(ZH) One Of Spain's Largest Hydro-Power Plants To Halt Operations As Drought Wor

One Of Spain's Largest Hydro-Power Plants To Halt Operations As Drought Worsens

A large drop in renewable energy output is forcing Spain to increase natural gas demand to generate electricity at a time Europe is in the worst energy crisis in a generation.
Spain's hydropower output has been halved this year due to drought, and things could get a lot worse as one of the country's largest hydropower plants is set to close.
Bloomberg reported the Mequinenza facility in the northeastern region of Aragon would halt hydropower generation in mid-November after water levels were 23% below capacity. It'll be the first time the hydro plant has closed since it was constructed in 1996.
In the week through Nov. 1, Mequinenza was only producing 6,221 gigawatt-hours or operating at around 27% of total capacity. According to Bloomberg calculations based on Environmental Transition Ministry data, water levels in the reservoir have hit the lowest level since 1995. This means there's not enough water flow to turn the plant's turbines.
Spain's hydropower generation has tumbled a whopping 53% this year through October, according to grid operator Red Electrica Corporacion SA. So when temperatures rise, and droughts persist, the hydropower industry gets squeezed hard.
Regarding other renewables like wind and solar, there is not enough output between the two to offset the loss in hydro, which means Spain has increased NatGas demand for power generation.
Data via network operator Enagas SA shows NatGas demand to generate electricity jumped 78% through October.
Source: Bloomberg
"A steep fall in renewable energy output is prompting the Mediterranean country to tap the fossil fuel to generate electricity at a time when Europe struggles with an unprecedented energy crisis following Russia's decision to cut supply, which pushed prices to a record high," Bloomberg said.

>>> Europe : Brokers Upgrades & Downgrades - 8th of November 2022 V2(+)

>>> Up
* ALK-Abello Raised to Buy at SEB Equities; PT 140 kroner
* Diageo ADRs Raised to Buy at CFRA; PT $195
* Hammerson Raised to Hold at Liberum; PT 20 pence
* ISS Raised to Buy at Nordea; PT 200 kroner
* Saipem Raised to Buy at HSBC; PT 1.23 euros
* Technip Energies Raised to Buy at Redburn (+)
* Vestas Raised to Buy at Kepler Cheuvreux; PT 200 kroner (+)
* VW Raised to Buy at BofA (+)

>>> Down
* Assa Abloy Cut to Hold at Berenberg; PT 250 kronor
* Deutsche PBB Cut to Hold at Deutsche Bank; PT 7 euros
* ITM Power Cut to Neutral at Citi
* NWF Group Cut to Hold at Peel Hunt; PT 245 pence
* PhotoCure Cut to Hold at Norne Securities; PT 110 kroner
* Sodexo Cut to Hold at HSBC; PT 100 euros
* Swatch Cut to Underperform at Credit Suisse; PT 180 Swiss francs (+)
* Viafin Service Cut to Accumulate at Inderes; PT 16 euros
* VW Cut to Neutral at Goldman; PT 150 euros

>>> Initiation
* Alpha Finl Markets Rated New Add at Peel Hunt; PT 423 pence
* ASML Rated New Overweight at Morgan Stanley; PT 650 euros
* Babcock Rated New Buy at Berenberg; PT 425 pence
* Eni Reinstated Outperform at Exane; PT 18 euros
* Ericsson Reinstated Equal-Weight at Morgan Stanley; PT 75 kronor
* Forsee Power Rated New Neutral at Oddo BHF; PT 3.30 euros
* Hermes Rated New Neutral at Credit Suisse; PT 1,230 euros (+)
* M&C Saatchi Reinstated Buy at Liberum; PT 260 pence (+)
* National Grid Resumed Overweight at JPMorgan; PT 1,150 pence
* Porsche AG Rated New Buy at Deutsche Bank; PT 115 euros
* Porsche AG Rated New Neutral at Exane; PT 107 euros
* Porsche AG Rated New Overweight at JPMorgan; PT 140 euros
* Porsche AG Rated New Equal-Weight at Morgan Stanley
* Porsche AG Rated New Equal-Weight at Barclays; PT 106 euros
* Porsche AG Rated New Buy at Goldman (+)
* Segro Rated New Buy at SocGen
* Troax Rated New Buy at Nordea; PT 200 kronor
* Watches of Switzerland Rated New Outperform at Credit Suisse (+)

>>> Call
* AB Foods Results Look Mixed, Buyback Will Be Well Received: RBC (+)
* ASML and BE Semi Are Morgan Stanley’s Top European Semi Picks
* Assa Abloy Downgraded at Berenberg on Slowdown, M&A Overhangs
* Babcock ‘Misunderstood and Overlooked,’ New Buy at Berenberg (+)
* Bernstein Strategists Say Buy European Stocks With Low Leverage (+)
* JPMorgan’s Kolanovic Warns of Hawkish Policy’s Risk to Stocks
* MS Prefers Nokia to Ericsson in Tough Telecom-Equipment Sector
* National Grid Rated Overweight at JPM as Energy Transition Play
* NWF Group Cut to Hold at Peel Hunt as Stock Hits Broker’s PT (+)
* Qiagen Guidance Raise May Mean 5% Boost to Consensus, MS Says (+)

>>> Stoxx 600 Pre-Market Indications

  • Qiagen (QIA TH) +2.9%
    • Qiagen Boosts FY Adjusted EPS Forecast
  • Renault (RNL TH) +2%
    • Renault, Google Expand Pact to Make Cars ‘Like Mobile Phones’
  • Vestas (VWSB TH) +1.7%
  • BE Semiconductor (BSI TH) +1.6%
    • ASML and BE Semi Are Morgan Stanley’s Top European Semi Picks
  • Freenet (FNTN TH) +1.2%
  • ASML (ASME TH) +0.8%
  • Swedish Match (SWMC TH) -0.5%
  • Just Eat Takeaway (T5W TH) -0.5%
  • BP (BPE5 TH) -0.7%
  • Hermes (HMI TH) -0.7%
  • TotalEnergies (TOTB TH) -0.8%
  • Nel (D7G TH) -0.8%
    • Citi Sees Slower Hydrogen Ramp-Up, Downgrades ITM Power
  • Shell (R6C0 TH) -0.8%
  • HelloFresh (HFG TH) -1%
  • Axa (AXA TH) -1.2%
  • ASMI (AVS TH) -1.9%

FT : Renault seeks to boost operating margins and reinstate dividends

Renault seeks to boost operating margins and reinstate dividends
French carmaker wants to produce €2bn of cash a year from 2023

Renault aims to double operating profit margins to 10 per cent by the end of the decade as the French carmaker sets out plans to reinstate dividends next year and spin out its electric vehicle unit through a stock market listing.

The targets announced on Tuesday include producing €2bn of cash a year from next year, rising to €3bn in 2026, and increasing margins to 8 per cent by 2025, rising to 10 per cent by 2030.

Renault is looking to extend on a turnround after losses in 2019 and 2020 and to repair its strained relationship with Japanese partner Nissan, as it races to compete with rivals pushing into EVs.

Its electric car unit, Ampere, will aim for a listing from the first half of 2023.

Alongside the new targets, Renault will also divide into “teams” that chief executive Luca de Meo said would help the business “break down silos” and work faster.

He said: “Today’s announcements are a new sign of Renault Group team’s determination to prepare the company for the future challenges and opportunities generated by the transformation of our industry.”

The measures will also help raise the quality of its debt from “junk” status to “investment grade”, which will pave the way for Renault to pay out up to 35 per cent of profits as dividends under the group’s first payout policy since it halted payouts in 2020 during the pandemic.

Renault also wants employees to own 10 per cent of the company’s shares by the end of the decade. Its transformation plan is expected to coincide with a change in the structure of Renault’s alliance with Nissan over the coming weeks, people close to the discussions have said.

The company is also separating its internal combustion motor business, and on Tuesday signed a framework agreement to form a joint venture on engines and hybrid powertrains with China’s Geely.

The new unit aims to supply hybrid and traditional engines to auto brands worldwide “for years to come”. Each side will own 50 per cent at the outset, with the aim of bringing in new investors in the future.

Once formed, the new business will have about 19,000 employees across 17 manufacturing plants and five research facilities.

>>> TradeGate Pre-Market Indications

DAX:
  • Qiagen (QIA TH) +3%
    • Qiagen Boosts FY Adjusted EPS Forecast
  • Zalando (ZAL TH) +1%
  • Puma (PUM TH) +0.7%
  • Henkel (HEN3 TH) +0.6%
    • Henkel Narrows FY Adjusted Ebit Margin Forecast
  • VW (VOW3 TH) +0.5%
  • Bayer (BAYN TH) +0.1%
    • Bayer 3Q Adjusted Ebitda Beats Estimates
  • Deutsche Post (DPW TH) -0.2%
    • Deutsche Post 3Q Ebit Beats Estimates
MDAX:
  • Freenet (FNTN TH) +1.6%
  • Bechtle (BC8 TH) +0.8%
  • Jungheinrich (JUN3 TH) +0.8%
  • Aroundtown (AT1 TH) +0.7%
  • Fraport (FRA TH) +0.7%
    • Fraport Sees FY Revenue Above EU3B, Saw About EU3B, Est. EU3.08B
  • Evonik (EVK TH) -0.1%
    • Evonik Boosts FY Sales Forecast, Beats Estimates
  • ProSieben (PSM TH) -1%
SDAX:
  • Schaeffler (SHA TH) +2.2%
    • Schaeffler 9M Revenue EU11.79B
  • SMA Solar (S92 TH) +1.8%
    • SMA Solar Raised to Outperform at Exane; PT 62 euros
  • PNE AG (PNE3 TH) +1%
  • flatexDEGIRO (FTK TH) -1%
  • Ceconomy (CEC TH) -1.4%
    • German Holdings Round-Up: AUTO1, Cancom, Ceconomy
  • Deutsche PBB (PBB TH) -1.9%
    • Deutsche PBB Cut to Hold at Deutsche Bank; PT 7 euros
  • Uniper (UN01 TH) -2.3%
    • Germany to Spend €83.3 Billion to Subsidize Energy Prices (1)

>>> What to look at today - 8th of November 2022

A gauge of Asian stocks climbed, following the S&P 500 higher as investors await US midterm elections and inflation data later this week. Chinese shares fell. Japanese equities led gains in the region, while US and. European futures edged lower. Technology companies were the biggest losers among Chinese shares, halting their recent rally, as investors considered a jump in virus infections and official comments defending Covid-Zero.  Markets are focused on the elections later Tuesday for potential gridlock in government, which historically has been good for US stocks, and on the consumer price print Thursday for its impact on Federal Reserve interest-rate hikes.  The Bloomberg Dollar Spot Index was little changed after recent declines. The gauge fell 0.4% Monday, extending the 1.7% loss from Friday, which was its worst day since March 2020. The inflation reading is coming after the core consumer price index rose more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone. Goldman Sachs Group Inc.’s top economist said there was still a “very plausible” path for the US economy to avoid a recession.  JPMorgan Chase & Co.’s Marko Kolanovic warned of the risk to stocks from ongoing Fed hawkishness, and Morgan Stanley’s Mike Wilson said companies will need to aggressively shrink expenses, including through layoffs, before he becomes more optimistic on US equities. The Bank of Japan has been scooping up so many 10-year bonds there may soon be little left to buy. It held 73% of 10-year government notes with a residual maturity of at least seven years as of end-October, according to data compiled by Bloomberg. swaps markets are leaning toward a 50 basis-point Fed rate increase in December, after a fourth consecutive jumbo hike to a target range of 3.75% to 4% at last week’s meeting. Rates are expected to peak slightly above 5% around mid-2023. US After Hours NSTG -18.7%, TTWO -16.3%, TRIP -16%, LYFT -14%, VECO -13.1%, FIVN -12.8%, UIS -8.5% lower on earnings; SEDG +9.8%, SANM +8.3%, QGEN +5.9% higher on earnings

Nikkei +1.25% Hang Seng -0.36% CSI -0.98% Shanghai -0.68% Shenzen -0.61%

Eur$ 1.0000 CNH 7.2551 CNY 7.2489 JPY 146.71 GBP 1.1492 CHF 18.5274 RUB 62.6813 TRY 18.5276 WTI$ 91.31 -0.51% Gold 1,669.60 -0.36% BTC 19,665 -4.93% ETH 1,469.60 -6.72%

S&P -0.09% Nasdaq -0.09% EuroStoxx +0.05% FTSE -0.37% Dax +0.10% SMI -0.04%
Macro :
- JPMorgan’s Kolanovic Warns of Hawkish Policy’s Risk to Stocks
- VIX Momentum Drops to Six-Year Low Ahead of US CPI Report: Chart

Keep an eye on :
- AIR FP : Emirates Orders for 5 Boeing Freighters at $1.7b in List Prices
- BAKKA NO : Bakkafrost Cuts FY Harvest Forecast
- BAYN GY : Bayer 3Q Adjusted Ebitda Beats Estimates
- CA FP : Carrefour Raises Annual Investment Goals at Capital Markets Day
- CA FP : Carrefour and Publicis Join Forces to Create a Leader in the European and Latin American Retail Media Market
- CRDA LN : Watch International Flavors European Peers After Guidance Cut
- DPW GY : Deutsche Post 3Q Ebit Beats Estimates
- EBS AV : Erste Makes Bid to Buy Sberbank Loans in Czech Republic
- EUZ GY : Eckert & Ziegler Maintains FY Revenue Forecast
- ELG GY : Elmos: Germany Now ‘Most Likely’ to Ban Wafer Fab Sale to Silex
- ELE SM : Endesa 9M Net Income EU1.65B Vs. EU1.46B Y/y
- RF FP : Eurazeo Sells Majority Stake in NEST New York
- RF FP : Eurazeo SE Assets Under Management EU32.37B
- EVK GY : Evonik Boosts FY Sales Forecast, Beats Estimates
- FCT IM : Fincantieri 9M Revenue EU5.32B
- FLS DC : FLSmidth 3Q Ebit Beats Estimates
- FRA GY : Fraport Sees FY Revenue Above EU3B, Saw About EU3B, Est. EU3.08B
- HEN3 GY : Henkel Narrows FY Adjusted Ebit Margin Forecast
- INDT SS : Indutrade Boosts Target for Ebita Margin
- SKB GY : Koenig & Bauer Cuts FY Revenue Forecast
- LEHN SW : Lem FY Sales Forecast Beats Estimates
- MUV2 GY : Munich Re Maintains FY Profit Forecast
- NWG LN : UK Firms Face New Requirements to Back Up Their Climate Claims
- NOKIA FH : MS Prefers Nokia to Ericsson in Tough Telecom-Equipment Sector
- NHY NO : Hydro Rein, Commerz Real to Develop 362 MW Solar in Denmark
- NPVN DW : Novartis Says Leqvio Trial Data Show Sustained Efficacy, Safety
- OX2 SS : OX2 Holder Peas Industries Offers 13.6m Shares
- PSPN SW : PSP Swiss Cuts FY Vacancy Rate Forecast
- PUB FP : Carrefour and Publicis Join Forces to Create a Leader in the European and Latin American Retail Media Market
- QIA GY : Qiagen Boosts FY Adjusted EPS Forecast
- RNO FP : French Carmaker Renault Plans to Restore Dividend, Double
- RVRC SS : RVRC Holding 1Q Net Sales Misses Estimates
- SHA GY : Schaeffler 3Q Revenue Beats Estimates
- STLA IM : Stellantis Says Has Paused Paid Advertisements on Twitter
- TOBII SS : Tobii 3Q Operating Loss SEK36M, Est. Loss SEK44.3M
- TWEKA NA : TKH Divests Remaining Stake in CCG to Infinite Electronics
- UBI FP : Ubisoft Launches ~€450M Offering for Convertible Bonds Due 2028
- UN01 GY : Vitol and Germany’s SEFE in Talks to Avoid €1 Billion Gas Cut
- VVCT FP : Vicat 3Q Like-for-Like Sales +18%
- VOLVB SS : Volvo Sells Aurobay Stake to Geely in Shift to Be Fully Electric
- VOW3 GY : Bosch to Pay $25m in California Diesel-Emissions Settlement
- WBD IM : Webuild Reaches Conditional Pact to Buy Australia Company Clough

>>> Europe : Brokers Upgrades & Downgrades - 8th of November 2022

>>> Up
* ALK-Abello Raised to Buy at SEB Equities; PT 140 kroner
* Diageo ADRs Raised to Buy at CFRA; PT $195
* Hammerson Raised to Hold at Liberum; PT 20 pence
* ISS Raised to Buy at Nordea; PT 200 kroner
* Saipem Raised to Buy at HSBC; PT 1.23 euros

>>> Down
* Assa Abloy Cut to Hold at Berenberg; PT 250 kronor
* Deutsche PBB Cut to Hold at Deutsche Bank; PT 7 euros
* ITM Power Cut to Neutral at Citi
* NWF Group Cut to Hold at Peel Hunt; PT 245 pence
* PhotoCure Cut to Hold at Norne Securities; PT 110 kroner
* Sodexo Cut to Hold at HSBC; PT 100 euros
* Viafin Service Cut to Accumulate at Inderes; PT 16 euros
* VW Cut to Neutral at Goldman; PT 150 euros

>>> Initiation
* Alpha Finl Markets Rated New Add at Peel Hunt; PT 423 pence
* ASML Rated New Overweight at Morgan Stanley; PT 650 euros
* Babcock Rated New Buy at Berenberg; PT 425 pence
* Eni Reinstated Outperform at Exane; PT 18 euros
* Ericsson Reinstated Equal-Weight at Morgan Stanley; PT 75 kronor
* Forsee Power Rated New Neutral at Oddo BHF; PT 3.30 euros
* National Grid Resumed Overweight at JPMorgan; PT 1,150 pence
* Porsche AG Rated New Buy at Deutsche Bank; PT 115 euros
* Porsche AG Rated New Neutral at Exane; PT 107 euros
* Porsche AG Rated New Overweight at JPMorgan; PT 140 euros
* Porsche AG Rated New Equal-Weight at Morgan Stanley
* Porsche AG Rated New Equal-Weight at Barclays; PT 106 euros
* Segro Rated New Buy at SocGen
* Troax Rated New Buy at Nordea; PT 200 kronor

>>> Call
* ASML and BE Semi Are Morgan Stanley’s Top European Semi Picks
* Assa Abloy Downgraded at Berenberg on Slowdown, M&A Overhangs
* JPMorgan’s Kolanovic Warns of Hawkish Policy’s Risk to Stocks
* MS Prefers Nokia to Ericsson in Tough Telecom-Equipment Sector

FT : Nuclear fusion power edges from fantasy to reality

Nuclear fusion power edges from fantasy to reality
Investors are crowding in on the promise of ‘unlimited clean energy’

The promise of producing limitless power by fusing atoms has tantalised scientists for decades — but always seemed just out of reach.

Now, a series of scientific breakthroughs and a rush of private investment is raising hopes that commercial fusion power could yet play a meaningful role in cutting global emissions before 2050.

“There’s no point this technology arriving in 2048 because it’s too late,” says Chris Kelsall, chief executive of Tokamak Energy, which is one of more than 35 private fusion companies worldwide betting they can deliver commercially viable fusion power in the next decade. “We’re very focused on delivering demonstration of the technology, net electricity into the grid, in the early- to mid-2030s.”

Soviet scientists pioneered the development of the first fusion machine, known as the “tokamak”, in the 1950s. The design enabled a plasma of two hydrogen isotopes, deuterium and tritium, to be held in place by powerful magnets and heated to extreme temperatures so that the atomic nuclei fuse, releasing vast amounts of energy.


The same reaction powers the sun but, to this day, no group has been able to achieve fusion while producing more energy than the system consumes — a milestone known in the industry as net energy gain. “That is what we think of as the Wright brothers’ moment . . . when the plane actually takes off,” says Melanie Windridge, a plasma physicist who runs the consultancy Fusion Energy Insights.

While net energy gain remains elusive, there are several reasons for optimism. Last year, the US government’s National Ignition Facility in California came the closest yet to generating net energy by bombarding a tiny pellet of hydrogen plasma with 192 lasers. Six months later, scientists at the government-funded Joint European Torus (JET) facility in Oxford, England, produced a record 59 megajoules from a reaction lasting five seconds — enough energy to boil about 60 kettles.

Although far off the requirements for commercial power, both achievements were heralded as major breakthroughs in the scientific community. However, it is the activity in the private sector that has provoked the most excitement.

In the 12 months to the end of June, private fusion companies raised $2.83bn in investment, mainly in the US but also in the UK, according to the Fusion Industry Association.

The financing — from investors including Bill Gates, Tiger Global Management and Chevron — was more than the total funding raised by the industry up to that point and brought private sector investment to date to almost $4.9bn.

Kelsall says there has been a “palpable inflection” in attitudes to the fusion industry in the past year as investors have begun to take it seriously as potential tool in the fight against climate change.

While government-backed facilities like JET and its successor, ITER — currently under construction in France at a cost of more than €20bn — will continue to lead on fusion research, the hope is that smaller, more nimble private sector players can accelerate the path to commercial use.

Nicholas Hawker, chief executive of Oxford-based First Light Fusion, which has been developing an approach called projectile fusion since 2011, says the prospect of “unlimited clean energy” makes fusion’s potential too attractive to ignore. “Fusion is, in a sense, the ultimate solution to climate change.”

First Light’s approach involves firing a projectile at a deuterium-tritium fuel pellet to force the isotopes to fuse. The energy density of the fuel is so great that a pellet one centimetre wide should be able to generate the same amount of energy as a barrel of oil, he says.

Windridge puts it another way: roughly 1 kilogramme of fusion fuel has the potential to produce as much energy as 10mn kilogrammes of fossil fuels.

That makes fusion power particularly attractive for energy-intensive processes — such as repairing the future climate by pulling carbon dioxide from the atmosphere, in a process known as direct air capture.

Accessing the hydrogen isotopes most used in fusion should not be a problem. Deuterium, which can be found in seawater, is widely available, while tritium can be extracted from lithium.

Tritium is mildly radioactive but, unlike nuclear fission where atoms are split, fusion does not produce long-lived radioactive waste.

For that reason, the UK government in June confirmed that future fusion facilities will be regulated by the Environment Agency and the Health and Safety Executive, rather than the Office for Nuclear Regulation, in a boon for the British fusion industry.

Britain has been at the forefront of public fusion research ever since the UK Atomic Energy Authority, established a world-leading fusion laboratory at Culham in Oxfordshire in 1965.

“It’s a really exciting time now because we’ve got the public labs doing important experimental work on the science and, at the same time, we’ve got the private companies doing important engineering work,” says Windridge. “The more that those two can partner together, which is now happening, the faster we’re going to get to fusion.”

(ZH) Cryptos Plunge As FTX-Binance Battle Escalates

Cryptos Plunge As FTX-Binance Battle Escalates

Update (1105ET): The price of FTX Token FTT just crashed over 20% after holding support at $22 since the CEO of Alameda Research (FTX hedge fund) offered to buy all Binance's FTT holdings at that level.
Earlier this evening, Binance founder CZ responded with a tweet that he 'will let the market decide'...
And that triggered aggressive selling in FTT...
This is triggering selling pressure across much of the crypto space as FTX liquidity/contagion fears spread as a bank-run of sorts occurs on assets sitting on the FTX platform.
Solana is being hammered lower since it is part of FTX's reserves...
As we detailed below, Bankman-Fried denied CZ's allegations: “A competitor is trying to go after us with false rumors,... FTX is fine. Assets are fine.”
"FTX has enough to cover all client holdings.
We don't invest client assets (even in treasuries).
We have been processing all withdrawals, and will continue to be."
Bitcoin puked below $20,000 on the back of the moves...
Whether strategic or not, FTX is one of Binance’s largest competitors and in just one day, those comments and Binance’s sale of FTT holdings have started a chain of second and third order effects.
* * *
As we detailed earlier, new battle of the billionaires is brewing (if not boiling over) among the current kings of crypto as tensions between Binance founder Zhao “CZ” Changpeng and FTX founder Sam Bankman-Fried have escalated a war of words on Twitter into actions over CZ's claims that FTX's hedge fund's asset base may not be all it's cracked up to be.
The drama began early Sunday morning when FTX's FTT token suddenly plunged as rumors surfaced that a giant whale with 23 million FTT, probably Binance, might be dumping its tokens.
Shortly after that initial plunge, Zhao said his company would liquidate its entire FTT holdings in the coming months, on fears that the token might collapse in the same manner as Terra (LUNA) in May 2021.
Binance was an early investor in FTX.
Zhao referenced "recent revelations that have came to light," but did not elaborate publicly.
However, his actions come shortly after a Nov 2nd article on CoinDesk that said much the balance sheet of Bankman-Fried’s trading house Alameda Research is comprised of the FTT token.
Cointelegraph reports that, according to the CoinDesk report, Alameda Research had $14.6 billion on its balance sheet as of June 30, with FTT being the largest holding at $5.8 billion, making up 88% of its net equity. In addition, the firm held $1.2 billion in Solana, $3.37 billion in unidentified cryptocurrency, $2 billion in “equity securities” and other assets.
On the other hand, Alameda Research reportedly had liabilities worth $8 billion, including $2.2 billion worth of loans collateralized by FTT.
That, coupled with the firm’s alleged exposure to illiquid altcoins, prompted some analysts to predict its insolvency in the future.
“Alameda will never be able to cash in a significant portion of FTT to pay back its debts,” wrote Mike Burgersburg, an independent market analyst, for the Dirty Bubble Media Substack, noting:
“There are few buyers, and the largest buyer appears to be the very company which Alameda is most closely tied to [...] the fair market value of their FTT in the event of large sales would rapidly approach $0.”
Bankman-Fried responded in a brief tweet thread, saying: “A competitor is trying to go after us with false rumors,... FTX is fine. Assets are fine.”
He went on to note that:
"FTX has enough to cover all client holdings.
We don't invest client assets (even in treasuries).
We have been processing all withdrawals, and will continue to be.
It's heavily regulated, even when that slows us down. We have GAAP audits, with > $1b excess cash. We have a long history of safeguarding client assets, and that remains true today.
Concluding with an 'oilve branch' perhaps:
"I'd love it, @cz_binance, if we could work together for the ecosystem."
Notably, as Decrypt reports, Zhao's actions (and the Alameda leaks) follow weeks of criticism directed at FTX’s founder and Chief Executive Sam Bankman-Fried for regulatory proposals he put forth in a blog post which recommended restrictions regarding DeFi. He has since committed to revising his regulatory position.
While it's fun to watch billionaire whiz-kids slinging mud at each other, the collateral damage (quite literallY) could be significant for the rest of the crypto universe.
“Overall, FTT is a relatively illiquid token on open markets, so Binance’s plans to liquidate all FTT tokens they hold is quite a significant market event,” Clara Medalie, head of research at analytics firm Kaiko, said.
“Alameda will likely dedicate considerable resources to ensure the price of FTT doesn’t crash.”
In fact, Alameda's CEO tweeted that her trading firm’s financial condition is stronger than what was reflected by the balance sheet CoinDesk wrote about. She also offered, in a reply to the Binance CEO’s post, to buy his firm’s FTT token holdings for $22 each.
Nothing to worry about at all...
Nevertheless, the FTX outflows continue...
Overall, as Kaiko concludes, it is clear that FTT market makers are working overtime to maintain the price of FTT, which is down 3% over the past day along with most other cryptocurrencies. Despite a massive surge in selling pressure, there is barely a dent in market depth and only a slight increase in price slippage. Ultimately it may be in all parties' best interest to engage in an OTC transaction as suggested by Caroline Ellison to limit price impacts, especially considering Binance, FTX, and Alameda all risk large losses should FTTs price fall significantly.