Vice : U.S. and Israeli Officials Claim Hamas Was High During Oct. 7 Attack. Is

U.S. and Israeli Officials Claim Hamas Was High During Oct. 7 Attack. Is It True?
Captagon is at the center of a long-debunked myth about militant violence in the Middle East.

The Israel Defense Forces and U.S. government have both recently claimed that Hamas militants were high on captagon, a type of amphetamine popular in the Middle East, during the group’s brutal October 7 attack on Israel. The drug increased Hamas’ willingness to kill and torture civilians, officials said.

According to one of the world’s foremost experts on captagon, whom Motherboard spoke to, it’s an incredibly unlikely claim with little evidence to back it up. While it’s possible that some militants were high on uppers at the time of the attack, recent reports that captagon induces a violent mania are unfounded—while claims that Islamic extremists routinely use captagon to go into battle is a rumor that has been discredited before.

The reports that Hamas fighters were high on captagon during the attacks originated with Israel news agency Channel 12 before they made their way to USA Today and Semafor. According to the reports, unnamed officials from the IDF and U.S. government confirmed that captagon was found on the bodies of dead Hamas soldiers. The anonymous officials told Semafor that the drug was used to “stimulate [Hamas’] willingness to attack, kill, and in some cases, torture, civilians,” but the report did not quote officials directly.

Notably, U.S. officials made a point of telling Semafor that captagon was used by ISIS. Equating Hamas to ISIS has been a key part of Israel’s strategy to justify its ongoing siege of Gaza, which has killed thousands of civilians, to destroy Hamas.

Caroline Rose, director of New Lines Institute’s Strategic Blind Spots Portfolio, was skeptical of officials’ claims around captagon. “There was this claim that captagon was on his body, but there was no video evidence of this,” she told Motherboard. Rose tracks the movement of captagon as part of her work with New Lines and said that the drug is in Gaza—narcotics regularly make their way into the strip, and Hamas previously seized a shipment of captagon while blaming Israeli sources for trafficking the drug—but stressed that the popular amphetamine pill is not a wonder drug that explains the violence of the attacks.

Captagon is a bit of a mystery. It’s the brand name for a fenethylline, a synthetic upper first produced in Germany in the 1960s as an amphetamine alternative. “It’s very similar to Ritalin,” Rose said. “It allows people to stay up late. It allows people to stave off hunger, to focus, and concentrate.”

The drug fell out of favor in the decades after its initial manufacture. In the early 2000s, as official production dwindled, the remaining supplies moved onto the black market. It became popular in the Middle East and is currently manufactured primarily in Syria. Now, captagon is a catch-all name for a wide variety of substances, usually taken in pill form, that produce an amphetamine-like high.

“We don’t have a comprehensive definition for the substance,” Rose said. “But once it came to the Middle East, we started to see the formula change quite drastically. It did not mimic fenethylline whatsoever, instead it incorporated little to no amphetamine or, sometimes, up to 47 percent of amphetamine metabolites inside a pill that was a mixture of caffeine, quinine, procaine, and sometimes toxic levels of zinc and copper from the tableting machine…we would see a very wide spectrum of anything producers could find to put inside these captagon pills.”

Rose said that some captagon pills contain just minimal levels of amphetamine—the active ingredient in many common ADD medications—and cutting agents. She said that reports of captagon causing a violent mania are strictly anecdotal. “When we look at the surveys and the comprehensive studies that are conducted on captagon consumption, and to be fair there aren’t that many, it doesn’t seem to be inciting this kind of crazed behavior,” she said.

She also noted that some of the facts in the USA Today story didn’t make sense. “What’s notable is that they said they were methamphetamine-like stimulants. Captagon is an amphetamine type stimulant, not methamphetamine,” she said. “Israeli security said that small batches were found in the form of a cocaine-like powder. And they also said that small bottles containing a white fluid with traces of captagon were also found. I look at captagon seizures a lot and I’ve seen power in the sense of precursor materials, but not captagon powder. And I’ve never seen captagon in liquid form before. So I find it somewhat difficult to believe that, in one raid, we find two new forms of captagon.”

Politicians have long pointed to captagon as a source of militant violence, especially in the Middle East. Often, this ends up portraying the perpetrators of extreme terroristic violence as bloodthirsty, drug-fueled zombies—a kind of unstoppable evil.

“There is this rush to blame captagon for the violent behavior that’s perpetrated, when it’s very clear that there was extensive planning and preparation for these operations,” Rose said. She pointed to reports in 2015 that captagon fueled Islamic State attacks in Paris. “In fact, that operation required a lot of planning and a lot of preparation.” A tox screen of the Paris attackers later revealed they had no drugs in their system.

“It helps some people try and rationalize some of the violence that’s conducted,” Rose said. “The attack we saw in early October was catastrophic. Additionally, it’s an illicit activity that people can pin on bad actors that are already identified as bad actors.”

Drug use by soldiers, especially the use of stimulants, is common. Throughout the 1950s and 1960s, the Pentagon kept nuclear equipped B-2 bombers in the air above the world 24 hours a day. The pilots chewed dexedrine pills to keep awake during long flights. During the Vietnam war, the DoD pumped soldiers full of speed. World War II was, famously, fought on amphetamine. U.S. pilots reported amphetamine use in the Gulf War and the War on Terror; two service members even tried to blame amphetamines for a friendly fire incident in Afghanistan. “They’re all pretty much used for the same thing, which is to stay up, stave off hunger, stay focused,” Rose said.

She said she’d tracked seizures of captagon in Gaza, but stressed that there’s no pill that unlocks a person’s ability to conduct brutal attacks and there’s no evidence that captagon use was widespread or a key part of Hamas’ plan. “Fighters might have taken cocaine right before, or captagon, or no substances at all. Some might have taken caffeine, some may be sleep deprived,” she said. “There’s so many different stimulants that heighten awareness and attention during an operation, but there's no way that captagon was a factor to blame in the violence and atrocities that we witnessed on October 7.”

“I think when it comes to the mystique of militant use of substances, we’ve seen this story again and again and again. It’s not new,” she said.

The Information : It’s Time for Apple to Identify Cook’s Successor

It’s Time for Apple to Identify Cook’s Successor

What a week Tim Cook had. On Thursday, Apple reported anemic September-quarter results, completing a fiscal year where revenues fell 2.8%. That’s actually not a bad result given that the smartphone market that drives Apple’s business shrank 10.5% in the same 12-month period, according to IDC data. Still, it is yet another reminder (if any were needed) that Apple is no longer a growth company. Cook’s other big event this week was his birthday: He turned 63 on Wednesday, which incidentally is several years older than any of his counterparts atop other big tech firms. In fact, the average age of the CEOs of Microsoft, Alphabet, Meta Platforms, Amazon and X/SpaceX/Tesla is around 50.

For a company of Apple’s size and cultural importance, it’s remarkable that there’s so little public discussion of the fact that its management is aging—and so little sense of who could come next. Jeff Williams, Apple’s chief operating officer, is reportedly just a couple of years younger than Cook, which means he could only be a short-term successor if Cook decided to retire tomorrow. To be clear, there’s no reason to think Cook is planning to retire imminently, but it’s certainly possible he wants to have another chapter in his life. A Bloomberg report in 2021 said Cook wanted to stick around for “one more major new product” release, such as the mixed-reality glasses which are due out early next year. Assuming that’s true, Apple’s board should be looking for a successor now.

In fact, while Cook has unquestionably been an excellent CEO, at least from a shareholder point of view, it wouldn’t be a terrible thing for him to move on sooner rather than later. The company is too reliant on a portfolio of mostly older products to have any hope of improving its long-term growth trajectory. The mixed-reality headset looks unlikely to be the fix some might want. What Apple needs is a leader with fresh ideas and a willingness to take some risks. Cook, who has maintained an exemplary track record over the past dozen years, has reason to take less risk, not more. After all, who wants to blot their reputation at this point in their tenure?

Will that be someone from inside? Most of the people at the top of Apple have been there a long time and have surely absorbed Apple’s way of doing things. That’s probably a good thing, given how successful the company has been. The question is whether one of those people is willing to try a few new things. It’s a question the board and shareholders need answered.

FT : City of London seeks to redefine itself as dining destination

City of London seeks to redefine itself as dining destination
New Wolseley restaurant comes as Square Mile aims to become leisure hotspot after drop in worker footfall

At 7am on Wednesday, the Wolseley, a West End diner frequented by a mix of financiers, dealmakers and celebrities, will throw open the doors to its first outpost in the City of London.

The launch of the Wolseley spin-off, which occupies the site of a grand former department store opposite London Bridge known as the “Gateway to the City”, marks the biggest restaurant opening of the year in the Square Mile, costing an estimated £10mn.

It comes as London’s financial district presses ahead with efforts to redefine itself as a destination for restaurant-goers, day trippers and tourists in a push to offset the drop in office workers’ footfall since the shift to hybrid working following the coronavirus pandemic.

The number of restaurants in the City fell by 28 per cent between September 2019 and September 2023, outpacing the rate of closures across the capital, according to research by industry tracker CGA and consulting group Alix Partners.

But in the past year the district has stemmed the tide — losing just 1.3 per cent of its sites, the lowest rate of decline for any inner London district.


“Things have definitely picked up in the City,” said Baton Berisha, chief executive of the Wolseley Hospitality Group, which was founded by famed restaurateur Jeremy King before he was ousted by majority owner Thai-based Minor Hotels last year.

Berisha predicted that higher demand for corporate lunches from workers in the office between Tuesday and Thursday, as well as increased footfall from tourists on weekends, would ensure the new outpost remained “very busy” beyond opening day. Wolseley Hospitality Group operates nine sites across the UK.

Historically deprived of a vibrant dining scene, the City has added a series of marquee venues over the past decade, and demand for the Wolseley’s upmarket competitors nearby has remained strong despite the cost of living crisis.

One Lombard Street, a brasserie located opposite the Bank of England, had its best trading day in its 25-year history in mid-October, recording just over £60,000 in turnover. A few streets away, almost 2,000 diners visited steak restaurant Hawksmoor’s City outlet in the last week of October, 15 per cent higher than the same week in 2019, when it did not open on weekends.

Gareth Banner, managing director of Soho House-run members’ club The Ned, said the Wolseley was a “welcome addition” to the Square Mile. “I’ve always adopted the view that a rising tide lifts all boats. “I’m conscious that they will be competition . . . but ultimately it makes the City a bit more of a destination,” he added.

Demand patterns resemble a “bell-shaped curve” concentrated between Tuesdays and Thursdays, when workers commute into the office, according to Soren Jessen, a former banker who runs One Lombard Street. In turn, restaurants have cut back on staffing numbers on less busy days: the Ned saves up to 25 per cent on payroll on Mondays and Fridays, Banner said.

Oyster card usage at London Underground stations located in the City was 13 per cent higher on a Wednesday in mid-October than on an average day before the pandemic, according to a Financial Times analysis of data from Transport for London, which runs the network. But usage on the Monday and Friday of the same week last month was more than 20 per cent down on pre-Covid levels.

Jessen said that in the middle of the week, regulars “come for breakfast, go and have meetings, come back for lunch and then a drink in the afternoon. You can spend a lot of money in one restaurant.”

Corporate lunches, the linchpin of demand for City venues, meant the district was better placed to weather any economic slowdown, according to Will Beckett, chief executive of Hawksmoor, which has had a presence there since 2011.

“In a cost of living crisis, you’d probably rather be exposed to corporate cards than purely household income; it’s a bit more robust,” said Beckett, estimating that two-thirds of midweek lunches at his group’s Square Mile restaurant were paid for by corporate credit cards.

But the Square Mile has also benefited from an increase in leisure visitors over the weekends, spurred by a £2.5mn-a-year investment from the authority that manages it. Sunday lunch at the Ned, for instance, is fully booked for the next six weeks.

“On weekends, we never had anyone much in the City . . . that has absolutely changed,” said Chris Hayward, policy chair at the City of London Corporation, which began its annual investment in 2021. “The stuffy image of the City of 20-30 years ago has long gone.”

He said efforts to boost tourism had helped the City compete with local rival Canary Wharf and global competitors, such as New York’s financial district. Both have put more focus on diversifying into leisure attractions since the pandemic.

Coq d’Argent, a rooftop restaurant overlooking the BoE, used to be “a sea of suits but . . . not anymore”, said David Loewi, managing director of its owner D&D London. “You can’t just rely on the corporates anymore.”

Karl Chessell, CGA’s director of hospitality, said upmarket restaurants were likely to be “less susceptible” to an economic downturn because of the spending power of their clientele. But he cautioned against “calling the bottom of the market”.

The possibility of more rail strikes later this year could yet hit the hospitality sector over the vital Christmas period, while a planned rise in business rates next April could add to restaurants’ costs.

But for the time being the City’s dining scene continues to thrive. “The Wolseley has never really been about the food, it’s about the overall experience and the buzz . . . and the City has always been open to that formula,” said Peter Harden, who collates the annual Harden’s London restaurants guide.

FT : Shell boss backs ‘leaner’ operation in defending renewables strategy shift

Shell boss backs ‘leaner’ operation in defending renewables strategy shift
Top executives have left group’s green divisions after shift in focus under new CEO

Chief executive Wael Sawan plans to make Shell “leaner” and more selective about how it invests in the energy transition as he defended a shift in focus that has led several senior executives to leave the company’s green divisions in the past six months.

Since he took the top job in January, Sawan has outlined plans to boost returns by maintaining oil output, growing the gas business and trimming less profitable parts of the company’s low-carbon portfolio established under his predecessor Ben van Beurden.

“We need to get leaner, we need to get more focused, we need to get more disciplined,” Sawan told the Financial Times. “That inevitably will include choices around where we are going to operate but also importantly how we operate.”

Last month the UK-listed energy major, which is the largest company on the FTSE 100, confirmed it would cut 200 jobs in its low-carbon solutions division and place another 130 positions under review, representing at least 15 per cent of the workforce in that unit.

The cuts followed a decision to scale back Shell’s work on hydrogen technology for passenger cars to focus on hydrogen for heavy goods vehicles and industry. Shell is building Europe’s largest green hydrogen production plant in the Netherlands.

This year Shell has also agreed to sell its retail energy business in the UK and Germany and is seeking to exit some of its investments in renewable power generation and storage in Europe.

Senior executives, who have left Shell because of the shift, told the FT it had become clear internally that the company’s ambition in some of these areas had changed.

“It’s not what he’s said, it’s what he hasn’t said,” said one recently departed executive, referring to a perceived lack of support from Sawan for parts of Shell’s Renewables and Energy Solutions business. “The silence was deafening.”

Sawan told the FT he remained committed to transforming Shell into a “multi-energy” company, while cutting emissions to net zero by 2050, but that Shell would no longer “pretend to lead” in parts of the energy transition where it did not have the right competencies and capabilities.

“In transport and industry we already have a significant market share there, and we think it is only natural for us to lead as we support the decarbonisation of those sectors,” he said.

In addition to hydrogen production that means Shell will focus its low-carbon spending on activities such as electric vehicle charging, biofuels and carbon capture and storage.

In areas where Shell lacks a unique capability, such as renewable power generation, it would aim to work with partners or not invest at all, Sawan said. “This is really much more of a selective approach to where we are going to lead.”

The moves have been welcomed by many investors, with Shell shares trading near record highs in London. The stock was further underpinned after it reported robust third-quarter earnings on Thursday.

As part of the shift in emphasis under Sawan, the company has also said it will invest more in its world-leading gas business to grow sales volumes of liquefied natural gas by 20 to 30 per cent by 2030.

Selling more gas could mean Shell would have to revise down its emissions reductions targets during a review next year, analysts said.

Sawan said it was too early to comment on the energy transition strategy update planned for March but stressed that LNG had made a significant contribution to global emissions’ reductions in the past five years by allowing coal to gas switching for power generation, particularly in China.

“A sensible, focused approach on low-carbon intensity gas molecules, and LNG in particular, is a key part of [our] strategy,” he added. “That goes hand in hand with our continued focus on looking at profitable decarbonisation with low-carbon molecular solutions.”

FT : Tech giants pour billions into cloud capacity in AI push

Tech giants pour billions into cloud capacity in AI push
Google, Microsoft and Amazon boost investment by a fifth over two years to a combined quarterly total of $42bn

Amazon, Microsoft and Google parent Alphabet look set to ramp up capital spending, as the world’s biggest cloud computing groups build up capacity to serve the growth of generative artificial intelligence.

The Big Tech groups, which together dominate the global cloud market, have boosted investment in computing infrastructure over the past few years.

Capital spending rose to a combined $42bn in the three months to September, almost 20 per cent more than the same period in 2021. That figure, which comprises reported corporate capex from Alphabet and Microsoft and Amazon’s businesswide investment in property and equipment, marked a 10 per cent rise from the quarter to June. Analysts expect the pace of cloud-related spending to accelerate next year.

Executives from the companies said last month that significant chunks of capital spending are going towards the generative AI systems that require huge amounts of computing power and data-crunching. Amazon chief executive Andy Jassy predicted that generative AI will drive “tens of billions in revenues”.

The three tech giants are vying to increase their shares of the cloud market — the business drives Amazon’s overall profits in particular — and must remain competitive in AI to hold on to their customers. Each wants to win new customers with a suite of state of the art AI tools and services, and use the technology to enhance other core products.

The rivals “have to compete on generative AI or they’ll lose relevance and market share”, said Jeff Pearson, managing director at technology consultancy Slalom. “All that is going to require a tremendous amount of capex”, for equipment such as servers and data centres.


Bank of America analysts predict the collective cloud-related capex of Amazon, Alphabet and Microsoft will rise at an accelerated 22 per cent next year to $116bn. This year they raised their 2023 forecast from no growth to 14 per cent. Last year the companies’ combined investment increased 20 per cent from 2021 to $84bn, BofA said.

Microsoft is “ramping up” investment at the fastest pace to support “an uptick in AI workloads” and their broader cloud business, said BofA analyst Justin Post. All three companies, however, were “investing ahead of future revenues”, he added.

Amazon’s quarterly investment figures include assets for its retail business, which it invested heavily in during the pandemic. Analysts said the fall in Amazon’s third-quarter investments, compared with last year, reflected a pullback in ecommerce spending. Amazon said in October its retail capex would fall this year while its cloud-related investment would rise.

The need for huge amounts of costly computing capacity to develop generative AI has pushed AI start-ups to seek partnerships with the Big Tech groups. Microsoft took an early lead and signed an exclusive deal with start-up OpenAI, now seeking a valuation of $86bn. The tie-up gives Microsoft’s customers access to the technology behind ChatGPT.

Microsoft this month became the first in the industry to make the technology behind ChatGPT available as a standard feature in a widely used software product, with the launch of its Copilot generative AI assistant. The upgrade will add as much as 83 per cent to businesses’ monthly software bill.


Microsoft said AI-related demand delivered an unexpected boost to cloud growth in the most recent quarter. Alphabet and Amazon were vaguer in their earnings reports about the impact of their AI investment.

None of the three has “unique advantages on the capex side”, said Charles Fitzgerald, an angel investor and former Microsoft executive. “All have a ton of money on the balance sheet. All are committed to leading in the AI era, so will spend what needs to be spent.”

The focus on growing a capital-intensive business could squeeze margins, analysts warned. High levels of capex were “not going to show up right away” but could be a “headwind” to margins over time and also hit cash flow, said BNP Paribas analyst Stefan Slowinski.

Alphabet said in October that it was committed to “re-engineering our cost base” to “create capacity” for AI-related investments. Microsoft said margins “may decrease” as a result of cloud and AI investments.

FT : Top US gas producer says pipeline fights endanger industrial world

Top US gas producer says pipeline fights endanger industrial world
EQT chief lambasts ‘movement to cancel energy infrastructures’ after latest delay to Mountain Valley project

The largest US natural gas producer has lambasted a “war on infrastructure” that risks sparking a Europe-style energy crisis in parts of the US, days after the latest delay to a new pipeline fast-tracked for approval by Congress.

EQT chief executive Toby Rice told the Financial Times that the US had “oceans of natural gas”, but companies like his in the prolific Appalachian shale region were struggling to add supplies because new pipeline capacity had been blocked.

“The industrial world that we enjoy now is severely compromised because of the lawsuits, the pushback and the movement to cancel energy infrastructures and modern society. We’ve run out of flexibility,” said Rice, 41, who describes himself as a “shalennial”.

His comments followed the announcement last month of another delay to the Mountain Valley Pipeline, a 303-mile gas project stretching between West Virginia and Virginia that is opposed by green campaigners and some landowners.

When MVP was first announced in 2014 it was expected to be completed by 2018 and cost $3.5bn. It is now forecast to cost $7.2bn and begin operations next year.

“The ramp-up of MVP’s contractor workforce has been slower and more challenging than expected, due to multiple crews electing not to work on the project based on the history of court-related construction stops,” Equitrans Midstream, one of the owners of MVP, said in a securities filing.

In June, Congress passed a law specifically to fast-track construction of the MVP following the intervention of Joe Manchin, a West Virginia senator who holds the balance of power in the Senate. A month later the Supreme Court cleared the legal path for construction to resume.

But several attempts to pass laws in Congress to streamline permitting processes more broadly, which were supported by both the fossil fuel and renewable energy lobbies, have failed over the past two years.

Rice said the fact it now took an act of Congress to get a single pipeline built in the US “should scare the hell out people”, particularly when cities in New England have to import liquefied natural gas from abroad during winter freezes.

He warned that parts of the US could face the kind of energy crisis that hit Europe after Russia’s full-scale invasion of Ukraine. Rice said Europe was vulnerable because it had “shut down building infrastructure”.


“What’s happened in Europe is happening in the United States. We’re just five years behind,” Rice said.

Since 2016 at least four pipelines — PennEast, Constitution, Atlantic Coast and Northeast Direct which could have connected EQT’s shale gasfields to the US east coast — have been cancelled. However, capacity on other pipelines in the north-east has been expanded, according to data from the Energy Information Administration.

Opponents of the MVP project argue that it poses a risk to properties and sensitive ecosystems and prolongs the lifespan of the fossil fuel industry, whose emissions are the main cause of climate change.

“When companies make investments in expensive, capital-intensive, fossil fuel infrastructure it creates its own momentum for them to keep using the asset at a time when we need to move beyond fossil fuels,” said Casey Roberts, an attorney at the Sierra Club, an environmental group.

Last year the build out of interstate natural gas pipelines in the US fell to a record low of 897mn cubic feet a day, down from a peak of 28bn in 2017.

Pipeline capacity constraints have the ability to curtail gas flows from Appalachia into New England. Last winter, prices for gas to be delivered in Boston briefly soared to almost $30 per million British thermal units, comparable to prices in Europe, where utilities were scrambling to find international supplies to replace Russian energy.

In a note to clients in September, consultancy Wood Mackenzie said that a failure to build new pipelines in the north-east would raise gas prices, dent demand and accelerate the energy transition away from gas in that market. As a result, north-east gas production would be downgraded significantly to 30bn cubic feet a day or by 10bn cu ft/d below the base case in 2040, it said.

Williams, a $42bn pipeline company, previously clashed with former New York Democratic governor Andrew Cuomo after his administration denied water quality permits for its $1bn Constitution pipeline even though it had been approved by federal energy regulators.

“Permitting has become highly weaponised in Democratic states, and so it’s being used completely inappropriately,” said Alan Armstrong, Williams chief executive.

FT : Citadel’s Ken Griffin warns against hedge fund clampdown to curb basis trad

Citadel’s Ken Griffin warns against hedge fund clampdown to curb basis trade risk
Founder of $62bn firm hits out at US proposals to treat big players in his industry like broker-dealer arms of banks

Ken Griffin, the founder and chief executive of $62bn US hedge fund Citadel, has warned regulators that they should focus their attention on banks rather than his industry if they want to reduce risks in the financial system stemming from leveraged bets on US government debt.

Global regulators have warned about growing risks emerging from the so-called Treasury basis trade — selling Treasury futures while buying US government bonds and extracting gains from the small gap between the two using borrowed money.

But Griffin said they should focus on the risk management of banks that enable the trade by lending to hedge funds, rather than try to increase regulation of the hedge funds themselves.

The US Securities and Exchange Commission, which regulates hedge funds, has proposed a new regime for the Treasury market that would treat hedge funds like the broker-dealer arms of banks.

“The SEC is searching for a problem,” Griffin told the Financial Times. “If regulators are really worried about the size of the basis trade, they can ask banks to conduct stress tests to see if they have enough collateral from their counterparties.”

Hedge fund bets against US Treasuries futures climbed to new highs in the seven days to October 24, with record net shorts against both the two-year and five-year future. Most, but not all, of these bets are in the basis trade.

Citadel, alongside rival hedge funds Millennium Management and Rokos Capital Management, is among many that are routinely using the basis trade.

The Bank for International Settlements and researchers at the US Federal Reserve are among those to have warned about the risks of a rapid build-up of hedge fund bets in the Treasury market, which is magnified by leverage levels that can exceed 100 times.

If the trade moves against them and hedge funds are forced to sell their Treasury bonds at the same time, regulators worry it could lead to a collapse of the world’s most important bond market, with severe implications for the wider financial system.

The BIS blamed a “disorderly reduction in margin leverage” as a contributor to the collapse of the US Treasury market in March 2020 at the onset of the pandemic. However, in the Fed’s latest Financial Stability Report last month, the central bank said risks related to the basis trade “are likely mitigated by tighter financing terms applied to hedge funds by dealer counterparties over the past several quarters”.

The prime brokerage divisions of banks play a key part in the basis trade because they lend money to hedge funds while using their Treasury bonds as collateral. Banks are expected to evaluate how the portfolios of their hedge fund clients perform under various market stresses to make sure they have enough collateral to withstand a market shock.

Griffin said he was not opposed to regulations capping the amount of borrowing by hedge funds in the Treasury market, provided the proposals were “subject to sound economic analysis and proposed for public comment”.

He noted that the basis trade brought down the cost of issuing government bonds, as hedge funds buy large quantities of Treasuries to pair against their short futures positions.

“The ability for asset managers to efficiently gain exposure to Treasuries through futures allows them to free up cash to invest in corporate bonds, residential mortgages and other assets,” he said.

This is because futures are leveraged products requiring a fraction of the cash posted as collateral to maintain the position, rather than paying full price for a Treasury bond now.

“If the SEC recklessly impairs the basis trade, it would crowd out funding for corporate America, raising the cost of capital to build a new factory or hire more employees,” Griffin said. “It would also increase the cost of issuing new debt, which will be borne by US taxpayers to the tune of billions or tens of billions of dollars a year.”

Addressing risks elsewhere in the financial system, the Citadel founder said “the risks lie where there is a significant mismatch between assets and liabilities relative to the leverage employed”, pointing to the collapse this year of Silicon Valley Bank.

The US lender’s $180bn in deposits provided cheap short-term funding and because loan demand was weak it bought long-term bonds that were unhedged, but rising interest rates devalued the bonds, leading to a liquidity crisis when customers tried to withdraw their money.

“Silicon Valley Bank using customer banking deposits to invest in long-dated Treasuries is profoundly different from a hedge fund buying a Treasury bond and selling a futures contract that can be closed out by delivering the bond,” Griffin said.

The SEC under chair Gary Gensler has unleashed the largest regulatory blitz since the financial crisis. A rule that would force larger players to register as broker-dealers or government securities dealers is among proposed regulations that would subject hedge funds to increased oversight.

“Regulators should focus on the banks instead of requiring every hedge fund that’s going to partake in the Treasury market at any reasonable scale to be a registered broker-dealer,” Griffin said. “This is a much more cost-effective way to address any concerns that the SEC or other regulators in this space might have.”

FT : Russia’s approach to Israel reveals problems in the Kremlin

Russia’s approach to Israel reveals problems in the Kremlin
Unrest in the north Caucasus follows the stoking of an anti-western, anti-imperialist mood at home

On October 29, several thousand angry men stormed the airport at Makhachkala, capital of Dagestan in Russia’s mainly Muslim north Caucasus. They were looking for Jews believed to have arrived from Israel. The police seemed inactive, much like during Yevgeny Prigozhin’s abortive mutiny in June. In a second Dagestani city, Khasavyurt, a mob searched for Jewish refugees allegedly placed in local hotels. In Karachay-Cherkessia, protesters demanded the eviction of all Jews from the republic. In Nalchik, also in the north Caucasus, a Jewish cultural centre under construction was set on fire and antisemitic graffiti scrawled on its walls.

As happened after the Prigozhin mutiny, Vladimir Putin appeared to have temporarily lost control. This time, it occurred in the Caucasus, where Putin’s rise to power began with ruthless military campaigns. In both cases the explanation is the same: enthusiasts attempt to help the government carry out its policy more decisively, as they interpret it. With the Wagner group, this meant fighting Ukraine with full force. With the Dagestani mob, it meant openly supporting Palestinians in defiance of the west and Israel. The current war in the Middle East is not the first during Putin’s long rule, but the consequences are different. The reason lies in Russia’s fundamentally changed foreign and domestic policy.

After 9/11, Putin was the first foreign leader to phone his US counterpart, George W Bush, to express his condolences. Twenty-two years later, after Hamas’s attack on Israel, Putin was careful, even ambiguous, in his words, even though Israel has not joined western sanctions against Russia and has limited its aid to Ukraine. One reason is that the war against Ukraine has changed Russia so much that it has a different approach to the Arab-Israeli conflict and domestic antisemitism.

By disputing Ukraine’s right to exist, Russia is acting as the arbiter of and successor to the Soviet and tsarist empires. Their legacy includes friendships with Arab states, directed against Israel and the west, and unofficial antisemitism in Soviet institutions that marked out domestic opponents in ethnic and cultural terms. This is not to mention the pogroms of the late tsarist era. 

In foreign policy, this legacy manifests itself in the Kremlin’s attempts to rally countries against the world order under the banner of anti-westernism and anti-imperialism. Inside Russia, it labels critics of the war, many of whom went abroad, including to Israel, as insufficiently patriotic. The Kremlin sees ordinary people in and outside Russia as having a natural hostility towards liberals, gay people, intellectuals and political, cultural and financial elites, as well as imbued with a certain antisemitism.

After the failure of Russia’s blitzkrieg attack on Ukraine in early 2022, the Kremlin became consumed with the idea of opening a second front. It tried a gas front against Europe last winter, and a grain front stoking fears of world food shortages and migration crises. It hoped for a flare-up over Taiwan, or domestic political problems in the US. Now that a second front has opened in the Israel-Hamas war, Moscow may hope to propose a bargain to the west: “We’ll help you get out of the mess in Palestine, you help us do the same in Ukraine.” This accounts for a Hamas delegation’s visit to Moscow on October 26.

However, Russia’s decision-making is too degraded for its leaders to use such opportunities. They are in the grip of destructive emotions, obsessed with grievances and fixated on revenge. This reduces their ability to play a constructive role in the Middle East. While conducting its aggressive geopolitical game, the Kremlin has overlooked the consequences at home. Its intense anti-western sentiment has generated violence in the north Caucasus which contradicts the image of domestic harmony that Putin aims to project.

Miss Tweed : LVMH mulls buying back Off-White license from Farfetch

Miss Tweed : LVMH mulls buying back Off-White license from Farfetch

LVMH has been in on-and-off-talks with Farfetch over the past few months about acquiring the license to manufacture and distribute the fashion brand Off-White, several industry sources said. Founded by former Louis Vuitton menswear creative director Virgil Abloh in 2013, Off-White suffers from underinvestment by Farfetch, which owns the license through its New Guards Group (NGG) unit.

LVMH owns only the trademark name, not the license, and is unhappy about seeing the value of its asset decline. Lossmaking Farfetch has had to shed staff and put many expansion projects on hold to save money, as Miss Tweed reported last month.

LVMH has been complaining about the damage done to Off-White by selling items at a discount, closing boutiques – such as its London flagship this summer – and holding back on marketing and development projects aimed at helping it grow and remain visible, several industry sources said. Farfetch has not opened as many boutiques as it pledged to when it bought the brand’s license in 2019. Initially, the goal was to open 30 stores in three years. In the end, around half of that, or some 15 stores, were opened, industry sources have said.

To save money, Off-White had to cancel its 10-year anniversary show, which it had planned in New York in September in homage to Abloh. Cutting funds to grow Off-White and other brands run by NGG has caused friction with the company’s co-founders, Davide De Giglio and Andrea Grilli, who abruptly left in June. The brand’s last real fashion show was in March.

“LVMH executives have been complaining about how Farfetch and NGG are managing Off-White,” one senior industry source said. “LVMH has sent some of its people to Milan to oversee the management of Off-White, but they are having trouble having some sort of influence on this situation.”

“New Guards has the license of the trademarks for the Off-White brand,” a spokeswoman for Farfetch told Miss Tweed in an email. “This license expires in 2035 and includes the right for either party of opt out of the agreement effective as of January 1, 2026, subject to a notice provision.” Farfetch and LVMH declined to comment on the talks about the Off-White license.

If LVMH wishes to take the license back for free by Jan. 1, 2026, it will need to give notice by end-December 2024, a source with knowledge of the matter said.

MICHAEL BURKE
“There have been discussions between LVMH and NGG about the license for many months now,” one of the sources said, adding that the person leading the talks on the LVMH side was Michael Burke. The 66-year-old executive, who ran Louis Vuitton for a decade, is one of the closest lieutenants of LVMH CEO Bernard Arnault. Burke had a good understanding with Abloh. Burke was the one who appointed him as creative director of Louis Vuitton menswear. He has been involved with many of the tributes paid to Abloh since he passed away two years ago. Burke did not reply to several requests for comment.

Burke is expected to become head of LVMH’s Fashion Group, the unit that includes brands such as Celine and Givenchy. If LVMH acquires the license and owns the whole of Off-White, it is likely that the brand will come under Burke’s supervision and join the Fashion Group.

Some industry sources say you cannot blame Farfetch for underinvesting in Off-White. It has had little incentive to do so since it is likely to lose the license in just over two years. On the other hand, LVMH is worried that if it waits until the end of 2024, Off-White’s image and brand equity will have suffered so much that it may not be worth investing to help it take off again. In January 2026, LVMH “will get a dead body if it waits that long,” one person close to the talks told Miss Tweed on condition of anonymity.

CULTURAL SIGNIFICANCE
Therefore, the question is: how motivated is LVMH to fully own Off-White? The brand has been regarded as one of the most disruptive voices in fashion this past decade with a distinct coolness and authentic message of inclusivity. But what is its growth potential without its star designer and founder? Can it really reach the goal it set in 2020 of €1 billion in revenues by 2030? Abloh died of a rare form of cancer in November 2021 at the age of 41, leaving behind his beloved wife Shannon, with whom he was close since high school, and two small children.

“Abloh was the voice of Off-White and had cultural significance,” one industry insider said. “He could also connect with people and consumers in ways no one could.” Abloh has often been compared to the late Karl Lagerfeld in how prolific he was in coming up with original and striking designs for everything – not only fashion but in other areas as well such as music, electronics, homeware and sports goods. He had a strong point of view and was truly connected with the times, critics say. His creations stood out in their freshness and brightness.

To replace Abloh, Off-White appointed Ibrahim Kamara as the brand’s new art and image director. Under him, the brand’s story will no doubt be different, fashion experts say, and it will take time to spread and be adopted. If Abloh was into baggy and oversize proportions, Kamara has produced closer-to-body silhouettes with quite a bit of tailoring, and a few asymmetric skirts at his last show in Paris in March. However, he preserved the brand’s utilitarian inspiration with an emphasis on buckles and removable harnesses. There were lots of all-black looks ornamented with rows of tiny metallic circles around perforations. Kamara has also focused on a bright blue shade he wants to make synonymous with Off-White.
“Off-White is a very innovative brand in its thinking,” Kamara, 33, told journalists at the Paris show in March, WWD reported. “We’re experimenting, we’re still developing our own codes.”

Born in Sierra Leone and raised in Gambia, Kamara moved to London when he was 16 and graduated from the prestigious Central Saint Martins fashion school. Before joining Off-White, the designer worked with Abloh while he was at Louis Vuitton.

In 2021, Kamara was appointed editor-in-chief of Dazed magazine and previously consulted for many brands including Chanel, Burberry and Marc Jacobs. His shows have been getting positive reviews and his efforts at staying true to the brand’s disruptive free spirit have been applauded by critics. However, the brand has lost momentum in recent months, not only because of underinvestment but also due to consumers’ fading appetite for luxury streetwear in the current inflationary environment. Off-White’s “Out of Office” calf leather sneakers cost €475 and “Jitney” leather bags cost €1,490. When Abloh was alive and was a world superstar, the brand could get away with such prices. It continued to enjoy growth in 2022 as people bought legacy products, the last designed by Abloh. But can it justify such prices now that he is no longer there?

ABLOH’S BRAIN
Hence, it’s not entirely clear if getting the license back is worth the trouble for LVMH. Originally, the group was interested in Abloh, the man and his brain, not the Off-White brand. LVMH bought a 30 percent stake in the IP of Off-White when Abloh started working as creative director for Louis Vuitton menswear in 2018. It raised that holding to 60 percent in July 2021, four months before the designer passed away. Last year, LVMH bought the remaining 40 percent from Abloh’s wife, Shannon. Now LVMH owns 100 percent of the brand’s IP.

Originally, Arnault was keen to invest in Abloh’s brand to use him as an internal creative consultant for the group and get him involved in all sorts of projects. “Additionally, LVMH and Mr. Abloh have agreed to another arrangement to join forces,” the French group said when it announced in 2021 that it owned 60 percent of the brand. “It will leverage together the group’s expertise to launch new brands and partner with existing ones in a variety of sectors beyond the realm of fashion.”
LVMH has developed a habit of buying stakes in the brands of the designers it hires. When Jonathan Anderson became creative director of the group’s Spanish luxury brand Loewe in 2013, the group took a minority stake in his J.W. Anderson brand, which is based in London.

COLLABORATIONS
Off-White is the master of collaborations. It has done more than 100 of them over the past decade and some have been hugely successful, such as its work with U.S. sportwear brand Nike. Last month, Off-White produced a special capsule for Mattel’s Monster High dolls. The collection featured four dolls dressed in edgy Off-White looks. In January this year, it did one with the Chicago Bulls basketball team. It was a tribute to Abloh’s love of basketball and to his home city.

When Farfetch acquired New Guards Group, the deal gave the company an enterprise value of $675 million. The idea was to leverage Farfetch’s marketplace and sell NGG’s brands online. NGG has the license to manufacture and distribute nine fashion brands including Off-White, Palm Angels, Heron Preston and Opening Ceremony. It owns a controlling stake in all of them except Off-White – which is the crown asset, generating around €300 million in sales. NGG has some 70 boutiques and more than 300 points of sale. It pays a royalty of around 10 percent to LVMH on the sales Off-White, industry sources estimate.

Last year, Off-White’s underlying profitability, or Ebitda, was around €100 million. Several industry sources estimate that it would cost around €200 million for LVMH to secure the license earlier than planned, if a deal was concluded in the near future. However, that’s far from certain, several industry sources said. The situation is complex.

First, relations between LVMH and Farfetch have never been particularly cordial, even before this Off-White affair. The group has always refused to let its flagship Dior and Louis Vuitton sell handbags or ready-to-wear on Farfetch’s marketplace, and negotiations between Arnault and Farfetch CEO José Neves have been tough in the past regarding e-concessions on the company’s platform, sources close to the company say.

For Farfetch, NGG without Off-White does not have quite the same aura and weight on the fashion market. That being said, industry sources say Palm Angels has been growing fast and could eventually catch up with Off-White in terms of size.

NGG’s total revenues last year reached more than €620 million. In 2019, many investors and analysts criticized Farfetch for buying NGG, but it turned out that this was actually the only unit generating profits within the company. This year, NGG’s overall sales are forecast to be lower due to the current downturn.

When Richemont publishes results on Friday this week, investors expect the Swiss group to clarify its intentions vis-à-vis Farfetch. Meanwhile, LVMH will be maneuvering to avoid having to “White Off” its investment in the luxury streetwear brand.

WSJ : LVMH to Buy Eyewear Brand Favored by the Stars

WSJ : LVMH to Buy Eyewear Brand Favored by the Stars
Deal for Barton Perreira comes as luxury giant uses glasses to tap aspiring high-end shoppers

PARIS—LVMH Moët Hennessy Louis Vuitton LVMUY 1.01%increase; green up pointing triangle has agreed to buy Los Angeles-based eyewear maker Barton Perreira, part of the luxury conglomerate’s push to extend its reach to goods with mass-market appeal.

Eyewear has emerged in recent years as one of the first purchases that aspiring luxury consumers make before moving on to more expensive items such as handbags. That is prompting LVMH and other luxury-goods companies to wean themselves off licensing agreements with third-party manufacturers and develop in-house eyewear operations.

LVMH’s purchase of Barton Perreira—valued at roughly $80 million, according to people familiar with the deal—adds a renowned frame maker to the French company’s burgeoning eyewear division.

Barton Perreira has built up a devoted following in the U.S. in recent years, with A-listers including Sandra Bullock, Demi Lovato and Ryan Gosling spotted wearing its eyeglasses. The label, whose frames are manufactured in Japan, operates stores in New York; Aspen, Colo.; Kansas City, Mo., and Bozeman, Mont.

The brand was founded in 2007 by Bill Barton and Patty Perreira, who had previously worked together for Oliver Peoples before that brand was acquired by Oakley. They will both stay on at the company, whose glasses sell for hundreds of dollars a pair.

LVMH plans to expand the brand outside the U.S. by selling its glasses in high-end stores it already works with throughout Europe and Asia. It also plans to open a number of stand-alone Barton Perreira stores, initially in Europe.

“The brand is well-known and well-established in the U.S., but we see massive opportunity to expand it,” said Alessandro Zanardo, who runs LVMH’s eyewear division, Thélios.

Luxury groups have been moving into eyewear, beauty products and fragrances as a means to attract a new group of younger consumers who might not have the means to purchase a handbag or a watch but could do so in the future.

The eyewear industry is also changing, with some consumers buying glasses more frequently in line with fashion trends.

“More and more, it follows the logic of fashion for consumers,” Zanardo said.

The eyewear market is expected to reach $246.47 billion by 2030, up from $161.61 billion in 2023, according to research firm Fortune Business Insights.

Thélios creates and distributes frames for Dior, Fendi and Givenchy, among other LVMH brands. It has doubled its sales over the past two years, driven by buying up the licenses for more LVMH brands as well as expanding into new markets.

LVMH created Thélios in 2017 to move away from the traditional model in the luxury industry, whereby brands would license out their names to specialist manufacturers to design frames and produce glasses.

Bringing eyewear operations in-house has allowed LVMH to capture a greater share of the profit from the products and given the company greater control over quality, distribution and marketing.

Previously, a brand’s selection of eyewear had only a small connection to the rest of its offering, Zanardo said. Now, each brand’s aesthetic is more closely linked to its eyewear products.

“We’ve tried to control this value chain so that we go from the maison right up to the final consumer in a very consistent way. All the dots are together,” Zanardo said.

Aside from buying up licenses for LVMH brands including Céline, Stella McCartney and Fendi, Thélios has also sought to expand through deals. In September, it said it would buy French high-end sunglasses brand Vuarnet for an undisclosed sum.

The eyewear unit has also expanded its manufacturing capabilities. Last week, it bought an Italian factory located close to its roughly 200,000-square-foot plant, which it inaugurated in 2018. It also owns a metalworking atelier nearby.

Zanardo said that luxury brands in the past hadn’t always given eyewear sufficient attention and that some consumers perceived their glasses as simply a logo slapped onto a piece of plastic.

“The goal is to really dignify eyewear into the sphere of luxury,” Zanardo said.