FTX Collapse Blame Game! Now Its Tom Brady’s Fault(?), Cathy Wood Sticks To Bitcoin Target Of $1 Million (Didn’t ANYBODY Look Under The Hood Of FTX/Alameda Research??)

Again, why did people with professional investment managers not look under the hood, so to speak, when touting FTX and Sam Bankman-Fried’s scam? Or why didn’t Washington DC politicians like Maxine Water (D-CA) look into what was going on with their second largest donor after George Soros?

According to CBS News Miami,

Former FTX Trading CEO Sam Bankman-Fried, NFL quarterback Tom Brady, supermodel Gisele Bundchen and comedian Larry David are among a celebrity-studded list of people accused of defrauding investors who lost money in the cryptocurrency exchange’s sudden collapse.

A proposed class-action filed in federal court in Florida late Tuesday names those four, along with other athletes and entertainers, as defendants in the case. All promoted FTX, one of the world’s largest crypto trading platform exchanges before it declared bankruptcy on November 11, with the company now under investigation for possible securities violations.

“It is still very difficult to comprehend that just one company defrauded more than $11 billion dollars from consumers, all from our backyard here in Miami,” Adam Moskowitz, the attorney leading the class action, said in an email.The suit seeks unspecified damages and is the first filed against Bankman-Fried and his companies since FTX filed for bankruptcy protection. BECAUSE MR MOSKOWITZ, NOBODY LOOKED UNDER THE HOOD.

Other current and former athletes named in the suit are NBA star Stephen Curry; NFL quarterback William Trevor Lawrence; baseball player Shohei Ohtani; tennis player Naomi Osaka; and broadcaster and former basketball player Shaquille O’Neal. Kevin O’Leary, a host of “Shark Tank,” is also named in the complaint, which was filed Nov. 15 in the Southern District of Florida.

The exchange shuffled customer money between affiliated entities, using new investor funds and loans to pay interest to the old ones in an attempt “to maintain the appearance of liquidity,” Moskowitz alleged, adding that FTX used public figures to give the operation an air of credibility.

Larry David, Trevor Lawrence and Naomi Osaka got stung by SBF like Tom Brady and Step Curry in a fraud scheme. True, celebrities should have excercized caution with dealing with SBF (I would love to see SBF’s investor presentation, but there may not have been one).

Or did SBF show this Bitcoin chart with Fed tightening? Or did ARK’s Cathy Wood look at this chart?/

Despite the recent FTX-fueled crypto market collapse, Cathie Wood, founder and CEO of Ark Invest Management, stood by her prediction that Bitcoin would reach $1 million by 2030.

$16,500 to $1,000.,000 by 2030? In 8 years??

“FTX were geniuses at public relations and marketing, and knew that such a massive Ponzi scheme — larger than the Madoff scheme — could only be successful with the help and promotion of the most famous, respected, and beloved celebrities and influencers in the world,” he said.

FTX did not reply to a request for comment.

FTX’s creditors will be first in line to get whatever assets a bankruptcy judge deems appropriate to distribute as the company seeks to restructure as part of its Chapter 11 filing. Investors in the Bahamas-based company, which had raised some $2 billion in venture capital, come next.

That means FTX account holders, who used the platform to trade bitcoin, ethereum and other digital currencies, may have to wait years to get their money back – if they ever do.

And so it goes. I doubt that Maxine Waters House Financial Services Committee will do anything constructive. The hearing will be a battle cry for more regulation and perhaps even paint SBF as victim of volatility.

The really sad part of this story is that SBF is still trying to raise money to do it all over again. But there are always investors who want to buy a piece of the blue sky, or a bridge in Brooklyn.

Litecoin is up big … again.

The Deep! The US Treasury 10Y-2Y Yield Curve Keeps Going Deep Into Inversion As M2 Money YoY Collapses

The US economy is in “The Deep.” Deep into yield curve inversion, that is.

The US Treasury 10Y-2Y yield curve swam deeper into inversion at -75 basis points. The deepest inversion since just before The Great Recession and housing market crash.

98 Shades Of Gray! US Treasury 10Y-2Y Yield Curve Inverts To -73.5 BPS, Worst Since 1981 (98 Straight Days Of Inversion)

The Biden Administration is setting all sorts of records. One is the worst inflation rate in 40 years. Another is highest gasoline prices in history (until the latest global slowdown). The list goes on, but here is another one: the US Treasury 10Y-2Y yield curve is now at -72.5 basis points, the more inverted curve since 1981.

This is the US Treasury version of 50 Shades Of Grey.

Drivers To See Highest Thanksgiving Gasoline Prices Ever While Diesel-To-Gasoline Spread Soars (Food Prices UP 49% Under Biden, Diesel Prices UP 102%)

As Americans prepare to hit the road for Thanksgiving, average gas prices will be at their highest seasonal level ever, according to GasBuddy.

GasBuddy says the national average is projected to stand at $3.68 on Thanksgiving Day. This is nearly 30¢ higher than last year, and over 20¢ higher than the previous record of $3.44 set in 2012.

And diesel prices, the life blood of the shipping industry, relative to gasoline prices, are soaring. Highest since 2004.

As we approach Thanksgiving Day, it is important to be thankful … that things aren’t even worse under Billions Biden. US CRB foodstuffs are up 49% under Biden while diesel fuel is up 102%.

Now, gasoline prices fell recently as WTI crude prices slipped on slowing demand. And as stimulus wears out.

And its now only food.

Have a holly jolly Thanksgiving!!

My Thanksgiving dinner, because of the cost, will be a Jersey Mike’s turkey and provolone sub (mini). Or this canned dinner.

Alarm! Yesterday’s PUT/CALL Ratio Was Highest In History (1.46, Higher Than 2001 And 2008!) REAL M2 Money YoY Plunges To Lowest Since 1980 And Jimmy Carter

Alarm!

Yesterday’s PUT/CALL ratio was the highest in history at 1.46. That is higher than 2001 and 2008.

REAL M2 Money YoY has crashed to its lowest level since 1980 and Jimmy Carter.

And the train keeps on rollin’.

Instead of Little Games, The Federal Reserve is making this BIG GAMES.

Philadelphia Fed’s Business Outlook Plunges To -19.40% YoY, Lowest Since 2012 (It’s NOT Always Sunny In Philadelphia)

Call out The Birds Of War! Aka, The Federal Reserve.

The Philadelphia Fed’s Business Outlook plunged to 1-9.40% YoY, the worst since 2012. Notice how the Philly Phed Plunge is related to M2 Money growth YoY.

Birds of war!

Buying Typical US Home Now Requires Income of Over $100,000, Up 46% YoY (19 Straight Months Of Negative REAL Wage Growth Isn’t Helping)

Redfin had an interesting post where they showed that the “typical” US home now requires income of over $100,000.

Of course, it is easy to blame the figure on rapidly rising mortgage rates and Federal Reserve tightening.

But the rest of the story (as Paul Harvey used to say) is that US REAL wage growth has been NEGATIVE for 19 straight months. This alone makes housing unaffordable for the middle class and low wage workers.

Good day!

Again, why are Biden and Trudeau wearing Mao jackets in Bali? And why is Biden looking like a robot?? Biden does look like he is saying “Take me to my leader, Pei.”

US Mortgage Rates Drop Below 7% in Biggest Decline Since July (But MBA Purchase Applications Drop -9.52% WoW, Refi Apps Drop -11.44%)

US mortgage rates fell last week by the most since the end of July, slipping below 7% and helping generate a bounce in purchase applications that otherwise remain depressed, but only in the Seasonally Adjusted data. The NON-Seasonally Adjusted data show a hefty decline.

The contract rate on a 30-year fixed mortgage decreased 24 basis points to 6.9% in the week ended Nov. 11, according to Mortgage Bankers Association data released Wednesday. The group’s index of applications to buy a home rose 4.4% — the most since June — but is still near the weakest level since 2015. 

But the bounce was in Seasonally Adjusted data only. The NON-seasonally adjusted data remained depressed.

Mortgage applications decreased -10.0 percent SA from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 11, 2022. This week’s results include an adjustment for the observance of Veterans Day.

The Refinance Index decreased -11.44% percent from the previous week and was 88 percent lower than the same week one year ago. The unadjusted Purchase Index decreased -10 percent compared with the previous week and was 46 percent lower than the same week one year ago.

Mortgage purchase applications will continue to fall in NSA terms since it is the Winter and home buying season won’t really start until January. Refinancing applications actually dropped -11.44% even with the drop in mortgage rates.

The data. As my former students know, I like the “raw” data, better known as NON-seasonally adjusted (NSA) data and avoid seasonally-adjusted data (SA) since it hides what is going on.

And on The Fed Futures Front, The Federal Reserve is still looking a hiking their target rate from 4% to just under 5%.

Keynesian Policies Have Left High Debt, Inflation and Weak Growth (Inflation Remains Near 40-year Highs And 19 Straight Months of NEGATIVE Real Wage Growth)

Daniel Lacalle wrote a nice piece about disastrous Keynesian policies that led the US with high debt, inflation and weak wage growth.

The evidence from the last thirty years is clear. Keynesian policies leave a massive trail of debt, weaker growth and falling real wages. Furthermore, once we look at each so-called stimulus plan, reality shows that the so-called multiplier effect of government spending is virtually inexistent and has long-term negative implications for the health of the economy. Stimulus plans have bloated government size, which in turn requires more dollars from the real economy to finance its activity.

As Daniel J. Mitchell points out, there is evidence of a displacement cost, as rising government spending displaces private-sector activity and means higher taxes or rising inflation in the future, or both. Higher government spending simply cannot be financed with much larger economic growth because the nature of current spending is precisely to deliver no real economic return. Government is not investing; it is financing mandatory spending with resources of the productive sector. Every dollar that the government spends means one less dollar in the productive sector of the economy and creates a negative multiplier cost.

When society decides to use a certain part of the resources generated by the productive sector for non-economic return activities, be it social spending or mitigation of threats, it can only do it by understanding how much of the productive capacity of the economy is able to sustain a larger cost. When costs are not considered as a burden, but considered as entitlements that can only grow, the productive capacity is not strengthened, but weakened.

The main problem of the past decades, but particularly since 2008, is that government spending and monetary policy have become solutions of first resort to any slump in economic activity, even if that decline was created by government decisions, such as shutting down the economy due to a health crisis. Furthermore, government spending increases and loose monetary policy continued even in growth periods. This, in turn, creates an unsustainable public deficit that needs to be monetized or refinanced. Both mean a larger harm for the productive sector as the debt increase leads to higher taxes for everyone but also a soaring cost of living coming from the destruction of purchasing power of the currency.

Government spending does not boost private sector activity, even less so when the entire budget is spent on non-investment outlays. It is even worse when citizens believe that infrastructure or real economic return investments should be conducted with taxpayers’ money. If an investment is productive and economically viable there is no need to involve the government. At best, the government should only participate as a co-investor, as the example of technology and defence shows, but never as a resource allocator for a simple reason. Public intervention is always aimed at perpetuating the existing inefficiencies and maximizing the budget. Efficient resource allocation cannot come from entities that have a core interest in expanding the budget and always perceive any inefficiency or poor result as the consequence of not having spent enough.

Yes, US public debt has exploded, particularly since the 2008 financial crisis and then again the Covid outbreak of 2020.

And inflation is near a 40-year high.

Then we have 19 consecutive months of negative wage growth in the US.

Biden is apparently doubling down on “Green Schemes” now that the US House of Lords (aka, Senate) remain under Keynesian control (aka, Democrat). So watch for inflation to start increasing again.

US Treasury Yield Curve Slips Into Darkness (Implied Yield On 3M T-Bills In 18 Months – 3M T-Bill Yield Inverts) Slippin’ Into Darkness

The US economy is Slippin’ Into Darkness.

The Fed’s favorite yield curve measure, the implied yield on 3-month T-Bills in 18 months less the 3-month T-bill yield has inverted. Note that this curve inverts prior to a recession.

The new face of reckless Fed policy and Federal spending. 19 straight months of negative REAL earnings growth as America re-elects the same irresponsible fools that are turning the US into Venezuela.