The News Radar

Timely links to external news and articles, usually valuation related, with occasional commentary. Most recent items shown below - for more, check the archive in the sidebar.

Wednesday, 18 January 2023
Wall Street Rapper Charged in Crypto Heist Gets New Tech Job

The former tech entrepreneur, “Razzlekhan” rapper and accused cryptocurrency thief Heather Morgan has a new job.

Morgan, who dubbed herself on social media and in music videos as “The Crocodile of Wall Street,” was hired by an unspecified technology company even though she’s under 24-hour house arrest, according to a court filing. She and her husband are accused of trying to launder $4.5 billion of Bitcoin stolen from the Bitfinex currency exchange.

Only 18 days in and already found the headline of the year.

Tuesday, 17 January 2023
China’s Population Falls, Heralding a Demographic Crisis

HONG KONG — The world’s most populous country has reached a pivotal moment: China’s population has begun to shrink, after a steady, yearslong decline in its birthrate that experts say is irreversible.

The government said on Tuesday that 9.56 million people were born in China last year, while 10.41 million people died.

A major turning point.

Extremely Hardcore

No breaking news here, but an excoriating summary of Elon's last 12 months, and his absolutly bungled Twitter buyout.

Thursday, 12 January 2023
Microsoft’s Nadella Takes Fresh Aim at Google With OpenAI Talks

The company is in discussions to invest as much as $10 billion in OpenAI, the creator of viral AI bot ChatGPT, according to people familiar with its plans. The proposal under consideration calls for Microsoft to inject the cash over several years, though final terms may change, the people said.

Very difficult to speculate on whether or not these particular economics make sense, but Microsoft has been an incredibly canny navigator of tech disruption since its inception.

US Inflation Cools Again, Giving Fed Room to Downshift on Rates

US inflation continued to slow in December, adding to evidence price pressures have peaked and putting the Federal Reserve on track to again slow the pace of interest-rate hikes.

The overall consumer price index fell 0.1% from the prior month, with cheaper energy costs fueling the first decline in 2 1/2 years, according to a Labor Department report Thursday. The measure was up 6.5% from a year earlier, the lowest since October 2021.

Tuesday, 3 January 2023
2023 Will Be the Year of the Electric SUV

The ironic thing is no one really has any idea just how many drivers want to go electric, but safe to say it’s a lot. Surveys regularly peg the EV-curious between 25% and 50% and that share will only increase as products proliferate. For green driving, as the saying goes, it’s the best of times and…well…it could be better.

Continuing to frame EVs as some kind of "green" alternative is crazy. Extremely few people are in a position to pay an extra $10k+ on something just because it's a more eco-friendly choice. The real story behind EVs is that they're unbelievably better cars. Anyone who has driven one will tell you that it is a qualitatively different and better experience than a regular gasoline car. The best metaphor I have for it is like when high definition TVs first came out - once you saw that with your own eyes it was immediately obvious that it was the future of the entire industry.

US Recession ‘Pretty Likely,’ Ex-New York Fed Chief Dudley Says

“A recession is pretty likely just because of what the Fed has to do,” he said in an interview on Bloomberg Surveillance Tuesday. “But what’s different this time I think is that if we have a recession, it’s going to be a Fed-induced recession and the Fed can end the recession by subsequently easing monetary policy.”

Checks out.

Thursday, 29 December 2022
Best Business Books of 2022

A selection of the best business books of the year, a few tips from readers and the titles DealBook looks forward to reading in 2023.

Wall Street’s Top Stars Got Blindsided by 2022 Market Collapse

The two men — high-profile personas at big-name firms — are the public faces of what can only be described as the blindsiding of Wall Street. With few exceptions, the best and brightest in stock and bond markets failed to appreciate how the inflation outbreak would upend the investing world in 2022. They failed to anticipate how the Fed would react — the rate increases came at a torrid, not measured, pace — and failed to foresee how that, in turn, would trigger the worst simultaneous rout in stocks and bonds since at least the 1970s.

No one can predict what the stock market will do next.

Milan Reports 50% of Passengers on China Flights Have Covid

Italian health authorities will begin testing all arrivals from China for Covid after almost half of the passengers on two flights to Milan were found to have the virus.

They are also sequencing the Milan tests to see if there are new variants, the Health Ministry said in a statement.

Not a headline you want to see three years into this thing...

Thursday, 22 December 2022
Forget Stock Predictions for Next Year. Focus on the Next Decade.

These attempts at clairvoyance are stymied by a fundamental problem: It’s simply impossible to forecast the path of the markets six months or a year ahead with accuracy and consistency, as many academic studies have shown. That the financial services industry continues to label these unreliable numbers as forecasts is a triumph of breathtaking chutzpah — a technical term for shameless audacity.

The best investing advice I've seen all year.

Bankman-Fried Associates Flip as FTX Founder Arrives in NYC

FTX co-founder Sam Bankman-Fried landed in the US late Wednesday to face a range of criminal charges just as two of his long-time associates said they were cooperating with prosecutors.

The revelation that Caroline Ellison and Gary Wang had pleaded guilty to fraud and were working with federal officials probing the collapse of the crypto exchange is an ominous sign for Bankman-Fried. The 30-year-old is facing an eight-count indictment in New York.

This guy is done for.

Renters Want to Buy Their First Homes — They Just Can’t

While 95% of millennials who rent want to own a home, they’re doubtful they’ll be able to pull it off any time soon.

First there was the pandemic housing frenzy, with bidding wars and cash offers dominating an under-supplied market that was too hot for many first-time buyers to crack, even with historically low mortgage rates. Then came interest rate hikes, which have driven up borrowing costs. And while the Fed has managed to cool housing demand, the supply of available properties is still low and monthly mortgage payments have spiked out of reach for many potential buyers.

Left unstated in this article is that this result is the explicit and purposeful goal of current fed policy. Rates go up => people buy less things. The only interesting facet here is how such policy affects different groups disproportionately:

Across age demographics, 88% percent of people who bought a primary residence between July 2021 and June 2022 were White, according to the National Association of Realtors. Among first-time buyers during that period, 82% were White, the highest share in at least 20 years.

Monday, 19 December 2022
Get Yourself Some “No Men”

What is the problem with “Yes Men?” They tell their masters what they want to hear, fail to challenge their worst ideas, and generally encourage their patron’s own bad instincts. As we have seen in 2022, “Yes Men” are disastrous for titans of industry, billionaires, even monarchs.

Some of 2022’s most disastrous situations occurred because these people failed to have anyone around to challenge or push them to come up with better solutions. They needed to have some “No Men” around.

Incredibly good advice, albeit difficult to follow. Always have someone that can comfortably and safely disagree with you.

Tuesday, 15 November 2022
FTX’s Balance Sheet Was Bad

And yet bad as all of this is, it can’t prepare you for the balance sheet itself, published by FT Alphaville, which is less a balance sheet and more a list of some tickers interspersed with hasty apologies. If you blithely add up the “liquid,” “less liquid” and “illiquid” assets, at their “deliverable” value as of Thursday, and subtract the liabilities, you do get a positive net equity of about $700 million. (Roughly $9.6 billion of assets versus $8.9 billion of liabilities.) But then there is the “Hidden, poorly internally labeled ‘fiat@’ account,” with a balance of negative $8 billion. I don’t actually think that you’re supposed to subtract that number from net equity — though I do not know how this balance sheet is supposed to work! — but it doesn’t matter. If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.

What Levine is doing is special. Give this man a Pulitzer.

Saturday, 12 November 2022
FTX says ‘unauthorized transactions’ drained millions from the exchange

FTX moved users’ funds to offline wallets early Saturday morning after a wave of “unauthorized transactions” drained hundreds of millions of dollars from the beleaguered cryptocurrency exchange. Ryne Miller, the general counsel at FTX US, didn’t confirm a hack, but said on Twitter that the company made the move to “mitigate damage” caused by the potential theft, as transferring funds offline, or to “cold storage,” helps prevents outsiders from gaining access to them.

The millions in funds evaporated from the platform shortly after FTX filed for chapter 11 bankruptcy on Friday, affecting the domestic FTX US trading platform, the global version of FTX, and Alameda Research. It’s still unclear how much is missing from the exchange, but a report from CoinDesk suggests the amount could total over $600 million, while the blockchain analytics company, Elliptic, puts this number at about $473 million.

One can only hope that the missing funds belonged primarily to Silicon Valley VC tech-bro libertarian clowns and not to the working-class folks that they've been pushing their ponzi scheme onto.

Friday, 11 November 2022
‘It’s All Gone’: FTX Bankruptcy Has Retail Traders Bracing for Losses

Investors with crypto on the FTX platform — who numbered more than 5 million worldwide at the peak — will be closely watching the bankruptcy proceedings for any hope they might be refunded. However, many are resigning themselves to the fact that their holdings may be gone forever.

“The company and Sam Bankman-Fried seemed trustworthy,” said Justin Zhang, a 34-year-old engineer in Los Angeles. “I thought FTX US was different because of all the regulations put in place, but it’s not.”

As incredible as it was predictable.

Wednesday, 9 November 2022
Is This Crypto’s Lehman Moment?

Indeed, the sale of FTX to Binance may turn out to be the most gripping crypto narrative of the year — a “Succession”-level drama involving rival billionaires, rumors of sabotage and high-stakes battles over the future of the industry. It’s a stunning, sudden fall from grace for one of the crypto world’s biggest celebrities. And it signals that the industry, already reeling from a brutal year of losses, may be in for even tougher times.

Monday, 7 November 2022
Tyson Foods CFO Arrested After Authorities Say He Fell Asleep in Wrong Home

John R. Tyson, Tyson Foods Inc.’s chief financial officer and son of the meat giant’s chairman, was arrested over the weekend after authorities said he fell asleep in the wrong house.

Mr. Tyson, 32 years old, was found asleep in a woman’s bed at her home in Fayetteville, Ark., on Sunday morning, according to a preliminary arrest report filed by the Fayetteville Police Department.


Mr. Tyson, the great-grandson of Tyson Foods’s founder, was promoted to the CFO role for the $24 billion meat company in September and took over the job at the start of October. He is the youngest chief financial officer serving at a company in the S&P 500 or Fortune 500, according to Crist Kolder, an executive-search firm.

Before taking over as CFO, he had been serving as Tyson’s executive vice president of strategy and chief sustainability officer, roles he still holds.

Absolutly breathtaking that investors in a public company would put up with this nepotism. No one on that board should have any credibility whatsoever. Just imagine how poorly other parts of this company might be running.

Wednesday, 2 November 2022
Stocks Drop After Strong ADP as Fed Decision Looms

The Fed is expected to raise rates by 75 basis points, extending its most aggressive tightening campaign since the 1980s. The decision will be announced at 2 p.m. in Washington and Powell will hold a press conference 30 minutes later. He may emphasize policymakers remain steadfast in their inflation fight, while leaving options open for their December gathering.

“Markets want clarity on where the Fed will at least pause the current rate hike cycle, but Chair Powell is not really in any position to provide that just yet,” said Nicholas Colas, co-founder of DataTrek Research. “For every sign the US economy is slowing (housing, commodity prices, retail sales ex-inflation) there are others that say labor market conditions remain strong.”

Very odd and seemingly counterintuitive that stocks should fall on news that the labor market is doing great. But the market wants some level of confidence on when/where rate hikes will eventually stop, and the continued stregth of the economy despite rate increases to-date makes that a very hard question to answer.

Tuesday, 1 November 2022
What Moneyball-for-Everything Has Done to American Culture

The religion scholar James P. Carse wrote that there are two kinds of games in life: finite and infinite. A finite game is played to win; there are clear victors and losers. An infinite game is played to keep playing; the goal is to maximize winning across all participants. Debate is a finite game. Marriage is an infinite game. The midterm elections are finite games. American democracy is an infinite game. A great deal of unnecessary suffering in the world comes from not knowing the difference. A bad fight can destroy a marriage. A challenged election can destabilize a democracy. In baseball, winning the World Series is a finite game, while growing the popularity of Major League Baseball is an infinite game. What happened, I think, is that baseball’s finite game was solved so completely in such a way that the infinite game was lost.

Compelling piece about baseball but actually about everything. You get what you measure, and the cloud computing explosion has us measuring more than ever.

Mortgage Giant Rocket Plunges Back to Earth, Hit by Rising Rates

Getting potential customers to trade a 3% mortgage for a 6% one is like “pushing rocks up hills,” said Colin Wyzgoski, who quit a job as a banker in August after taking time off because of work stress.

“When the fish are jumping in the boat, the job is one thing,” Rocket Mortgage Chief Executive Bob Walters said. “When you’re competing with a lot of other people, it’s a different thing.”

I'm sure it's unfair and presented out of context, but that's still a hell of a quote from a chief executive.

Why Mortgage Rates Are So Darn High

For the past decade, the spread between a measure of average national mortgage rates and 10-year Treasury yields has averaged 1.8 points, according to figures tracked by Autonomous Research. This year began right around that level. But with Treasurys yielding over 4%, the spread now at roughly 3 points is about as high as it has been this century.

Other times that the spread has seen comparable widening were in late 2008 and March 2020, when the financial crisis and pandemic, respectively, were driving investors to the haven of Treasurys. In both cases, the Federal Reserve stepped up to buy more mortgage bonds, bringing spreads and mortgage rates down, as spreads on mortgage bonds are a key component in the mortgage rates ultimately charged to borrowers.

This time, that isn’t happening.

Friday, 28 October 2022
We Should Just Accept We’re Going to Have a Blah Economy

If you follow financial commentary, it sounds like we’re about to hit the inflection point — that moment when the economy turns and we enter a recession; the stock market crashes, inflation deflates, people lose jobs and housing prices tank. But if there has been one thing consistently true over the past two years, it is that what everyone consistently predicted has turned out to be wrong. That’s because we’re in uncharted territory. We have never before turned the economy off, then turned it back on again as we did in the pandemic.

Welcome to Hell, Elon

the problems with Twitter are not engineering problems. They are political problems. Twitter, the company, makes very little interesting technology; the tech stack is not the valuable asset. The asset is the user base: hopelessly addicted politicians, reporters, celebrities, and other people who should know better but keep posting anyway. You! You, Elon Musk, are addicted to Twitter. You’re the asset. You just bought yourself for $44 billion dollars.

The problem when the asset is people is that people are intensely complicated, and trying to regulate how people behave is historically a miserable experience, especially when that authority is vested in a single powerful individual.