Calls to Investigate Short Sellers Intensify as Bank Crisis Deepens
What should I do about short sales?
JPMorgan Chase & Co. chief Jamie Dimon sold short as part of stepping up pressure on regulators to “end” the crisis for small and medium-sized banks as shares of another regional bank plummeted on Thursday. I joined the chorus calling for an investigation into the dealer. of any solution.
Short sellers are making huge profits on local bank stocks. These traders have profited from falling stock prices in their target companies, making more than $7.5 billion in 2023 by targeting small financiers, according to financial data provider S3 Partners. Pacwest, the regional bank with the most short sales, likely added more to the figure on Thursday as its shares closed down nearly 23% after announcing new deposit releases last week. .
Dimon has called on regulators to step up scrutiny. The bank’s chief executive has been at the center of efforts to resolve the crisis, with JPMorgan buying struggling First Republic earlier this month. “The SEC has the enforcement ability to look at what people are doing with options, derivatives and shorts by name,” he said. bloomberg. “If someone is doing something wrong, colluding, short selling and tweeting about banks, you should go after them vigorously,” Dimon added.
his intervention American Bankers Associationtrade groups called on the Securities and Exchange Commission to take action against “market manipulation and other abusive short-selling practices.”
The SEC has no intention of banning short selling. But Dealbook hears there is increasing pressure on regulators to introduce short-selling restrictions mandated by the Dodd-Frank Act. Section 929X of the Act requires the SEC to adopt rules for the disclosure of short positions. The SEC never fully fulfills its obligations, and there is debate as to whether that means revealing individual short positions or total investments.
Proponents say it will add much-needed transparency to the market. Because other investors, targeted company management, and policy makers need to understand what’s really going on when stock prices are under attack.
Opponents argue that short sellers are not the real problem. They argue that revealing who was shorting the stock would give companies a reason to avoid communicating with the investor, preventing important conversations. Former SEC Commissioner Jay Clayton told Dealbook, “There was always a concern that if there was short sale disclosure information, companies would use it as a weapon to not tell people.”
And critics say vanished deposits are the real problem in the current crisis.
“Asset values fall when buyers were previously unwilling to pay for an asset,” Chester Spatt, a professor of finance at Carnegie Mellon University’s Tepper School of Business, told Dealbook. “This debate does not depend on whether short sales are permitted or disclosed.”
Even Dimon admitted that his call contradicted his own bank’s investigation. Analysts at JPMorgan said short-selling was not the cause of the stock’s decline. “I think they may be partially wrong,” he said.
what is going on here
Ron DeSantis has blocked his travel records from public view. The Governor of Florida on Thursday approved a law that states: Prohibit state agencies from sharing security and travel information. Critics say the move is aimed at preventing harmful information about his travels from being exposed, as he plans to participate in the Republican presidential campaign.
The Biden administration has issued a warning to migrants trying to cross the U.S.-Mexico border. Homeland Security Secretary Alejandro Mayorcas repeated after Title 42 that “borders are not open.”, A pandemic-era policy that allowed the government to deport migrants before they could apply for asylum expired on Thursday.
US and Chinese officials hold rare talks. National Security Advisor Jake Sullivan met with China’s top foreign diplomat Wang Yi in Vienna this week in an effort to reset. high level contact between Washington and Beijing. The talks came after high-level communications were restricted for a period of time after the United States shot down what appeared to be a Chinese reconnaissance balloon.
SoftBank is reportedly planning an IPO of up to $10 billion for Arm. Japanese tech conglomerate tests investor interest New York listing of chip designer According to Bloomberg, it could be the world’s largest this year.
Musk says he will eventually replace him on Twitter
Elon Musk delivered on Thursday a promise to answer the big succession question swirling on Twitter, saying his social media platforms include: new CEO I will be replacing him in the next few weeks.
There are still many questions about what this means for the company, its earnings prospects and performance. Regulatory challenges faced. But the announcement was greeted with great relief in another corner of Musk’s business empire. Tesla shares rose as weary investors hoped the move would allow him to spend more time running the electric-car maker.
Who is the mysterious CEO? NBCUniversal head of advertising Linda Yaccarino was Musk’s choice, initially The Wall Street Journal report. According to The Times, the two have been in talks for several weeks. Additional twist: Yaccarino interviews Musk He took the stage at an industry event in Miami last month.
What about Yaccarino? She played a major role in launching Peacock, NBCUniversal’s fast-growing streaming service, and is also an expert in data-targeted advertising, long considered a shortcoming of Twitter.
Convincing advertisers is the first job for Twitter executives. Since Musk took Twitter private in a $44 billion deal, major brands have abandoned the platform and the digital ad market has languished amid a slowing economy. (When Twitter was a public company, about 90% of its revenue came from advertising sales.)
Regulators, cash flow and debt payments continue to be a big focus. The company’s content moderation business, which Mr. Musk has cut to cut costs, faces regulatory scrutiny on both sides of the Atlantic. And with Musk facing $1.5 billion in interest payments on the debt he raised to buy Twitter, getting the company cash-flow positive again is paramount. He expects to reach that milestone this quarter, he said.
No one expects the outspoken Musk to be an afterthought. He said he would become the “executive chairman and CTO” (probably chief technology officer) and “oversee the product, software and systems people.” For months, Musk has said he is stepping down as CEO because running the company has become “painful” and he sometimes sleeps on his office couch at night.
NBCUniversal faces its own succession problem. The company is still permanently searching for a replacement for CEO Jeff Shell, who was fired last month after an internal investigation found he used his position to coerce a CNBC anchor into having sex.
“People woke up and understood the risks of this election in a different way than they did the day before. And if someone is going to ask a tough question and have such an awkward conversation, it will be broadcast on CNN.” should.”
— Chris Lichtthe CNN chairman defended the network’s decision to live broadcast a town hall event featuring Donald Trump on Wednesday, in which the former president took down A new torrent of election lies.
A glimmer of hope in debt ceiling negotiations
Equity futures rose on Friday after a bit of good news from Washington, a sign that negotiations over the impasse on the debt ceiling have taken a positive turn.
There doesn’t seem to be much official news. President Biden and congressional leaders postponed a second meeting scheduled for today. The reason is that senior White House officials and congressional aides have found something in common.
Rep. Dusty Johnson, South Dakota Republican leader of the Main Street caucuses, an influential conservative mainstream group that has focused on spending cuts, said: “In the last 48 hours, we have lost hope. I have more reasons to have it,” he said.
A breakthrough in energy licensing could be key to an agreement. Negotiators Close to Proposal to Accelerate Fossil Fuel Production and Clean energy projects will please both Republicans and Democrats to Bloomberg. An aide to House Speaker Kevin McCarthy said the odds of this being included in a deal were “more than 50/50.” Progress has also been made in recovering unused COVID-19 related funds.
Wall Street is nervous about the prospect of a no-deal scenario. Jamie Dimon Thursday defaults to “can have devastating effects‘” echoed Treasury Secretary Janet Yellen’s assessment in recent days. He added that in the stock and Treasury markets, “the closer you get to that, the more you panic.” “It could affect other markets around the world.”
S&P 500 futures were up nearly 0.4% as of 7:30 a.m. ET, with European stocks also rising. Benchmark indexes fell on Thursday as investors continued to worry about a crisis involving local banks and a slowdown in the economy. Investors are hoping for some progress ahead of June 1, the “X date,” when Yellen predicts when the state’s money for payments will run dry.
“We’re looking for a last-minute deal, but it’s not without significant drama leading to further economic and market volatility,” John Lynch, chief investment officer at Comerica Wealth Management, said this week. said in an investor note.
speed reading
Information of sale
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Acquisition talks between Apollo and struggling online retailer THG, it’s broken, THG shares plunged on Friday. (Bloomberg)
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Carl Icahn’s Holding Company Licensed Buy shares worth up to $500 million The company is trying to fend off a short-selling campaign that has caused its stock to plummet. (Bloomberg)
policy
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“A majestic clean energy trailblazer offering $400 billion” (New York Times)
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federal judge declared unconstitutional A law that prohibits licensed firearms dealers from selling handguns to customers between the ages of 18 and 20. (WaPo)
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Citigroup is reportedly in talks with Texas officials about allowing the bank. resume the sale of municipal bonds There, it was barred from the market by a 2021 state law against “awake” companies. (Fox Business)
best of the rest
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International travelers to the United States no longer need to prove their COVID-19 vaccination upon entry. (New York Times)
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New filings show that an organization led by conservative activist Leonard Leo spent billions of dollars on various right-wing groups and causes. (New York Times)
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“workers are happier than in decades.” (WSJ)
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