>>> Barron’s Weekend Summary

Barron’s Weekend Summary: American consumers are still on a roll, accounting for about 70% of the US economy

Cover:
After two years of sustained spending, rising interest rates, and inflation, American consumers are still on a roll, accounting for about 70% of the US economy. The Covid-era spending spree has kept the GDP on a path of surprisingly strong growth, with real GDP growing nearly 5% in the third quarter. However, the spending boom is bound to lose some vigor as savings erode and higher rates bite. Real personal-consumption expenditures are on track to rise 2.2% this year, below last year's 2.5% growth rate and 8.4% growth in 2021. However, relatively healthy household finances, a resilient labor market, and substantial housing wealth suggest that consumers still have plenty of firepower and that the US economy will avoid a recession next year. A healthy labor market has been the driving force behind consumer spending, with a 3.1% annual jump in retail sales in the past three months.

Interview:
-This week’s Interview features Thomas Buberl, CEO of AXA. Buberl has led the Paris-based insurer through a transformation since becoming CEO in 2016. The company has grown from life insurance to a diversified global business, managing around $920B in financial assets. Despite facing global turmoil, such as Russia's invasion of Ukraine, AXA remained profitable. Buberl has taken aggressive positions on climate issues, including divesting from coal. His view of the world is influenced by the company's annual Future Risks report, which describes a world in "polycrisis" where risks are interconnected. Climate change is ranked as the world's top risk, followed by cybersecurity, geopolitical instability, artificial intelligence and big data, and energy issues. Buberl believes that the sequence of risks' realization is changing, with many of them happening together or straight after one another.

Tech Trader:
-Cisco Systems, one of the tech giants, is still dealing with Covid. it has reportedly slowed its growth amid the Covid pandemic. Despite a 8% increase in revenue in the October quarter, the company's product orders fell by 20%, with a 32% decline in orders from telecom and cloud customers and a 26% slide from enterprise customers. This has led to a 10% drop in the stock, which is currently flat on the year. Cisco's January quarter guidance calls for revenue of $12.7B, a 6.6% decrease from the previous year, and a 5% decline in its July 2024 fiscal year, all attributed to the pandemic.

The Trader:
-The November stock market rally has been convincing, with the S&P 500 index potentially hitting a record high by the end of the year. The S&P 500 gained 2.2% this past week, while the Dow Jones Industrial Average advanced 1.9% and the Nasdaq Composite rose 2.4%. The lift came on Tuesday when October's consumer price index came in lower than expected, solidifying the Federal Reserve's thesis that interest rates will stop raising. The CPI reading was good, with headline numbers and core CPI rising 0.2% and 0.3% respectively, indicating the Fed is winning the battle against inflation. The S&P 500 has advanced 10% over the past three weeks, its largest three-week gain since 2020.
-Copper prices are starting to recover, with future contracts increasing by 5.4% to $3.71 per pound from a low of $3.52 on October 23. This is driven by lower inflation, which suggests the Federal Reserve may cut interest rates, potentially supporting economic demand and the price of copper. Lower rates would also weaken the dollar, boosting copper, which is priced in greenbacks. Freeport-McMoRan stock, which recommended copper could hit close to $5 soon, has also seen a drop in rates, boosting optimism and potentially encouraging traders to invest more in commodities like copper. The current value of all commodities held by nonbanks is about 0.5% of the value of all bonds, cash, and equities held, indicating that traders can tolerate more risk in commodities.

Features:
-Elon Musk's seeming endorsement of anti-Semitic rhetoric has sparked backlash from advertisers and Tesla shareholders. Musk's posts on X, the former Twitter platform, have drew condemnation from the Anti-Defamation League and the White House. Several prominent advertisers, including Apple, Disney, Lionsgate, and the European Commission, have suspended advertising on the platform. Tesla shareholders have also expressed outrage. Kristin Hull, founder of Nia Impact Capital, called on Tesla's board to punish Musk, stating that it is their responsibility to look after all stakeholders, including shareholders, employees, and the community. Nia Impact Capital called on Tesla's board to censure Musk, which could include demotion, reassignment, suspension, or removal.
-OpenAI has announced that CEO Sam Altman has resigned due to his inconsistent communication with the board, which hindered the company's ability to exercise its responsibilities. The board no longer has confidence in Altman's ability to continue leading OpenAI. Chief technology officer Mira Murati was appointed interim CEO. Altman expressed his love for his time at OpenAI and the transformative experience working with talented people. Microsoft, the largest investor in OpenAI, did not directly address the reasons for Altman's departure but stated its commitment to Mira and their team.

Europe:
-Volvo Cars' stock fell by 11.144% in overseas trading on Friday, primarily due to technical reasons rather than fundamental factors like weak car sales or rising costs. The drop was caused by entities connected with parent company Geely selling shares, which held less than 80% of the outstanding shares. The sale aimed to increase the number of shares available for trading, making it easier for larger investors to take positions in the stock and increasing the potential pool of buyers.

Emerging Markets:
-There was no update this week, but in view of the Argentinean elections on Sunday Nov. 19, it’s worth rereading an article from Barron’s published last October 24:
Argentina's economy is facing a grim outlook, with long-suffering bonds sliding another 10% after the first-round presidential election. Economy minister Sergio Massa has risen from third place in the August primary to first with 37% of the vote. Argentina's next bond restructuring, expected in 2024 or 2025, could be more investor-friendly than the last one, which was hammered out in 2020. The principal holiday starts to expire next year, likely requiring Argentina to restructure again. Argentina's economy is caught in a vicious cycle, with government overspending driving inflation, making citizens more dependent on social support, and driving more spending. Massa is expected to slay Argentina's economic dragons, but the country is caught in a vicious cycle. Libertarian firebrand Javier Milei may be willing to rip off the Band-Aid if he comes back to win the second round, but he would have to grapple with the Peronists' dominance of Congress, the key Buenos Aires regional government, and still-powerful trade unions.

Commodities:
-Oil prices fell for a fourth consecutive week, despite an uptick on Friday. The drop is attributed to a slump in demand and a boost in supply, but some of it is technical and potentially temporary. Prices could rebound in the coming weeks, but recent economic data isn't particularly optimistic for oil bulls. Unused crude oil is filling up storage tanks in Cushing, Oklahoma, and Chinese refining margins have fallen, indicating soft demand in China. The International Energy Agency and US Energy Information Administration have been lowering their 2024 global oil demand forecasts, with the EIA now expecting a 100,000-barrel-per-day surplus in the oil market next year.

Streetwise:
-The cheapest stock in the S&P 500 is no bargain says Jack Hough. Credit-card issuer Synchrony Financial or Texas utility NRG Energy, which are in the bottom five at just over 5X forward earnings estimates apiece. It is not United Airlines Holdings or General Motors, which Warren Buffett has had enough of after 11 years. The company's name vaguely evokes a date-night medicament for men: the cheapest stock in the S&P 500 is Viatris (VTRS), which trades at just 3.3X earnings and has a dividend yield of 5.1%. Jefferies upgraded the stock early this year, it said it liked that management had recently provided a “clear road map” to growth. It had bought two companies with treatments for dry eyes as part of a strategy to become a “global ophthalmology leader.” More broadly, it plans to offset its base business erosion with its “organic pipeline,” which means making things, and its “inorganic opportunities,” which means buying things.

>>> Weekend Papers Summary

Weekend Papers Summary

FINANCIAL TIMES
-OpenAI co-founder Sam Altman has resigned following a board review, which found he was not consistently candid in his communications, affecting the company's ability to exercise its responsibilities. Altman expressed his love for his time at OpenAI and expressed his desire to discuss his future plans.
-Chinese President Xi Jinping and US President Joe Biden held their second meeting at Filoli estate in the sidelines of the APEC summit in San Francisco, resulting in constructive discussions. They agreed to reopen communication channels between the two nations, which were shut down in 2022 due to US House Speaker Nancy Pelosi's visit to Taipei. Additionally, Washington and Beijing agreed to create a counter-narcotics working group, focusing on cracking down on Chinese groups that supply Mexican cartels with fentanyl ingredients, a synthetic opioid responsible for 70,000 US overdose deaths last year.
-Elon Musk has faced criticism for endorsing an antisemitic post on X, the former Twitter, which he bought for $44B last year. Media Matters found advertisements for top brands, including Apple, IBM, Oracle, Comcast's Xfinity, and Bravo, next to posts promoting "pro-Nazi" views. IBM recently announced it was pulling global advertising from X.
-As oil prices hit a year low of $77/barrel this week, Saudi Arabia is expected to extend its 1 million barrel-a-day oil production cut into next year, as OPEC+ considers further reductions in response to falling prices and growing anger over the Israel - Hamas war. The voluntary measure, which expires at the end of this year, was introduced as a temporary step on top of wider cuts by the cartel. OPEC+ is considering further cuts, which could inflame tensions with the us, as it prepares to meet in Vienna on November 26. While the drop has prompted action to revive prices, anger over Israel’s war on Hamas and the humanitarian crisis in Gaza are also playing an important role.
-Ukrainian forces claim to have established several fortified bridgeheads on the Russian-occupied left bank of the Dnipro River after their “most significant” territorial advance in weeks as part of the so-called counteroffensive. The Ukrainian military did not name where these advances took place.
-Berlin rejected a €100B EU common budget top-up request by Brussels, citing a German constitutional court ruling that made it impossible to find additional funding. The European Commission requested a €100B increase, half of which would be for Ukraine over four years, while the remaining €50B would be used to repay common debt, increase migration spending, and increase EU officials' salaries. Berlin stated it was committed to providing more funding to Ukraine, but the court ruling's strict spending limits left Berlin with no spare funds.
-Carles Puigdemont, former Catalan president, sought to regain Catalonia from Spain but was crushed in his independence bid in 2017. He fled to Belgium, where allies envision him as a separatist hero. Puigdemont was the lead Catalan negotiator of the political accord that allowed Prime Minister Pedro Sánchez to return to power. He is now the most high-profile beneficiary of the price he extracted in return: an amnesty for all those facing criminal charges over the failed secession bid. His return to Catalonia would also stoke national political fury in Spain.

NEW YORK TIMES
-Meet Mira Murati, the engineer now leading OpenAI. The company’s interim C.E.O. has been managing the development and distribution of ChatGPT and DALL-E for years.
-Advertisers flee X as outcry grows over Elon Musk’s endorsement of anti-Semitic post. Disney, Apple, Paramount and Lionsgate halted marketing on X, formerly Twitter, as Elon Musk faced a furor over antisemitic abuse on his social media platform.
-New York Times journalists traveled with an Israeli military convoy to catch a rare glimpse of conditions inside wartime Gaza.
-Israeli military signals intent to move into southern Gaza. The chief military spokesman said forces were prepared to expand their offensive in Gaza “in every place that Hamas is, and it is in the south of the strip.”
-The discovery of a tunnel shaft at Al-Shifa Hospital didn’t seem to resolve whether Hamas hid command centers there.
Judge says trump ‘engaged in insurrection’ but keeps him on Colorado ballot. A district court judge said the disqualification clause of the 14th Amendment did not apply to former President Trump.
-Thousands gather in pro-palestinian protests across New York City
In Brooklyn and in Manhattan, multiple rallies drew large crowds calling for a cease-fire in the Israel-Hamas war.
-Students for Justice in Palestine, which was founded at Berkeley, has fueled campus activism. Critics say it has also stoked intimidation and antisemitism.
-President Xi Jinping is one of the most self-contained Chinese leaders in decades. He reveals next to nothing about his personal life.
-Former President Donald Trump went unmentioned during the memorial service for Maryanne Trump Barry, seemingly in accordance with her wishes.
-Rosalynn Carter, 96, has entered hospice care at a home in Georgia
The former first lady, who has dementia, joined her husband, former President Jimmy Carter, who has been in hospice care since February.
-Montauketts’ bid for NY State recognition is vetoed for the 5th time.
The tribe on Eastern Long Island, which lost state recognition more than a century ago, has won over the State Legislature, but not the governor.
-Liberia’s president concedes election defeat in a knife-edge vote. President George Weah announced that he had lost his bid for re-election to Joseph Boakai, a 78-year-old former vice president.


NY POST
-The FBI has conducted a federal corruption investigation into NYC Mayor Eric Adams' 2021 campaign, including the raid of a City Hall staffer's home and the home of a former Turkish Airlines executive. The investigation is focusing on whether Adams' team conspired with the Turkish government to fuel his campaign with foreign donations and whether he urged FDNY to fast track permits for a new high-rise Turkish consulate despite failing an earlier safety inspection. The New Jersey home of Rana Abbasova was also searched as part of the investigation. Adams has not been accused of any wrongdoing.
-Federal Reserve Bank of Boston President Susan Collins has said that while evidence suggests inflation is easing, she is not ready to rule out more rate hikes if needed. Collins said that to get back down to 2% inflation in a reasonable amount of time, patience and resoluteness are needed. She remains focused on assessing the full complement of information and making real-time assessments about the right course of action.

TechCrunch : WTF is going on at OpenAI? We have theories

WTF is going on at OpenAI? We have theories

In perhaps the most unexpected tech news of the year, billionaire and AI evangelist Sam Altman has been ejected from his CEO role at OpenAI by the company’s board after an apparent vote of no confidence. Its exact wording in a release issued this afternoon: Altman’s “departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”

What the hell is happening at the most hyped company in the world?! Here are some totally speculative theories that occurred to us and others around the web.

1. Did Altman circumvent the board in a major deal?
Based on the board’s language and the way these giant tech companies work, this is the prevailing theory floating around right now. “Not consistently candid” is a very diplomatic way of saying Altman lied.

It’s possible that Altman — and potentially OpenAI President Greg Brockman, who stepped down as chairman simultaneously, then resigned — wanted to make a bold move that he knew the board would not like. It’s not uncommon for these deals to be hammered out quietly in smoke- (or vape-) filled rooms and then presented as a fait accompli, but if it was controversial enough and the board found out about these maneuvers, it could be fuel for an ouster.

But what kind of deal would be big and dangerous enough for a summary dismissal of the CEO and famous face of the company? The man was onstage two weeks ago; I just talked with him! What could have happened since then?

Few would be shocked if Microsoft, which is deeply, deeply embedded in OpenAI as an investor and customer, is a factor here. Could Altman have been working with — or against — OpenAI’s patron in secret? If Altman wanted to kill the golden goose by going independent, that might have activated the board’s fiduciary or otherwise statutory duty. On the other hand, if he was negotiating some other deal, like an acquisition or deeper and more exclusive integration, it could also have caused the board to bristle, either at the idea itself or at being excluded.

But if Microsoft was as shocked as the rest of us, as one report has it, it could hardly be the kind of high-stakes conspiracy some seem to be hoping for. But one must assume that Microsoft would say that either way. Even if they’d been working with Altman on some kind of secret plan, they can truthfully say they were surprised by his firing. (And they “remain committed to our partnership.”)

2. Do they disagree on long-term strategy?
Despite being the hottest tech company in the world right now and everyone talking about ChatGPT, OpenAI isn’t exactly a sound business. It’s shoveling money into the furnace as fast as it can by serving, by all accounts, a fantastically expensive product at bargain-bin prices.

That’s all well and good for a year or two, but at some point that strategy changes from a growth hack to an existential liability. Could Altman and the board have had irreconcilable differences on where that point lies?

This doesn’t seem so likely. The company has been very deliberately pursuing this very publicly, confidently and on a long-term basis. Altman and the board seem to be in sync on this, at least for the present.

3. Do the numbers not add up?
On the other hand, could OpenAI be losing even more money than Altman admitted or projected? It seems impossible, but the costs of running this operation have no precedent, nor really does the operation itself.

Or what if, and again this is purely speculation, Altman has been secretly pursuing an internal project, perhaps at significant cost, against the advice of the board and without the necessary safety measures that probably should accompany such research? It sounds a little wild, but firing your CEO like this is also a little wild.

Some kind of major mismatch in the financial department could be cause for dismissal, but it’s hard to imagine what Altman could have kept from the board and CTO that would be so damning.

There’s also the possibility that Altman was making personal investments in a way that the board disagreed with. With OpenAI poised to be a kingmaker in the field, he would certainly be in a position of power. One would think that, as an ideologically driven person already rich beyond belief and at the head of the world’s leading AI company, Altman would have risen beyond having to do this kind of side deal, or at the very least that scrutiny on him and those close to him would prevent them. But one can never be sure.

4. Could it be a major security or privacy incident?
The idea that the company has experienced a major, perhaps pervasive, security issue is bolstered by the fact that Microsoft reportedly suspended use of ChatGPT internally a few days ago. OpenAI subsequently stopped allowing new signups. If there was a serious security problem in its biggest product and Altman downplayed it, that would obviously create distrust with the board.

There is also the potential for misuse at scale with the enormous amount of personal data that travels through OpenAI’s APIs and services.

Working against this theory is the fact that CTO Mira Murati was just elevated to interim CEO in Altman’s place. It seems unlikely that anything security-related would go through the CEO and not the CTO, or that the two would be at odds to the point where one could be fired like this and the other swapped in to clean up the mess. As the board’s statement notes, Murati is in charge of product and safety, among other things. Any significant snafu in that department would reflect on her, as well as Altman.

5. Perhaps a difference of AI ethics or philosophy?
Altman is a proud techno-optimist, and often speaks fondly of the possibilities of AGI, or artificial general intelligence, a theoretical software system that achieves human-like intellect and versatility.

The board’s statement pointedly includes that “OpenAI was deliberately structured to advance our mission: to ensure that artificial general intelligence benefits all humanity” and that new leadership was necessary. It’s possible that Sam’s zeal for AGI, even absent a secret project or agreement, led to a major rift between him and the board.

It’s been obvious to all that Altman took the company in a much more corporate direction from its origins, changing its legal status and aggressively pursuing enterprise and consumer applications. That doesn’t sound a lot like the “mission” the board wants to advance. Then again, this shift didn’t happen today, and it certainly doesn’t seem like a plausible reason for abruptly firing the CEO and a few others on a beautiful fall Friday afternoon.

6. What about IP and legal liability?
Altman told me at OpenAI’s Dev Day earlier this month that the company doesn’t want to incur any copyright problems by using (as I had asked about) datasets of pirated books. But a lot of research I’ve been reading contradicts that, as does pretty much every AI data scientist I talk to. It’s exceedingly hard to imagine that OpenAI built GPT-3 with the copyrighted books database (as seems to be the case) but not GPT-4 or succeeding models. (I was going to write this up next week, so thanks OpenAI board for eating my lunch.)

If you were the board and facing the mounting accusations that your product was built on a dataset that includes thousands or millions of copyrighted works — and your CEO had systematically downplayed the potential liability there — how would you feel? I’d feel very hurt.

But again, if copyright liability was the reason, it seems unlikely that the board would promote the CTO. Presumably, OpenAI’s Chief Science Officer Ilya Sutskever would also have been in the know, and he’s still on the board.

7. Did CTO Mira Murati launch a coup?
Probably not — she seems cool, and anyway what CTO wants to be CEO? Mira, answer my email!

8. Was it a “personal matter”?
When someone is kicked out in a hurry, it’s not uncommon that there was some kind of unprofessional behavior in the workplace. Some CEOs get a pass on things like having kids with direct reports, but not all.

Altman also has three siblings, and his younger sister Annie has publicly accused him of abuse. We have no way of evaluating these allegations, which involve private matters.

Our read on the board’s language in dismissing Altman, however, is that it was not a legal or personal problem that provoked the action, but a professional or business one.

We probably won’t know the full truth on this for a long time, as the characters in the drama are likely to be NDA’ed up. Per various whispers and leaks, an all-hands meeting about the situation this afternoon didn’t produce any revelations beyond banal reassurances that the company is fine and they’ll get a fresh CEO soon. Expect to hear a lot of rumors before we hear the real thing.

WSJ : Jim Chanos, Short Seller Who Took on Enron and Tesla, to Close Hedge Funds

Jim Chanos, Short Seller Who Took on Enron and Tesla, to Close Hedge Funds
Chanos & Co. manages less than $200 million, down from $6 billion in 2008

Wall Street’s best-known bear is going into hibernation.

After nearly four decades, Jim Chanos is shutting down hedge funds he manages that wager against companies he believes are overpriced or fraudulent. His career as a short seller spanned a contrarian bet against Enron that paid off when the energy trader collapsed as well as yearslong, money-losing campaigns against Tesla and AOL.

More recently, Chanos has struggled to turn his pessimistic positions into profits while markets generally moved higher. His firm, Chanos & Co., manages less than $200 million today, down from $6 billion in 2008, and its funds are down 4% so far this year, while the S&P 500 is up 19%, including dividends. Shares of Tesla are up about 90% this year, and the electric-vehicle maker is one of the world’s most valuable companies.

“The marketplace for what I do has changed,” Chanos, 65, told The Wall Street Journal. He expects to return most of his investors’ cash by Dec. 31.

Chanos will continue to operate his firm but will focus on doing advisory and research work for select clients and running certain separately managed accounts. He says he’s lately been shorting high-price data-storage companies and real-estate investment trusts, which he says will be hurt as interest rates stay elevated.

He also plans to keep posting on Twitter, the social-media platform now known as X, where his account, @WallStCynic, broadcasts criticisms of what he sees as analysts’ and investors’ overexuberance to over 133,000 followers.

Chanos first made a name for himself as a bearish junior analyst at Gilford Securities in 1982 when he urged clients to bet against Baldwin-United, a highflying maker of pianos that had expanded into insurance, months before it filed for bankruptcy.

He assumed an unusually public role as a stock-market scold. Though other short sellers preferred to operate below the radar, Chanos seemed to enjoy the spotlight. He regularly took to television and industry conferences, including his own “Bears in Hibernation” gatherings.

Targets of Chanos were so bothered that they sometimes hired private investigators to dig up dirt on him and complained to the Securities and Exchange Commission. “People think I have two horns and spread syphilis,” Chanos told the Journal for a 1985 story.

Later that year, he left his job as an analyst, raised $16 million and launched a hedge-fund firm, originally named Kynikos Associates after a Greek word for “cynic.” In the 1990s, Kynikos secured an investment from the Ziff Brothers, billionaire backers of hedge-fund managers including Bill Ackman. (In 2022, the name of the firm was changed to Chanos & Co.)

Chanos’s breakout moment occurred in 2001. He had set his sights on Enron, a gas-pipeline company that had morphed into a big player in energy trading and became a Wall Street darling. After studying Enron’s filings, Chanos flagged disclosures that pointed to risky related-party and off-balance-sheet transactions. He concluded that the company was a “hedge fund in disguise.”

That autumn, Enron announced a surprise loss and a regulatory investigation. It collapsed into bankruptcy before the end of the year in one of the biggest cases ever of corporate fraud and malfeasance. Several Enron executives went to prison.

Ahead of the 2008-09 financial crisis, Chanos issued warnings about a potential credit and banking crisis and his funds scored gains when the markets tumbled, though they paled compared with those of others who didn’t specialize in shorting, like John Paulson. Chanos followed that up with wagers against companies that would suffer from a slowdown in the Chinese economy.

The crash that Chanos predicted took years to arrive. By 2015, bearish Chinese positions accounted for about one-fifth of the holdings in Kynikos’s global funds, and the firm produced gains when Chinese stocks sold off that summer.

Some of Chanos’s targets took him to court. Casino magnate Steve Wynn brought, and later lost, a slander lawsuit against Chanos in 2014 after the short seller suggested that Wynn Resorts may have broken anticorruption laws. Insurer Fairfax Financial Holdings accused Kynikos and other hedge funds in 2006 of coordinating bets against the company; a judge dismissed the case against Kynikos.

Chanos’s funds were up 7% last year while the S&P 500 dropped 18% as interest rates climbed. Chanos’s funds rose 16% in 2021. Those returns weren’t impressive enough to stem the outflow of investor cash.

Today, fewer investors see value in adopting a bearish tack. Overall, hedge funds that focus on bearish bets manage $5.3 billion, down from $6.2 billion in 2012, according to data-tracker HFR.

That made it harder for Chanos to operate his firm, which like many hedge funds that do deep research has high costs.

In a letter to his clients that was seen by the Journal, Chanos said “the long/short equity business model has come under pressure and interest in fundamental stock pickers has waned.”

Chanos’s firm, in effect, provided investors with a form of insurance. If stocks fell, the firm’s short-focused funds stood to profit.

“A lot of people don’t care about insurance anymore,” he says.

WSJ : How Elon Musk, for Many, Went Too Far

How Elon Musk, for Many, Went Too Far
A misleading tweet, a vexed billionaire and a new firestorm over antisemitism

Elon Musk insists he isn’t an antisemite.

But this past week, the billionaire entrepreneur left many wondering. At the very least, a string of inflammatory tweets he sent Wednesday showed how gratuitous Musk can be and how easily tweets on his own social-media platform can be misleading and trigger him.

His tweets called an antisemitic post “the actual truth” and renewed his pointed criticisms against the Anti-Defamation League, a Jewish advocacy group that he has described as pushing a “woke mind virus” hurting free speech and, in turn, his business, Twitter-turned-X.

It was an unexpected provocation six weeks after Musk and the ADL appeared to reach a detente after an earlier escalation. And once again his self-generated drama is hindering his pursuits.

He has drawn a tidal wave of negative attention at the moment when he was supposed to be a shining example of American excellence at the Asia-Pacific Economic Cooperation conference in San Francisco and overseeing the potentially historic launch of SpaceX’s large rocket scheduled for Saturday.

Instead, Drudge Report was running a banner headline naming him the “world’s richest bigot.” Longtime vocal Tesla investors were expressing dismay in their famous CEO. Apple, Disney and other majors advertisers suspended spending on X, opening a major new risk for the company. And the White House was condemning Musk’s “abhorrent promotion of antisemitic and racist hate in the strongest terms, which runs against our core values as Americans.”

A close study of his tweets Wednesday helps show what prompted him to go nuclear against the ADL. His ugly detour began shortly after the lunch hour in California when Musk came across a tweet from the kind of user he might consider one of the so-called citizen journalists he has become obsessed with on the platform.

“Fake corporate new media is making up stuff again,” began a post by an account called Wall Street Silver, run by Jim Lewis and Ivan Bayoukhi and followed by more than one million users, including Musk.

Wall Street Silver, which has its roots in a Reddit forum dealing with metals, included a screenshot of an MSNBC broadcast about the rise of hate speech at Twitter under Musk that cited data from the ADL. “Not exactly legitimate objective sources,” it concluded.

Musk responded. “They really should just drop the ‘A’ and go with Defamation League,” he wrote. “Way more accurate.”

In the roughly two hours that followed, the billionaire’s rhetoric grew hotter as he continued to name check the ADL. One could almost see anger building in real time as what Musk’s biographer has dubbed his Demon Mode exploded online for all to see.

At one point, Musk tweeted support for a random X user’s post espousing the same sort of vile conspiracy theory about Jews replacing whites that was spewed by a killer who shot up a Pittsburgh synagogue in 2018. That reply by Musk—“You have said the actual truth”—ignited the firestorm against him.

He kept going.

“The ADL unjustly attacks the majority of the West, despite the majority of the West supporting the Jewish people and Israel,” Musk tweeted. “This is because they cannot, by their own tenets, criticize the minority groups who are their primary threat. It is not right and needs to stop.”

When a user pushed back that it wasn’t fair to generalize against the Jewish community at large, Musk mostly agreed: “You right that this does not extend to all Jewish communities, but it is also not just limited to ADL.”

He added, “And, at the risk of being repetitive, I am deeply offended by ADL’s messaging and any other groups who push de facto anti-white racism or anti-Asian racism or racism of any kind. I’m sick of it. Stop now.”

What makes the whole episode even more of an unforced error is that the MSNBC screenshot was from almost a year ago, though the Wall Street Silver tweet doesn’t mention that. Lewis and Bayoukhi each responded to requests for comment with a giant poop emoji.

Wall Street Silver’s X account is the kind of user Musk has been interacting with more and more as he works to promote so-called citizen journalists, or content creators, that he’s betting can create the types of viral posts that make X the place to be for a whole host of topics.

This month, Musk has averaged a daily reply on X to Wall Street Silver, which often covers a wide array of current events through a sensational or conservative lens.

Under X’s new revenue share program, certain paying users, such as Wall Street Silver, have new motivations to see their tweets go viral as more engagement can generate larger payouts.

Wednesday’s Wall Street Silver post about the ADL was viewed more than 1 million times through Friday, according to X’s count.

Musk’s citizen journalism effort has been tested since the outbreak of the Israel-Hamas war in October and the subsequent flood of posts involving the conflict—some filled with very real images and others not so much, including old video clips misleadingly repurposed.

The company’s ability to handle hate speech and misinformation has been under heightened scrutiny, including from the ADL, since Musk acquired Twitter in late October 2022. The ADL’s research, suggesting a spike in antisemitism, helped fuel news stories that fall, including that MSNBC story.

“Today, we are joining dozens of other groups to ask advertisers to pause Twitter spending because we are profoundly concerned about antisemitism and hate on the platform,” the ADL tweeted shortly after Musk took over.

In the weeks that followed, Musk dismantled much of the company’s infrastructure around content moderation, moves that left some advertisers and others worried X would be left more vulnerable to offensive content than rivals.

The changes were partly framed by Musk as being made to combat an overly liberal mindset that squashed free speech on the platform, especially among more conservative voices.

In September, Musk lashed out at the ADL over its criticism, blaming his company’s advertising woes on pressure the group applied to brands—claims it denied.

To Musk, the ADL was a progressive liberal group looking to silence speech and part of the “woke mind virus” he had vowed to push back against.

“Since the acquisition, The @ADL has been trying to kill this platform by falsely accusing it & me of being anti-Semitic,” Musk tweeted.

Musk’s aggressive rebuttals, including threatening to sue the ADL, came as his newly hired X Chief Executive Linda Yaccarino had been trying to smooth things over with advertisers and the ADL.

By Oct. 4, a detente was reached between Musk and the ADL. The group issued a statement announcing it would resume advertising on the platform. “We appreciate @X’s stated intent over the last few weeks to address antisemitism and hate on the platform,” the ADL tweeted.

Musk thanked the group in his own tweets. Then came Wednesday.

FT : Israel raises $6bn in borrowing bonanza to fund war against Hamas

Israel raises $6bn in borrowing bonanza to fund war against Hamas
Yield on debt is sharply higher than before the conflict began

Israel has borrowed billions of dollars in recent weeks through privately negotiated deals to help fund its war against Hamas but is having to pay unusually high borrowing costs to get the deals over the line.

Since Hamas’s attack on October 7, Israel has raised more than $6bn from international debt investors. This has included $5.1bn across three new bond issues and six top-ups of existing dollar and euro-denominated bonds, and more than $1bn of fundraising through a US entity.

Investors said recent bonds had been issued in so-called private placements, a process through which the securities are not offered to the public market but instead sold to select investors.

The final pricing of the deals was not disclosed. However, bankers said they had priced in line with what they would expect from a public deal. Of two dollar bonds issued in November, Israel is paying coupons of 6.25 per cent and 6.5 per cent on bonds maturing in four and eight years’ time.

That is much higher than benchmark US Treasury yields, which ranged between 4.5 and 4.7 per cent when the bonds were issued. The deals were arranged by Goldman Sachs and Bank of America respectively.

In contrast, Israel issued a 2033 dollar bond in January with a coupon of 4.5 per cent, a much smaller spread — or gap — above Treasury yields, which were 3.6 per cent at the time.

Israel’s bond issuances to help fund the war are viewed as controversial in some parts of the debt market. While some investors, for instance in the US, have been keen to lend to the country following the October 7 attacks, others view the fundraising as anathema, given the humanitarian cost of Israel’s invasion of Gaza.

Investors and analysts noted that the bumper issuance was done through private placements rather than via open syndications and roadshows, which are usually carried out when new bonds are launched.

The reason for this, they said, could be to raise funds for the war effort quickly or without attracting unwanted attention, and could be a sign of how nervous some investors had grown about buying Israel’s debt.

“The reality is that, for a lot of investors, Israel at the moment carries too much ESG [environmental, social and governance] risk, especially for some emerging market investors where Israel is off benchmark,” said Thys Louw, emerging market debt portfolio manager at fund manager Ninety One. 

Caution about Israel’s debt is reflected in the surge in the cost of insuring against default on its bonds. The spread on five-year credit default swaps has widened from under 60 basis points in early October to about 125 basis points on Friday. 


That compares with a spread of about 55 basis points for five-year CDS in Saudi Arabia, which has a lower credit rating from S&P.

“The market is still pricing a very high premium on Israel’s international debt, given that the war is ongoing,” said a strategist at one of the world’s biggest investment banks who asked not to be named given the sensitive nature of the topic. “In particular, the market is worried about how the war is going to impact Israel’s growth and public debt levels, and subsequent sovereign ratings.” 

Israel’s finance ministry did not respond to a request for comment.

Israel has rarely struggled to find buyers for its debt in the past, owing to its strong public finances and interest from investors specialising both in emerging and developed markets.

But its economic outlook is deteriorating. JPMorgan said this week it expected Israel to run a budget deficit of 4.5 per cent next year, up from a previous forecast of 2.9 per cent. That could bring the government’s debt-to-gross domestic product ratio to about 63 per cent by the end of next year compared with 57.4 per cent before the war, the bank said. 

The Bank of Israel has already downgraded its growth forecasts for the economy this year from 3 per cent to 2.3 per cent, and the cost of the war remains highly uncertain.

It is not the first time that Israel has privately placed bonds, as it did over the Covid-19 pandemic, to raise money urgently.


Investors note that Israel’s debt, which has a double A minus credit rating from S&P, is trading at a chunky discount to countries with similar credit ratings such as South Korea, which has a dollar bond maturing in five years with a current yield of 4.8 per cent.

“Israel’s bonds look extremely cheap,” said Paul McNamara, lead manager on emerging market debt strategies at GAM.

Brazil, which has a triple B minus credit rating from S&P, six rungs lower than Israel, issued a seven-year dollar paper this week in its first-ever foreign currency sustainable bond with a yield of 6.5 per cent.

Israel has also turned to individuals and municipalities to raise debt. Israel Bonds, which is registered in the US but affiliated to Israel’s finance ministry, has sold more than $1bn of bonds since October 7, almost doubling the amount it had raised for the year. 

Dani Naveh, chief executive of Israel Bonds, told the Financial Times that most of the investment had come from the US and Europe, roughly evenly split between private investors and institutions, mainly represented by local governments.

Israel Bonds at present offer a 5-year term with a rate of 5.44 per cent and a 10-year term with a rate of 5.6 per cent. More than 15 US states have invested in Israel Bonds since the war broke out including Florida, New York, Texas, Alabama, Arizona and Ohio.

“We have never faced such huge support, in terms of the numbers or the scope of investments, by so many people,” said Naveh. “It allows the ministry of finance in Israel to raise billions of dollars of additional debt to fulfil all its special missions following the war.” 

FT : Short seller Jim Chanos to close his main hedge funds

Short seller Jim Chanos to close his main hedge funds
Legendary bear says interest in fundamental stockpicking has waned

One of Wall Street’s best-known bears, Jim Chanos, has told his backers he is closing his main short-focused hedge funds after more than three decades.

Chanos is best-known for his bet against Enron, the energy trader that collapsed in 2001, as well as for his more recent, but unsuccessful, campaign against electric-car maker Tesla, which he described as a “circus”.

In a letter to investors seen by the Financial Times, Chanos wrote: “It is no secret that the long/short equity business model has come under pressure and interest in fundamental stock pickers has waned.”

He added: “While I am as passionate as ever about research and investing, I feel compelled to pursue these passions in a different construct.”

Chanos, 66, said the bulk of the funds would be returned to investors by year-end. He will continue to offer bespoke advice on fundamental short ideas as well as some macro insights.

His decision to close the funds was first reported by The Wall Street Journal.

“Even in the face of multi‐year market euphoria, we have worked hard to meet your and our shared expectations,” Chanos said.

In his letter, he said his short holdings had generated annualised alpha — outperformance relative to broad market indices such as the S&P 500 and Russell 2000 — of about 8 per cent since the 2018 market bottom and more than 20 per cent over the past three years.

“These results, despite zero-interest rate policy, meme stock mania, and more, remain ahead of virtually all hedge fund industry return indices,” he added.

Short sellers aim to profit from falling prices, borrowing shares in a bet that their value will have dropped by the time they return them. While an established element of the financial markets, it has always attracted controversy, often from the executives of the companies targeted.

Chanos’s relatively high public profile contrasts with the lower-key approach taken by many short sellers, who rely heavily on social media — a tool not available to Chanos during his first two decades in the industry — to spread their warnings of perceived overvalued or fraudulent investments.

Despite some prominent losing bets like Tesla and some large technology companies, Chanos never lost his sceptical bent, telling the FT in 2020 that “we are in the golden age of fraud”. A week before, his funds had made $100mn shorting German payments company Wirecard, which filed for bankruptcy after admitting that most of its cash did not exist. Wirecard’s collapse followed a five-year investigation by the FT into its accounting.

Chanos set up his original fund Kynikos Associates in 1985, using a Greek word that is associated with cynicism.

His most famous bet, Enron, came after he was troubled by disclosures that suggested off-balance sheet financing. A surprise loss reported by the Wall Street darling late in 2001 prompted a regulatory probe and ultimately, its collapse amid fraud that resulted in several executives being jailed.

Ahead of the 2008 financial crisis, Chanos had also warned about the risks of a credit crisis.

Last year he shorted data centres despite their popularity among investors, including big-name private equity groups, which bet on a rise in demand for server space as online activity soared.

Chanos told the FT he was shorting older data centres because their biggest customers, Microsoft, Amazon and Google, were likely to build their own in future, reducing demand for existing sites.

FT : Apple and Disney join advertiser exodus from Elon Musk’s X

Apple and Disney join advertiser exodus from Elon Musk’s X
Comcast, Paramount and Warner Bros also follow IBM in pulling back from the site amid concerns about antisemitic content

An advertiser exodus from Elon Musk’s X gathered pace on Friday, with Apple, Disney, Comcast, Paramount and Warner Bros all pausing spending on the social media platform amid concerns about antisemitic content.

Musk, who bought X last year for $44bn, has drawn criticism for endorsing an antisemitic post on the platform earlier this week. Meanwhile, a report from left-leaning non-profit group Media Matters on Thursday found advertisements for top brands — including Apple, IBM, Oracle and Comcast’s Xfinity, a telecoms company, and Bravo, the TV network — next to posts touting “pro-Nazi” views.

The companies’ decisions follow IBM, which on Thursday announced it was pulling global advertising from the platform. Apple was the fourth-largest advertiser on X in the year to date, according to Sensor Tower data.

Media Matters released another report on Friday showing that ads for companies including Amazon, NBA Mexico, and NBCUniversal’s brand agency had appeared next to content with white nationalist tags.

Amazon and NBA did not immediately respond to requests for comment.

The spending cull by major brands will hamper efforts by chief executive Linda Yaccarino, hired by X in June, to win back marketers after many pulled their spending from the platform in the wake of Musk’s takeover.

Those companies were increasingly concerned their adverts would be placed next to toxic content after Musk relaxed the site’s moderation policies and fired many staff overseeing platform safety. Ad revenues fell about 50 per cent as a result, the billionaire said in July.

Since then, Yaccarino has been on a charm offensive, meeting with advertisers and agencies to reassure them that the company was investing more in safety. But critics warn she has little power to stop Musk himself from tweeting controversial posts, which also drives away advertisers.

The loss of Comcast marks a particular blow, as Yaccarino worked as the head of advertising at one of its subsidiaries, NBCUniversal, before joining X.

On Wednesday Musk, a self-declared “free speech absolutist”, touted an antisemitic conspiracy theory on X, drawing opprobrium. A White House spokesperson released a statement about his comments on Friday, condemning the “abhorrent promotion of antisemitic and racist hate”.

Apple’s decision to pull advertising from the platform could have implications for its commercial relationship with X, and comes as Musk’s site has been cutting costs in an attempt to improve its finances. Already, in November last year, Musk claimed the iPhone maker was pulling advertising and threatening to remove the platform from its App Store, asking his followers: “Do they hate free speech in America?” A meeting between the controversial billionaire and Apple chief executive Tim Cook later calmed the dispute.

Apple’s decision was first reported by Axios, and the New York Times first reported Disney’s move.

X declined to comment.

On Thursday, following the FT’s reporting that IBM had culled its spending on the platform, Yaccarino tweeted: “X’s point of view has always been very clear that discrimination by everyone should STOP across the board . . . When it comes to this platform — X has also been extremely clear about our efforts to combat antisemitism and discrimination.”