FTX

Two days ago, the US announced its intention to prosecute Sam Bankman-Fried and he was arrested by authorities in the Bahamas. I thought this might be the final shoe to drop in cryptospace and could cause a bounce in crypto currencies. The absence of one was the only thing worthy of note.

inflation

Yesterday, the government reported a slight decrease in the rate of domestic price rises, just before the Wall Street open. This caused an immense initial bounce in stock prices, one that gradually faded as the day progressed. What was very odd about this, though, was that the biggest risers were stay-at-home stocks, whose merits in today’s world are open to question, at the very least. ROKU, for instance, was up by about 12% at first, but closed slightly down on the day. ARKK was up 8%, but weakened steadily as the day wore on.

Interesting that a set of trading bots would extrapolate from the world of 2020-21 to the present. Interesting, also, how quickly either humans or other bots acted on this error.

Musk

There’s more talk today about the big commercial banks who financed Musk’s takeover of Twitter wanting him to repay $3 billion of the loans they recently issued to Twitter to buy in its stock. He would reportedly do so by using money he would raise through a margin loan issued by the same banks, and secured by, say $6 billion, of his TSLA stock. Musk reportedly has already used a big chunk of his TSLA shares to secure other margin loans, but he also has stock options on $40 billion? more. So, although possibly risky for Musk if he’s highly leveraged already, a margin loan is presumably doable.

But why in the world would Musk do this?

The only thing that I can come up with is that Twitter is either now, or may soon be, in violation of loan covenants that specify minimum levels of operating performance the company must meet–or face the possibility of ceding control of Twitter to the banks.

Same question, though …why in the world would the banks want to take over Twitter?

Sounds like a classic game of chicken to me.

the market

The last couple of weeks of the calendar year are usually uneventful. Most professionals are closing their books right now. Retail investors are trying to figure out what tax losses to generate. During the days after Christmas unscrupulous fellows often try to make small, illiquid stocks dance in a way the boosts their performance bonuses.

My hunch is that more than usual is going on now, that what we’re seeing in days like yesterday is a harbinger of what 2023 will look like. So I think the patterns in current winners/losers will have much more information than is usually the case.