Liz Hoffman
@lizrhoffman
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writing about biz & finance @Semafor . @WSJ alum. author of CRASH LANDING out now from @crownpublishing . order here:
Joined February 2009
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Pinned Tweet
Look what just (crash) landed on my doorstep. Pre-order here to get yours on March 7!
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Elon Musk's team is seeking new investors for Twitter, offering the same $54.20-a-share deal and trying to close by the end of the year. Scoop w/
@ReedAlbergotti
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This a.m. before securing an emergency lifeline from rival Binance, FTX was canvassing deep pockets in Silicon Valley and Wall St — think billionaires, not institutions — ppl familiar told me &
@lmatsakis
@SaacksAttack
. Two of the ppl he he was seeking more than $1bn.
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This mostly makes sense to me. FTX had a lot of collateral ($60bn) against not that many liabilities ($2bn). The problem is that collateral was monopoly money and the liabilities were ... real money. Just real basic banking stuff.
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One thing: This isn't 2008. The assets that are the problem here aren't toxic real-estate garbage, they're, like, Treasurys. Everyone can figure out what they're worth, sell them, lend against them, etc. The FDIC should be able to advance money to uninsured depositors pretty fast
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See here (SBF's words not mine, a bankruptcy trustee will sort it out, etc): Collateral - mostly crypto - went from being "worth" $60bn to $9bn *fast*
Even a "conservative" balance sheet goes upside-down very fast when the assets are garbage and the debts are real. See: Lehman
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A new lawsuit says Coinbase insiders CEO Brian Armstrong, Marc Andreessen and Fred Wilson & others
made $1 billion selling stock ahead of bad news, including that the company needed cash
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One person briefed on the fundraising blitz said what started as a $1bn ask was looking more like $5bn-$6bn by midday. More here
@semafor
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*96%* of SVB's deposits exceeded the $250,00-per-customer FDIC limit and so are uninsured. That's wild (Bank of America's is 32%, PNC is 46%) and magnifies the risk of a run on the bank like the one we just saw
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A fun consequence of government policy that makes everything go up: The youngs don’t need any of your fancy financial advice.
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Scoop: Davos founder Klaus Schwab is stepping down as executive chairman of the World Economic Forum
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Those ppl said it looked like a classic run on the bank: panicky investors pulling money out of FTX faster than it could sell assets to produce the cash.
Of note here tho is
@SBF_FTX
suggested 2 days ago that FTX's deposits were all held in cash:
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Hi 👋🏼
I’m writing a twice-weekly newsletter to help you understand this extremely weird and important moment for Wall Street, C-suites and the real economy they preside over.
Sign up for
@Semafor
Business:
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@daveweigel
Hands down Bonfire of the Vanities. TCM did an incredible podcast about how it went so wrong.
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FTX isn’t Lehman, it’s MF Global — using customer funds to bail itself out. Great reporting from Reuters
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Setting aside whether there was fraud or not - a question for DOJ - this appears to just be a run on the bank. Crypto tokens are objectively riskier/stupider collateral than mortgage bonds, but neither are cash! Same basic gravitational forces at work here.
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Hollywood producer and Biden counselor Jeffrey Katzenberg met today with the president and warned him that donor cash is drying up. Scoop
@semafor
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I don't care how bad your day is, it is not as bad as whoever proofread Lyft's earnings release
$LYFT in their release said 500bps of EBITDA margin expansion (as a % of GBV) in 2024 and just said on the call it's actually 50bps
Stock went from +65% to +11% 😂
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Microsoft is in talks to invest $10 billion into the owner of ChatGPT, the addictive humanoid AI chatbot. A late-night (East Coast) scoop from me and
@ReedAlbergotti
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NEWS: The Justice Dept is overhauling its review of bank mergers, Jonathan Kanter, the agency’s top antitrust cop, tells me.
Focus on branch overlap and deposits ignores the rise of fintech, private equity, etc. New rules could come as soon as tomorrow.
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BlackRock takes down 2022 ad that included footage of Trump shooter, then a high schooler
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Ok Succession premiere was great, I’m in, but watching them bid a public company up on enterprise value and not per-share price killed me
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Sure yes you can further inflate your assets by doing pump-and-dumps or drain then by stealing customers’ money but neither is a prerequisite for what seems to have happened here
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Scoop w/
@maxwelltani
Sam Bankman-Fried had designs on a Substack competitor. He sounded out Matt Yglesias & Nate Silver, floated Matt Levine
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A solid Jones Act joke
The easiest way to get the feds to stop the Chinese Spy Balloon is to load it up with American-made goods and try floating it between 2 US ports.
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Scoop: Goldman Sachs is set to lay off as many as 4,000 people as the cost of its ambitious push onto Main Street takes a toll
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For sure SVB has *some* garbage (loans to startups that will never pay it back) but the bulk of the investment portfolio is Treasury bonds, Fannie bonds, super liquid stuff. Which raises the question of why they didn't take it as collateral to the Fed or FHLB to buy some time.
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Welp, Credit Suisse employees are helping bail out the bank. They've been paid for years in the special bonds that are now being zeroed out in the fire sale to UBS. Latest w/
@GinaChon
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Bill Ackman's fund IPO went from a $10B whisper number to a $25B whisper number to a $2B actual number
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We asked ChatGPT to write a version of our story from the viewpoint of a Wall Street analyst and, well, it is superb.
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not to say there won't be fallout but the problem in 2008 was nobody could value the garbage assets so they had to put money into all the banks.
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To everyone asking “why didn’t SVB hedge?” It’s not like they forgot. Hedging is a cost!
Rep Sherman—SVB could have sold LT bonds or hedged, but that would have cut into earnings, and therefore bonuses. (Yes!!)
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Um Twitter links are sending users to bankruptcy court website (have confirmed with a live human user that this is randomly happening)
Each time I open a photo on Twitter it sends me to Chapter 11: Bankruptcy or an article on FTX
@elonmusk
pls fix
@TwitterSupport
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This is literally thousands of people’s jobs at McKinsey etc
This is truly incredible:
I made a post asking dealers to share how their month is going.
It received 191 responses in under 12 hours.
A random follower of mine scraped all the data and ran it through ChatGPT.
The result?
A incredibly detailed, crowdsourced report of the
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It’s true! Can’t wait
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Countries have sovereign wealth funds to invest extra cash. The US *owes* people, like, a shocking amount of money.
Trump: Why don’t we have a wealth fund? Other countries have wealth funds. We have nothing. We are going to have a sovereign wealth fund. We will put tremendous amounts of money through all this money will be taking in through tariffs
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This story is, as they say, developing.
Today’s scoop: 777 used $1.5B of its insurance customers’ cash to invest in sports teams and a lot of other things, documents show
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Fun chat with Kara and Scott on my book CRASH LANDING, the Black Death, why CEOs will win the war on butts in seats, and I guess my next gig as
@profgalloway
’s cohost
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Solvency
What do you look for in a bank when you’re opening a checking account?
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When I started covering Goldman in 2016, there was one big story: Its push onto Main Street. Six years later, that dream is dead.
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The Cut continues to have just banger finance content
This is the ‘Summer of the Finance Bro,’ so writer Joanna Rothkopf set out to talk to men ‘in finance, trust fund, six-five, blue eyes’ about their dating lives.
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While we've got you, this Elon/Twitter story is such a great one for
@semafor
's story form, which apparently we're calling the Semaform. It deconstructs the news article in a way we hope is more reader-friendly and transparent.
We've got the scoop:
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Chinese executives are oddly good at choosing when to sell their stock. How good?
Since 2016, they’ve avoided $10bn in losses by selling ahead of price declines
US execs over the same period actually *missed out on gains* when they sold
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We've been hard at work building
@semafor
and I'm so thrilled to be able to tell you all today that we are pro-Oxford comma
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The world’s best pole vaulter is doing corporate earnings management and I love it
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Davos is a lot of things: elitist, cold, kinda cabal-y. But it's also wrong, like, all the time. The "Davos consensus" as contra-indicator: it missed the 2008 crisis, Brexit, Trump, the rise of nationalism & balkanization, and of course the pandemic
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Nothing says panic in Silicon Valley like a late Friday law firm client call
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I spent a lot of 2020 and 2021 and also somehow 2022 working on this project and I'm excited to share the cover for my book CRASH LANDING, coming 3/7/23. A huge thanks to the team at
@CrownPublishing
. Available to preorder now!
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If you’re up, and I can’t imagine why you would be, I’ll be on
@Morning_Joe
in a few minutes talking about the politics of ESG
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In August 2022, federal prosecutors charged a woman with blackmailing an unnamed public-company CEO over sexually explicit messages and photos he sent her.
Here’s the strange story of AMC’s memelord, Adam Aron, and the catfisher
@semafor
scoop:
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Grindr just went public via a SPAC in the deadest IPO market in years and is up 320%. At one point this morning it was worth more than Credit Suisse.
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We were promised flying cars and instead we get just screaming “TOSTITOS” at the tv during the Super Bowl
Sony owns a patent that would force viewers to exclaim the brand name during commercials to end them.
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In today's newsletter, a secret, late-night text between the two men of the moment, SBF and Elon, and how we got here
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The choices in this NYT news quiz question tell you a lot about why Biden is having a hard time
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In what is shaping up to be Goldman's second-best year ever by revenue, there isn't enough money to go around. Billions sunk into consumer banking with little to show mean something has to give, and that's going to be thousands of employees early next year
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This is a wild chart. Investors think lending to big companies is safer than lending to the U.S. government for the next month. More on the markets' prep for a default scenario:
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Someone asked me today why all of Wall Street is on vacation right now. Setting aside the obvious (it's August, markets *tend* to be quieter, Hamptons, etc.) it was a fun excuse to refresh myself on the mandatory two-week rule:
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I will eventually stop doing this but here's a scoop for twitter dot com:
Crypto exchange FTX is the winning bidder for bankrupt crypto lender Voyager, ppl familiar said. Purchase price of ~$50m but could eventually be twice that if AUM and other milestones are hit
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In which I, an older millennial who complained that boomers had broken the economy and ransacked my future, ask Gen Z zeitgeist-meter
@kylascan
about how we did it again whoops
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It’s not totally empty it’s just finance executives in Manhattan
A startling case of American exceptionalism is visible in this survey shared in
@DLeonhardt
’s newsletter today.
The “socially liberal and fiscally conservative” quadrant would be very full, possibly the largest, in most other English-speaking countries.
In USA it’s almost empty
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Lots of internal docs cited, some redacted, but 2 things seem clear: Coinbase knew its fees were under pressure and that it needed to raise money.
When investors found out, the stock lost $37bn. The suit alleges insiders captured $1bn of that.
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Really hope the U.S. Open sponsored by JPMorgan Chase purse is $2.6m but a cool $3m if the winner also opens a direct deposit account
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Checks out.
new
@DoublePivotPod
!
we are joined by
@lizrhoffman
from Semafor to talk about her reporting on 777 Partners and what's going on at the insurance(?) company that's buying Everton
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Digging into the SBF origin story with
@ReedAlbergotti
and it's wild. The big money was from two loans from bigwigs in the effective-altruism charity movement — charging a *43% rate*
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1/ So
@Semafor
doesn't launch for a few weeks but here’s some news that wouldn’t hold:
Josh Harris, whose messy exit from Apollo riveted Wall St a year ago, is back. Almost 2 yrs after losing a power struggle at the $500bn+ investing giant, he’s building his own firm to compete
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Both positively! So much for this being the populism election
Congrats to both Goldman Sachs and Wharton for getting name-checked 10 minutes into this debate
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This is true but so is the reverse. *Startups* convinced *SVB* that it was one of them, that the gravitational laws of banking didn't apply, that things like "innovation" and "burn rate" mattered more than things like, you know, capital and mark-to-market accounting
In a deep sense — though not a legal sense — what SVB actually did was a kind of affinity fraud a la Madoff. It managed to convince the VC/startup/crypto etc world that it was one of them, part of their community, and hence trustworthy 5/
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SEC chief Gary Gensler throwing shade in this Fox Business interview
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The world's richest man should be able to buy anything he wants. But can Elon Musk actually buy Twitter? (Spoiler: he doesn't have the money and getting it will be harder than it sounds)
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He read Buffett's investor letters as a kid. Now he idolizes Bill Ackman. Meet today's MBAs.
http://t.co/8qDBOlw2hz
http://t.co/3LWx8NXMYf
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One thing we're not talking about enough is that the past 15 years of interest rates is literally just the shrug emoji ¯\_(ツ)_/¯
US 2-year yields exceed 5% for the first time since 2007.
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I’m such a fan of
@longformpodcast
and was absolutely tickled when this popped up in my feed today. Talked my book, the economy, financial journalism and how money works (lots of zeros basically) with
@maxlinsky
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And because we don't have a monopoly on good stories, we include some of the best reads from other publications
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First shameless startup pitch: sign up here to follow along when we start publishing
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I asked Chancellor of the Exchequer
@jeremy_hunt
whether it’s true, per Liz Truss’ new memoir, that Downing St is infested by fleas. He says he changed the carpets “at my own vast expense.”
@semafor
World Economy Summit
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From the law firm advising UBS on the deal and I'd love to know what the antitrust advice looked like.
"Usually I'd say your regulators would never allow you to merge with Credit Suisse."
"Our regulator is the one making us merge with Credit Suisse."
"My work here is done."
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A pretty good explanation of what I meant when I said on
@SquawkCNBC
that in a normal company, a CEO-sexting-blackmail-catfish situation would be bad but at AMC i genuinely don’t know
@lizrhoffman
Why spread this crap! What hedge fund owns you! We just buy more sorry u sold your soul to Wallstreet criminals !
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