much as 12% after issuing a profit warning, predicting 1H23 revenue and Ebit below the previous year. ZKB downgraded the stock to market perform from outperform after the news Tesco slips as much as 1.3% after the grocer reported 1Q sales and kept its guidance. The unchanged operating profit outlook suggests a slightly lower margin, according to Bloomberg Intelligence Asian stocks also rose as markets in China, Hong Kong Australia and South Korea climbed. Japanese shares rose while the yen fell, after the Bank of Japan kept is negative rate and yield curve control program unchanged. “The decision should not have been a surprise,” said John Vail, chief global strategist at Nikko Asset Management. “Anyone who shorts the yen versus the dollar must realize that the authorities will likely intervene with little warning if it gets much weaker.” Hang Seng and Shanghai Comp. were underpinned amid anticipation of further support measures from China but with gains capped in the mainland amid lingering frictions with the EU to ban Huawei and ZTE equipment from internal Commission networks and after the US tempered expectations of a breakthrough in relations ahead of US Secretary of State Blinken’s visit to China. Nikkei 225 initially declined amid cautiousness heading into the BoJ policy decision but then recovered after the BoJ refrained from any hawkish surprises and maintained its ultra-easy policy settings. ASX 200 was positive with the gains led by early strength in energy and utilities after AGL Energy flagged a jump in FY24 underlying profit and with some households facing electricity tariff increases of up to 51% for the winter season. In FX, the Bloomberg dollar index faded earlier gains following a 0.7% drop on Thursday after ECB President Christine Lagarde said a further hike in July is “very likely.” The euro was little changed after rallying the most since April on Thursday following the European Central Bank’s decision to lift interest rates by another quarter-point. The yen declined as much as 0.8%, paring its rebound from a seven-month low against the dollar touched in the previous session; the BOJ left its negative interest rate and yield curve control program unchanged at the end of a two-day gathering. The central bank expects inflation will slow in the middle of the financial year and won’t hesitate to ease further if needed. “There’s no option but to see the yen weakening,” said Kengo Suzuki, senior market strategist at Mizuho Bank Ltd. “Divergence is quite big with the BOJ saying it will add easing if necessary” compared with the Fed and ECB which are more hawkish, he said. “The euro area has more of an inflation problem than the US and therefore the ECB will continue to hike, at least to 4%,” Christian Kopf, head of fixed income and FX for Union Investment Privatfonds GmbH said in an interview with Bloomberg Television. In rates, treasury yields rose across the curve as the front-end underperformed with 2-year yields cheaper by about 4bp on the day, pushing 2s10s spread through Thursday’s low. There was some outperformance by longer-dated US yields flattens 2s10s by ~3bp, 5s30s spreads by ~2bp on the day. 10-year at 3.73% is higher by ~1bp, trailing bunds and gilts in the sector by 4bp and 3bp. According to Bloomberg, there was no apparent catalyst for bear-flattening beyond rate-hike premium creeping back into swaps for July Fed policy meeting. Core European rates outperform following Thursday’s ECB rate decision. Looking at today's calendar, we have a few Fed speakers to listean to: Waller at 7:45 a.m., then Barkin at 9:00 a.m. That’s followed with US June University of Michigan Consumer Sentiment at 10:00 a.m. and the Baker Hughes US rig count at 1:00 p.m.   Market Snapshot S&P 500 futures little changed at 4,430.25 MXAP up 0.8% to 169.72 MXAPJ up 0.8% to 536.48 Nikkei up 0.7% to 33,706.08 Topix up 0.3% to 2,300.36 Hang Seng Index up 1.1% to 20,040.37 Shanghai Composite up 0.6% to 3,273.33 Sensex up 0.4% to 63,184.70 Australia S&P/ASX 200 up 1.1% to 7,251.25 Kospi up 0.7% to 2,625.79 STOXX Europe 600 up 0.5% to 466.49 German 10Y yield little changed at 2.51% Euro little changed at $1.0952 Brent Futures up 0.1% to $75.78/bbl Gold spot up 0.2% to $1,962.31 U.S. Dollar Index little changed at 102.20 Top Overnight News 1) BOJ Governor Kazuo Ueda continued to defy global central bank trends by sticking with stimulus as he waits for signs of more sustainable inflation while his peers signal the need to raise interest rates further to rein in prices. Ueda and his fellow board members left their negative rate and yield curve control program unchanged at the end of a two-day gathering and maintained their view that inflation will slow over the coming months. BBG 2) China will roll out more stimulus to support a slowing economy this year, but concerns over debt and capital flight will keep measures targeted at shoring up weak demand in the consumer and private sectors, sources involved in policy discussions said. RTRS 3) Blue Owl is eyeing up the European direct lending market. Among the options under consideration: building a team, buying an existing fund manager or raising a fund to be overseen by a portfolio manager based there. BBG 4) Chipmakers are betting big on new plants in Europe and Asia. Intel is bolstering its presence in Poland with a $4.9 billion factory, the country's leader tweeted. Micron is close to a $1 billion deal for a plant in India, people familiar said, and pledged another $600 million for a site in China — just weeks after Beijing imposed curbs on its chips. BBG 5) Gas prices appear likely to be lower this summer driving season after last year’s oil spike caused widespread pain at the pump. A gallon of regular averaged about $3.59 on Thursday, according to AAA, down from a record high of $5 a year ago when the war in Ukraine sent energy markets into a tailspin and fanned the flames of inflation globally. WSJ 6) Moody’s expects speculative-grade corporate defaults to climb to 4.6% by the end of the year — higher than the 4.1% long-term average — and peak at 5% by the end of April 2024, before easing to 4.9% in May. The forecast assumes US high-yield spreads will widen to 532 basis points over the next four quarters, from about 460 basis points at the end of May, with US unemployment rising to 4.8% from 3.7% in the same period. BBG 7) Lawrence Summers is confused by what the Fed did this week. While there were arguments for a hold, he said those wouldn't be consistent with adding two rate hikes to the outlook this year and boosting the forecast for growth. The inconsistency may be a "disturbing" sign of internal politics driving the Fed. BBG 8) $4.2 trillion OpEx today may rattle the gravity-defying bull market as investors roll over positions or start new ones. The maturation of a massive pile of options coincides with the quarterly expiration of index futures and the rebalancing of indexes including the S&P. Traders will probably roll out call positions but the overall impact is hard to predict. BBG 9) A $1.7 billion opioid settlement is on the verge of unraveling. Mallinckrodt, the drugmaker that began producing morphine and codeine in 1898, owes states, hospitals, tribes and others $200 million by the end of today. But the firm's business is sputtering, and some of its lenders are urging management to renege. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks traded higher following the gains on Wall St where the major indices were lifted alongside a weaker dollar and softer yields as participants digested a hawkish ECB and the rise in US jobless claims.  ASX 200 was positive with the gains led by early strength in energy and utilities after AGL Energy flagged a jump in FY24 underlying profit and with some households facing electricity tariff increases of up to 51% for the winter season. Nikkei 225 initially declined amid cautiousness heading into the BoJ policy decision but then recovered after the BoJ refrained from any hawkish surprises and maintained its ultra-easy policy settings. Hang Seng and Shanghai Comp. were underpinned amid anticipation of further support measures from China but with gains capped in the mainland amid lingering frictions with the EU to ban Huawei and ZTE equipment from internal Commission networks and after the US tempered expectations of a breakthrough in relations ahead of US Secretary of State Blinken’s visit to China. Top Asian News NDRC said China will accelerate the implementation of policies to increase consumption and that temporary fluctuations in some sectors are normal with China's economic operations maintaining a recovery trend overall. NDRC also stated that China will speed up the process to allow private firms to access the infrastructure of major national scientific research projects, while they will encourage and attract more private firms to participate in national major projects and key industrial supply chain projects. White House National Security Adviser Sullivan said they do not expect a breakthrough in US-China relations from Secretary of State Blinken's upcoming trip to China. BoJ kept its policy settings unchanged, as expected, with rates at -0.10% and the parameters of QQE with YCC maintained in which the decision on YCC was made through a unanimous vote. BoJ said Japan's economy is picking up and is likely to continue recovering moderately but also noted that uncertainty regarding the economy is very high. Furthermore, it reiterated that core consumer inflation is likely to slow the pace of increase towards the middle of the current fiscal year and that inflation expectations are moving sideways after heightening. BoJ Governor Ueda says more time is needed to meet BoJ's 2% inflation target; do need to pay attention to financial and FX markets. Responding to inflation undershoot after a premature rate hike is more difficult than responding to overshoot. Risk of excessive inflation overshoot with cautious policy response is "not zero" but there's also risk of inflation undershoot with hasty monetary normalisation. Possible a large shift in the price view could result in a policy change. European bourses are firmer across the board, Euro Stoxx 50 +0.4%, though action has at times been somewhat choppy in the likes of the FTSE 100 +0.3% despite a lack of fresh specific drivers since the Cash Open. Note, Goldman Sachs lifted its end-2023 year-end target for the Stoxx 600 to 500 from 475. Sectors are primarily in the green with some of the more defensively biased names leading such as Utilities and Healthcare while Basic Resources lags slightly after recent upside. Stateside, futures are firmer though only modestly so with newsflow limited thus far as we await a number of Fed speakers lter in the session. Top European News ECB's Holzmann says has no view on what should happen with rates beyond July. ECB's Nagel said the ECB may need to keep raising rates after the summer break. ECB's Simkus says he does not see rate cuts at the start of next year. ECB's Rehn says rate decisions will continue to follow a data-dependent approach; key rates will be brought to levels sufficiently restrictive to achieve a timely return to inflation's medium-term target. ECB's Muller says rates are yet to peak. FX Dollar off post-IJC lows with help from the Yen, DXY holds 102.000 handle as USD/JPY bounces from sub-140.00 towards 141.50 YTD peak in response to unchanged BoJ and dovish Governor Ueda press conference. Euro pivots 1.0950 vs Buck after hawkish ECB hike and flanked by hefty option expiries. Pound extends gains against Greenback to 1.2800+ awaiting BoE next week and unfazed by a decline in UK inflation expectations. Yuan continues recovery in hope of even more Chinese stimulus, with USD/CNY and USD/CNH both eyeing 7.1000 from peaks nearer 7.2000. PBoC set USD/CNY mid-point at 7.1289 vs exp. 7.1282 (prev. 7.1489) Commodities Crude benchmarks are under modest pressure this morning with fresh drivers limited and the action perhaps a break in the least few sessions consolidation and a return to the last few weeks general direction. WTI and Brent are towards the lower-end of circa. USD 1.00/bbl parameters and erring towards the USD 70.00/bbl and USD 75.00/bbl marks respectively. Spot gold is firmer as the tone remains tentative pre-FOMC speak while base metals are mixed given further Chinese support though a sizeable LME warehouse print seemingly weighs on Copper. Fixed Income More sustainable debt revival appears technical and positional following the extent of the recent decline. Bunds bounce from 132.18 to 132.96 and Gilts to 95.36 from 94.41. T-note lags within 113-16+/05 range awaiting prelim Michigan sentiment and commentary from the Fed post-hawkish FOMC hold. ECB TLTRO.III June window early repayment figure (EUR): 29.5bln (prev. 87.7bln). Geopolitics   US State Department said it wants Iran to take steps to cease its actions that destabilise the region including steps to curb its nuclear programme. It was separately reported that the US and Iran are in talks aimed at limiting Iran's nuclear programme, releasing some US citizens and unfreezing Iranian assets, while steps would be cast as an understanding and not an agreement subject to Congressional review, according to officials cited by Reuters. Russian Kremlin says President Putin remains open to any contacts to discuss the Ukraine conflict resolution, via Ria. Explosions heard in central Kyiv, according to Reuters witnesses. Note, an African leader delegation, led by South African president Ramaphosa, is currently in Kyiv. US Event Calendar 08:30: June New York Fed Services Business, prior -16.8 10:00: June U. of Mich. Sentiment, est. 60.0, prior 59.2 June U. of Mich. Expectations, est. 55.2, prior 55.4 June U. of Mich. Current Conditions, est. 65.1, prior 64.9 June U. of Mich. 1 Yr Inflation, est. 4.1%, prior 4.2% June U. of Mich. 5-10 Yr Inflation, est. 3.0%, prior 3.1% DB's Jim Reid concludes the overnight wrap Today is the day that a passionate group within 1% of the world's population get extraordinarily excited about something that the other 99% of the globe ranges from being completely unaware of, to being completely apathetic towards. Yes, one of the oldest international sporting rivalries in the world kicks off here in England as we take on Australia at cricket for The Ashes. The home series are every 4 years, and I can soundtrack my life to these battles. Hopefully 2023 will go down as one of the best. So if you're one of the 99% spare a thought for the small number of obsessed nervous wrecks within the 1% of us today. Risk assets are exhibiting few nerves at the moment and have continued their relentless advance over the last 24 hours, with the S&P 500 (+1.22%) rising for a 6th consecutive session for the first time since November 2021. It marked a big turnaround from earlier in the day, when there’d been a significant rates selloff, particularly after the ECB hiked rates and raised their inflation forecasts once again. But just 15 minutes later, the mood completely turned after the US weekly jobless claims unexpectedly remained at last week’s level of 262k, which is the highest they’ve been since October 2021. And in turn, that meant investors grew more doubtful about whether the Fed would end up delivering the two further hikes they indicated for this year, which supported a multi-asset rally across equities, bonds and commodities. Ironically, the rest of the US data from yesterday had been perfectly respectable, with the retail sales numbers even posting a mild beat. But markets are overweighting the weekly claims data at the moment, since they’re one of the most timely indicators we get, and would therefore be one of the first to show if the labour market is beginning to crack. So when the 262k reading came in well above the 245k consensus expectation, that prompted a sizeable reaction, particularly given the negative surprise from last week as well. For instance, yields on 10yr US Treasuries had stood at 3.83% just after the ECB delivered their hike, before tumbling down to 3.716% by the end of the session. The elevated claims number was a little more broad based than the surprise last week when two states made up the overwhelming bulk of the increase. So last week there was slightly more reason to be suspicious of the increase than this week. Ironically the first reaction to the perception of a weaker labour market was positive through the Fed effect. However be careful what you wish for. Even more attention will be on next week’s numbers now. This release distracted markets from what was an eventful ECB meeting in its own right. The main headline was another 25bp hike as expected, which took the deposit rate up to 3.5% and its highest level since 2001. But what caused a big reaction was the upgrade to their inflation forecasts, which signalled that more action was needed to get inflation back to their 2% target. For example, headline inflation was revised up by a tenth across each of 2023-25, and they’re now expecting it to only come down to 3.0% in 2024 and 2.2% in 2025. In addition, the core inflation forecast that excludes food and energy saw even bigger upgrades, with both 2023 and 2024 revised up half a point to 5.1% and 3.0% respectively. And even in 2025, core inflation was still seen at 2.3%, so the ECB are signalling they still expect headline and core inflation to be above their target in two years’ time. President Lagarde then offered some further hawkish comments in her press conference, saying that “barring a material change to our baseline, it is very likely the case that we will continue to increase rates in July.” That helped remove any doubt about whether the ECB were finished hiking yet, and investors moved to fully price in a further 25bp move to 3.75% at the next meeting. Looking further out, investors also began to consider it more-likely-than-not that the ECB would deliver yet another hike beyond that in September, which if realised would take the deposit rate all the way up to 4%. Following the meeting, our European economists have maintained their view of a 3.75% terminal rate but continue to see upside risks. However they did note some dovish counterbalancing comments from the ECB. See their reaction note here for more. All this meant European rates were torn between the generally hawkish ECB and the weak claims data, but ultimately the ECB won out. By the close, yields on 10yr bunds (+5.2bps), OATs (+4.5bps) and BTPs (+4.2bps) had all risen, and the 2yr German yield (+11.0bps) hit a post-SVB high. It was a similar story for equities, with the STOXX 600 (-0.13%) underperforming its US counterparts, despite paring back its losses later in the session. In the US it was a very different story however, since the claims data took centre stage. That meant Treasuries rallied across the curve, with yields on 10yr Treasuries closing -7.0bps lower at 3.716%. Furthermore, the 2s10s curve inverted further to -93.4bps, which is the most inverted its been since SVB, and just demonstrates how recessionary indicators are continuing to flash with growing alarm. This morning 2yr and 10yr yields are are back up +3bps and +1.7bps respectively with the curve thus inverting a touch more. For equities, there was a similarly buoyant tone, and the S&P 500 (+1.22%) closed above the 4400 mark for the first time since April 2022. 88% of index constituents were higher on the day with all but two industry groups gaining. For once, tech stocks slightly underperformed the broader S&P, but there was still a decent advance as software companies rose +2.7% to pace the S&P 500 industry groups. Elsewhere the FANG+ index (+1.09%) rose for the 10th time in the last 11 sessions, bringing its YTD gains beyond +76%. Asian equity markets are also mostly trading higher tracking overnight gains on Wall Street alongside hopes of fresh stimulus from China. As I check my screens, the Hang Seng (+0.68%), the CSI (+0.44%), the Shanghai Composite (+0.37%) and the KOSPI (+0.69%) are all moving higher. Elsewhere, the Nikkei (-0.10%) is trimming its losses but continues to remain in the red after the Bank of Japan (BOJ) maintained its ultra-easy monetary policy despite stronger-than-expected inflation (more below). Outside of Asia, US equity futures are indicating a slight pull back with those on the S&P 500 (-0.18%) and NASDAQ 100 (-0.22%) printing mild losses on what is triple witching day, with huge option expiries going through later. Overnight, the run of central bank meetings has continued, with the BoJ maintaining its current pace of yield curve control in line with market expectations as the central bank waits to ensure Japan sustainably achieves 2% inflation. While warning about risks to the global outlook, the central bank’s policy statement indicated that it won’t hesitate to ease further if necessary. Following the substantially dovish decision, the Japanese yen declined -0.35% against the US dollar to around 140.775. Finally, yesterday brought several other data releases from the US aside from jobless claims. Retail sales surprised on the upside with +0.3% growth (vs. -0.2% expected) even if retail control (that goes directly into GDP) was inline at 0.2%. Furthermore, the Empire State manufacturing survey for June rebounded to 6.6 (vs. -15.1 expected). That said, industrial production unexpectedly fell by -0.2% in May (vs. +0.1% expected). To the day ahead now, and data releases include the University of Michigan’s (UoM) preliminary consumer sentiment index for June, along with the final Euro Area CPI reading for May. Watch out for the inflation expectations in the UoM report as the long-term ones have been edging up of late. Otherwise, central bank speakers include the Fed’s Bullard, Waller and Barkin, along with the ECB’s Holzmann, Rehn, Villeroy and Centeno. Tyler Durden Fri, 06/16/2023 - 08:09.....»»

Futures Rise On Taper, Evergrande Optimism US index futures jumped overnight even as the Fed confirmed that a November tapering was now guaranteed and would be completed by mid-2022 with one rate hike now on deck, while maintaining the possibility to extend stimulus if necessitated by the economy. Sentiment got an additional boost from a strong showing of Evergrande stock - which closed up 17% - during the Chinese session, which peaked just after Bloomberg reported that China told Evergrande to avoid a near-term dollar bond default and which suggested that the "government wants to avoid an imminent collapse of the developer" however that quickly reversed when the WSJ reported, just one hour later, that China was making preparations for Evergrande's demise, and although that hammered stocks, the report explicitly noted that a worst-case scenario for Evergrande would mean a partial or full nationalization as "local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion." In other words, both reports are bullish: either foreign creditors are made whole (no default) as per BBG or the situation deteriorates and Evergrande is nationalized ("SOEs step in") as per WSJ. According to Bloomberg, confidence is building that markets can ride out a pullback in Fed stimulus, unlike 2013 when the taper tantrum triggered large losses in bonds and equities. "Investors are betting that the economic and profit recovery will be strong enough to outweigh a reduction in asset purchases, while ultra-low rates will continue to support riskier assets even as concerns linger about contagion from China’s real-estate woes." That's one view: the other is that the Fed has so broken the market's discounting ability we won't know just how bad tapering will get until it actually begins. “The Fed has got to be pleased that their communication on the longer way to tapering has avoided the dreaded fear of the tantrum,” Jeffrey Rosenberg, senior portfolio manager for systematic fixed income at BlackRock Inc., said on Bloomberg Television. “This is a very good outcome for the Fed in terms of signaling their intent to give the market information well ahead of the tapering decision.” Then there is the question of Evergrande: “With regards to Evergrande, all those people who are waiting for a Lehman moment in China will probably have to wait another turn,” said Ken Peng, an investment strategist at Citi Private Bank Asia Pacific. “So I wouldn’t treat this as completely bad, but there are definitely a lot of risks on the horizon.” In any case, today's action is a continuation of the best day in two months for both the Dow and the S&P which staged a strong recovery from two-month lows hit earlier in the week, and as of 745am ET, S&P 500 E-minis were up 25.25 points, or 0.6%, Dow E-minis were up 202 points, or 0.59%, while Nasdaq 100 E-minis were up 92.0 points, or 0.60%. In the premarket, electric vehicle startup Lucid Group rose 3.1% in U.S. premarket trading. PAVmed (PVM US) jumps 11% after its Lucid Diagnostics unit announced plans to list on the Global Market of the Nasdaq Stock Market.  Here are some of the biggest movers today: U.S.-listed Chinese stocks rise in premarket trading as fears of contagion from China Evergrande Group’s debt crisis ease. Blackberry (BB US) shares rise 8.7% in premarket after co.’s 2Q adjusted revenue beat the average of analysts’ estimates Eargo (EAR US) falls 57% in Thursday premarket after the hearing aid company revealed it was the target of a Justice Department criminal probe and withdrew its forecasts for the year Amplitude Healthcare Acquisition (AMHC US) doubled in U.S. premarket trading after the SPAC’s shareholders approved the previously announced business combination with Jasper Therapeutics Steelcase (SCS US) fell 4.8% Wednesday postmarket after the office products company reported revenue for the second quarter that missed the average analyst estimate Vertex Energy Inc. (VTNR US) gained 2.1% premarket after saying the planned acquisition of a refinery in Mobile, Alabama from Royal DutVTNR US Equitych Shell Plc is on schedule Synlogic (SYBX US) shares declined 9.7% premarket after it launched a stock offering launched without disclosing a size HB Fuller (FUL US) climbed 2.7% in postmarket trading after third quarter sales beat even the highest analyst estimate Europe's Stoxx 600 index rose 0.9%, lifted by carmakers, tech stocks and utilities, which helped it recover losses sparked earlier in the week by concerns about Evergrande and China’s crackdown on its property sector. The gauge held its gain after surveys of purchasing managers showed business activity in the euro area lost momentum and slowed broadly in September after demand peaked over the summer and supply-chain bottlenecks hurt services and manufacturers. Euro Area Composite PMI (September, Flash): 56.1, consensus 58.5, last 59.0. Euro Area Manufacturing PMI (September, Flash): 58.7, consensus 60.3, last 61.4. Euro Area Services PMI (September, Flash): 56.3, consensus 58.5, last 59.0. Germany Composite PMI (September, Flash): 55.3, consensus 59.2, last 60.0. France Composite PMI (September, Flash): 55.1, consensus 55.7, last 55.9. UK Composite PMI (September, Flash): 54.1, consensus 54.6, last 54.8. Commenting on Europe's PMIs, Goldman said that the Euro area composite PMI declined by 2.9pt to 56.1 in September, well below consensus expectations. The softening was broad-based across countries but primarily led by Germany. The peripheral composite flash PMI also weakened significantly in September but remain very high by historical standards (-2.4pt to 57.5). Across sectors, the September composite decline was also broad-based, with manufacturing output softening (-3.3pt to 55.6) to a similar extent as services (-2.7pt to 56.3). Supply-side issues and upward cost and price pressures continued to be widely reported. Expectations of future output growth declined by less than spot output on the back of delta variant worries and supply issues, remaining far above historically average levels. Earlier in the session, Asian stocks rose for the first time in four sessions, as Hong Kong helped lead a rally on hopes that troubled property firm China Evergrande Group will make progress on debt repayment. The MSCI Asia Pacific Index climbed as much as 0.5%, with Tencent and Meituan providing the biggest boosts. The Hang Seng jumped as much as 2.5%, led by real estate stocks as Evergrande surged more than 30%. Hong Kong shares later pared their gains. Asian markets were also cheered by gains in U.S. stocks overnight even as the Federal Reserve said it may begin scaling back stimulus this year. A $17 billion net liquidity injection from the People’s Bank of China also provided a lift, while the Fed and Bank of Japan downplayed Evergrande risks in comments accompanying policy decisions Wednesday. Evergrande’s stock closed 18% higher in Hong Kong, in a delayed reaction to news a unit of the developer had negotiated interest payments on yuan notes. A coupon payment on its 2022 dollar bond is due on Thursday “Investors are perhaps reassessing the tail risk of a disorderly fallout from Evergrande’s credit issues,” said Chetan Seth, a strategist at Nomura. “However, I am not sure if the fundamental issue around its sustainable deleveraging has been addressed. I suspect markets will likely remain quite volatile until we have some definite direction from authorities on the eventual resolution of Evergrande’s debt problems.” Stocks rose in most markets, with Australia, Taiwan, Singapore and India also among the day’s big winners. South Korea’s benchmark was the lone decliner, while Japan was closed for a holiday In rates, Treasuries were off session lows, with the 10Y trading a 1.34%, but remained under pressure in early U.S. session led by intermediate sectors, where 5Y yield touched highest since July 2. Wednesday’s dramatic yield-curve flattening move unleashed by Fed communications continued, compressing 5s30s spread to 93.8bp, lowest since May 2020. UK 10-year yield climbed 3.4bp to session high 0.833% following BOE rate decision (7-2 vote to keep bond-buying target unchanged); bunds outperformed slightly. Peripheral spreads tighten with long-end Italy outperforming. In FX, the Bloomberg Dollar Spot Index reversed an earlier gain and dropped 0.3% as the dollar weakened against all of its Group-of-10 peers apart from the yen amid a more positive sentiment. CAD, NOK and SEK are the strongest performers in G-10, JPY the laggard.  The euro and the pound briefly pared gains after weaker-than-forecast German and British PMIs. The pound rebounded from an eight-month low amid a return of global risk appetite as investors assessed whether the Bank of England will follow the Federal Reserve’s hawkish tone later Thursday. The yield differential between 10-year German and Italian debt narrowed to its tightest since April. Norway’s krone advanced after Norges Bank raised its policy rate in line with expectations and signaled a faster pace of tightening over the coming years. The franc whipsawed as the Swiss National Bank kept its policy rate and deposit rate at record lows, as expected, and reiterated its pledge to wage currency market interventions. The yen fell as a unit of China Evergrande said it had reached an agreement with bond holders over an interest payment, reducing demand for haven assets. Turkey’s lira slumped toa record low against the dollar after the central bank unexpectedly cut interest rates. In commodities, crude futures drifted lower after a rangebound Asia session. WTI was 0.25% lower, trading near $72; Brent dips into the red, so far holding above $76. Spot gold adds $3.5, gentle reversing Asia’s losses to trade near $1,771/oz. Base metals are well bid with LME aluminum leading gains. Bitcoin steadied just below $44,000. Looking at the day ahead, we get the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Market Snapshot S&P 500 futures up 0.7% to 4,413.75 STOXX Europe 600 up 1.1% to 468.32 MXAP up 0.5% to 200.57 MXAPJ up 0.9% to 645.76 Nikkei down 0.7% to 29,639.40 Topix down 1.0% to 2,043.55 Hang Seng Index up 1.2% to 24,510.98 Shanghai Composite up 0.4% to 3,642.22 Sensex up 1.4% to 59,728.37 Australia S&P/ASX 200 up 1.0% to 7,370.22 Kospi down 0.4% to 3,127.58 German 10Y yield fell 5.6 bps to -0.306% Euro up 0.4% to $1.1728 Brent Futures up 0.3% to $76.39/bbl Gold spot up 0.0% to $1,768.25 U.S. Dollar Index down 0.33% to 93.16 Top Overnight News from Bloomberg Financial regulators in Beijing issued a broad set of instructions to China Evergrande Group, telling the embattled developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds China’s central bank net-injected the most short- term liquidity in eight months into the financial system, with markets roiled by concerns over China Evergrande Group’s debt crisis Europe’s worst energy crisis in decades could drag deep into the cold months as Russia is unlikely to boost shipments until at least November Business activity in the euro area “markedly” lost momentum in September after demand peaked over the summer and supply chain bottlenecks hurt both services and manufacturers. Surveys of purchasing managers by IHS Markit showed growth in both sectors slowing more than expected, bringing overall activity to a five-month low. Input costs, meanwhile, surged to the highest in 21 years, according to the report The U.K. private sector had its weakest month since the height of the winter lockdown and inflation pressures escalated in September, adding to evidence that the recovery is running into significant headwinds, IHS Markit said The U.K.’s record- breaking debut green bond sale has given debt chief Robert Stheeman conviction on the benefits of an environmental borrowing program. The 10 billion-pound ($13.7 billion) deal this week was the biggest-ever ethical bond sale and the country is already planning another offering next month A more detailed look at global markets courtesy of Newsquaw Asian equity markets traded mostly positive as the region took its cue from the gains in US with the improved global sentiment spurred by some easing of Evergrande concerns and with stocks also unfazed by the marginally more hawkish than anticipated FOMC announcement (detailed above). ASX 200 (+1.0%) was underpinned by outperformance in the commodity-related sectors and strength in defensives, which have more than atoned for the losses in tech and financials, as well as helped markets overlook the record daily COVID-19 infections in Victoria state. Hang Seng (+0.7%) and Shanghai Comp. (+0.6%) were also positive after another respectable liquidity operation by the PBoC and with some relief in Evergrande shares which saw early gains of more than 30% after recent reports suggested a potential restructuring by China’s government and with the Co. Chairman noting that the top priority is to help wealth investors redeem their products, although the majority of the Evergrande gains were then pared and unit China Evergrande New Energy Vehicle fully retraced the initial double-digit advances. KOSPI (-0.5%) was the laggard as it played catch up to the recent losses on its first trading day of the week and amid concerns that COVID cases could surge following the holiday period, while Japanese markets were closed in observance of the Autumnal Equinox Day. China Pumps $17 Billion Into System Amid Evergrande Concerns China Stocks From Property to Tech Jump on Evergrande Respite Philippines Holds Key Rate to Spur Growth Amid Higher Prices Taiwan’s Trade Deal Application Sets Up Showdown With China Top Asian News European equities (Stoxx 600 +0.9%) trade on the front-foot and have extended gains since the cash open with the Stoxx 600 now higher on the week after Monday’s heavy losses. From a macro perspective, price action in Europe has been undeterred by a slowdown in Eurozone PMIs which saw the composite metric slip to 56.1 from 59.0 (exp. 58.5) with IHS Markit noting “an unwelcome combination of sharply slower economic growth and steeply rising prices.” Instead, stocks in the region have taken the cue from a firmer US and Asia-Pac handover with performance in Chinese markets aided by further liquidity injections by the PBoC. Some positivity has also been observed on the Evergrande front amid mounting expectations of a potential restructuring at the company. That said, at the time of writing, it remains unclear what the company’s intentions are for repaying its USD 83.5mln onshore coupon payment. Note, ING highlights that “missing that payment today would still leave a 30-day grace period before this is registered as a default”. The most recent reports via WSJ indicate that Chinese authorities are asking local governments to begin preparations for the potential downfall of Evergrande; however, the article highlights that this is a last resort and Beijing is reluctant to step in. Nonetheless, this article has taken the shine off the mornings risk appetite, though we do remain firmer on the session. Stateside, as the dust settles on yesterday’s FOMC announcement, futures are firmer with outperformance in the RTY (+0.8% vs. ES +0.7%). Sectors in Europe are higher across the board with outperformance in Tech and Autos with the latter aided by gains in Faurecia (+4.6%) who sit at the top of the Stoxx 600 after making an unsurprising cut to its guidance, which will at least provide some clarity on the Co.’s near-term future; in sympathy, Valeo (+6.6) is also a notable gainer in the region. To the downside, Entain (+2.6%) sit at the foot of the Stoxx 600 after recent strong gains with the latest newsflow surrounding the Co. noting that MGM Resorts is considering different methods to acquire control of the BetMGM online gambling business JV, following the DraftKings offer for Entain, according to sources. The agreement between Entain and MGM gives MGM the ability to block any deal with competing businesses; MGM officials believe this grants the leverage to take full control of BetMGM without spending much. Top European News BOE Confronts Rising Prices, Slower Growth: Decision Guide La Banque Postale Eyes Retail, Asset Management M&A in Europe Activist Bluebell Raises Pressure on Glaxo CEO Walmsley Norway Delivers Rate Lift-Off With Next Hike Set for December In FX, not much bang for the Buck even though the FOMC matched the most hawkish market expectations and Fed chair Powell arguably went further by concluding in the post-meeting press conference that substantial progress on the lagging labour front is all but done. Hence, assuming the economy remains on course, tapering could start as soon as November and be completed my the middle of 2022, though he continued to play down tightening prospects irrespective of the more hawkish trajectory implied by the latest SEP dot plots that are now skewed towards at least one hike next year and a cumulative seven over the forecast horizon. However, the Greenback only managed to grind out marginally higher highs overnight, with the index reaching 93.526 vs 93.517 at best yesterday before retreating quite sharply and quickly to 93.138 in advance of jobless claims and Markit’s flash PMIs. CAD/NZD/AUD - The Loonie is leading the comeback charge in major circles and only partially assisted by WTI keeping a firm bid mostly beyond Usd 72/brl, and Usd/Cad may remain contained within 1.2796-50 ahead of Canadian retail sales given decent option expiry interest nearby and protecting the downside (1 bn between 1.2650-65 and 2.7 bn from 1.2620-00). Meanwhile, the Kiwi has secured a firmer grip on the 0.7000 handle to test 0.7050 pre-NZ trade and the Aussie is looking much more comfortable beyond 0.7250 amidst signs of improvement in the flash PMIs, albeit with the services and composite headline indices still some way short of the 50.0 mark. NOK/GBP/EUR/CHF - All firmer, and the Norwegian Crown outperforming following confirmation of the start of rate normalisation by the Norges Bank that also underscored another 25 bp hike in December and further tightening via a loftier rate path. Eur/Nok encountered some support around 10.1000 for a while, but is now below, while the Pound has rebounded against the Dollar and Euro in the run up to the BoE at midday. Cable is back up around 1.3770 and Eur/Gbp circa 0.8580 as Eur/Usd hovers in the low 1.1700 area eyeing multiple and a couple of huge option expiries (at the 1.1700 strike in 4.1 bn, 1.1730 in 1 bn, 1.1745-55 totalling 2.7 bn and 1.8 bn from 1.1790-1.1800). Note, Eurozone and UK flash PMIs did not live up to their name, but hardly impacted. Elsewhere, the Franc is lagging either side of 0.9250 vs the Buck and 1.0835 against the Euro on the back of a dovish SNB Quarterly Review that retained a high Chf valuation and necessity to maintain NIRP, with only minor change in the ordering of the language surrounding intervention. JPY - The Yen is struggling to keep its head afloat of 110.00 vs the Greenback as Treasury yields rebound and risk sentiment remains bullish pre-Japanese CPI and in thinner trading conditions due to the Autumn Equinox holiday. In commodities, WTI and Brent have been choppy throughout the morning in-spite of the broadly constructive risk appetite. Benchmarks spent much of the morning in proximity to the unchanged mark but the most recent Evergrande developments, via WSJ, have dampened sentiment and sent WTI and Brent back into negative territory for the session and printing incremental fresh lows at the time of publication. Back to crude, newsflow has once again centred around energy ministry commentary with Iraq making clear that oil exports will continue to increase. Elsewhere, gas remains at the forefront of focus particularly in the UK/Europe but developments today have been somewhat incremental. On the subject, Citi writes that Asia and Europe Nat. Gas prices could reach USD 100/MMBtu of USD 580/BOE in the winter, under their tail-risk scenario. For metals, its very much a case of more of the same with base-metals supportive, albeit off-best given Evergrande, after a robust APAC session post-FOMC. Given the gas issues, desks highlight that some companies are being forced to suspend/reduce production of items such as steel in Asian/European markets, a narrative that could become pertinent for broader prices if the situation continues. Elsewhere, spot gold and silver are both modestly firmer but remain well within the range of yesterday’s session and are yet to recovery from the pressure seen in wake of the FOMC. US Event Calendar 8:30am: Sept. Initial Jobless Claims, est. 320,000, prior 332,000; Continuing Claims, est. 2.6m, prior 2.67m 8:30am: Aug. Chicago Fed Nat Activity Index, est. 0.50, prior 0.53 9:45am: Sept. Markit US Composite PMI, prior 55.4 9:45am: Sept. Markit US Services PMI, est. 54.9, prior 55.1 9:45am: Sept. Markit US Manufacturing PMI, est. 61.0, prior 61.1 11am: Sept. Kansas City Fed Manf. Activity, est. 25, prior 29 12pm: 2Q US Household Change in Net Wor, prior $5t DB's Jim Reid concludes the overnight wrap My wife was at a parents event at school last night so I had to read three lots of bedtime stories just as the Fed were announcing their policy decision. Peppa Pig, Biff and Kipper, and somebody called Wonder Kid were interspersed with Powell’s press conference live on my phone. It’s fair to say the kids weren’t that impressed by the dot plot and just wanted to join them up. The twins (just turned 4) got their first reading book homework this week and it was a bit sad that one of them was deemed ready to have one with words whereas the other one only pictures. The latter was very upset and cried that his brother had words and he didn’t. That should create even more competitive tension! Back to the dots and yesterday’s Fed meeting was on the hawkish side in terms of the dots and also in terms of Powell’s confidence that the taper could be complete by mid-2022. Powell said that the Fed could begin tapering bond purchases as soon as the November FOMC meeting, in line with our US economists’ forecasts. He left some room for uncertainty, saying they would taper only “If the economy continues to progress broadly in line with expectations, and also the overall situation is appropriate for this.” However he made clear that “the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff.” The quarterly “dot plot” showed that the 18 FOMC officials were split on whether to start raising rates next year or not. In June, the median dot indicated no rate increases until 2023, but now 6 members see a 25bps raise next year and 3 members see two such hikes. Their inflation forecasts were also revised up and DB’s Matt Luzzetti writes in his FOMC review (link here) that “If inflation is at or below the Fed's current forecast next year of 2.3% core PCE, liftoff is likely to come in 2023, consistent with our view. However, if inflation proves to be higher with inflation expectations continuing to rise, the first rate increase could well migrate into 2022.” Markets took the overall meeting very much in its stride with the biggest impact probably being a yield curve flattening even if US 10yr Treasury yields traded in just over a 4bp range yesterday and finishing -2.2bps lower at 1.301%. The 5y30y curve flattened -6.7bps to 95.6bps, its flattest level since August 2020, while the 2y10y curve was -4.2bps flatter. So the market seems to believe the more hawkish the Fed gets the more likely they’ll control inflation and/or choke the recovery. The puzzle is that even if the dots are correct, real Fed funds should still be negative and very accommodative historically for all of the forecasting period. As such the market has a very dim view of the ability of the economy to withstand rate hikes or alternatively that the QE technicals are overpowering everything at the moment. In equities, the S&P 500 was up nearly +1.0% 15 minutes prior to the Fed, and then rallied a further 0.5% in the immediate aftermath before a late dip look it back to +0.95%. The late dip meant that the S&P still has not seen a 1% up day since July 23. The index’s rise was driven by cyclicals in particular with energy (+3.17%), semiconductors (-2.20%), and banks (+2.13%) leading the way. Asian markets are mostly trading higher this morning with the Hang Seng (+0.69%), Shanghai Comp (+0.58%), ASX (+1.03%) and India’s Nifty (+0.81%) all up. The Kospi (-0.36%) is trading lower though and is still catching up from the early week holidays. Japan’s markets are closed for a holiday today. Futures on the S&P 500 are up +0.25% while those on the Stoxx 50 are up +0.49%. There is no new news on the Evergrande debt crisis however markets participants are likely to pay attention to whether the group is able to make interest rate payment on its 5 year dollar note today after the group had said yesterday that it resolved a domestic bond coupon by negotiations which was also due today. As we highlighted in our CoTD flash poll conducted earlier this week, market participants are not too worried about a wider fallout from the Evergrande crisis and even the Hang Seng Properties index is up +3.93% this morning and is largely back at the levels before the big Monday sell-off of -6.69%. Overnight we have received flash PMIs for Australia which improved as parts of the country have eased the coronavirus restrictions. The services reading came in at 44.9 (vs. 42.9 last month) and the manufacturing print was even stronger at 57.3 (vs. 52.0 last month). Japan’s flash PMIs will be out tomorrow due to today’s holiday. Ahead of the Fed, markets had continued to rebound from their declines earlier in the week, with Europe’s STOXX 600 gaining +0.99% to narrowly put the index in positive territory for the week. This continues the theme of a relative outperformance among European equities compared to the US, with the STOXX 600 having outpaced the S&P 500 for 5 consecutive sessions now, though obviously by a slim margin yesterday. Sovereign bonds in Europe also posted gains, with yields on 10yr bunds (-0.7bps), OATs (-1.0bps) and BTPs (-3.2bps) all moving lower. Furthermore, there was another tightening in peripheral spreads, with the gap in Italian 10yr yields over bunds falling to 98.8bps yesterday, less than half a basis point away from its tightest level since early April. Moving to fiscal and with Democrats seemingly unable to pass the $3.5 trillion Biden budget plan by Monday, when the House is set to vote on the bipartisan infrastructure bill, Republican leadership is calling on their members to vote against the bipartisan bill in hopes of delaying the process further. While the there is still a high likelihood the measure will eventually get passed, time is becoming a factor. Congress now has just over a week to get a government funding bill through both chambers of congress as well as raise the debt ceiling by next month. Republicans have told Democrats to do the latter in a partisan manner and include it in the reconciliation process which could mean that a significant portion of the Biden economic agenda – mostly encapsulated in the $3.5 trillion over 10 year budget – may have to be cut down to get the entire Democratic caucus on board. Looking ahead, an event to watch out for today will be the Bank of England’s policy decision at 12:00 London time, where our economists write (link here) that they expect no change in the policy settings. However, they do expect a reaffirmation of the BoE’s updated forward guidance that some tightening will be needed over the next few years to keep inflation in check, even if it’s too early to expect a further hawkish pivot at this stage. Staying on the UK, two further energy suppliers (Avro Energy and Green Supplier) ceased trading yesterday amidst the surge in gas prices, with the two supplying 2.9% of domestic customers between them. We have actually seen a modest fall in European natural gas prices over the last couple of days, with the benchmark future down -4.81% since its close on Monday, although it’s worth noting that still leaves them up +75.90% since the start of August alone. There wasn’t much data to speak of yesterday, though US existing home sales fell to an annualised rate of 5.88 in August (vs. 5.89m expected). Separately, the European Commission’s advance consumer confidence reading for the Euro Area unexpectedly rose to -4.0 in September (vs. -5.9 expected). To the day ahead now, the data highlights include the September flash PMIs from around the world, while in the US there’s the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Tyler Durden Thu, 09/23/2021 - 08:13.....»»

Stock markets were unfazed by the Federal Reserve saying it was likely to cut back its bond purchases soon - which most analysts read as November. Fed boss Jerome Powell said the central bank is likely to start tapering soon. Sarah Silbiger/Getty Images Global stocks and cryptocurrencies rallied Thursday after the Federal Reserve gave more details on its tapering plan. Analysts broadly said they expect the Fed to cut back bond purchases in November, with some scope for a delay. Fears about Chinese property developer Evergrande cooled, but an offshore $83.5 million interest payment loomed on Thursday. See more stories on Insider's business page. Global stocks and cryptocurrencies rose Thursday after the Federal Reserve provided more clarity on its plan for the withdrawal of stimulus, while fears around indebted Chinese property developer Evergrande cooled for the time being.S&P 500 futures were up 0.74% at 4.50 a.m. ET, after the index snapped a four-day losing streak to close 0.95% higher Wednesday. Dow Jones futures advanced 0.71%, while Nasdaq 100 futures also put on 0.71%, signaling gains when markets open later in the day.Asian stocks advanced overnight as worries receded about risks to the wider financial system from an Evergrande debt default. China's CSI 300 index of Shanghai and Shenzhen-listed stocks rose 0.65%, while Hong Kong's Hang Seng climbed 1.01%.In Europe, the pan-continental Stoxx 600 climbed 1.02% in early trading, while London's FTSE 100 gained 0.48%.Cryptocurrencies rallied across the board after tumbling along with stocks earlier in the week. Bitcoin was up 1% to $43,891, according to Bloomberg prices. Ether, cardano, binance coin and other altcoins all rose more sharply.Stocks climbed after the US Federal Reserve, the world's most powerful central bank, on Wednesday heavily suggested that it would start cutting back on its bond purchases from November, and finish the job by the middle of 2022. Some Fed policymakers also said they'd like to see interest rates start rising as soon as next year.Analysts said markets were reassured that Fed Chair Jerome Powell left the door open to maintaining stimulus if the US economy needs it, and by his cautious approach to movement on interest rates.Jim O'Sullivan, chief US macro strategist at TD Securities, said Powell gave an "unambiguous" signal that the Fed would start tapering bond purchases in November. O'Sullivan said he doesn't expect it to start hiking interest rates until 2023.Neil Wilson, chief market analyst at trading platform Markets.com, said: "Jay Powell continues to walk the line between guiding the market to expect tightening without unduly worrying investors."Read more: Meet the 8 strategists calling for a stock market correction by the end of the year as Wall Street turns bearish. Here are their key concerns and top recommendations for positioning against a market meltdown.Still in focus for investors is the $300 billion debt crunch faced by Evergrande, China's second-biggest property developer. Fears the company could collapse and send shockwaves across the global economy helped push US stocks to their worst losses since May on Monday.Yet those concerns were easing somewhat, after Evergrande unit Hengda said it had "resolved" an onshore interest payment via negotiation and the company reassured retail investors that they were a top priority. China's injection of 90 billion yuan ($13.9 billion) into the banking system also bolstered those hoping Beijing would step in to contain any shocks.Shares in Evergrande jumped 17.62% on Thursday, although they remain more than 80% lower for the year.But the property developer is still seen as in perilous position, and investors are closely watching a key test for Evergrande Thursday, when an $83.5 million interest payment on an offshore bond is due.The US bond market was little changed after the Fed meeting, a sign that the central bank hadn't ruffled feathers. The yield on the key 10-year US Treasury note was roughly flat at 1.336% on Thursday. Yields move inversely to prices.Oil prices continued to rise as the global economy reopened and supplies tightened. Brent crude was up 0.12% to $76.29, while WTI crude was 0.1% higher at $72.28 a barrel.Read the original article on Business Insider.....»»

In "Significant Shift" To Bailing Out Its Sinking Property Sector, China Puts Largest Developer On Rescue "White List" In a move which analysts say marks a "significant shift" in Beijing's strategy to assist distressed builders and boost confidence in China's sinking housing sector amid the deepening property crisis, overnight Beijing included property giants Country Garden Holdings (whose collapse would be orders of magnitude worse than that of Evergrande) and Sino-Ocean Group to China's draft list of 50 developers eligible for a range of financing support which we profiled earlier this week.  As Bloomberg anchor Sofia Horta e Costa notes, "Country Garden was previously the leading developer by sales with numerous ongoing construction projects. If China aims to bolster confidence among homeowners and buyers, ensuring that projects will be completed and delivered seamlessly even in the event of a developer default, then this is the way to go." CIFI Holdings Group, another builder that has missed debt payments, was also included on the white list according to Bloomberg, which adds that regulators are set to finalize the roster and distribute it to banks and other financial institutions within days. The inclusion of distressed builders such as Country Garden, which missed payments on a dollar bond for the first time last month, underscores regulators’ shifting stance toward some of the nation’s biggest private developers as the refusal of the relentless property crisis to ease. Chinese President Xi Jinping has also stepped up support for the broader economy, issuing more sovereign debt for infrastructure spending, raising the budget deficit ratio and even making an unprecedented visit to the central bank. Then again, not a day goes by this year when we are not inundated with the latest Chinese "news" and "plans" of a moderate stimulus, one which never actually materializes, however, and which is just recycled into the next newscycle where readers completely forget that they are just reading recycled news over and over. And this time was no different because a Bloomberg index of Chinese developer stocks rallied this week on expectations that the financing help may alleviate fears of further contagion in China’s property sector. Still, some investors were concerned the list would mainly comprise state-owned firms and leave out distressed builders most in need of the support. Gemdale, which hasn’t missed any debt payments, is also on the draft list along with China Vanke, Seazen and Longfor Group. Even if Beijing has finally decided to step in and bail out its long-suffering housing sector, there is no guarantee that the aid isn't a case of too little, too late. Country Garden, which is bigger than Evergrande was at its peak, has property developments in almost every province in China, and in October posted its biggest sales drop in at least six years. Growing concerns among potential buyers of its ability to complete projects threaten to exacerbate a cash crunch. Speculation over Country Garden’s fate flared anew earlier this month after Reuters reported that China’s State Council instructed the government of Guangdong province to ask Ping An Insurance (Group) Co. to take a controlling stake. Ping An said it doesn’t hold any shares in Country Garden and has no plans to acquire it. China’s property crisis has engulfed almost all of the largest developers, which have been struggling to repay debts and complete projects since the credit crunch emerged three years ago. Vanke, one of the country’s few remaining investment-grade builders, saw its dollar bonds plunge in recent weeks on the heels of Country Garden’s default. Vanke later received an unusually strong show of support from the local government. Tyler Durden Wed, 11/22/2023 - 19:30.....»»

The former FTX CEO was found guilty on all seven counts and could spend 120 years in jail. Here’s how events unfolded, according to his inner circle It took exactly one year for Sam Bankman-Fried to transform from beloved billionaire entrepreneur to convicted felon. On Nov. 2, a New York jury found Bankman-Fried guilty on all seven counts he was charged with by the Department of Justice, including defrauding customers and investors of his crypto exchange FTX. Bankman-Fried, the jurors decided, was part of a conspiracy to extract more than $8 billion from FTX customers and funnel it to his trading firm Alameda Research, which then spent it on Bahamian real estate, startup investments and political donations. [time-brightcove not-tgx=”true”] The jury’s decision comes exactly one year after Bankman-Fried’s empire first started to crumble, when the crypto outlet Coindesk published a leaked balance sheet from Alameda Research. The balance sheet appeared to show that Alameda was in much worse financial shape than it had let on. Fears about FTX’s solvency quickly mounted, with customers withdrawing billions of dollars. But FTX, it turned out, did not have the funds to pay them back, and the company declared bankruptcy less than two weeks later.  Since then, Bankman-Fried has consistently denied that he misused customer funds. He pleaded not guilty and testified of his innocence last week in a Manhattan courthouse. But the jury was not convinced. It took them less than five hours for them to find him guilty on all counts. Bankman-Fried faces up to 120 years in prison and will be sentenced by Judge Lewis Kaplan at a later date. Mark Cohen, Bankman-Fried’s lawyer, responded to the verdict in a statement: “We respect the jury’s decision. But we are very disappointed with the result. Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.” The government’s case against Bankman-Fried centered upon the testimony of Bankman-Fried’s inner circle: his former closest collaborators, who all took the stand to allege that he directed them to commit fraud in order to steal billions from customers.  Here were the most consequential and shocking pieces of evidence presented over the course of the trial, which shed light on Bankman-Fried’s fraudulent empire. Alameda Research had been taking FTX customer deposits for years. A little less than a year ago, the cryptocurrency exchange FTX collapsed, as its users tried to collectively withdraw billions of dollars but were unable to do so. It was soon revealed that the money had ended up in the coffers of Alameda Research, Bankman-Fried’s trading firm, which made enormous bets on various parts of the crypto ecosystem.  This was nothing new. In fact, FTX co-founder and executive Gary Wang testified that, from FTX’s inception in 2019, customer funds had always flowed straight to bank accounts owned by Alameda, which was then able to do as it pleased with the money. That year, Wang hard-coded an exception into FTX that made Alameda the only user on the exchange allowed to have a negative balance—i.e., to borrow from customer funds. Wang says that Bankman-Fried directed him to create that exception.  This borrowed money was then deployed across the world, alleged Professor Peter Easton, an accounting professor at Notre Dame and expert witness called by the prosecution. During his testimony, Easton displayed analysis that appeared to show that billions of customer funds were taken and reinvested in Bahamian real estate (including the $30 million penthouse Bankman-Fried lived in), crypto startups, and political contributions. (On Oct. 31, however, Bankman-Fried said he didn’t “necessarily agree” with the veracity of the exhibit.)  Bankman-Fried has conceded that Alameda borrowed FTX customer funds—and has stated that he believed Alameda was allowed to do so, as long as its value was net-positive. When FTX crashed, Bankman-Fried allegedly misled users about the financial state of the company. On Nov. 7, 2022, Bankman-Fried tried to reassure his customers of his flailing exchange by tweeting out, “FTX is fine. Assets are fine. FTX has enough to cover all client holdings.”  But the previous day, Bankman-Fried had created a Google Doc, which was presented in evidence, in which he wrote that FTX had “enough to process ⅓ of remaining client assets.” And on the morning of Nov. 7, he sent a Signal message to FTX’s inner circle in which he calculated the financial state of the company. While he estimated that FTX could likely scrounge up $3.9 billion worth of assets over the course of a week, he wrote that there would still be a shortfall of $8.1 billion in terms of deliverable customer assets.  Neither Bankman-Fried nor his lawyer addressed the Google Doc or the message thread in court. Instead, Bankman-Fried defended the original Tweet: “My view at the time was that the exchange was okay and that there was no hole in terms of assets.” He has maintained that the issue was about liquidity as opposed to solvency—as in that he had the funds, but not in a way that he could immediately pay out.  Meanwhile, his collaborators testified that FTX had previously given outsiders a misleading view of their finances. Former FTX engineering director Nishad Singh said that at the end of 2021, Bankman-Fried had asked him to create backdated financial statements in order to get the exchange’s yearly revenue over $1 billion. Bankman-Fried denied directing him to backdate documents, but admitted to signing his name to a related contract many months after the contract’s listed date. Bankman-Fried’s lawyer Cohen defended his actions in that instance in his closing argument, saying: “The fact that he signed an agreement that others prepared for him doesn’t move the needle.” Wang said that FTX lied to the public about the size of its insurance fund, which was designed to protect customers from absorbing losses. Wang alleged that the company used a random number generator to make the insurance fund appear to be bigger than it was, and then published that number on the FTX website.  Caroline Ellison warned Bankman-Fried that the company was in trouble months before it crashed. Bankman-Fried has long maintained that FTX’s collapse came as a complete surprise to him. But former Alameda CEO Caroline Ellison presented several spreadsheets that she had shown to Bankman-Fried over 2021 and 2022, which showed the devastating impact that a crypto crash could have on the company, which she wrote was borrowing billions from FTX. Bankman-Fried appeared to agree: “Yup, and could also get worse,” he commented on the Google Doc.  In the Google Doc, Bankman-Fried asked Ellison how an additional $3 billion in investments might impact Alameda’s financial health. The answer from Ellison’s numbers was clearly bleak—but Bankman-Fried went ahead and started a $2 billion venture fund anyway.  Former executives attacked Bankman-Fried mercilessly. The top executives of FTX and Alameda Research had once been a tight-knit unit. Bankman-Fried and Ellison dated on and off. Bankman-Fried was on a group chat with Wang and Nishad Singh titled “the fantastic three.” For several months, all four of them shared the $30 million penthouse apartment in the Bahamas.  But Ellison, Singh and Wang all testified against Bankman-Fried under cooperation agreements with the government, and did not hold back in their criticism of FTX or Bankman-Fried. Singh said that by time FTX was on the brink of collapse, he had become suicidal and was feeling extreme guilt about his role in the organization: “I knew that I was becoming party and participating in something heinously criminal.”  Ellison said of Bankman-Fried: “He directed me to commit these crimes.” Wang admitted that he knew the actions he took with the company were wrong and that customers had not agreed for FTX to spend their funds. He added that Bankman-Fried had “said publicly that we would not use customer funds like this.”  Two more secondary players of the drama, FTX software developer Adam Yedidia and general counsel Can Sun also weighed in. “FTX defrauded all of its customers,” Yedidia said outright. (Judge Kaplan told the jury to strike that allegation from their minds.) Sun said he was “shocked” upon learning the special privileges that Alameda had on the platform.   Bankman-Fried’s last remaining allies included his parents Barbara Fried and Joe Bankman, who showed up to the courthouse to support him every day. After Bankman-Fried’s first time on the stand, his father walked over to him to deliver a grin and a thumbs up. Bankman-Fried allegedly oversaw a $100 million bribe to the Chinese government. One moment of the trial that drew audible gasps was when Ellison alleged that Bankman-Fried directed Alameda employees to pay a bribe to Chinese government officials in order to unfreeze $1 billion it had stored on two Chinese crypto exchanges. Bankman-Fried has been charged with foreign bribery related to this alleged incident, although it will be litigated in a separate trial scheduled for next year.  Ellison said that Alameda tried several methods of rescuing the money, including setting up trading accounts in the names of “Thai prostitutes.” After those attempts were unsuccessful, Ellison alleged that Bankman-Fried resorted to bribery—and that then she refused to write about the event directly in internal documents, instead labeling it “the thing.”  FTX’s political influence campaign was highly calculated and robust. Bankman-Fried wasn’t tried for political finance violations: that charge is also part of next year’s trial. But prosecutors still presented evidence of Bankman-Fried’s attempts to curry favor with regulators and policymakers. They presented a text message from Ryan Salame, an FTX executive who was heavily involved with Bankman-Fried’s political efforts that described their strategy of surreptitiously donating to candidates of both parties: “Sam wants to donate to both [Democratic] and Republican candidates in the US but cause the worlds frankly lost its mind if you [donate] to a democrat no republicans will speak to you…We will be heavily putting money to weed out anti crypto dems for pro crypto dems and anti crypto repubs for pro crypto repubs.” Singh testified how he reluctantly became the conduit for Bankman-Fried’s political donations to Democratic candidates. Singh alleged that Salame had access to Singh’s Prime Trust bank account and would use it to make millions of dollars of donations in his name, all of which flowed first from FTX customers. Singh himself was barely involved in that decision making, he claimed: “After some point in time, my role was to click a button,” he said.  Bankman-Fried cultivated an image of himself When Bankman-Fried rose to fame in 2021 and 2022, he charmed many people in part thanks to his lack of pretense. Bankman-Fried almost always wore cargo shorts and an FTX t-shirt and rarely cut famously unkempt hair—even when onstage with former world leaders Bill Clinton and Tony Blair.  Ellison contended that this was an act. She testified that Bankman-Fried said his hair “was an important part of FTX’s narrative and image.” She said that he opted not to drive the luxury car given to him by FTX because “it was better for his image to be driving a Toyota Corolla.” Bankman-Fried denied these characterizations on the stand. He said that he wore a tee and shorts because they were “comfortable,” and that he didn’t cut his hair because he was “kind of busy and lazy.”  His friends said he had a mean streak. Part of Bankman-Fried’s public image was his affable, earnest demeanor. But during testimony, his closest colleagues attempted to puncture this impression. Ellison told stories of Bankman-Fried angrily confronting her and blaming her for Alameda’s troubles, reducing her to tears.  Singh described in vivid detail a confrontation he had with Bankman-Fried in the fall of 2022, saying: “Sam has some physical tells for when he is thinking hard or is upset. He puffed out his chest…closing his eyes, grinding his teeth or tongue in his mouth. When he opened them to respond, he would sort of glare at me with some intensity.”  When Bankman-Fried took the stand and was questioned by his own lawyer Cohen, he appeared relaxed and jovial. He was much more tense and even petulant when being cross-examined by prosecutor Danielle Sassoon. When confronted with tough questions, Bankman-Fried swayed side to side, furrowed his brow, and scratched his face......»»

Here are the biggest bombshells from Sam Bankman-Fried's fraud trial over his collapsed cryptocurrency exchange, FTX. Much has come out about Sam Bankman-Fried at his trial. Chelsea Jia Feng/InsiderSam Bankman-Fried, cryptocurrency's former golden boy, is on trial in Manhattan federal court.His former friends and executives took the stand against him and said they stole money together.Here are the biggest bombshells from the trial so far.Sam Bankman-Fried's criminal trial has been a treasure trove of revelations about the former crypto king.Dethroned from his cryptocurrency empire, Bankman-Fried has stood trial the last few weeks in a Manhattan federal court.Prosecutors allege Bankman-Fried siphoned billions of dollars from customers of his crypto exchange, FTX, to his personal crypto hedge fund, Alameda Research. Three of his close friends and executives — Caroline Ellison, Gary Wang, and Nashad Singh — have all pleaded guilty and testified as cooperating witnesses, saying they co-conspired with Bankman-Fried in the plot.Here are the wildest details from the trial so far.1. SBF believed there was a 5% chance he'd be presidentIf the trial has established anything, it's that Bankman-Fried had an inflated view of himself.In addition to being the leader of a major cryptocurrency exchange, the FTX founder thought he might eventually become the leader of the free world, Caroline Ellison testified."He said there was a 5% chance he might be president someday," Ellison, the former CEO of Alameda Research and his ex-girlfriend, testified.2. He placed a high value on his mane of curlsAs he aimed high with his potential, Bankman-Fried did the same with his hair. Since being remanded to a federal detention center in Brooklyn, he has gotten a shorter haircut. The Wall Street Journal reported it was another inmate who cut his hair.But Bankman-Fried previously said his mane of unruly black curls was "essential to his image," Ellison testified."He thought his hair was very valuable," Ellison said, noting that Bankman-Fried believed he'd gotten higher bonuses in past jobs due to his hair.3. The stress of the scheme left a key executive 'suicidal for days'Nishad Singh testified against his former boss in court.Jane Rosenberg/ReutersNishad Singh, the head engineer at FTX, testified against Bankman-Fried and spoke to the intense pressure of the scheme. Singh, who pleaded guilty to financial crimes and cooperated with prosecutors, had a significant stake in the company and was among the last in Bankman-Fried's inner circle to find out Alameda was pilfering FTX customer funds.As customers began to withdraw their deposits, FTX didn't have enough liquid cash to actually give them their funds. Instead of working together to solve the issue, executives blamed each other, Singh testified."I'd been suicidal for some days," Singh said. "Now more than ever, to salvage whatever we could, FTX employees needed to be productive, and resolving the blame game quickly and definitively seemed like it would be a path towards that."4. Bankman-Fried's co-conspirators knew they were doing something wrongEllison, Singh, and Wang all testified that, even before they met with prosecutors and pleaded guilty, they knew taking customer funds was the wrong thing to do — and did it anyway."Customers did not agree for us to use their funds," Wang testified.Only six days after FTX's bankruptcy, Wang flew to the United States from FTX's headquarters in the Bahamas and met with prosecutors."I thought I was likely to be charged and I wanted to get a shorter prison sentence," said Wang, FTX's co-founder and chief technology officer.Ellison said Bankman-Fried justified lying through his utilitarian philosophy."He said that he was a utilitarian, and he believed that the ways that people tried to justify rules like don't lie and don't steal within utilitarianism didn't work," Ellison testified. "And he thought that the only moral rule that mattered was doing whatever would maximize utility."5. Bankman-Fried had an angry streakSam Bankman-Fried.Angela Weiss/AFP via Getty ImagesSingh testified that Bankman-Fried sometimes snapped in anger when he pushed back on the FTX CEO's spending habits and pressed for ways to pay back customers.When Singh suggested they buy a cheaper home in the Bahamas than the $35 million penthouse they ultimately purchased, Bankman-Fried effectively told him to shut up, he testified."Sam said that he would pay $100 million for the drama to just be done with and go away, which I took as a pretty clear sign that I should shut up and we should move forward with this," Singh said.On another occasion, Bankman-Fried was visibly upset when Singh expressed anxiety about getting enough money for FTX customers."Sam has some physical twitches for when he gets angry," Singh said."Puffed out his chest, had his hands back, he was grinding his finger, closing his eyes, grinding his teeth or tongue in his mouth," he added. "When he opened them to respond, he would sort of glare at me with some intensity."6. SBF faced a confrontation with a colleague on a paddle tennis courtAdam Yedidia, a software developer at FTX, described one tense conversation he had with Bankman-Fried after playing paddle tennis.Under a hut between the courts, Yedidia asked a "worried" and "nervous" Bankman-Fried if things were "okay" regarding the debt Alameda owed to FTX customers."In response, Sam said something like, 'We were bulletproof last year, but we're not bulletproof this year,'" Yedidia testified.7. FTX didn't realize for months that a bug miscalculated its balances by hundreds of millions of dollarsNEW YORK, NEW YORK - OCTOBER 04: Former FTX developer Adam Yedidia leaves after testifying during the trial of former FTX CEO Sam Bankman-Fried at Manhattan Federal Court on October 04, 2023 in New York City. Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy in connection with the collapse of the crypto exchange he founded, FTX.Michael M. Santiago/Getty ImagesJurors have spent a lot of time in the trial hearing about a bug in FTX that miscalculated Alameda's deposits on the exchange.Yedidia testified he may have "inadvertently" introduced the bug into FTX's code while working on a tool that helped automate customer deposits in 2021.In December of that year, FTX discovered that the bug in the code overstated how much Alameda owed to FTX customers. By the time the bug was discovered, the balance was off by $500 million.The bug wasn't fixed until June 2022. By that time, Alameda's understated liabilities on FTX had reached $8 billion.8. Bankman-Fried was told it was a bad idea for him to date EllisonYedidia and Bankman-Fried were friends at MIT, where they lived together. Before Yedidia joined FTX in 2021, the two engaged in a bit of locker-room talk."Sometime in early 2019," Yedidia testified, Bankman-Fried "told me that he and Caroline had had sex and asked if it was a good idea for them to date.""I said no," Yedidia added, noting that Bankman-Fried "figured that was reasonable and thought that I would say something like that."9. Bankman-Fried may have paid a $100 million bribe to Chinese officials and hired 'Thai prostitutes' to retrieve moneyCaroline Ellison got into the wrong car after leaving the courthouse on Tuesday.GettyIn her testimony, Ellison recounted an occasion where Chinese regulators froze two of Alameda's trading accounts — which together held about $2 billion in assets — as part of an investigation into a person who had traded with the accounts.Bankman-Fried and other members of Alameda's leadership tried several harebrained schemes to rescue the money, Ellison said.In one plan they tried, they had "Thai prostitutes" make trades with Alameda's accounts in a way that would transfer the wealth over to them, where Alameda would then transfer it to themselves.It didn't work, Ellison said.After trying a few other ideas, Bankman-Fried authorized what Ellison believed was "a large bribe" that was "in the ballpark of $100 million" to officials in China.The accounts were unlocked soon afterward, Ellison said.10. Ellison admitted to Alameda employees that she was taking money from FTX customersAs FTX and Alameda were collapsing in November 2022, Ellison held an all-hands meeting with her staff at Alameda Research.At the November 9 meeting — two days before Alameda and FTX filed for bankruptcy — Ellison said crypto prices were tanking, and Alameda couldn't repay loans that lenders were recalling. Then, she dropped the bomb that Alameda had taken funds from unknowing FTX customers."I was utterly shocked," testified Christian Drappi, a former Alameda software engineer who was present at the meeting in Alameda's Hong Kong office. He quit within 24 hours of the meeting.Snippets of a recording of the meeting Drappi obtained were played for jurors in court.Insider exclusively got ahold of an hour-long recording of the entire meeting, which you can listen to here.11. Ellison felt relieved that it all came crashing downCaroline Ellison leaving the courthouse after testifying. Michael M. Santiago/Getty ImagesWhen customers withdrew their funds en masse in November of 2022 — leading to the collapse of FTX and Alameda — Ellison said her "constant state of dread" was lifted. She no longer had to keep their theft a secret, she said."I felt a sense of relief that I didn't have to lie anymore, that I could start taking responsibility and being honest about what I had done," Ellison said. "Even though I obviously felt indescribably bad about all of the people that were harmed and the people that lost their money, the employees that lost their jobs, people that trusted us that we had betrayed."Ellison said she confided in Bankman-Fried about her feelings of relief because she didn't feel like she had anyone else she could talk to about her feelings."I didn't feel I had anyone else to share it with because I had been trying to keep it secret for so long," she testified.Read the original article on Business Insider.....»»

SBF's lawyers argue FTX's collapse was complicated and unfortunate. Prosecutors say it was simple: He and his friend took money that wasn't theirs. Sam Bankman-Fried.AP Photo/Seth Wenig Sam Bankman-Fried's defense attorneys have argued that FTX's collapse is complicated and he didn't know everything. They've argued his ex-friends who pleaded guilty just want a lighter sentence. But all of Bankman-Fried's lieutenants and former friends have implicated him in the scheme to take customer funds. During opening statements at Sam Bankman-Fried's trial, it quickly became clear that prosecutors and his defense attorneys had very different approaches.Prosecutors told a simple story of straightforward theft. Bankman-Fried, they alleged, stole funds deposited by customers of his cryptocurrency exchange, FTX, by moving it to his hedge fund, Alameda Research, and took out loans for his own benefit.Three of his close friends and associates — Caroline Ellison, Gary Wang, and Nishad Singh — had already pleaded guilty to conspiring with Bankman-Fried and would testify in the trial. The mechanics, involving financial concepts like cryptocurrency, highly leveraged loans, and market-makers, could be esoteric. But in a federal courthouse in downtown Manhattan, Assistant US Attorney Thane Rehn put it in plain terms."He spent the money on lavish houses for himself, his parents, and his friends," Rehn said. "He spent it so he could get introduced to celebrities. He spent millions more on political donations to gain influence in Washington. He poured money — other people's money — into his own investments to try to make himself even richer."Bankman-Fried's attorneys say it was a little more complicated.According to his lawyer Mark Cohen, the whole case is in the mechanics. Alameda took legitimate loans from FTX for legitimate business purposes, including for market-making purposes, he said. "Some things got overlooked" in the details at FTX, and Ellison made irresponsible decisions as the CEO of Alameda, Cohen said, leaving FTX exposed to disaster if cryptocurrency prices fell.Crypto prices did fall in 2022, Cohen said, which led to the mess where customers couldn't withdraw money from their FTX accounts. But, he suggested, the losses could also be attributed to risky margin trading from customers. Very unfortunate? Sure. Criminal? Absolutely not, Cohen argued.As the trial has gone on, it's become clear that Bankman-Fried's lawyers have a problem.According to testimony from Bankman-Fried's former friends and business associates, the excuses about Alameda's market-making capabilities and spot margin trading are red herrings.They just took the money, they've all said.It's complicated, SBF's lawyers sayIn their opening statement and cross-examination of witnesses, Bankman-Fried's lawyers have tried to complicate the story in two particular ways.One, FTX allowed users to engage in spot margin trading. That allowed users to put up collateral in order to make particularly risky trades on the exchange. In certain circumstances where they were on the wrong side of a trade, they could lose money from their accounts.Two, Bankman-Fried's lawyers have stressed Alameda's role as not just a trading firm on FTX, but as a market maker. Alameda had special privileges that allowed it to hold a negative balance on FTX — ultimately, negative $65 billion. Ellison, the now-former CEO of Alameda, testified that meant Alameda had an essentially unlimited line of credit from FTX, without any regard for whether the money belonged to customers.To secure an acquittal in a criminal trial, defense attorneys need to convince just one juror to have reasonable doubt of their client's guilt. Prosecutors have accused Bankman-Fried of fraud, money laundering, and conspiracy, with a potential sentence of over a century. If any juror doubts even one count, it could help Bankman-Fried, who is 31 years old, spend less time in prison.Sam Bankman Fried leaves Manhattan federal court following a pre-trial hearing.Craig Ruttle/APIt's a high bar to clear, according to Sarah Krissoff, an attorney at Cozen O'Connor and former federal prosecutor in New York. But Bankman-Fried's attorneys may convince jurors that Bankman-Fried genuinely believed his actions were acceptable in the wild-west cryptocurrency industry."He thought this was okay in this world where crypto wasn't regulated, and so he had sort of no concept that this was a fraud," Krissoff said. "Now, the issue is that if all of the other insider witnesses have said, 'I knew this was wrong, and I pled guilty to crimes related to it.'"Ellison, Singh, and Wang were all in Bankman-Fried's inner circle. Ellison led Alameda Research for much of 2021 and 2022. Wang co-founded Alameda and FTX with Bankman-Fried and led the latter as its chief technology officer. Singh knew Bankman-Fried since he was in high school and was the top developer at FTX, having intimate knowledge of its code. All of them lived together in a $35 million penthouse that Bankman-Fried purchased in the Bahamas with Alameda's funds. And all of them pleaded guilty to conspiring with Bankman-Fried to take customer money.The challenge for Bankman-Fried's attorneys is to convince jurors that he didn't know about any wrongdoing. They've suggested that Bankman-Fried's former lieutenants and close friends are motivated to testify against him in hopes of getting lighter sentences for themselves."The question isn't so much necessarily, 'Is all of that wrong, or is that stuff criminal?'" said Paul Tuchmann, an attorney at Wiggin and Dana, and a former federal prosecutor in New York. "It's 'Did SBF know about it? Did he direct them to do it?'"Everyone has pointed fingers at SBFBut while the defense attorneys have tried to obfuscate each witnesses' relationship with Bankman-Fried and his knowledge of wrongdoing, those witnesses have been forthright on the witness stand."The government has flipped everybody else in order to prosecute Sam Bankman-Fried," Krissoff said. "And by doing that, the fact that multiple other individuals have agreed 'I knew I was doing something wrong, I was committing a crime, I did something wrong, I knew it was illegal at the time' — it doesn't help his intent argument."Bankman-Fried does have some points in his favor. In one memo shown to jurors, circulated in the fall of 2022 — before FTX and Alameda collapsed — Bankman-Fried lamented Ellison's skills running Alameda while he focused on FTX. He said the trading firm would have done better if he were at the wheel, which bolsters the defense attorneys' argument that Ellison, but not Bankman-Fried, is to blame.But Ellison has held Bankman-Fried firmly responsible.It was Bankman-Fried, she testified, who directed her to spent "in the ballpark of $10 billion" in customer deposits to repay loans as Alameda was collapsing."He was the one who set up the systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans," she said.Who told Ellison to come up with a bunch of alternative balance sheets to give a rosy portrait of Alameda's finances to lenders?"Sam directed me to," Ellison testified.Caroline Ellison testified for two days at the criminal trial of SBF.Eduardo Munoz AlvarezWho was responsible for the margin trading system that Bankman-Fried's lawyers suggested was to blame for lost customer deposits?"Sam directed a lot of these specifics of how the code should run and what it should be doing," Singh testified. "As an example, Sam designed all the rules for the margin system and the liquidation engine, and Gary implemented them."Every witness who developed FTX's software also pointed out that the spot margin trading program — which actually did introduce the possibility of customers losing funds — was something that individual customers needed to opt into. And FTX often bragged that its liquidation engine was so well-designed that losing funds would be extremely rare. In order to lose those segregated funds, customers would need to have their collateral liquidated, for market makers to reject those positions, and for a separate insurance fund to be completely drained, according to Can Sun, FTX's former top lawyer."It has been FTX's consistent position that they have never depleted the insurance fund, we have never clawed back users, and we have no intention of clawing back users as well," Sun testified in the trial. "It was one of FTX's main marketing and selling points."Bankman-Fried's lawyers will have a tough time changing the narrative in front of the jury. One way to do it would be if Bankman-Fried took the witness stand himself and testified about his version of the story.Doing so would be incredibly risky, particularly because Bankman-Fried has given so many interviews about his experience already. If prosecutors catch him in a lie during cross-examination, his potential sentence could be much harsher."He's challenged here," said Krissoff, the former federal prosecutor. "He would be in a much better position if he had not spoken out publicly so much about this before and he could just craft his testimony fresh."The trial is expected to wrap up in the next week or two, depending on whether or not Bankman-Fried decides to testify.Read the original article on Business Insider.....»»

Prosecutors are nearly done walloping SBF in court. If he tries to save himself by testifying, his past interviews could come back to haunt him. Sam Bankman-Fried must soon decide whether he'll testify at his criminal trial.Chelsea Jia Feng/Insider Sam Bankman-Fried needs to decide soon whether he'll take the witness stand in his criminal trial. The case is going badly for SBF, so he may think he has little to lose. If the judge thinks he's lying under oath, he could get an even harsher sentence. Prosecutors are nearly done walloping Sam Bankman-Fried in court.They're scheduled to bring just one or two more witnesses in the case, which is playing out in a federal courtroom in downtown Manhattan.Defense attorneys have said they may not present any witnesses at all. But if they do, there's a good chance Bankman-Fried himself will take the witness stand."We are still working through whether we are going to put a case on and, if so, of what nature," Bankman-Fried's lawyer Mark Cohen told US District Judge Lewis Kaplan, who's overseeing the trial, earlier this week.If they do present a defense case, Cohen said later, they'll tell prosecutors before court resumes on Thursday after a break in the trial, and take about a week to present evidence to jurors.Ever since his cryptocurrency exchange, FTX, collapsed last November — and billions of dollars of customer deposits seemed to evaporate in connection with his crypto trading firm, Alameda Research — Bankman-Fried has been trying to tell his own version of the story.He's given numerous interviews with journalists, tweeted that FTX was solvent, spoken at a conference, and wrote a Substack post in his defense.According to prosecutors — and Bankman-Fried's friends and former employees who testified at his trial — there's a very clear explanation for how $8 billion disappeared from FTX customer accounts: They all took the money for themselves.Now, faced with the prospect of a century-long sentence, Bankman-Fried has to decide whether he'll take an oath and tell that story to jurors.Bankman-Fried has little to loseDefendants have a presumption of innocence, and can win at trial as long as at least one juror says they have reasonable doubt of their guilt during deliberations. But things are looking bad for Bankman-Fried.Former Alameda Research CEO Caroline Ellison, and former FTX executives Gary Wang and Nashad Singh all pleaded guilty to conspiracy and fraud charges. They testified that they conspired with Bankman-Fried to siphon money from FTX customers.The money, they said, pointing to internal records on the witness stand, was spent on crypto bets, investments, expensive advertising, and loans to themselves.If Bankman-Fried believes he's doomed no matter what, he may decide he has little to lose by testifying, according to Sarah Krissoff, a former federal prosecutor in New York.He may at least be able to elicit a little sympathy from jurors, she said."If a conviction seems almost inevitable based on what's presented in the courtroom so far, he has probably not that much to lose by testifying," said Krissoff, now a defense attorney at Cozen O'Connor. "Because it does humanize him in a way to the jury that can be very effective."FTX founder Sam Bankman-Fried.AP Photo/Mary AltafferOne of the biggest challenges for Bankman-Fried's defense team is that they might not have anyone else.Kaplan refused to allow them to have their pick of expert witnesses testify. Court filings indicate they planned to suggest the norms of cryptocurrency exchanges — particularly those operating outside of the US, as FTX was — may allow for the use of customer funds.Without those expert witnesses, Bankman-Fried's defense team has little scaffolding to support the closing arguments they'll present to jurors, according to Paul Tuchmann, an attorney at Wiggin and Dana, and a former federal prosecutor in New York."It's important for a number of reasons to have those witnesses, both because it gives the jury something to chew on, something to hang their hat on, and then by extension something for the defense to kind of point to in their closing arguments," Tuchmann said.Prosecutors may have been preparing for SBF to testifyProsecutors have spent a lot of time showing spreadsheets that demonstrate the behind-the-scenes financial relationship between FTX and Alameda Research.But messages that directly point to how much Bankman-Fried knew — and when he knew it — are a little harder to come by.Bankman-Fried did much of his communicating on Signal, a messaging app. He told employees to use its auto-deletion features, according to witnesses who testified in the trial."There wasn't much benefit to keeping messages around, and if regulators found something they didn't like in those messages, that could be bad for the company," developer Adam Yedidia testified, explaining Bankman-Fried's reasoning.Much of the communication records shown at trial come from November 2022, when FTX was collapsing and those auto-deletion features were turned off, and in a smattering of screenshots taken by his colleagues.Caroline Ellison testified in the trial of her ex-boyfriend, Sam Bankman-FriedJANE ROSENBERGFor that reason, the case against Bankman-Fried rests on the credibility of his alleged co-conspirators.In cross-examining Ellison, Wang, and Singh, his defense attorneys have suggested that they're implicating Bankman-Fried only to seek a lighter prison sentence themselves."At least theoretically, the question isn't so much necessarily, 'Is all of that wrong?' or 'Is that stuff that they walk through in the spreadsheet criminal?'" Tuchmann told Insider. "It's 'Did SBF know about it? Did he direct them to do it?'"In their own questioning of the cooperating witnesses, prosecutors have encouraged them to be open about taking responsibility for their crimes. Wang forthrightly said that what he did was wrong. Ellison teared up on the witness stand when talking about the weight of her guilt. Singh talked about how he became "suicidal" with the pressure of knowing he took money from customers and covering it up.Prosecutors have also taken pains to suggest that Bankman-Fried is a serial liar. They pointed to his tweets around the time of the FTX collapse when he falsely said the company had enough liquidity to cover customer withdrawals. And, according to Ellison, Bankman-Fried's unkempt hair and reputation for slovenliness was only a matter of public relations. She testified that he had a luxury car before getting a Toyota Corolla because "he thought it was better for his image."On the witness stand, Ellison said Bankman-Fried told her that, under the effective altruism philosophy he subscribed to, it was OK to be dishonest because "rules like don't lie or don't steal" don't "fit into that framework.""He said that he was a utilitarian, and he believed that the ways that people tried to justify rules like don't lie and don't steal within utilitarianism didn't work, and he thought that the only moral rule that mattered was doing whatever would maximize utility," Ellison said.Prosecutors — and the judge — can use SBF's media interviews against himBecause prosecutors have the burden of proof in criminal cases, they often tell defendants not to testify. All they technically need to do is undercut the prosecution, not make any kind of affirmative defense.The decision, however, is ultimately up to the defendant himself. And Bankman-Fried's earlier interviews complicate things."I had the sort of fortunate or unfortunate experience of having a lot of defendants testify. And there's a type," Krissoff told Insider. "In my view, there's often certain categories of defendants that like to testify. And in a white-collar case — particularly when the person's veracity is what's at issue — it's not uncommon for the defendant to want to testify and in fact do it."Court sketch of Sam Bankman-Fried on the first day of his trialJANE ROSENBERG/ReutersIf Bankman-Fried takes the stand, he'll be cross-examined by prosecutors. And those prosecutors have plenty of material to try to catch him in a lie. He's testified before Congress and given numerous interviews.In court on Thursday, prosecutors pulled up a video of an interview Bankman-Fried gave to ABC News in December, days before he was extradited, where he squirmed when asked direct questions about what he knew and when.He hesitated and hedged extensively, saying he was only "vaguely aware" that FTX deposits were being funneled to Alameda. Ten months later, that wouldn't seem to be the case, according to testimony given by his former executives who have testified against him. If Bankman-Fried takes the stand, prosecutors will almost certainly point to more material and catch him in any contradictions."It's particularly complicated for him because of how much he's talked before," Krissoff said. "So he's going to have to weave a story together that both takes into account all of the evidence that's presented in the government's weeks of presentation and also all of the statements he made before."The even bigger issue for Bankman-Fried could be Kaplan's future sentencing, if he's found guilty.In court proceedings, Kaplan has shown little sympathy for Bankman-Fried. Over the summer, he jailed Bankman-Fried, finding that he tried to tamper with two witnesses ahead of trial and repeatedly violated the terms of his home confinement. And that was after expressing exasperation in several earlier hearings that prosecutors didn't seek more stringent restrictions in the first place.If Kaplan finds that, on top of everything, Bankman-Fried lied on the witness stand, he could issue a much tougher sentence — not to mention add complications to a second criminal trial on campaign finance charges, scheduled for next year."He may make the calculation of, 'You know what, if I get convicted, Judge Kaplan's going to sentence me into next century anyway, so I might as well testify in an effort of avoiding that,'" Tuchmann told Insider. "But that's risky because maybe that's not what Judge Kaplan would do. But if he sees SBF testify on the stand then in a way that he believes is untruthful, then maybe he would tack on additional time."Read the original article on Business Insider.....»»

Sam Bankman-Fried needs to decide soon whether he'll take the stand in his criminal trial in Manhattan federal court. Sam Bankman-Fried must soon decide whether he'll testify at his criminal trial.Chelsea Jia Feng/Insider Sam Bankman-Fried needs to decide soon whether he'll take the witness stand in his criminal trial. The case is going badly for SBF, so he may think he has little to lose. If the judge thinks he's lying under oath, he could get an even harsher sentence. Prosecutors are nearly done walloping Sam Bankman-Fried in court.They're scheduled to bring just one or two more witnesses in the case, which is playing out in a federal courtroom in downtown Manhattan.Defense attorneys have said they may not present any witnesses at all. But if they do, there's a good chance Bankman-Fried himself will take the witness stand."We are still working through whether we are going to put a case on and, if so, of what nature," Bankman-Fried's lawyer Mark Cohen told US District Judge Lewis Kaplan, who's overseeing the trial, earlier this week.If they do present a defense case, Cohen said later, they'll tell prosecutors before court resumes on Thursday after a break in the trial, and take about a week to present evidence to jurors.Ever since his cryptocurrency exchange, FTX, collapsed last November — and billions of dollars of customer deposits seemed to evaporate in connection with his crypto trading firm, Alameda Research — Bankman-Fried has been trying to tell his own version of the story.He's given numerous interviews with journalists, tweeted that FTX was solvent, spoken at a conference, and wrote a Substack post in his defense.According to prosecutors — and Bankman-Fried's friends and former employees who testified at his trial — there's a very clear explanation for how $8 billion disappeared from FTX customer accounts: They all took the money for themselves.Now, faced with the prospect of a century-long sentence, Bankman-Fried has to decide whether he'll take an oath and tell that story to jurors.Bankman-Fried has little to loseDefendants have a presumption of innocence, and can win at trial as long as at least one juror says they have reasonable doubt of their guilt during deliberations. But things are looking bad for Bankman-Fried.Former Alameda Research CEO Caroline Ellison, and former FTX executives Gary Wang and Nashad Singh all pleaded guilty to conspiracy and fraud charges. They testified that they conspired with Bankman-Fried to siphon money from FTX customers.The money, they said, pointing to internal records on the witness stand, was spent on crypto bets, investments, expensive advertising, and loans to themselves.If Bankman-Fried believes he's doomed no matter what, he may decide he has little to lose by testifying, according to Sarah Krissoff, a former federal prosecutor in New York.He may at least be able to elicit a little sympathy from jurors, she said."If a conviction seems almost inevitable based on what's presented in the courtroom so far, he has probably not that much to lose by testifying," said Krissoff, now a defense attorney at Cozen O'Connor. "Because it does humanize him in a way to the jury that can be very effective."FTX founder Sam Bankman-Fried.AP Photo/Mary AltafferOne of the biggest challenges for Bankman-Fried's defense team is that they might not have anyone else.Kaplan refused to allow them to have their pick of expert witnesses testify. Court filings indicate they planned to suggest the norms of cryptocurrency exchanges — particularly those operating outside of the US, as FTX was — may allow for the use of customer funds.Without those expert witnesses, Bankman-Fried's defense team has little scaffolding to support the closing arguments they'll present to jurors, according to Paul Tuchmann, an attorney at Wiggin and Dana, and a former federal prosecutor in New York."It's important for a number of reasons to have those witnesses, both because it gives the jury something to chew on, something to hang their hat on, and then by extension something for the defense to kind of point to in their closing arguments," Tuchmann said.Prosecutors may have been preparing for SBF to testifyProsecutors have spent a lot of time showing spreadsheets that demonstrate the behind-the-scenes financial relationship between FTX and Alameda Research.But messages that directly point to how much Bankman-Fried knew — and when he knew it — are a little harder to come by.Bankman-Fried did much of his communicating on Signal, a messaging app. He told employees to use its auto-deletion features, according to witnesses who testified in the trial."There wasn't much benefit to keeping messages around, and if regulators found something they didn't like in those messages, that could be bad for the company," developer Adam Yedidia testified, explaining Bankman-Fried's reasoning.Much of the communication records shown at trial come from November 2022, when FTX was collapsing and those auto-deletion features were turned off, and in a smattering of screenshots taken by his colleagues.Caroline Ellison testified in the trial of her ex-boyfriend, Sam Bankman-FriedJANE ROSENBERGFor that reason, the case against Bankman-Fried rests on the credibility of his alleged co-conspirators.In cross-examining Ellison, Wang, and Singh, his defense attorneys have suggested that they're implicating Bankman-Fried only to seek a lighter prison sentence themselves."At least theoretically, the question isn't so much necessarily, 'Is all of that wrong?' or 'Is that stuff that they walk through in the spreadsheet criminal?'" Tuchmann told Insider. "It's 'Did SBF know about it? Did he direct them to do it?'"In their own questioning of the cooperating witnesses, prosecutors have encouraged them to be open about taking responsibility for their crimes. Wang forthrightly said that what he did was wrong. Ellison teared up on the witness stand when talking about the weight of her guilt. Singh talked about how he became "suicidal" with the pressure of knowing he took money from customers and covering it up.Prosecutors have also taken pains to suggest that Bankman-Fried is a serial liar. They pointed to his tweets around the time of the FTX collapse when he falsely said the company had enough liquidity to cover customer withdrawals. And, according to Ellison, Bankman-Fried's unkempt hair and reputation for slovenliness was only a matter of public relations. She testified that he had a luxury car before getting a Toyota Corolla because "he thought it was better for his image."On the witness stand, Ellison said Bankman-Fried told her that, under the effective altruism philosophy he subscribed to, it was OK to be dishonest because "rules like don't lie or don't steal" don't "fit into that framework.""He said that he was a utilitarian, and he believed that the ways that people tried to justify rules like don't lie and don't steal within utilitarianism didn't work, and he thought that the only moral rule that mattered was doing whatever would maximize utility," Ellison said.Prosecutors — and the judge — can use SBF's media interviews against himBecause prosecutors have the burden of proof in criminal cases, they often tell defendants not to testify. All they technically need to do is undercut the prosecution, not make any kind of affirmative defense.The decision, however, is ultimately up to the defendant himself. And Bankman-Fried's earlier interviews complicate things."I had the sort of fortunate or unfortunate experience of having a lot of defendants testify. And there's a type," Krissoff told Insider. "In my view, there's often certain categories of defendants that like to testify. And in a white-collar case — particularly when the person's veracity is what's at issue — it's not uncommon for the defendant to want to testify and in fact do it."Court sketch of Sam Bankman-Fried on the first day of his trialJANE ROSENBERG/ReutersIf Bankman-Fried takes the stand, he'll be cross-examined by prosecutors. And those prosecutors have plenty of material to try to catch him in a lie. He's testified before Congress and given numerous interviews.In court on Thursday, prosecutors pulled up a video of an interview Bankman-Fried gave to ABC News in December, days before he was extradited, where he squirmed when asked direct questions about what he knew and when.He hesitated and hedged extensively, saying he was only "vaguely aware" that FTX deposits were being funneled to Alameda. Ten months later, that wouldn't seem to be the case, according to testimony given by his former executives who have testified against him. If Bankman-Fried takes the stand, prosecutors will almost certainly point to more material and catch him in any contradictions."It's particularly complicated for him because of how much he's talked before," Krissoff said. "So he's going to have to weave a story together that both takes into account all of the evidence that's presented in the government's weeks of presentation and also all of the statements he made before."The even bigger issue for Bankman-Fried could be Kaplan's future sentencing, if he's found guilty.In court proceedings, Kaplan has shown little sympathy for Bankman-Fried. Over the summer, he jailed Bankman-Fried, finding that he tried to tamper with two witnesses ahead of trial and repeatedly violated the terms of his home confinement. And that was after expressing exasperation in several earlier hearings that prosecutors didn't seek more stringent restrictions in the first place.If Kaplan finds that, on top of everything, Bankman-Fried lied on the witness stand, he could issue a much tougher sentence — not to mention add complications to a second criminal trial on campaign finance charges, scheduled for next year."He may make the calculation of, 'You know what, if I get convicted, Judge Kaplan's going to sentence me into next century anyway, so I might as well testify in an effort of avoiding that,'" Tuchmann told Insider. "But that's risky because maybe that's not what Judge Kaplan would do. But if he sees SBF testify on the stand then in a way that he believes is untruthful, then maybe he would tack on additional time."Read the original article on Business Insider.....»»

As Mortgage Rates Hit 8%, US Housing Affordability At Lowest Level Since The '80s Update (1320ET): The average rate on the popular 30-year fixed mortgage rate hit 8% Wednesday morning, according to Mortgage News Daily.  That is the highest level since mid-2000. “Here’s another milestone that seemed extreme several short months ago,” said Matthew Graham, chief operating officer of Mortgage News Daily. “The fact is that many borrowers have already seen rates over 8%. That said, many borrowers are still seeing rates in the 7s due to buydowns and discount points.” As CNBC reports, to put it in perspective, a buyer purchasing a $400,000 home with a 20% down payment would have a monthly payment today of nearly $1,000 more than it would have been two years ago. *  *  * As Andrew Moran detailed earlier via The Epoch Times, the U.S. housing market has witnessed a slowdown in activity this year due to tighter supply, says Thomas Barkin, the president of the Federal Reserve Bank of Richmond. Speaking at a Real Estate Roundtable event in Washington, D.C., Mr. Barkin explained that home prices have remained strong in an environment of higher interest rates and slowing sales volumes. But the industry has been pining for lower rates, he noted. "You may know that the last time the Fed tackled high inflation, in the ’80s, homebuilders sent Paul Volcker two-by-fours inscribed with the message: Lower interest rates," he said. In a letter to Fed Chair Jerome Powell by the National Association of Home Builders, the Mortgage Bankers Association, and the National Association of Realtors, the central bank was urged not to pull the trigger on more rate hikes. "Further rate increases and a persistently wide spread pose broader risks to economic growth, heightening the likelihood and magnitude of a recession," the letter stated. A treasure trove of data and research shows that further Fed tightening could exacerbate current conditions in the real estate sector, especially regarding affordability. Housing Affordability Challenges With supply failing to keep up with demand and mortgage rates marching toward 8 percent, housing affordability deteriorated to a fresh all-time low in August, new industry data show. The NAR Housing Affordability Index clocked in at 91.7 in August, down from 93.9 in July - anything below 100 indicates a household with a median income does not earn enough to be approved for a mortgage on a median-priced home. This was the lowest reading since at least the early 1980s. NAR figures highlighted that the typical family needed to earn $107,232 in August to qualify for a mortgage, based on a 20 percent downpayment. It was the third consecutive month of a six-figure headline number. Meanwhile, the organization reported that the average family spent more than one-quarter (27 percent) of their income on annual mortgage payments. Housing inventories have worsened over the past year. Existing home sales have declined in 13 of the last 15 months, including a 0.7 percent drop in August. The challenge faced by the U.S. real estate market today is that homeowners are not erecting for-sale signs on their front lawns. When the Federal Reserve slashed interest rates to nearly zero during the coronavirus pandemic, mortgage rates crashed to their lowest levels on record. According to the Freddie Mac Primary Mortgage Market Survey (PMMS), the 30-year fixed-rate mortgage collapsed to 2.77 percent in August 2021. For the week ending Oct. 12, 2023, it is close to a 23-year high of 7.6 percent. Home prices have also surged since the public health crisis, rising nearly 30 percent to a median sales price of $416,100. The mix of high mortgages and prices has prevented the new generation of homebuyers from achieving the American dream of homeownership. However, anyone who purchased a home before the U.S. central bank launched its quantitative tightening cycle is in good shape: a 2 to 4 percent 30-year mortgage rate and a residential property that has accumulated plenty of equity. This past summer, a Redfin analysis revealed that 92 percent of homeowners enjoyed a mortgage rate below 6 percent, offering minimal incentive for owners to sell their properties and move to another home with a higher rate. Nearly one-quarter (24 percent) maintain a rate below 3 percent, close to a record high achieved in the first quarter of 2022. Ultimately, it could be a tale of two housing market participants. Andy Walden, the ICE vice president of enterprise research, warned that incomes would have to spike 55 percent or home prices would have to collapse 35 percent to restore affordability. "Those are massive movements we're talking about, and none of them are going to happen in a vacuum, and none of those one single factors are going to make the move," Mr. Walden told CNBC earlier this month. Mortgage Rates Now and Beyond The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) found that builder confidence in the real estate market for newly constructed single-family homes slumped for the third consecutive month in October. They are seeing lower levels of buyer traffic as some buyers, including the younger families, are "priced out of the market because of higher interest rates," says NAHB Chairman Alicia Huey, a custom home builder and developer. "Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability," Ms. Huey added. A construction worker carries materials as he works on a home under construction at a housing development in Petaluma, Calif., on March 23, 2022. (Justin Sullivan/Getty Images) NAHB Chief Economist Robert Dietz noted that one of the primary tools available to solve the housing affordability crisis is contributing "attainable, affordably supply." "Boosting housing production would help reduce the shelter inflation component that was responsible for more than half of the overall Consumer Price Index increase in September and aid the Fed’s mission to bring inflation back down to 2%," he said. "However, uncertainty regarding monetary policy is contributing to affordability challenges in the market.” The September consumer price index (CPI) shelter index is up 7.2 percent compared to a year ago. While the futures market is pricing in the Fed, keeping rates unchanged at the November and December Federal Open Market Committee (FOMC) policy meetings, the central bank’s Summary of Economic Projections suggests officials are planning one more rate hike this year. In addition, Treasury yields have been accelerating, with the 2-, 10-, and 30-year yields touching their highest levels in 16 years. The volatility in the bond market has played a critical role in the housing market because mortgage lenders tie their interest rates closely to Treasury bond rates. As a result, Fannie Mae projects that mortgage rates will hover in the 7 percent range for most of next year before sliding to 6.7 percent by the end of 2024. "In many ways, the housing market experienced four years of business in a two-year period between mid-2020 and mid-2022," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "With ongoing affordability constraints and rising mortgage rates, much of that activity has essentially been given back. We expect the higher mortgage rate environment to continue to dampen housing activity and further complicate housing affordability into 2024." The FOMC will hold its next two-day policy meeting on Oct. 31 and Nov. 1. Tyler Durden Wed, 10/18/2023 - 13:40.....»»

China has reached the end of its economic boom. What comes next should worry every American business — and the rest of the world. China has reached the end of its economic boom. What comes next should worry every American business — and the rest of the world.Tyler Le/InsiderWe've reached the end of an era for the Chinese economy.For the past three decades, China has been on the upswing of a supercycle that saw an almost uninterrupted expansion of the country's capacity to manufacture, appetite to consume, and ability to project power across the world economy. The Chinese Communist Party relentlessly pursued economic development over all else, even when that single-mindedness pushed the party to make debilitating policy mistakes — creating a massive bubble in the property market, saddling provinces with loads of debt, and failing to transition away from an overreliance on investment. There was no time to stop for corrections while China's mind was on money alone. This era of expansion was not only a boon for Beijing, it also helped fuel global demand. Countries relied on China's hunger for speedy modernization and industrial might to supercharge their own development. Even American companies saw China as the next great global market — and made bets accordingly.They lost those bets.President Xi Jinping has shifted the CCP's raison d'être to national security over the economy. Getting rich isn't China's big project anymore; the project is power. As a result, both the government's priorities and behavior have changed. In the past, whenever it seemed like a recession was on the horizon, the CCP came to rescue. There's no hefty stimulus coming this time. Nor will the explosive growth that experts once expected from China return. Beijing's relationship with the outside world is no longer guided by the principles of economic rationality, but rather its yearning for political power."This isn't about the economy anymore, it's all about advanced technology and weaponry," Lee Miller, the founder of the Chinese economic surveyor China Beige Book, told me.In response, American businesses need to consider how else Beijing's decision-making may now be flipped on its axis. For everyone from American farmers to pharmaceutical companies, this means shrinking demand and unstable supply chains. For policymakers, it means a China that is harder to mollify when conflicts arise. For the rest of us, it's a more precarious world.A spent economic system The Chinese economy has been bending under the weight of its structural problems for almost a decade now, but since the end of Xi's COVID-lockdown policy, it's become clear that its growth model is well and truly broken. Beijing's story so far has been to claim that, like other economies on the mend from the pandemic, China will in time resume its normal growth pattern. Instead, it looks like the economy is falling behind.Let's start with the country's real-estate market, the importance of which cannot be overstated. Not only is it the biggest source of wealth for Chinese households, real estate is also the mechanism through which local governments are financed. Instead of property taxes, municipalities sell large swaths of land to property developers and then use the revenue for basic social services like fixing roads and paying out pensions. Cities like Shanghai and Beijing get a lot of attention, but they make up just a fraction of the property market. Property firms did the most building in third-tier cities where people aren't as wealthy. This is where you'll find China's infamous ghost cities.It's been clear for years that the Chinese real-estate market has been in trouble. China has a population of 1.4 billion, but it has built housing for a population of 3 billion, according to expert estimates. Many of the mega-developments became empty monuments to Beijing's insatiable desire for growth. In Shenyang, farmers have taken over a development of empty mansions for cattle grazing.Worried that the sector would implode, Beijing attempted on multiple occasions to limit the credit that was fueling the bubble. But because real estate played such a vital role as a government-funding mechanism, China had to keep building, despite these troubles. Authorities didn't want to change the way local governments funded themselves or allow Chinese household finances to crumble, so they could not let prices fall. That credit addiction remains.The Chinese real estate sector — built on government-fueled speculation and a massive amount of debt — is starting to break down.China Photos/Getty ImagesBut this system, supported by speculation and easy money, is starting to break down. Country Garden, China's largest real-estate developer, is on the brink of collapse. In a sign that Beijing has grown tired of this game, Xu Jiayin, the chairman of Evergrande, another embattled real-estate behemoth, has been detained by authorities. Money-starved provinces are being forced to ask for bailouts — which the federal government doesn't want to give — and sell assets that the local governments claim are illiquid. The country's massive, opaque shadow-banking sector, which served as the backbone for the real-estate boom, is also under pressure. At least one $87 billion money manager,  Zhongrong Trust, skipped payments to investors this summer, sparking protests. "We've not been in a situation where so many developers are defaulting and consumers are questioning whether or not they should prepay for an apartment," Charlene Chu, the managing director and senior analyst at Autonomous Research, told me. "Before they were thinking, 'Prices are rising so fast, I need to get in.' Now prices are declining and the urgency to buy has vanished, so they're waiting."Official data has shown relatively modest price declines so far, but like a lot of official economic data coming from Biejing these days, it's hard to take those numbers seriously. Private data shows prices falling by 15% in metropolises like Shenzhen and Shanghai. In tier-two and tier-three cities, prices have fallen by as much as 50%, according to Bloomberg. "Eighty percent of all sales by area are in tier-three and below cities," Chu said, adding that many of these places are facing long-term structural problems. "If their market doesn't come back, the entire market doesn't come back."Little fires everywhere all at onceThe real-estate sector is the most visible sign of China's fading star, but other key parts of the economy are showing strain as well. While the rest of the world is battling inflation, China is still in deflationary mode. August CPI came in at 0.1%, up from minus-0.3% the month before, showing an overall lack of domestic demand. Exports — which make up 40% of the country's GDP growth — hit their lowest level in three years in July, falling 14% from the same time a year before. August export figures showed some improvement but still came in down 8.8% from the year before. Overall, Autonomous expects China's exports to slow 8% compared to last year. Chu — who has been called the "rock star" of Chinese debt analysis — told me that this weakness is not just a result of a cyclical downturn; it's a part of a more permanent shifting of supply chains caused by trade tensions with Europe and the US. These are powerful forces that are not easily reversed. Once multinational corporations no longer see China as a source of steady growth, they could begin changing their plans to invest. At the same time, domestic anxiety about shrinking employment may change the basic consumer behavior that powered China's rise. This can create a vicious, self-reinforcing cycle that keeps investment out and spending low.The authorities are playing a game of whack-a-mole, trying to contain any shocks to the financial system because they fear social instability.Chu started the year with one of the weakest growth outlooks for China on Wall Street, and the second half is looking worse. Autonomous' proprietary growth index for China, the Real Autono Economic Activity Composite, projects the country's economy to grow by 3.8% for all of 2023, down from its original 4.2% projection in January — and worse than Autonomous projected during the depths of China's COVID lockdown. Beijing is projecting 5% growth — and given how tightly the CCP likes to manage expectations, officials will stick to that number come hell or high water. It's a far cry from the double-digit growth policymakers used to demand and a signal to the Chinese people that Beijing is not going to direct its banks to spew credit to get the economy moving faster again. Victor Shih, an associate professor and the director of the 21st Century China Center at the University of California San Diego, told me that when people ask him if there will be a financial crisis in China, he tells them that China "is constantly in a financial crisis." It's like the authorities are playing a game of whack-a-mole, trying to contain any shocks to the financial system because they fear social instability. That means there can be no correction, but if there's no correction, there's no deleveraging, and if there's no deleveraging, the moles will only multiply.Zombies in the Middle KingdomThe economy has put Beijing in a bind. There's too much for the Chinese Communist Party to do, and not enough money or time to do it. Allowing a property-market correction, bailing out local governments, creating a new funding mechanism for them, developing a social safety net for the people through all this instability — all of it costs money. And even if the capital were there, policymakers fear what this disruption could do to their grip on power. Falling property prices and shrinking exports would weigh on the Chinese people's wealth, and the government is concerned that a meaningful correction would cause unrest. "Every time there are severe property-price declines, Beijing views it as a risk to social stability," Chu said.Plus, Beijing may need to conserve its firepower for other concerns coming down the pipeline. In the long-term, the CCP has to worry about China's demographics. Thanks to government mandates like the one-child policy, the country's population is rapidly aging — and even started to decline in 2022. The workforce will soon begin shrinking: Right now there are three working-age adults for every retired person in China, according to data compiled by J Capital Research, and by 2050, that ratio will hit one to one. Without booming property prices or continued growth, the growing pool of retirees will put a heavy burden on China's threadbare social safety net. GDP per capita is currently about $12,800. When Japan started struggling in 1991 with a similar dynamic — aging population, sky-high debt, and slowing growth — its GDP per capita was more than triple that amount, at $41,266 in today's dollars. China will get old before it gets rich, placing the task of growing the economy on fewer and fewer people as time goes on.Getting rich isn't China's big project anymore; the project is power."What's really a shame is that China never seized the opportunity on the way up to build a comprehensive social safety net where people feel they don't have to save a lot of money for a rainy day — for healthcare, education, what have you," Chu told me. "Most Chinese people do not feel they are covered for everything they need … This is what's going to make moving to the domestic, demand-driven model difficult."Unless dramatic action is taken, the future of China's economy is looking less like a young dynamo and more like an old, slow-moving blob. Last week, Bloomberg reported that policymakers are considering a modest $137 billion stimulus — just enough to meet its already comparatively low annual growth target, and nothing in the way of reform."There are healthy parts of the economy, it's just the zombie parts that have to be dealt with," Shih said. "It doesn't look like they are doing that now, but it will be a bigger and bigger drag on growth. I think the slow growth will cause such a serious employment and capital-flight problem, there could be political instability."But again, that's could, not will. And because its priority is now power — where gains are much more idiosyncratic — it's a risk that Beijing has shown it is willing to take.A new, more dangerous eraThe idea that Chinese policymakers connect political stability and economic growth is dogma in the West, but what we're witnessing now suggests that's not the case — at least not in practice. Beijing has not spent money on — or talked about raising money for — social programs for its aging population, nor has it made any attempts to tackle the cost of living for young families. If economic modernization was the most important thing, these would have been on the docket years ago. But they're not. Policymakers don't want an implosion, but they're not pushing for warp-speed development anymore either."All the policies are now determined by Xi Jinping himself, and his priorities are spending money to engage in a technology and national-security race with the US," Shih explained. President Xi Jinping has shifted China's priorities from economic growth to what one experts calls a "technology and national-security race with the US."Lintao ZhangOnce upon a time, infrastructure and property were the big beneficiaries of Beijing's largess, now it's the military. US government estimates put China's annual defense budget at about $700 billion, much higher than independent NGO estimates of about $290 billion and just shy of what the US spends on defense annually, $800 billion. "If we're talking about the economic relationship between the US and China, there just isn't that much going on," China Beige Book's Miller told me over the phone. "The worry we have is not that Chinese consumers will do even less. It's that all the global supply chains are intermixed in industries like pharmaceutical and green tech. If things get too tense, it's potential supply-chain snarls that coil and screw up US business."Miller told me that multinational corporations are not only unsure of where to go next, they also lack full transparency as to where China impacts some supply chains. "It's not just that we have a problem," he said, "it's that we don't even know how big the problem is."China has never been a big consumer of American imports, but certain sectors will get hurt as our trade relationship is reset. A faltering Chinese economy will suppress demand for commodities like oil seeds and grain, hitting US farmers especially hard. It will also eat into corporate profits for companies such as Nike and Starbucks that made large bets on Chinese consumers. US restrictions on technology exports — created to counter new national-security concerns — threaten the more than $50 billion of revenue that US chipmakers generate selling to China. Wall Street doesn't have to go home, but it can't stay here. The WSJ reported that foreign executives are jittery about visiting China, afraid they'll never be allowed to leave. The great traveling circus that is hot money and adventure capitalism is already scouring the world for its next opportunity in countries like Mexico and Vietnam. These are forces bigger than Beijing.Earlier this month, the House Select China Competition Committee held a hearing in New York City, calling on witnesses to describe what risk looks like with a Chinese Communist Party that's less committed to the free flow of capital and more concerned with flexing its muscles within its region. In her testimony, Anne Stevenson-Yang, the founder of J Capital Research, said that the US — especially its Midwest industrial heartland — isn't invested in China because of market demand. It's invested there for the outsourcing of mechanical goods and labor. For the US economy, China as a workshop is much more important than China as a consumer. Companies will need to scour their supply chains for potential vulnerabilities and consider their exposure accordingly. When Beijing is focused on national security, rules can change at the drop of a dime. Foreign businesspeople who once sought efficiencies going in may find it cumbersome to get out."The biggest risk there is the currency," Stevenson-Yang explained. "As companies make more money and want to move it to the US, they run into currency controls and they might not be able to get dollars out." It's time to imagine a future where China does not become rich but may remain powerful — building its army and continuing to develop its domestic technological capabilities. History has shown that economic privation need not impede China's technological achievement. During the depths of the Maoist purges, the CCP was still able to develop the atomic bomb, the hydrogen bomb, and its own intercontinental ballistic missiles. Xi has warned China to prepare for "great struggles" on the road to glory. Now that China's economic supercycle is over, that may be the cycle we're about to witness. It will be a painful adjustment.Correction: October 15, 2023 — An earlier version of this story misstated the defense budgets of China and the United States. They are about $700 billion and $800 billion, respectively, not $700 million and $800 million.Linette Lopez is a senior correspondent at Insider.Read the original article on Business Insider.....»»

President Xi Jinping has shifted China's goal from economic growth to military power. That should worry US companies and the rest of the world. Getting rich isn't China's big project anymore, President Xi Jinping's new project is to accumulate global power.Tyler Le/InsiderWe've reached the end of an era for the Chinese economy.For the past three decades, China has been on the upswing of a supercycle that saw an almost uninterrupted expansion of the country's capacity to manufacture, appetite to consume, and ability to project power across the world economy. The Chinese Communist Party relentlessly pursued economic development over all else, even when that single-mindedness pushed the party to make debilitating policy mistakes — creating a massive bubble in the property market, sidling provinces with loads of debt, and failing to transition away from an overreliance on investment. There was no time to stop for corrections while China's mind was on money alone. This era of expansion was not only a boon for Beijing, it also helped fuel global demand. Countries relied on China's hunger for speedy modernization and industrial might to supercharge their own development. Even American companies saw China as the next great global market — and made bets accordingly.They lost those bets.President Xi Jinping has shifted the CCP's raison d'être to national security over the economy. Getting rich isn't China's big project anymore; the project is power. As a result, both the government's priorities and behavior have changed. In the past, whenever it seemed like a recession was on the horizon, the CCP came to rescue. There's no hefty stimulus coming this time. Nor will the explosive growth that experts once expected from China return. Beijing's relationship with the outside world is no longer guided by the principles of economic rationality, but rather its yearning for political power."This isn't about the economy anymore, it's all about advanced technology and weaponry," Lee Miller, the founder of the Chinese economic surveyor China Beige Book, told me.In response, American businesses need to consider how else Beijing's decision-making may now be flipped on its axis. For everyone from American farmers to pharmaceutical companies, this means shrinking demand and unstable supply chains. For policymakers, it means a China that is harder to mollify when conflicts arise. For the rest of us, it's a more precarious world.A spent economic system The Chinese economy has been bending under the weight of its structural problems for almost a decade now, but since the end of Xi's COVID-lockdown policy, it's become clear that its growth model is well and truly broken. Beijing's story so far has been to claim that, like other economies on the mend from the pandemic, China will in time resume its normal growth pattern. Instead, it looks like the economy is falling behind.Let's start with the country's real-estate market, the importance of which cannot be overstated. Not only is it the biggest source of wealth for Chinese households, real estate is also the mechanism through which local governments are financed. Instead of property taxes, municipalities sell large swaths of land to property developers and then use the revenue for basic social services like fixing roads and paying out pensions. Cities like Shanghai and Beijing get a lot of attention, but they make up just a fraction of the property market. Property firms did the most building in third-tier cities where people aren't as wealthy. This is where you'll find China's infamous ghost cities.It's been clear for years that the Chinese real-estate market has been in trouble. China has a population of 1.4 billion, but it has built housing for a population of 3 billion, according to expert estimates. Many of the mega-developments became empty monuments to Beijing's insatiable desire for growth. In Shenyang, farmers have taken over a development of empty mansions for cattle grazing.Worried that the sector would implode, Beijing attempted on multiple occasions to limit the credit that was fueling the bubble. But because real estate played such a vital role as a government-funding mechanism, China had to keep building, despite these troubles. Authorities didn't want to change the way local governments funded themselves or allow Chinese household finances to crumble, so they could not let prices fall. That credit addiction remains.The Chinese real estate sector — built on government-fueled speculation and a massive amount of debt — is starting to break down.China Photos/Getty ImagesBut this system, supported by speculation and easy money, is starting to break down. Country Garden, China's largest real-estate developer, is on the brink of collapse. In a sign that Beijing has grown tired of this game, Xu Jiayin, the chairman of Evergrande, another embattled real-estate behemoth, has been detained by authorities. Money-starved provinces are being forced to ask for bailouts — which the federal government doesn't want to give — and sell assets that the local governments claim are illiquid. The country's massive, opaque shadow-banking sector, which served as the backbone for the real-estate boom, is also under pressure. At least one $87 billion money manager,  Zhongrong Trust, skipped payments to investors this summer, sparking protests. "We've not been in a situation where so many developers are defaulting and consumers are questioning whether or not they should prepay for an apartment," Charlene Chu, the managing director and senior analyst at Autonomous Research, told me. "Before they were thinking, 'Prices are rising so fast, I need to get in.' Now prices are declining and the urgency to buy has vanished, so they're waiting."Official data has shown relatively modest price declines so far, but like a lot of official economic data coming from Biejing these days, it's hard to take those numbers seriously. Private data shows prices falling by 15% in metropolises like Shenzhen and Shanghai. In tier-two and tier-three cities, prices have fallen by as much as 50%, according to Bloomberg. "Eighty percent of all sales by area are in tier-three and below cities," Chu said, adding that many of these places are facing long-term structural problems. "If their market doesn't come back, the entire market doesn't come back."Little fires everywhere all at onceThe real-estate sector is the most visible sign of China's fading star, but other key parts of the economy are showing strain as well. While the rest of the world is battling inflation, China is still in deflationary mode. August CPI came in at 0.1%, up from minus-0.3% the month before, showing an overall lack of domestic demand. Exports — which make up 40% of the country's GDP growth — hit their lowest level in three years in July, falling 14% from the same time a year before. August export figures showed some improvement but still came in down 8.8% from the year before. Overall, Autonomous expects China's exports to slow 8% compared to last year. Chu — who has been called the "rock star" of Chinese debt analysis — told me that this weakness is not just a result of a cyclical downturn; it's a part of a more permanent shifting of supply chains caused by trade tensions with Europe and the US. These are powerful forces that are not easily reversed. Once multinational corporations no longer see China as a source of steady growth, they could begin changing their plans to invest. At the same time, domestic anxiety about shrinking employment may change the basic consumer behavior that powered China's rise. This can create a vicious, self-reinforcing cycle that keeps investment out and spending low.The authorities are playing a game of whack-a-mole, trying to contain any shocks to the financial system because they fear social instability.Chu started the year with one of the weakest growth outlooks for China on Wall Street, and the second half is looking worse. Autonomous' proprietary growth index for China, the Real Autono Economic Activity Composite, projects the country's economy to grow by 3.8% for all of 2023, down from its original 4.2% projection in January — and worse than Autonomous projected during the depths of China's COVID lockdown. Beijing is projecting 5% growth — and given how tightly the CCP likes to manage expectations, officials will stick to that number come hell or high water. It's a far cry from the double-digit growth policymakers used to demand and a signal to the Chinese people that Beijing is not going to direct its banks to spew credit to get the economy moving faster again. Victor Shih, an associate professor and the director of the 21st Century China Center at the University of California San Diego, told me that when people ask him if there will be a financial crisis in China, he tells them that China "is constantly in a financial crisis." It's like the authorities are playing a game of whack-a-mole, trying to contain any shocks to the financial system because they fear social instability. That means there can be no correction, but if there's no correction, there's no deleveraging, and if there's no deleveraging, the moles will only multiply.Zombies in the Middle KingdomThe economy has put Beijing in a bind. There's too much for the Chinese Communist Party to do, and not enough money or time to do it. Allowing a property-market correction, bailing out local governments, creating a new funding mechanism for them, developing a social safety net for the people through all this instability — all of it costs money. And even if the capital were there, policymakers fear what this disruption could do to their grip on power. Falling property prices and shrinking exports would weigh on the Chinese people's wealth, and the government is concerned that a meaningful correction would cause unrest. "Every time there are severe property-price declines, Beijing views it as a risk to social stability," Chu said.Plus, Beijing may need to conserve its firepower for other concerns coming down the pipeline. In the long-term, the CCP has to worry about China's demographics. Thanks to government mandates like the one-child policy, the country's population is rapidly aging — and even started to decline in 2022. The workforce will soon begin shrinking: Right now there are three working-age adults for every retired person in China, according to data compiled by J Capital Research, and by 2050, that ratio will hit one to one. Without booming property prices or continued growth, the growing pool of retirees will put a heavy burden on China's threadbare social safety net. GDP per capita is currently about $12,800. When Japan started struggling in 1991 with a similar dynamic — aging population, sky-high debt, and slowing growth — its GDP per capita was more than triple that amount, at $41,266 in today's dollars. China will get old before it gets rich, placing the task of growing the economy on fewer and fewer people as time goes on.Getting rich isn't China's big project anymore; the project is power."What's really a shame is that China never seized the opportunity on the way up to build a comprehensive social safety net where people feel they don't have to save a lot of money for a rainy day — for healthcare, education, what have you," Chu told me. "Most Chinese people do not feel they are covered for everything they need … This is what's going to make moving to the domestic, demand-driven model difficult."Unless dramatic action is taken, the future of China's economy is looking less like a young dynamo and more like an old, slow-moving blob. Last week, Bloomberg reported that policymakers are considering a modest $137 billion stimulus — just enough to meet its already comparatively low annual growth target, and nothing in the way of reform."There are healthy parts of the economy, it's just the zombie parts that have to be dealt with," Shih said. "It doesn't look like they are doing that now, but it will be a bigger and bigger drag on growth. I think the slow growth will cause such a serious employment and capital-flight problem, there could be political instability."But again, that's could, not will. And because its priority is now power — where gains are much more idiosyncratic — it's a risk that Beijing has shown it is willing to take.A new, more dangerous eraThe idea that Chinese policymakers connect political stability and economic growth is dogma in the West, but what we're witnessing now suggests that's not the case — at least not in practice. Beijing has not spent money on — or talked about raising money for — social programs for its aging population, nor has it made any attempts to tackle the cost of living for young families. If economic modernization was the most important thing, these would have been on the docket years ago. But they're not. Policymakers don't want an implosion, but they're not pushing for warp-speed development anymore either."All the policies are now determined by Xi Jinping himself, and his priorities are spending money to engage in a technology and national-security race with the US," Shih explained. Chinese President Xi Jinping has shifted the country's priorities from economic growth to a "technology and national-security race with the US."Lintao ZhangOnce upon a time, infrastructure and property were the big beneficiaries of Beijing's largess, now it's the military. US government estimates put China's annual defense budget at around $700 million, much higher than independent NGO estimates of around $290 million and just shy of what the US spends on defense annually, $800 million. "If we're talking about the economic relationship between the US and China, there just isn't that much going on," China Beige Book's Miller told me over the phone. "The worry we have is not that Chinese consumers will do even less. It's that all the global supply chains are intermixed in industries like pharmaceutical and green tech. If things get too tense, it's potential supply-chain snarls that coil and screw up US business."Miller told me that multinational corporations are not only unsure of where to go next, they also lack full transparency as to where China impacts some supply chains. "It's not just that we have a problem," he said, "it's that we don't even know how big the problem is."China has never been a big consumer of American imports, but certain sectors will get hurt as our trade relationship is reset. A faltering Chinese economy will suppress demand for commodities like oil seeds and grain, hitting US farmers especially hard. It will also eat into corporate profits for companies such as Nike and Starbucks that made large bets on Chinese consumers. US restrictions on technology exports — created to counter new national-security concerns — threaten the more than $50 billion of revenue that US chipmakers generate selling to China. Wall Street doesn't have to go home, but it can't stay here. The WSJ reported that foreign executives are jittery about visiting China, afraid they'll never be allowed to leave. The great traveling circus that is hot money and adventure capitalism is already scouring the world for its next opportunity in countries like Mexico and Vietnam. These are forces bigger than Beijing.Earlier this month, the House Select China Competition Committee held a hearing in New York City, calling on witnesses to describe what risk looks like with a Chinese Communist Party that's less committed to the free flow of capital and more concerned with flexing its muscles within its region. In her testimony, Anne Stevenson-Yang, the founder of J Capital Research, said that the US — especially its Midwest industrial heartland — isn't invested in China because of market demand. It's invested there for the outsourcing of mechanical goods and labor. For the US economy, China as a workshop is much more important than China as a consumer. Companies will need to scour their supply chains for potential vulnerabilities and consider their exposure accordingly. When Beijing is focused on national security, rules can change at the drop of a dime. Foreign businesspeople who once sought efficiencies going in may find it cumbersome to get out."The biggest risk there is the currency," Stevenson-Yang explained. "As companies make more money and want to move it to the US, they run into currency controls and they might not be able to get dollars out." It's time to imagine a future where China does not become rich but may remain powerful — building its army and continuing to develop its domestic technological capabilities. History has shown that economic privation need not impede China's technological achievement. During the depths of the Maoist purges, the CCP was still able to develop the atomic bomb, the hydrogen bomb, and its own intercontinental ballistic missiles. Xi has warned China to prepare for "great struggles" on the road to glory. Now that China's economic supercycle is over, that may be the cycle we're about to witness. It will be a painful adjustment.Linette Lopez is a senior correspondent at Insider.Read the original article on Business Insider.....»»

Caroline Ellison is a key witness in the criminal case against Sam Bankman-Fried. Former Alameda Research CEO Caroline Ellison is expected to be a key witness in the fraud case against Sam Bankman-Fried.Tyler Le/InsiderCaroline Ellison testified in the criminal case against Sam Bankman-Fried.The former Alameda Research CEO is expected to be a key witness in the case against Bankman-Fried.Ellison was in Bankman-Fried's inner circle and used to date the FTX co-founder.Caroline Ellison took the witness stand Tuesday to testify in the trial against her ex-boyfriend and former boss Sam Bankman-Fried.Ellison, the former CEO of the cryptocurrency hedge fund Alameda Research, said in a downtown Manhattan federal courtroom that she conspired with Bankman-Fried and other members of his inner circle to defraud customers and investors of FTX, his cryptocurrency exchange."Alameda took several billion dollars from FTX customers and used it to make our own investments and pay off lenders who we owed," Ellison testified.Ellison pleaded guilty to fraud charges in December and has been cooperating with investigators. Her testimony marks the first time she has spoken publicly since FTX collapsed last year.Prosecutors allege Bankman-Fried orchestrated a scheme to defraud FTX customers and investors out of billions of dollars. They say Bankman-Fried siphoned money from customer accounts to fund crypto bets with Alameda Research, a hedge fund he controlled. He directed employees to develop programming code that allowed virtually unlimited funds to move from FTX to Alameda quickly and quietly, according to trial testimony.Ellison testified Tuesday that Bankman-Fried told her to take money from FTX customers."He was the one who told us to use customer money to repay our loans," she said."We ultimately took $14 billion, some of which we were able to pay back," she added moments later.Bankman-Fried is facing seven criminal charges, including wire fraud and money laundering, and has pled not guilty on all counts.Ellison took the stand wearing her signature round-framed glasses and a gray blazer over a simple pink dress. Asked if she recognized Bankman-Fried in the courtroom — packed with journalists and spectators — she looked around the room for nearly a minute before saying she spotted him at the defense table.Since the exchange collapsed, the former FTX CEO has attempted to put the blame for the platform's collapse on other executives, including Ellison.During opening statements earlier this month, his lawyer Mark Cohen pointed out that Ellison — and not Bankman-Fried — was the CEO of Alameda Research at the time the two companies fell apart."He relied on her and he trusted her to act as the CEO and manage the day-to-day of trading management, preparing financial documents, handling lender relationships, and he stayed involved as owners do," Cohen said.The companies may have stayed solvent, Cohen suggested, if only Ellison had followed Bankman-Fried's investment strategies as crypto prices became increasingly unstable in 2022."He spoke to Ms. Ellison, the CEO, and he urged her to put on a hedge, something that would protect against such a downturn," Cohen said. "She didn't do so at the time, and this also becomes an issue later on, when the storm hit."At Bankman-Fried's direction, she sent balance sheets to Alameda investors that played down the commingled finances between the crypto hedge fund and FTX to make Alameda appear more stable, Ellison said.Sam Bankman-Fried's former girlfriend, Caroline Ellison, walks through security at Manhattan Federal CourtBRYAN R. SMITHThe trial has already delved into Ellison's and Bankman-Fried's tortured relationshipWitnesses so far in the trial have sketched how Ellison, who previously worked alongside Bankman-Fried at the trading firm Jane Street, rose to the leadership of Alameda. There, she made apparently disastrous trades.According to Gary Wang — the FTX co-founder who testified earlier in the trial — Bankman-Fried justified taking customer funds by saying that things would balance out so long as FTX's trading revenue exceeded whatever amount Alameda took.In 2022, according to Wang, FTX's revenue was $1.2 billion. But by September 2022 — shortly before the collapse — Alameda Research had taken $14 billion from FTX customers without their permission, Wang testified.Wang and Adam Yedidia, an FTX developer, have testified about how Ellison worked with other members of Bankman-Fried's inner circle to account for just how much money was taken from customers and figure out how to deal with mounting losses. When Bankman-Fried proposed shutting down Alameda, Wang noted that there would be no way to repay everyone and "could not shut down as a result.""It did not have $14 billion in assets that it could sell off to repay it," Wang testified.Caroline Ellison and Sam Bankman-Fried.Chelsea Jia FengOther portions of trial testimony have veered into personal territory.In the Bahamas, where FTX and Alameda Research were based, several top employees and their significant others — including Bankman-Fried, Ellison, and Yedidia — all lived in a $35 million luxury penthouse together.Yedidia recalled an uncomfortable moment where Bankman-Fried approached him for relationship advice."Sometime in early 2019, the defendant told me that he and Caroline had had sex and asked if it was a good idea for them to date," he said."I said no," Yedidia continued.Bankman-Fried didn't seem offended, according to Yedidia."He said he figured that was reasonable and thought that I would say something like that," Yedidia said.Eric Chaffee, a law professor at Case Western Reserve University, told Insider that Ellison's testimony will likely be one of the most damaging to Bankman-Fried's case due to her close relationship with the FTX cofounder, who was her on-and-off boyfriend.Bankman-Fried's tortured relationship with Ellison has caused him trouble ahead of the trial.The FTX co-founder leaked entries from Ellison's private diary to The New York Times in July. At the time, the US Department of Justice accused the defendant of attempting to taint the jury pool. In response, Bankman-Fried's attorneys told the judge the leaked documents were not an attempt to discredit Ellison as a witness, but rather an effort for Bankman-Fried to "give his side of the story."The leaked diary entries included details about Ellison's romantic relationship with Bankman-Fried, as well as admissions from the former Alameda Research CEO that she felt unqualified to lead the company. US District Judge Lewis Kaplan, who's overseeing the case in a downtown Manhattan courtroom, ruled that the journal leaks were a form of witness tampering and ordered Bankman-Fried to be jailed ahead of the trial.Last week, even more details about Ellison's on-and-off romantic relationship with the FTX co-founder were revealed in a new biography on Bankman-Fried that hit the shelves on October 3. Author Michael Lewis wrote that Ellison was "terrified" of Bankman-Fried when she first met him and the FTX cofounder made her a pros and cons list for entering into a sexual relationship with him.The trial is expected to last around six weeks. If convicted, Bankman-Fried could face a hefty prison sentence.Read the original article on Business Insider.....»»

Caroline Ellison is a key witness in the criminal case against Sam Bankman-Fried. Former Alameda Research CEO Caroline Ellison is expected to be a key witness in the fraud case against Sam Bankman-Fried.Tyler Le/InsiderCaroline Ellison is set to testify later today in the criminal case against Sam Bankman-Fried.The former Alameda Research CEO is expected to be a key witness in the case against Bankman-Fried.Ellison was in Bankman-Fried's inner circle and used to date the FTX co-founder.All eyes will be on star witness Caroline Ellison when she takes the stand later today in the trial against her ex-boyfriend and former boss Sam Bankman-Fried.Ellison, the former CEO of FTX's sister company Alameda Research, is scheduled to begin her testimony Tuesday over the collapse of Bankman-Fried's cryptocurrency exchange platform FTX.Insider will be in the courtroom and updating this post throughout the day when her testimony kicks off.Ellison pleaded guilty to fraud charges in December and has been cooperating with investigators — which means she's likely getting ready to spill the beans on her time in Bankman-Fried's inner circle. It will be the first time she has spoken publicly since FTX collapsed last year.Eric Chaffee, a law professor at Case Western Reserve University, told Insider that Ellison's testimony will likely be one of the most damaging to Bankman-Fried's case due to her close relationship with the FTX cofounder, who was her on-and-off boyfriend.Prosecutors allege Bankman-Fried orchestrated a scheme to defraud FTX customers and investors out of billions of dollars. They say Bankman-Fried siphoned money from customer accounts to fund crypto bets with Alameda Research, a hedge fund he controlled. He directed employees to develop programming code that allowed virtually unlimited funds to move from FTX to Alameda quickly and quietly, according to trial testimony.Bankman-Fried is facing seven criminal charges, including wire fraud and money laundering, and has pled not guilty on all counts.Since the exchange collapsed, the former FTX CEO has attempted to put the blame for the platform's collapse on other executives, including Ellison.During opening statements earlier this month, his lawyer Mark Cohen pointed out that Ellison — and not Bankman-Fried — was the CEO of Alameda Research at the time the two companies fell apart."He relied on her and he trusted her to act as the CEO and manage the day-to-day of trading management, preparing financial documents, handling lender relationships, and he stayed involved as owners do," Cohen said.The companies may have stayed solvent, Cohen suggested, if only Ellison had followed Bankman-Fried's investment strategies as crypto prices became increasingly unstable in 2022."He spoke to Ms. Ellison, the CEO, and he urged her to put on a hedge, something that would protect against such a downturn," Cohen said. "She didn't do so at the time, and this also becomes an issue later on, when the storm hit."Sam Bankman-Fried's former girlfriend, Caroline Ellison, walks through security at Manhattan Federal Court on Tuesday.BRYAN R. SMITHThe trial has already delved into Ellison's and Bankman-Fried's tortured relationshipWitnesses so far in the trial have sketched how Ellison, who previously worked alongside Bankman-Fried at the trading firm Jane Street, rose to the leadership of Alameda. There, she made apparently disastrous trades.According to Gary Wang — the FTX co-founder who testified earlier in the trial — Bankman-Fried justified taking customer funds by saying that things would balance out so long as FTX's trading revenue exceeded whatever amount Alameda took.In 2022, according to Wang, FTX's revenue was $1.2 billion. But by September 2022 — shortly before the collapse — Alameda Research had taken $14 billion from FTX customers without their permission, Wang testified.Wang and Adam Yedidia, an FTX developer, have testified about how Ellison worked with other members of Bankman-Fried's inner circle to account for just how much money was taken from customers and figure out how to deal with mounting losses. When Bankman-Fried proposed shutting down Alameda, Wang noted that there would be no way to repay everyone and "could not shut down as a result.""It did not have $14 billion in assets that it could sell off to repay it," Wang testified.Caroline Ellison and Sam Bankman-Fried.Chelsea Jia FengOther portions of trial testimony have veered into personal territory.In the Bahamas, where FTX and Alameda Research were based, several top employees and their significant others — including Bankman-Fried, Ellison, and Yedidia — all lived in a $35 million luxury penthouse together.Yedidia recalled an uncomfortable moment where Bankman-Fried approached him for relationship advice."Sometime in early 2019, the defendant told me that he and Caroline had had sex and asked if it was a good idea for them to date," he said."I said no," Yedidia continued.Bankman-Fried didn't seem offended, according to Yedidia."He said he figured that was reasonable and thought that I would say something like that," Yedidia said.Bankman-Fried's tortured relationship with Ellison has caused him trouble ahead of the trial.The FTX co-founder leaked entries from Ellison's private diary to The New York Times in July. At the time, the US Department of Justice accused the defendant of attempting to taint the jury pool. In response, Bankman-Fried's attorneys told the judge the leaked documents were not an attempt to discredit Ellison as a witness, but rather an effort for Bankman-Fried to "give his side of the story."The leaked diary entries included details about Ellison's romantic relationship with Bankman-Fried, as well as admissions from the former Alameda Research CEO that she felt unqualified to lead the company. US District Judge Lewis Kaplan, who's overseeing the case in a downtown Manhattan courtroom, ruled that the journal leaks were a form of witness tampering and ordered Bankman-Fried to be jailed ahead of the trial.Last week, even more details about Ellison's on-and-off romantic relationship with the FTX co-founder were revealed in a new biography on Bankman-Fried that hit the shelves on October 3. Author Michael Lewis wrote that Ellison was "terrified" of Bankman-Fried when she first met him and the FTX cofounder made her a pros and cons list for entering into a sexual relationship with him.The trial is expected to last around six weeks. If convicted, Bankman-Fried could face a hefty prison sentence.Read the original article on Business Insider.....»»

Beijing has to ensure that troubled developers don't create risks for the financial system, the IMF said. People commute in front of the under-construction Guangzhou Evergrande football stadium in Guangzhou, China's southern Guangdong province on September 17, 2021.Noel Celis/AFP/Getty Images Chinese officials must take "forceful action" to address the problems in its property sector, an IMF official said. The group's chief economist said Beijing must enact robust policy to ensure developer risks don't spread.  "Clearly what this is calling for is forceful action by the authorities," he said. The chief economist of the International Monetary Fund cautioned that Beijing authorities must enact robust policy to address the issues plaguing China's property sector. In a press conference Tuesday in Marrakesh, Morocco, Pierre-Olivier Gourinchas also warned that failure to act could lead to problems extend beyond troubled real estate developers."Clearly what this is calling for is forceful action by the authorities," Gourinchas said, according to Bloomberg. Two of China's largest developers, Evergrande and Country Garden, have made headlines this summer, each dealing with massive indebtedness.Bond investors in Evergrande this week warned that the company — which filed for Chapter 15 bankruptcy protection in August — could face an "uncontrolled collapse" that would be disastrous for the entire property sector.  To Gourinchas, Beijing should "help restructure struggling property developers, to make sure there isn't any increase in financial instability, to make sure it remains localized in the real estate market and doesn't spread into the broader financial system, and help restore confidence in households."The comments came as the IMF lowered its economic outlook for the country, while reports emerged that China is weighing raising its budget deficit for 2023 amid talk of new stimulus measures.The IMF slashed its growth outlook on China for this year from 5.2% to 5%, and for 2024 from 4.5% to 4.2%, with economists pointing to the property sector as a primary obstacle.Read the original article on Business Insider.....»»

The troubled developer cancelled a $19 billion debt restructuring. Investors in its bonds say the move could ripple through the entire sector. China's property sector is central to its economy.Getty Images A group of Evergrande bond investors sounded the alarm on the troubled Chinese developer, the WSJ reported.  Last month, Evergrande cancelled a $19 billion debt restructuring, leading bondholders to warn of wider turmoil.  "This will likely lead to the uncontrolled collapse of the group," the investors wrote.  A group of investors who hold more than $6 billion of bonds issued by ailing Chinese property giant Evergrande said the developer could soon face big trouble that could spill out into the rest of the country's real estate market. The Wall Street Journal and Reuters reported Monday that a statement from bond investors raised doubts about the company's efforts to win over regulators amid its business turmoil and mounting debts.Last month, Evergrande cancelled a $19 billion debt restructuring that had been in the works for years at the last minute, citing regulatory hurdles. In their letter, the investors said the deal must get done or else consequences could be dire. "This will likely lead to the uncontrolled collapse of the group," the bond holders said of Evergrande's inability to get the restructuring done. Evergrande defaulted in 2021 and remains China's most indebted property developer. By June, it held roughly $332 billion in liabilities, which included thousands of unfinished homes it still had to deliver. The group of investors said that the company's failure to go ahead with the debt deal could ripple through the rest of the property sector with a "catastrophic effect" on competitors already facing their own issues. They said the firm must seek a deal with regulators and get the restructuring done. "This is the only way the cloud of uncertainty surrounding the regulatory issues can be resolved," the investors said. "Until then, the base case is that China Evergrande Group will be liquidated at the next winding up hearing on October 30, 2023."In August, Evergrande filed for Chapter 15 bankruptcy protection.Should regulators fail to approve the deal, investors said it would make "any offshore restructuring of Chinese real estate companies a mission impossible."Meanwhile, Country Garden, the biggest developer in China, has been able to narrowly skirt a default, but it was late on bond payments in August. And another developer, Sunac China Holdings, is now targeting a roughly $11 billion restructuring of dollar debt, per the Journal.Evergrande said in March that if it can't secure a restructuring deal and a liquidation becomes necessary, bond investors would see returns likely around two to nine cents on the dollar. Read the original article on Business Insider.....»»

Adam Yedidia worried he "may have unwittingly written code" that contributed toward a crime at FTX. Chelsea Jia Feng/InsiderSam Bankman-Fried's ex-confidant Adam Yedidia testified Wednesday at the FTX cofounder's trial.Yedidia insisted on immunity to testify because he was worried he may have facilitated a crime.He roomed with SBF at a $35 million Bahamas penthouse and worked at both FTX and Alameda.Before Adam Yedidia could testify against Sam Bankman-Fried at the FTX cofounder's criminal trial, he needed reassurances.In federal court in downtown Manhattan on Wednesday, Yedidia told jurors that he insisted on getting immunity from future prosecution in order to testify about his experience working for the now-collapsed cryptocurrency trading platform FTX, where he was a software developer."I was concerned that as a developer at FTX I may have unwittingly written code that contributed to the commission of a crime," Yedidia said on the witness stand.Prosecutors allege that Sam Bankman-Fried defrauded depositors and investors at FTX, the cryptocurrency exchange he once ran, in part by commingling customer funds with Alameda Research, a crypto hedge fund he also controlled.This courtroom sketch shows Adam Yedidia, former FTX and Alameda Research employee and former friend of Sam Bankman-Fried, testifying, Wednesday, Oct. 4, 2023. AP Photo/Elizabeth WilliamsBefore Yedidia finished his testimony on Wednesday afternoon — to be continued on Thursday morning — he didn't talk about the software code he was worried about. But prosecutors say that Bankman-Fried directed employees to write computer code that would allow funds to move seamlessly between FTX and Alameda Research, allowing the firm to take FTX customer funds and use the money for risky cryptocurrency bets.Yedidia shifted in his seat between questions, which he answered quickly and concisely. US District Judge Lewis Kaplan, who's overseeing the case, granted him immunity ahead of the trial's start earlier this week. Prosecutors asked for immunity for two witnesses in the case, according to letters filed to the court docket.Prosecutors separately reached cooperation agreements with three executives in Bankman-Fried's orbit, including Alameda Research CEO Caroline Ellison and FTX cofounder Gary Wang. Prosecutors said Wang would testify by the end of the week.While Yedidia can't be prosecuted for what he'll testify about, he said he understood he could still face criminal charges for perjury if he lies on the stand.Yedidia was a "close friend" of Bankman-Fried for years before he ended up at FTX, he testified. The two were "close" at MIT, and met at a group house that he once described as akin to a frat house, "but replace all the alcohol with the nerdiest stuff you can imagine."Bankman-Fried and Yedidia lived and worked together in college, he testified. In 2017, he worked at Alameda Research for two months as a trader before leaving to pursue a PhD.In 2021, he returned to working for Bankman-Fried, this time at FTX as a software developer.The two became roommates once again. Yedidia said he lived in a $35 million penthouse apartment in the Bahamas, which he said Alameda Research purchased at Bankman-Fried's direction. Nine employees lived there in total, he said.Yedida said he resigned from FTX in November 2022 after he learned that Alameda Research used FTX customer funds to repay creditors.That was the last time he saw Bankman-Fried in person, he said — until testifying at his criminal trial.Yedidia took the stand following testimony from a former FTX customer who said he lost thousands of dollars by being unable to withdraw funds from the exchange at the time of its collapse.Earlier Wednesday, during opening statements, prosecutors painted Bankman-Fried as a thief who stole over $10 billion from FTX customers while telling them they could access their money whenever they wanted.The defense said Bankman-Fried is a "math nerd" who built two lucrative businesses in the span of a few years but overlooked some aspects of risk management. Bankman-Fried's fault was entrusting his executives, such as ex-girlfriend Caroline Ellison, to run the business, his attorney argued.Read the original article on Business Insider.....»»

China is cracking down in a string of high-profile corporate leaders in recent years through investigations, exit bans, and heightened surveillance. A slew of high-profile corporate execs have been targeted by Chinese authorities in recent years including HNA's Chen Feng and Adam Tan, Anbang's Wu Xiaohui, and Xi Jinping critic, Ren Zhiqiang.Thomson Reuters/REUTERS/Amr Alfiky/Getty Images/Chairman of Anbang Insurance Group Wu Xiaohui attends the China Development Forum in Beijing A slew of high-profile leaders have been targeted by China's tightening regulations. In recent months several executives have been barred from leaving the country through exit bans.  In June, the US State Department issued an updated travel advisory to China in light of the bans.  China has grown noticeably colder toward businesses — and their top leaders — in recent years. Under Xi Jinping's leadership, authorities have cracked down on private sector companies, raided the offices of major firms, slowed the approval of deals, and targeted a slew of high-profile executives. Many of these leaders have been subject to investigation, barred from leaving the country, placed under surveillance, or have even gone missing. China's tightening regulations have also triggered concerns overseas. In June, the US State Department issued an updated travel advisory to mainland China alerting potential travelers to the "arbitrary enforcement of local laws, including in relation to exit bans, and the risk of wrongful detentions." Here's a closer look at the growing list of execs that have been targeted by Chinese authorities. Michael Chan, managing director for the US risk-advisory firm Kroll, has been blocked from leaving the country over the past two months by an exit ban.Michael Chan, managing director at Kroll, which has offices in Beijing, is facing an exit ban in China.Construction Photography/Avalon / ContributorChan — who is based at Kroll's Hong Kong division — first arrived in mainland China back in July, according to the Wall Street Journal. He's currently assisting authorities in an investigation (where he is not the target) while continuing to work, the Journal said. At Kroll, Chan focuses on insolvencies and corporate restructuring according to his biography on the firm's website. It also notes that Chan has "extensive experience" investigating fraud, false financial statements, and defalcation (the misuse of funds by someone entrusted with them) and establishing recovery strategies for creditors.  Charles Wang Zhonghe, a senior banker at Japanese firm Nomura, was recently barred from leaving China.Charles Wang Zhonghe a senior banker at Nomura is facing an exit ban as he cooperates with an investigation.Toru Hanai/REUTERSWithin the country, however, Wang has leeway to move freely, the Financial Times reported, citing people familiar with the matter. The Wall Street Journal also noted that he can still be contacted.  The exit ban placed on Wang is tied to a larger investigation that has implicated Bao Fan and Cong Lin, top bankers at Chinese investment bank China Renaissance, according to the FT. Wang — who started off his career on Wall Street in the '90s — has been based in Hong Kong for the past several years, according to his LinkedIn profile. Since 2018, he's been chair of investment banking for China at Nomura's Hong Kong branch, according to LinkedIn. Prior to that he was Deputy CEO of ICBC for five years, and spent almost six years before that at Deutsche Bank as managing director and heading global banking for China, based on LinkedIn.  Hui Ka Yan, chairman of Evergrande, one of China’s largest real estate developers, is under police control.China Evergrande founder Hui Ka Yan is being monitored by authorities for suspected crimes.VCG/Getty ImagesHui is under suspicion by authorities who believe he may have committed crimes, according to multiple outlets.  He was taken by Chinese authorities earlier this month and is being monitored under "residential surveillance" which is a type of police action that falls shy of a formal arrest, according to Bloomberg. He's reportedly at a location in Beijing, the Wall Street Journal said, citing a domestic Chinese outlet.Hui grew up in a rural working class family in north central China, and worked at a steel factory for 10 years before founding Evergrande in 1996. The company eventually became China's second largest real estate developer and helped Hui earn a spot on Bloomberg's billionaire list. Evergrande, however, also became the world's most indebted property developer. By 2022, it had racked up almost $340 billion in liabilities and filed for bankruptcy this August.Bao Fan, the CEO and cofounder of Chinese investment bank China Renaissance, disappeared in February.Bao, one of China's top dealmakers, went missing in February and is cooperating with an investigation.Courtesy of China RenaissanceWhen Bao disappeared on February 16, China Renaissance issued a disclosure stating that they were unable to contact him, which also sent their stock prices plunging. It was only several weeks later that the bank filed a statement with the Hong Kong stock exchange acknowledging that they had "become aware" that Bao was "currently cooperating in an investigation being carried out by certain authorities in the People's Republic of China.He's likely involved in a corruption probe linked to Cong Lin, the former president of China Renaissance, who has been under investigation by authorities since last September, according to Chinese financial news outlet Caixin. Bao, often referred to as one of China's top tech dealmakers, worked at Credit Suisse, Morgan Stanley, and software company Asiainfo, before launching China Renaissance in 2004, according to his LinkedIn profile. He's earned a name through working with major Chinese companies. He reportedly closed the merger of food delivery group, Meituan, with restaurant rating platform Dianping, by "locking both sides in a hotel room for a day" according to the Financial Times. In a post he wrote for Insider back in 2017, Bao said that China was "the biggest competitor for Silicon Valley in the marketplace of ideas" and noted that Chinese authorities were "showing surprising tolerance for business model innovation."Chen Feng, chairman of Chinese conglomerate HNA and chief executive Adam Tan, were detained in 2021 over suspected crimes.HNA's Chen and Adam were detained in 2021.Thomson Reuters/REUTERS/Amr AlfikyEven before their arrests, though, the two had largely disappeared from the public eye. Chen was barred from taking flights and traveling by high-speed rail while Tan's name had last appeared on a company statement in 2018, the Financial Times reported.         Little has been reported about the two in the years since.    Their company, HNA, initially started as an airline and eventually became a travel-focused conglomerate that had snapped up more than $50 billion in acquisitions, many of which were made at a high premium. The company had stakes in Hilton, Dutch transport group TIP Trailer Services, and Irish aircraft leaser Avolon, according to the Financial Times. By the time the pandemic hit, though, the company was up against billions in debt and teetering on the brink of collapse. After being effectively taken over by the Hainan provincial government in 2020, the company was placed under bankruptcy administration in 2021. The company went through two years of corporate restructuring under official oversight, according to Bloomberg. Property tycoon, Ren Zhiqiang, was sentenced to 18 years in prison in 2020.Ren Zhiqiang went missing after he criticized the government's handling of the pandemic.Getty ImagesRen first went missing in March 2020 after accusing the Communist Party of mishandling the coronavirus pandemic in an essay where he also referred to President Xi Jinping as a "clown." Shortly thereafter, he was stripped of his Communist Party membership, detained, and put under investigation by China's Discipline Inspection Commission, which looks into alleged corruption and violation of party discipline, according to the Financial Times. That September, he was sentenced to prison in a one-day trial, according to the FT, which also reported that the court said Ren was "found guilty of charges including bribery, embezzlement of public funds and abuse of power." His peers, however, contend that he was sentenced because of his critical essay. Ren, who was 69 at the time of his sentencing, had been involved in a number of "high-profile projects" across Beijing, according to the FT. He grew up as the "privileged princeling son" of an official in the Chinese communist party and his "red pedigree" via his connections with government officials enabled him to speak out more candidly than his peers, the FT said.  Anbang Insurance Group’s founder and former chairman, Wu Xiaohui, was detained and subsequently sentenced to 18 years in prison.Former chairman of Anbang Insurance Group was sentenced to 18 years in prison.Thomson ReutersWu was sentenced to prison in May 2018 on charges of fraud and embezzlement. Yet, he had already been placed under investigation by authorities the prior June after a string of multi-billion dollar acquisitions Anbang had made, according to the state-run China Star Daily. The massive financial firm had agreed to buy the famed Waldorf Astoria Hotel in New York in 2014 for close to $2 billion. In 2016, it agreed to shell out $6.5 billion to buy a portfolio of hotels from Blackstone. The company was even on track to drop $14 billion on Starwood Hotels and was even in talks with Jared Kushner to strike a $4 billion deal with his family business, Kushner Industries — both of which never came to fruition. Wu, founded Anbang in 2004 and was once regarded as one of the most politically connected men in China due to his marriage to the granddaughter of former communist party leader Deng Xiaoping, the BBC reported.Chinese-Canadian billionaire, Xiao Jianhua, was sent to jail on corruption charges in 2022.Xiao was living at the Hong Kong Four Seasons when he was taken by authorities in 2017.Four Seasons Image LibraryXiao was sentenced to 13 years in prison and his corporate conglomerate, Tomorrow Group, was fined RMB 55.03 billion, or approximately $8 billion, after pleading guilty to bribery, illegally using funds, and other charges, according to a ruling from the Shanghai First Immediate People's Court. Xiao, himself, was also fined RMB 6.5 million, or around $1 million, based on the court's ruling.Xiao's appearance at the trial also marked his first public sighting since authorities took him from the Four Seasons Hotel in Hong Kong in February 2017, according to Bloomberg. He had been living since fleeing China years earlier, Bloomberg reported.Xiao, who was born in China, passed the examination for the highly selective Peking University at the age of 14, according to The New York Times. He graduated with a degree in law, and sold personal computers, before founding Tomorrow Group in 1999, according to Caixin. The conglomerate eventually grew to have stakes in businesses across banking, securities, insurance, coal and real estate, Caixin reported. By 2017, Xiao amassed a fortune of close to $6 billion according to the Hurun Report, which tracks China's billionaires, though a person close to Xiao told The Times the report vastly understated his wealth. He became a Canadian citizen around 2008 and also has a diplomatic passport to Antigua and Barbuda, according to Global News. Whitney Duan, once one of China’s richest women, disappeared in 2017.Desmond Shum, former husband of Whitney Duan, who went missing in 2017.PBSIn the years before Duan suddenly disappeared, she and her former husband, Desmond Shum, were among China's elite class.  The couple was involved in several large developments in Beijing including the Beijing Airport Cargo Terminal and the Bulgari Hotel, according to Time. In 2015, a couple of years after their marriage broke down, Shum himself left China out of concern for the "authoritarian turn" the country was taking under Xi Jinping, Time reported. Duan disappeared in 2017 and it took him four years to get in contact with her again. After he spoke to her again, Shum told Time that "she said she had no news of the outside world over the last four years. She said, 'They have been lenient to me, they didn't treat me that badly."He also said that Duan pleaded with him not to publish his recent book "Red Roulette: An Insider's Story of Wealth, Power, Corruption, and Vengeance in Today's China," which details corruption in the Chinese Communist Party.Shum told Time, "she asked me to stop the book launch, saying, 'How would you feel if something happened to our son? And what would happen to our son if something happened to me?' I took that to be a threat."  Jack Ma, e-commerce mogul, disappeared in 2020 after criticizing the Chinese financial industry.Chinese entrepreneur Jack Ma, once one of the wealthiest men in Asia, has kept a low profile since 2020.Future Publishing/Getty ImagesThe high-profile Chinese entrepreneur behind e-commerce giants like Alibaba and Ant Group is regarded as something of a celebrity in China and was once the richest man in Asia. At his peak in 2020 he had a fortune of close to $61 billion.  That October, though, as Ant Group was gearing up for an IPO, Ma criticized the Chinese financial industry in a speech he gave in Shanghai. The speech prompted authorities to impose new regulations halting the IPO and Ma suddenly disappeared from public view. He's kept a pretty low profile since, resurfacing over the years in locations like Spain, Thailand, and reportedly spent several months in 2022 living in Japan. In May, Ma made a rare public appearance in China, visiting a school founded by Alibaba partners in the city of Hangzhou, according to Aljazeera. His wealth has taken a hit, too, over the years, as his companies struggled during the pandemic. He's now worth close to $30 billion, according to Bloomberg.Read the original article on Business Insider.....»»

In this article, we will be taking a look at the China’s real estate bubble and 9 other predictions that turned out to be wrong. To see more predictions, you can go directly to see the 5 Predictions that Turned Out to be Wrong. Hedge fund managers, economists, strategists, and analysts play an essential role […] In this article, we will be taking a look at the China’s real estate bubble and 9 other predictions that turned out to be wrong. To see more predictions, you can go directly to see the 5 Predictions that Turned Out to be Wrong. Hedge fund managers, economists, strategists, and analysts play an essential role in the global financial sector. They are often looked upon to provide insight into opportunities worth pursuing at any given time. Nevertheless, it’s their ability to predict market trends and economic outcomes that have seen most of them capture the imagination of investors. Hedge fund managers and strategists leverage sophisticated strategies and techniques to provide predictions on various market events, trends, and stock movements. Some also offer insights on currency fluctuations, interest rate changes, and economic cycle directions. Some of the predictions have panned out true, going on to generate significant returns to investors that incorporated them in their decision-making process. Most investors often look to economic experts to help them make financial decisions. Unknown to some is that even the sharpest minds are not immune to forecasting errors. Some of the predictions have proven spectacularly wrong, denting the image and perceptions of some analysts. Access to large amounts of capital, leverage, and information has often seen the financial elite significantly sway the market’s direction. Likewise, retail and institutional investors often closely watch their predictions and insights on potential market-moving events and trends. Nevertheless, experts cannot see into the future; the factors affecting economies are too numerous and complicated to predict at times. This is one of the reasons the so-called gurus often make mis-judgments that are off the market. On the other hand, some have been known to be spot on in providing accurate insights into the direction the market is likely to move. Michael Burry is one of the most revered strategists and investors, having accurately predicted the 2008 stock market crash. He made billions of dollars in returns on betting against subprime mortgages, which propelled him to celebrity status in the finance world. With a personal net worth of over $ 300 million, the Scion Asset Management manager has made multiple predictions around market crashes, cryptocurrencies, and meme stocks in recent years. Burry is one of the few strategists and analysts who continue to shape the investment world with predictions. You can check out Burry’s latest moves here. Some of the most significant predictions that have shaped the investment world in recent years include the prediction that the Chinese real estate bubble was poised to burst, a prediction made by legendary investor Jim Chanos in 2010. We will talk about that below. You can check out Jim Chanos’ 10 short positions in 2023 here. Source: unsplash Jamie Dimon, the JPMorgan Chief Executive Officer, has also been caught up in the world of predictions suggesting that cryptocurrencies were just a fad poised to go to zero. He suggested that Bitcoin will disappear or be regulated out of existence, terming it a fraud or a hyped fraud. Considering how predictions by hedge fund managers, economists, and strategists have always panned out, it’s always a reminder that anything can happen. While the experts can sometimes accurately predict an event, it’s also possible for them to get it all wrong, all but causing unnecessary jitters in the market. Therefore, investors are always reminded to approach predictions with lots of caution, recognizing that the predictions can come true or fall through. A single event or market shift should never dictate investors’ long-term goals. Given that dips and troughs are natural, it’s important not to let expert predictions cause much worry. Our Methodology We have examined and analyzed some predictions made by high-profile personalities on Wall Street. We’ve provided the reasons behind the predictions and the evidence that supported or refuted the claims. We have also shared insights on how the predictions panned out and their implications. The forecasts are ranked based on when they were made. China’s Real Estate Bubble and Other Predictions That Turned Out To Be Wrong 10. Jim Chanos: China’s Real Estate Bubble Prediction: 2010 Renowned short seller Jim Chanos termed China’s real estate a big bubble that was destined to burst in 2010. He warned that companies exporting the country’s construction sector should be watched carefully because of a bubble in the commercial and residential real estate sector. The billionaire investor predicted concerns that the country was building too many houses, offices, and other infrastructure projects that were not needed. Chanos also warned that the robust market was driven by speculation, corruption, and unsustainable debt. “I do see all of the signs of a credit-induced real estate bubble that i think are going to be a doozy,” Chanos said. Chanos went on to warn that the collapse of the Chinese real estate sector would hurt the building material sectors and the commodities plats in the Western world. The Chinese real estate bubble would burst in 2021 at the height of the pandemic. The burst came after some of the biggest developers Evergrande led helped fuel a decade-long boom in the Chinese real estate market. After decades of big bets on properties with low occupancy rates, with some needing to be completed, everything would fall apart. Evergrande triggered a series of systemic shocks in the Chinese property sector that spilled over to other markets, including the US, in 2021 amid reports it was on the brink of collapse. The developer had failed to pay many of its suppliers and hinted that it could not meet interest payments on loans, which could result in the default of its debts. With more than $300 billion in liabilities, it was the most indebted company in the world, having resorted to loans to buy more than 1,300 real estate projects in over 280 Chinese cities. The burst of the Chinese real estate sector was inevitable as most of the growth over the years was fuelled by unsustainable debt. In 2017, nearly 40% of all bank loans were for home mortgages. Local governments were also on an investment spree, purchasing nearly 20% of all residential floors pace to provide affordable housing. The slump in Chinese property prices was severe because almost every major Chinese enterprise was heavily engaged in the sector. The slump in the Chinese real estate sector continued in 2022, with home prices dropping at the fastest pace in August, marking a 12-month decline. 9. Kyle Bass: Eurozone Collapse of Debt Crisis Prediction: 2011 The European debt crisis will go down in history as one of the biggest events that threatened the future of the economic zone. The multi-year debt crisis, which took place between 2009 and the late 2010s, was characterized by several European nations led by Greece, Portugal, Ireland, Spain, and Cyprus struggling to refinance their government debt. A balance of payment caused the crisis as some nations suddenly stopped foreign capital flow into countries with substantial deficits. The situation worsened due to the inability of governments to devalue currency by using the Euro. At the height of the crisis, hedge fund manager Kyle Bass warned of an imminent collapse of the Eurozone due to the escalating debt crisis. The investor warned of the unsustainable debt levels and deficits that would trigger default and force some countries to exit the euro currency union. Bass started betting against the economic block by buying credit default swaps, contracts that pay off in case of a debt default. The investor expected the Euro to depreciate significantly against the dollar as the crisis worsened. While severe impacts of the debt crisis were felt, especially in Greece and Portugal, the economic block did not collapse as predicted. As the block faced several challenges, the European Central Bank implemented several measures to address the issues. For instance, the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) were established as bailout funds. The measures helped stabilize the economic block and prevented a disorderly breakup. 8. Kyle Bass: Japan Sovereign Debt Crisis Prediction: 2012 While attending a Skybridge Alternatives or SALT Conference in 2012, Hayman Capital Management founder Kyle Bass alleged that Japan was on course to join Europe in debt crisis ranks. The remarks came as all attention was focused on Greece, facing one of its biggest economic crises triggered by debt issues. Bass predicted that the Japanese yen would collapse amid the sovereign debt crisis as the country’s debt-to-GDP ratio was unsustainable amid an aging population that was reducing domestic savings. The renowned short-seller reiterated that the country’s bond yield would spike, resulting in the yen depreciating between 30% and 40%. Bass was especially concerned by how the Bank of Japan was trying to print itself out of the debt crisis by monetizing the national debt by purchasing up to 50 trillion worth of government bonds. The investor went on to short the Japanese yen and bought Japanese stocks poised to benefit from an export boom. He also bought credit default swaps that pay off whenever a borrower defaults on his debts. Despite the bold predictions, the yen never collapsed as the Japanese government implemented various measures to avert a debt crisis. The Japanese government imposed a tighter fiscal policy that curbed spending and borrowing. It also introduced consumption tax hikes to increase revenue and reduce deficits. The BOJ also embarked on quantitative and qualitative easing that involved the purchase of government bonds and other assets to lower borrowing costs. The measures helped moderate the debt and currency situation. 7. George Soros: Brexit’s Economic Impact on UK Prediction: 2016 As the UK was headed for a referendum to determine the kingdom’s future in the European Union, billionaire investor George Soros made a damning prediction. The investor who once broke the Bank of England warned that the UK voting to leave the EU would be catastrophic and could trigger a crisis for the ordinary people. The philanthropist and supporter of human rights said Brexit would lead to a sharp depreciation of the Pound by more than 20%  and a fall in consumer confidence. He also warned of a rise in inflation on the UK being alienated from the EU, a development that would also lead to a decline in investment and trade. Soros also warned of Brexit’s immediate and dramatic impact on the financial markets’ prices and jobs. While most of the predictions did turn out true on the UK voting to leave the EU, most appeared exaggerated. Brexit ended up having less severe economic consequences, as touted by Soros. The Pound did depreciate but bounced back as the storm calmed. While inflation did rise, it was due to higher oil prices and not Brexit. 6. David Einhorn: Tesla Destined to Collapse Prediction: 2017 David Einhorn Greenlight Capital was never a fan of Tesla, the pioneer electric vehicle company. As early as 2017, he termed the company overvalued, facing an uncertain future amid stiff competition from other electric car makers. He claimed that deception at the electric car company was on course to catch up to it, as was the case with the Lehman brothers years earlier. “TSLA is unlikely to sustain a competitive advantage by having a network of charging stations or by accumulating driver data,” he added. “Competition was very slow to develop for Apple … By contrast; every major car company in the world intends to compete with TSLA in electric vehicles.” Einhorn was one of the biggest short sellers betting against Tesla in 2018, insisting that the company was on the brink of collapse, as was the case with the Lehman brothers at the height of the financial crisis. The short bet panned out as expected, as Tesla turned out to be one of the biggest winners on Greenlight’s capital portfolio. The skepticism about Tesla did hold some water as the company faced a lot of challenges between 2013 and 2020 as it sought to establish itself. Nevertheless, Einhorn got it all wrong, as Tesla did start getting its foothold in the sector in 2019. The company saw an unprecedented increase in unit sales  that strengthened the stock’s sentiments in the market Greenlight Capital accumulated significant losses in its short position as the EV giant continued to grow in strength despite its overvaluation concerns. Tesla went on to become one of the most valuable car makers by market cap in 2020, having achieved record deliveries and profits despite the COVID-19 pandemic. In 2020 alone, the stock soared by more than 700% to highs of $900 a share. Since the company went public in 2010, its shares have ballooned by more than 20,000%, outpacing the market as a whole and turning some investors into millionaires. Click to continue reading and see 5 Other Predictions that Turned Out to be Wrong. Suggested articles: 15 Countries That Care About The Environment Most 15 Countries That Watch the Most Gay Content Top 20 Most Visited Museums in the US in 2023 Disclosure: None. China’s Real Estate Bubble and 9 Other Predictions That Turned Out To Be Wrong is originally published on Insider Monkey......»»

Futures Flat As Yields Extend Gains After Brent Crude Hits $97 Overnight US equity futures reversed initial gains following Wednesday's surprise reversal that helped US stocks close green, and were trading marginally lower as global bonds resumed their selloff, sending 10Y yields to a new 16-year peak as soaring Brent oil prices hit $97 overnight before reversing as the US Dollar dipped. At 7:45am ET, S&P futures traded down 0.1% and Nasdaq 100 futures were down -0.3%. As 10-year yields rose 4bps to 4.65% the yield curve flattened and the 2s10s was inverted by less than 50bp for first time since May. 1Y breakeven had its largest move since late July as oil surged on constrained supply. Commodities are mixed with metals and natgas leading with USD lower pre-mkt. Today’s macro focus is on GDP, Consumption, Jobless Claims, Pending Home Sales, Kansas Fed, and updates on economic revisions. We also get four Fed speakers, including Powell at 4pm. Financial conditions have tightened since the Fed meeting and mortgage rates are at multi-decade highs. Keep an eye on the 4200 level as we reach expiration on Friday and the JPM collar is rolled. In premarket trading, Peloton rose 13% after the maker of the trademark exercise bikes agreed to a deal with Lululemon to tap its online workouts and team up on apparel. Micron Technology Inc. tumbled 5% as its mixed outlook for the November quarter weighed on investor sentiment. Analysts see near-term challenges but recovery in the longer term. Here are some other notable premarket movers: Gritstone gained 39% after the biotechnology company said it will receive as much as $433 million from the US government to conduct a trial of its next-generation Covid-19 vaccine. Workday shares fall 9.9% after the software company forecast annual subscription revenue growth of 17% to 19% over the next three years, which analysts say missed expectations. Hawkish commentary from central banks has dashed hopes for a pivot toward lower rates any time soon, making September the worst month for global stocks in a year and the weakest for global bonds since February. Fund managers at T. Rowe Price are shorting 10- and 30-year Treasuries on a bet yields will keep rising as they catch up with the Federal Reserve’s rapid interest-rate hikes. And indeed, traders are pushing yields higher on speculation that US policymakers will keep policy tight as oil prices approach $100 and spark a new round of inflation. The benchmark 10-year yield rose four basis points to 4.647%. "Markets are waking up to central banks are going to have to stay higher for longer in this world shaped by supply,” Wei Li, global chief investment strategist at BlackRock Investment Institute, said in an interview with Bloomberg TV. It's not just supply however: with oil soaring, the commodity inflation that many had left for dead, is back with a bang and overnight WTI briefly surpassed $95 for the first time in more than a year after the "tank bottoms" in Cushing stockpiles underscored a widening global deficit. European stocks are on course for a sixth day of declines with the Stoxx 600 down 0.3% as gains in energy shares boosted by surging oil prices are countered by weakness in rate-sensitive sectors such as technology and real estate. AMS-Osram slumps after the Swiss chipmaker announced a rights issue and 888, the owner of the William Hill gambling chain, falls after cutting its earnings outlook on a spate of bettor-friendly sports results. Here are the biggest European movers: Colruyt shares surge as much as 13% to the highest level in nearly two years on Thursday after the Belgian supermarket operator predicted a sharp increase in profitability. Degroof Petercam hailed the firm’s “major guidance uplift”. Babcock shares rise as much as 11%, the most since July, after the defense outsourcing co. released a trading update that Jefferies sees as “helpful” and de-risking the FY23 outlook. Deliveroo shares climb as much as 10%, the most in 11 months, after the food delivery company said it plans to return up to £250 million to shareholders via a tender offer between 115p-135p per share. Allegro shares gain as much as 9.1% after the company’s CFO warned that robust 3Q guidance from Poland’s biggest e-commerce platform could be a one-off. Europe’s Stoxx 600 energy index is the best-performing subsector in the benchmark on Thursday, as oil was propelled closer to the $100-a-barrel mark after stockpiles at a major US storage hub dropped to critical levels. Bpost shares rise as much as 7.2% after KBC Securities upgrades the Belgian postal company, giving the stock its first buy rating in more than four months, saying visibility is now much improved. Billerud shares gain as much as 4.7% to a more than four-month high after SEB upgrades the Swedish paper and packaging firm to buy on improved risk/reward following significant share price underperformance. AMS-Osram shares tumble as much as 23%, falling to the lowest since 2011, after the Swiss chipmaker announced what Vontobel described as a “significantly larger than feared” rights offering. 888 shares slump as much as 18% after the online betting firm trimmed its full-year Ebitda outlook in an update which Goodbody describes as “disappointing.” Earlier in the session, Asian stocks fell as continued concerns over China’s property market coupled with fear of inflation stoked by oil’s rally toward $100 inhibited risk taking. The MSCI Asia Pacific Index declined 0.8%, with Toyota and Tencent among the biggest drags. Hong Kong stocks fell after Evergrande’s shares were suspended from trading, further weakening sentiment on China’s real estate sector ahead of upcoming holidays.  “Suspension of trading in China Evergrande’s shares and its chairman placed under police surveillance further reinforces the odds of liquidation, while a bailout from authorities remains unlikely,” Yeap Jun Rong, market strategist at IG Asia, wrote in a note. Yeap sees low appetite for risk-taking in Asia in light of the latest developments in China’s property market. Hang Seng and Shanghai Comp diverged amid headwinds in the property sector after the suspension of shares in Evergrande and some of its units, while the mainland was kept afloat after the PBoC’s liquidity injections ahead of the holiday closures and following China’s latest support pledges. Japan's Nikkei 225 underperformed after it slipped beneath the 32,000 level and amid mass ex-dividend day in Japan concerning over 1,400 companies. The Topix dropped amid rising interest rates and as more than 1,000 stocks traded without rights to the next dividend. Markets were closed for holidays in South Korea, Indonesia and Malaysia. Australia's ASX 200 pared initial gains as strength in the commodity-related sectors was offset by the upside in yields and weakness in consumer stocks after retail sales missed forecasts. In FX, the Bloomberg Dollar Spot Index is down 0.3%,ending its longest run of gains in a year. The yen rose for the first day in five as repeated verbal warnings by Japanese authorities over the currency’s weakness spurred intervention speculation. USD/JPY fell 0.3% to 149.28, retreating from Wednesday’s 11-month high of 149.71. EUR/USD up 0.3% to 1.0537; German CPI data in focus later Thursday. GBP/USD snapped six-day decline, climbed 0.5% to 1.22 amid higher gilt yields In rates, treasuries are once again cheaper by up to 4bp across long-end of the curve as Wednesday’s bear-steepening move is extended into early US session. US 5-, 10- and 30-year yields reached new multiyear highs; 10-year TSY yields are more than 3bp cheaper on the day near 4.65%. The 2s10s curve inverted by less than 50bp for first time since May.  European government bonds are on the back foot as investors fret over the prospect of higher-for-longer interest rates. Gilts are faring worse than their German counterparts, with bunds falling less amid German state inflation numbers that point to a slowdown in the national reading later on Thursday. UK 10-year yields are up 11bps while the German equivalent adds 7bps.  The treasury auction cycle concludes with $37b 7-year note; Wednesday’ 5-year note auction stopped 1.2bp through, indicating strong demand. WI 7-year yield at ~4.70% is almost 50bp cheaper than August’s, which stopped 2.1bp through, and higher than all previous 7Y stops since sales of the tenor began in 2009. Dollar IG issuance slate includes a couple of deals with more expected; four companies priced deals on Wednesday, bringing weekly volume to $18.4b vs $15b-$20b projection. US session includes jobless claims, GDP and 7-year note auction. Fed Chair Powell is scheduled to host a town hall event with educators speak at 4pm New York time. In commodities, WTI crude futures are down slightly after touching a YTD high of $95/bbl during Asian trading hours, the highest level in over a year. Looking to the day ahead, it’s fairly busy on the data side, with the US September Kansas City Fed manufacturing activity, August pending home sales and initial jobless claims. In Europe, we have the Eurozone September services, industrial and economic confidence, the German September CPI, the Italian September manufacturing confidence, economic sentiment and consumer confidence, and the August PPI. We will also be hearing from the Fed’s Powell, Cook and Goolsbee, as well as the ECB’s Holzmann. Lastly, we will have company earnings from Nike, Accenture, and Blackberry. Market Snapshot S&P 500 futures little changed at 4,312.00 MXAP down 0.9% to 156.51 MXAPJ down 0.6% to 486.36 Nikkei down 1.5% to 31,872.52 Topix down 1.4% to 2,345.51 Hang Seng Index down 1.4% to 17,373.03 Shanghai Composite up 0.1% to 3,110.48 Sensex down 0.8% to 65,580.52 Australia S&P/ASX 200 little changed at 7,024.76 Kospi little changed at 2,465.07 STOXX Europe 600 down 0.4% to 445.12 German 10Y yield little changed at 2.89% Euro up 0.1% to $1.0518 Brent Futures down 0.1% to $96.43/bbl Gold spot down 0.0% to $1,874.88 U.S. Dollar Index down 0.11% to 106.55 Top Overnight News China appointed Lan Fo’an as the Communist Party chief at the Ministry of Finance, a move that will pave the way for him to become finance minister at a time when the government is seeking to bolster the economy. BBG OpenAI is in advanced talks with former Apple designer Sir Jony Ive and SoftBank’s Masayoshi Son to launch a venture to build the “iPhone of artificial intelligence”, fueled by more than $1bn in funding from the Japanese conglomerate. FT France is exploring ways to cap national electricity prices without falling foul of EU subsidy rules, including a possible windfall levy to deliver President Emmanuel Macron’s pledge to “take back control” of prices. FT Spain’s CPI for Sept came in at +3.2% Y/Y on the headline, up from +2.4% in Aug but below the Street’s +3.3% forecast (while core was +5.8%, down from +6.1% in Aug and below the Street’s +6% forecast). BBG Saudi Arabia and Russia have raked in billions of dollars in extra oil revenues in recent months, despite pumping fewer barrels, after their production cuts sent crude prices soaring. The cutbacks were a risky strategy, both financially and politically. But they appear to be paying off for the two most important members of the Organization of the Petroleum Exporting Countries and its Russia-led allies, or the OPEC+ cartel. WSJ WTI briefly hit $95, the highest in more than a year, after a drop in Cushing stockpiles to critical levels highlighted a widening global deficit. The jump heightened inflation concerns and raised expectations rates will stay higher for a protracted period. BBG There are few signs of a late deal to avert US government shutdown — with Kevin McCarthy making big demands of President Biden and bringing little leverage to the clash. McCarthy counts the long-term spending cuts he extracted from Biden last spring as one of his proudest achievements and is now looking for more concessions. BBG The second GOP presidential debate was full of arguments, one-liners and strained attempts for attention, but none of the candidates articulated a clear case why they should be the front-runner instead of Donald Trump. WSJ Trading in the shares of China Evergrande Group   and two of its publicly listed units was suspended on Thursday, after reports that the beleaguered property developer’s founder and chairman had been placed under police surveillance. WSJ All eyes on S&P 500 200dma of 4195. If level is tested and doesn’t provide support history suggests S&P 500 forward 1-/3-/6-/12-month returns are significantly below-average following a break in its 200dma. A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed following the indecisive performance in the US heading into month and quarter-end amid further upside in global yields and higher oil prices. ASX 200 pared initial gains as strength in the commodity-related sectors was offset by the upside in yields and weakness in consumer stocks after retail sales missed forecasts. Nikkei 225 underperformed after it slipped beneath the 32,000 level and amid mass ex-dividend day in Japan concerning over 1,400 companies. Hang Seng and Shanghai Comp diverged amid headwinds in the property sector after the suspension of shares in Evergrande and some of its units, while the mainland was kept afloat after the PBoC’s liquidity injections ahead of the holiday closures and following China’s latest support pledges. Top Asian News PBoC set USD/CNY mid-point at 7.1798 vs exp. 7.3239 (prev. 7.1717) HKEX announced shares of Evergrande (3333 HK), Evergrande Property Services (6666 HK) and Evergrande New Energy Vehicle (708 HK) have been suspended. China's cyberspace regulator has issued draft rules on promoting draft riles on promoting and regulating the cross-border flow of data; companies providing more than 1mln people's personal information outside the country should safety assessment of data. Where data does not contain personal information or important data, there is no need to declare a security review assessment, according to Reuters. Chinese FX Regulator expects the current account surplus to remain basically stable in H2 and said the cross-border two-way investment is expected to further stabilise and improve. The scale of FX reserves will remain basically stable. Will actively fend off and resolve external shock risks. Will strive to maintain the stability of FX markets and balance of payments. Chinese Finance Ministry will exempt urban land use tax on land used for construction of affordable housing projects. Stamp duty for affordable housing management firms and buyers are exempted. Tax exemptions and cuts effective from October 1st, according to Reuters. European bourses trade softer following a predominantly negative close yesterday as a lack of positive catalysts keeps sentiment suppressed. Sectors in Europe have a mostly negative tilt with Travel & Leisure at the bottom of the pile after feeling the pressure from higher energy prices. On the upside, Energy and Basic Resources outperform. US futures are trading modestly weaker, paring back gains seen in yesterday's session. The docket for today picks up, with US Core PCE Prices (Final), GDP (Final) and weekly IJC’s all due at the busy 13:30 BST / 08:30 ET slot. Top European News France is exploring a windfall levy to take back control of energy prices, according to FT. European Commission VP says the exact scope of the probe into Chinese EV imports has not been decided yet, when asked if Tesla (TSLA) will be impacted by the probe, via CNBC. FX The T-note managed to tread water for the most part within a 107-27/15+ range and perhaps with some leverage from blocked curve flatteners. Bunds and Gilts have been in freefall alongside Eurozone periphery debt. The 10 year German and UK benchmarks breached deeper chart and psychological supports on the way down to 127.60 and 93.43 respectively. Angst in BTPs was prompted by Italy’s budget and exacerbated by month-end supply, but the latest collapse elsewhere looks more momentum-based and technically driven given no obvious fresh fundamental catalyst. Italy sold EUR 8bln vs exp. EUR 7-8bln 4.10% 2029, 4.20% 2034 BTP Auction & EUR 1.5bln vs exp. 1-1.5bln 2026, 2030 CCTeu Auction. Fixed Income The T-note managed to tread water for the most part within a 107-27/15+ range and perhaps with some leverage from blocked curve flatteners. Bunds and Gilts have been in freefall alongside Eurozone periphery debt. The 10 year German and UK benchmarks breached deeper chart and psychological supports on the way down to 127.60 and 93.43 respectively. Angst in BTPs was prompted by Italy’s budget and exacerbated by month-end supply, but the latest collapse elsewhere looks more momentum-based and technically driven given no obvious fresh fundamental catalyst. Italy sold EUR 8bln vs exp. EUR 7-8bln 4.10% 2029, 4.20% 2034 BTP Auction & EUR 1.5bln vs exp. 1-1.5bln 2026, 2030 CCTeu Auction. Commodities France is exploring a windfall levy to take back control of energy prices, according to FT. European Commission VP says the exact scope of the probe into Chinese EV imports has not been decided yet, when asked if Tesla (TSLA) will be impacted by the probe, via CNBC. Geopolitics PBoC set USD/CNY mid-point at 7.1798 vs exp. 7.3239 (prev. 7.1717) HKEX announced shares of Evergrande (3333 HK), Evergrande Property Services (6666 HK) and Evergrande New Energy Vehicle (708 HK) have been suspended. China's cyberspace regulator has issued draft rules on promoting draft riles on promoting and regulating the cross-border flow of data; companies providing more than 1mln people's personal information outside the country should safety assessment of data. Where data does not contain personal information or important data, there is no need to declare a security review assessment, according to Reuters. Chinese FX Regulator expects the current account surplus to remain basically stable in H2 and said the cross-border two-way investment is expected to further stabilise and improve. The scale of FX reserves will remain basically stable. Will actively fend off and resolve external shock risks. Will strive to maintain the stability of FX markets and balance of payments. Chinese Finance Ministry will exempt urban land use tax on land used for construction of affordable housing projects. Stamp duty for affordable housing management firms and buyers are exempted. Tax exemptions and cuts effective from October 1st, according to Reuters. US Event Calendar 08:30: Sept. Initial Jobless Claims, est. 215,000, prior 201,000 Sept. Continuing Claims, est. 1.68m, prior 1.66m 08:30: Revisions: GDP/National Economic Accounts 08:30: 2Q GDP Annualized QoQ, est. 2.2%, prior 2.1% 2Q Core PCE Price Index QoQ, est. 3.7%, prior 3.7% 2Q GDP Price Index, est. 2.0%, prior 2.0% 2Q Personal Consumption, est. 1.7%, prior 1.7% 10:00: Aug. Pending Home Sales (MoM), est. -1.0%, prior 0.9% Pending Home Sales YoY, est. -13.0%, prior -13.8% 11:00: Sept. Kansas City Fed Manf. Activity, est. -2, prior 0 DB's Jim Reid concludes the overnight wrap The storm that’s been sweeping through New York while I've been here this week has stayed a bit longer in fixed income markets, with the 10yr Treasury yield (+7.2bps) climbing to a new cycle high of 4.61%. In part, that’s been driven by a fresh spike in oil prices, with Brent Crude currently at $97.41/bbl this morning for the first time since November. And as US rates turned higher, so too did the dollar index, which is also at its highest level since November as we go to press. Yet despite the latest sell-off in bond markets, US equities were relatively calm with the S&P 500 (+0.02%) regaining its composure after a mid-session sell-off, even as yields went from below 4.50% to above 4.60% in a few hours. That said, this respite might prove brief, as US futures are pointing lower again this morning, and there’ve been sharp losses for several Asian indices overnight. Meanwhile, there’s still no sign of the US House and Senate being able to agree on a funding extension ahead of a potential US government shutdown at the end of the week. Today we’ve got important US GDP benchmark revisions as well, which happen every 5 years and have the potential to rewrite history one way or the other, whilst informing economists of any change in recent data momentum. See Brett Ryan’s preview in his week ahead here. Once again, the big story yesterday was that bond sell-off, which sent Bloomberg’s aggregate global bond index down to its lowest level of 2023 so far. But it wasn’t just the 10yr that lost ground, as 3 0yr Treasury yields also moved up +4.4bps to a new cycle high of their own at 4.72%, which is their highest level since 2011. We can see how that’s increasingly being passed through to the real economy as well, since the MBA’s weekly update of 30yr mortgage rates climbed another 10bps to 7.41%. That’s their highest level since December 2000, and one that’s likely to go higher still given the recent move in rates. Real yields again drove much of the increase, with the 10yr real yield up +4.1bps to a post-GFC high of 2.26%. But we also saw a f resh rise in inflation breakevens, with the 30yr up +1.4bps to a 6-month high of 2.39%, not least as the upward march in oil prices regained steam. That came as Brent crude broke through the $95/bbl level all the way to $96.55/bbl, its highest level since November, after gaining +2.76% on the day, and this morning it’s since gone above $97/bbl. WTI crude saw an even more dramatic increase, up +3.64% in its largest rise since May, to close at a new one-year high of $93.68/bl, with further gains above $94/bbl this morning. The oil price spike occurred as the latest US weekly crude inventory data showed a -4.1% decline in oil stocks at the key hub in Cushing, Oklahoma to its lowest level since last summer. This sovereign bond sell-off was evident in Europe too, where the 10yr bund yield (+3.5bps) closed at a new post-2011 high of 2.84%, along with the 10yr French OAT (+3.8bps) at 3.40%. Italian BTPs underperformed once again, however, with the spread of 10yr Italian yields over bunds widening to 195bps, its highest closing level since the banking stress in March. That spread widening came ahead of the Italian government unveiling its 2024 budget yesterday evening, which foresees a 4.3% deficit next year as a share of GDP. That’s largely in line with earlier reports and a touch above the level that our economists see as consistent with EU recommendations – see their note earlier this week. For equities, there was a brief stabilisation yesterday that’s since turned more negative overnight again. For instance, the S&P 500 traded largely flat (+0.02%) while the NASDAQ saw a slight outperformance (+0.22%). The performance was varied across sectors, with energy stocks (+2.51%) seeing the strongest performance amidst to the surge in oil prices. Otherwise, industrials advanced (+0.76%) following stronger capital goods orders data (more on this below). Meanwhile, several of the more defensive sectors underperformed, including utilities (-1.93%) and consumer staples (-0.77%). Also notable is the near 10% decline of the consumer discretionary sector in the past two weeks (-0.38% yesterday), which comes as the latest weekly BEA card spending data saw the 4-week moving average fall to its lowest since early 2021. So a potential area of concern for the soft landing camp. Looking forward, futures on the S&P 500 have posted a modest -0.04% decline this morning. Overnight in Asia, the major indices have mostly lost ground this morning, with a sharp decline for the Nikkei (-1.96%) and the Hang Seng (-1.04%) overnight. That currently leaves the Hang Seng on course for its lowest close so far of 2023, which comes as trading in Evergrande has been suspended in Hong Kong . Otherwise, there’ve been smaller declines for stocks in mainland China, with the CSI 300 down -0.28%, whilst the Shanghai Comp (+0.13%) has seen a modest increase. Back in Europe, several data releases added to the downbeat tone yesterday. Among others, Germany’s Gfk consumer confidence index fell once again, from -25.5 to -26.5 (vs -26.0 expected). Similarly, the French INSEE household confidence survey for September fell from 85 to 83 (vs 84 expected). This was mostly driven by fears of unemployment and was the third month in a row that the indicator weakened. Alongside the other macro headwinds, this proved to be a challenging backdrop for European equity markets, with the STOXX 600 down by -0.18% to its lowest level in nearly six months . Turning to the remaining data yesterday, US durable goods orders came in above expectations at +0.2% (vs -0.5% expected) and core capital goods orders surprised strongly to the upside at 0.9% (vs +0.1% expected). That suggests some upside for US Q3 GDP trackers, though a modest one when accounting for downward revisions for the previous month (-0.5pp for capital goods orders). Looking to the day ahead, it’s fairly busy on the data side, with the US September Kansas City Fed manufacturing activity, August pending home sales and initial jobless claims. In Europe, we have the Eurozone September services, industrial and economic confidence, the German September CPI, the Italian September manufacturing confidence, economic sentiment and consumer confidence, and the August PPI. We will also be hearing from the Fed’s Powell, Cook and Goolsbee, as well as the ECB’s Holzmann. Lastly, we will have company earnings from Nike, Accenture, and Blackberry. Tyler Durden Thu, 09/28/2023 - 08:20.....»»