CNN : Western allies meeting regularly to game out potential framework for Ukrai

Western allies meeting regularly to game out potential framework for Ukraine ceasefire as war hits 100th day

Washington (CNN)Staring down the prospect of an extended stalemate in Ukraine, the US and its allies are placing a renewed emphasis on the need for a negotiated settlement to end the war as the conflict grinds into its 100th day with no clear victory in sight for either side.

US officials have in recent weeks been meeting regularly with their British and European counterparts to discuss potential frameworks for a ceasefire and for ending the war through a negotiated settlement, multiple sources familiar with the talks told CNN. Among the topics has been a four-point framework proposed by Italy late last month. That framework involves Ukraine committing to neutrality with regard to NATO in exchange for some security guarantees, and negotiations between Ukraine and Russia on the future of Crimea and the Donbas region.

Ukraine is not directly involved in those discussions, despite the US commitment to "nothing about Ukraine without Ukraine." US and Ukrainian officials said the US has not been pressuring Ukraine to commit to a certain plan or directly pushing them to sit down with the Russians.

Still, there is some confusion about what kind of framework the US would consider appropriate to bring to the Ukrainians for further discussion.

US Ambassador to the UN Linda Thomas Greenfield told reporters earlier this week that the Italian framework is "one of those initiatives that we certainly would love to see bring a conclusion to this horrific war and the horrific attacks on the Ukrainian people." But two US officials told CNN that the US actually does not support the Italian proposal.

In any case, US and western officials tell CNN that there is a growing concern that if the Russians and Ukrainians don't get back to the table and work out a deal, the war will drag on -- potentially for years.

Subtle language shift
It's not clear whether these discussions will translate into eventual settlement talks. The Biden administration still sees no real prospect for any diplomatic breakthroughs or ceasefires anytime soon and two NATO officials said that the western alliance sees little appetite to negotiate on the Ukrainian side -- in part because Russia's brutal bombing campaign and myriad human rights violations have destroyed public support for any concession to Russia.

Moscow has also showed little interest in serious talks, officials say. Right now, Ukraine remains focused on ensuring a decisive military victory in the east and the south in order to put themselves in a superior negotiating position, these sources said.

"We can propose all the plans we want, but unlikely Kyiv will go for anything that cedes territory at the moment," according to one official.
The concern that the conflict
could grind on indefinitely -- with mounting costs -- has been reflected in the subtle shift in language and messaging by US officials over the past several weeks.

In April, the US' stated goal was for Russia to "fail," a National Security Council spokesperson said at the time, and for the Russian military to be significantly "weakened" in the long term, as Defense Secretary Lloyd Austin proclaimed -- comments that reflected optimism that Ukraine might be able to defeat Russia decisively on the battlefield after successfully defending Kyiv.

But as an effective stalemate has taken hold on the battlefield, with Russia making incremental gains in the east and Ukraine saying it is increasingly outgunned and outmanned, senior Western officials -- including US President Joe Biden -- are emphasizing anew that even with advanced western weaponry, Ukraine's prospects for peace will ultimately rest on diplomacy.

"As President Volodymyr Zelensky of Ukraine has said, ultimately this war 'will only definitively end through diplomacy,'" Biden wrote in a New York Times op-ed on Tuesday. "Every negotiation reflects the facts on the ground. We have moved quickly to send Ukraine a significant amount of weaponry and ammunition so it can fight on the battlefield and be in the strongest possible position at the negotiating table."

The hope, officials said, is that the US can support Ukraine long enough to see it through to a peaceful settlement rather than a full capitulation.

"Wars are unpredictable," NATO Secretary General Jens Stoltenberg told reporters on Thursday. "We were able to predict the invasion, but how this war will evolve, it's very hard to predict. What we do know is that almost all wars end at some stage at the negotiating table."

But there are no indications yet that either Ukraine is giving up, or that Russian President Vladimir Putin will reverse what he's doing inside Ukraine, one administration official told CNN. There are also no signs that Putin is willing to negotiate in good faith to end the war.

"We just don't know" yet what might change Putin's mind, the official added.

Officials have been careful to note that the US is not pushing for Ukraine to cede any territory to Russia, and have said from the beginning of the war that the US will avoid getting directly involved in any Russia-Ukraine negotiations. One source said that any pressure the US and the West places on Ukraine to negotiate will erode Kyiv's leverage in future talks.

"It's not for us to decide or to have strong opinions [on] what Ukraine should accept or not accept," Stoltenberg said Thursday.

But some Ukrainian officials are still wary that the west will try to impose a deal on them, one Ukrainian source told CNN. Zelensky and his senior advisers have publicly ruled out making any territorial concessions to Russia.

"Those who advise Ukraine to give something to Russia, these 'great geopolitical figures,' never see ordinary people, ordinary Ukrainians, millions living on the territory they are proposing to exchange for an illusory peace," he said in a video address late last month.

Longer conflict, higher costs
The war has settled into a grinding slog that intelligence and military officials believe will last many months, if not years. Although the two sides may trade small swathes of territory back and forth from day to day or week to week, multiple officials with access to the latest intelligence told CNN that they do not expect either Russia or Ukraine to break through the existing battle lines anytime soon.

For now, that effective stalemate presents an opportunity for the US to slowly bleed Russia of both blood and treasure, multiple military officials said. But the longer the conflict drags on, the higher the costs for the West -- and the greater the challenge the Biden administration will face in supplying Ukraine, finding sustainable replacements for Russian oil and gas, and keeping an already-fractious European alliance committed to its strategy.

The issue is particularly politically fraught heading into election season, with gas prices continuing to rise largely because of the measures the west has taken to cut off imports of Russian oil and gas.

That has led to some debate within the administration about how much further to go with sanctions. Some officials are concerned that new tough moves -- like imposing secondary sanctions on countries that don't comply with US restrictions on Russian energy exports -- could roil energy markets even further. And there is a growing acknowledgement that sanctions will not be a "knock-out punch" to Russia, but rather a "stranglehold" that could take years to produce meaningful consequences, one senior official said.

As the US looks to maintain its military and financial support for Ukraine and isolate Russia for as long as it takes to get to a peace agreement, a key strategy will be keeping the NATO alliance unified. But already, sources say, there are cracks appearing in NATO -- Turkey is refusing to allow Sweden and Finland to move forward with joining the bloc, and diplomats had to carve out an exception for Hungary as part of Europe's recent oil embargo against Russia.

There's also the challenge of maintaining domestic support for funding Ukraine's war. There's been growing opposition among Donald Trump-aligned Republicans with each assistance vote that Congress has taken, one Democratic lawmaker noted. He added that there are concerns over how willing Congress will be in the future to fund a protracted conflict.

"We have some runway between now and the end of the year," the lawmaker said, referring to the $40 billion Ukrainian assistance package Biden signed into law last month.

Another top priority will be to continue to procure enough sophisticated weaponry to feed a high-attrition, artillery-heavy war without depleting US stockpiles. One option under consideration is to restart production lines for Soviet-era systems that the Ukrainians already know how to use. But the US also wants to transition Ukraine to NATO-compliant weapons systems, which are easier to produce and procure than the older Soviet systems. But even that comes with its own long-term challenge: Ukraine's military will need more training to operate the western systems.

Still, US officials have pointed to the more advanced weapons already on the battlefield, like the howitzers, that have helped Ukraine significantly to stop Russia's advances.

"I think we're not seeing the Ukrainian defenses buckle," said Colin Kahl, the Pentagon's undersecretary for policy. "They're hanging on, but it is a grinding fight."

Stoltenberg put it succinctly on Thursday. "We just have to be prepared for the long haul," he said, "because what we see is that this war has now become a war of attrition."

(CrunchBase) The Week’s 10 Biggest Funding Rounds: Acrisure And Upstream Bio Rai

The Week’s 10 Biggest Funding Rounds: Acrisure And Upstream Bio Raise Big In A Slow Week For Large Rounds

Maybe it was the holiday week that slowed things down, or maybe it’s another sign of a weakening venture market, but big funding rounds were hard to come by this week. Only five startups in the U.S. had raises of $100 million or more. That would have been unheard of last year. Nevertheless, there were some big rounds in financial services, biotech and upskilling.

1. Acrisure, $725M, financial services: In a large round many folks likely missed, Grand Rapids, Michigan-based Acrisure closed a $725 million Series B-2 at a $23 billion valuation. The round was led by a wholly owned subsidiary of the Abu Dhabi Investment Authority. The company offers financial, cyber, and asset and wealth management services to customers in insurance and real estate services. It grew its revenue from $38 million to $3.5 billion in the past eight years. Commercial insurance premiums have jumped as the war in the Ukraine has put upward pressure on rates. That may not have hurt Acrisure’s fundraising pitch.

2. Upstream Bio, $200M, biotech: Waltham, Massachusetts-based Upstream Bio locked up a $200 million Series A to continue its development of therapeutics for allergic and inflammatory diseases. The round was led jointly by OrbiMed and Maruho. Upstream Bio is developing an antibody that targets thymic stromal lymphopoietin and its receptors that can inflame when things like smoke or allergens are introduced into the environment. The treatment could be useful to those with asthma.

3. Guild, $175M, edtech: Upskilling has become popular as workers look to expand their skill set, and Guild used that popularity to raise an upsized round. The Denver-based online education platform with a focus on upskilling frontline employees raised $175 million in a Series F funding round led by Wellington Management that values the company at $4.4 billion. Even Oprah Winfrey invested. The upskilling space is capitalizing on workers wanting to take advantage of employer-covered e-learning. In addition to being easily accessible, upskilling firms can offer cheaper alternatives. Guild typically costs between $3,000 and $6,000 a year for its slate of courses offered through partner learning providers. Founded in 2015, the company has raised more than $553 million, according to Crunchbase data.

4. Coralogix, $142M, analytics: Data observability was big with investors last week and that continued. San Francisco-based Coralogix closed a $142 million Series D co-led by new investors Advent International and Brighton Park Capital. Data observability has become big as data in general has exploded and companies need to know the health and state of their data. Coralogix’s platform allows for real-time insights and trend analysis of data. Founded in 2014, the company has now raised a total of nearly $240 million, according to Crunchbase data.

5. Devo, $100M, cybersecurity: Despite the slowdown in the venture market, some companies are still able to raise large up rounds just months apart. In October, Cambridge, Massachusetts-based cybersecurity firm Devo closed a $250 million Series E that valued the company at $1.5 billion. This week, the company locked up a smaller $100 million Series F led by Eurazeo at an increased valuation of $2 billion. Devo’s cloud-native logging and security analytics platform helps companies manage the hundreds of disparate security tools they may have across their networks. The platform can analyze issues and collect data to try to provide answers in real-time. Founded in 2011 in Spain, the company has now raised more than $480 million, according to Crunchbase.

6. Vizgen, $85.2M, biotech: Cambridge, Massachusetts-based life science company Vizgen closed an $85.2 million Series C led by Blue Water Life Science Advisors and Arch Venture Partners. Founded in 2019, the company has raised more than $135 million, according to Crunchbase.

7. WorkOS, $80M, information technology: San Francisco-based WorkOS, which develops APIs to make applications enterprise-ready, closed an $80 million Series B led by Greenoaks. Founded in 2018, the company has now raised $95 million, according to Crunchbase.

8. MoEngage, $77M, marketing: San Francisco-based MoEngage, a customer engagement platform developer, raised $77 million in a Series E funding led by Goldman Sachs Asset Management and B Capital. The company has raised three rounds in the last 12 months, and has now raised a total of $210 million, according to Crunchbase data.

9. JupiterOne, $70M, cybersecurity: Morrisville, North Carolina-based cyber asset security firm JupiterOne raised a $70 million Series C led by Tribe Capital that values the company at more than $1 billion. The company has raised more than $119 million to date.

10. InfStones, $66M, blockchain: Dallas-based blockchain infrastructure company InfStones closed a $66 million round led by SoftBank Vision Fund 2 and GGV Capital. The company has now raised more than $100 million to date.

(CrunchBase) Andreessen Horowitz And Tiger Global Most Active Investors In US Ma

Andreessen Horowitz And Tiger Global Most Active Investors In US Market Even As Slowdown Persists

This is a monthly feature that runs down the most active investors in U.S.-based companies, looks at some of their most interesting investments, and includes some odds and ends of who spent what. Check out last month’s feature here.

Andreessen Horowitz and Tiger Global led the way last month in investing in U.S.-based startups—both in total rounds participated in, as well as rounds led or co-led.

Just like April, May saw only a half dozen firms invest in 10 or more deals announced in the month—down from May 2021 when 10 firms took part in double-digit numbers of rounds, according to Crunchbase data.

Let’s take a closer look at the most active investors in U.S.-based startups in May and some interesting rounds they took part in.

Andreessen Horowitz, 20 deals
For the first month this year, Andreessen Horowitz led the way in total rounds with 20—half in previous investments and half in new companies.

While a specific round usually catches our interest, sometimes it’s more of a theme that runs through the month for a certain investor that grabs our attention. In Andreessen Horowitz’s case, it was a sharp interest in all things Web3 and gaming.

It’s no secret the Menlo Park giant loves blockchain and crypto, but the firm did seem to double down on that interest last month. Its investments included:

  • Leading a $15 million Series A for Sacramento, California-based Azra Games, a blockchain-based developer of collectable combat role-playing games.
  • A $24 million Series A it led for San Francisco-based Metatheory, which focuses on building Web3 games and virtual worlds.
  • Leading a $6.5 million seed round into San Francisco-based StartPlaying, a gameplay community platform that allows players to find tabletop role-playing games and game masters.
  • The $40 million Series A it led for Wyoming-based Irreverent Labs, which is developing artificially intelligent games with blockchain technology.
  • Taking part in a $12 million seed round for San Francisco-based Web3 videogame platform LootRush.

That’s a lot of bets on Web3 and gaming on the next iteration of the internet. But a16z is not known to tread lightly in areas in which it believes.

Tiger Global, 16 deals
The hedge fund giant may be known for leading huge nine-figure rounds and minting unicorns, but this month we are going to look at a much smaller round that went to a company tackling a big issue.

Tiger led a $20 million Series A for New York-based telehealth startup Parallel Learning. The company works with families and schools to diagnose, treat and empower students with learning and thinking differences. According to the company, approximately one in five people struggle with learning or thinking differences. Care and diagnosis can be expensive and confusing.

Parallel looks to streamline and simplify that process. It expects to use the new cash to expand nationally and add behavioral and speech therapies.

Accel, 11 deals
It’s not often we highlight a round of undisclosed value, but this is an exception. Last month Accel took part in a seed round for San Francisco-based Sotera Heritage, an insurtech company.

While the insurtech industry has seen a lot of investment in recent years, Sotera—which is still under the radar—is a little different. The company is not looking to insure your car or home. Rather it uses what it calls “deep tech” and data to create risk ratings for “unusual objects.” Think high-end art and antiques.

The company completed the accelerator program at Lloyd’s and plans to use its platform to also record at-risk collections to help stop looting and the illegal trafficking of antiquities and art.

Gaingels, 11 deals
New York-based Gaingels—which invests in companies with diverse and inclusive leadership teams—has been near the top of this list every month this year. However, its number of U.S.-based investments have declined every month to land it a little lower in the rankings.

However, that does not mean it doesn’t have rounds of note. In April, the firm was part of a $7 million fundraise for San Francisco-based “crispy” plant-based chicken nuggets maker Nowadays. Last month, the firm continued its inquisitive food ways as part of an oversubscribed $2 million investment in Chicago-based company Hyfé Foods.

The sustainable food company develops low-carb, protein-rich “fungi flour.” The company uses fermentation to upcycle wasted sugar water from food and beverage manufacturing. This creates its mycelium flour. The process reduces water waste and contributes a sustainable form of protein.

Y Combinator, 11 deals
It’s no secret the venture capital market is experiencing a little dip right now as funding falls with valuations.

One option some startups may look into is venture debt—especially those that have raised some venture capital—and Y Combinator may have just the company to help.

Norwalk, Connecticut-based 8vdX, a digital venture debt provider for investors and startups, closed a $3 million seed round which included funding from the startup accelerator giant.

The company has created an online venture debt marketplace, with startups filling out applications for debt right on its platform. The startup can expedite the entire applying process to just a day or two.

In a down market, startups may look for just such a thing.

Insight Partners, 10 deals
Logistics and supply chain tech has been popular with investors, and Insight Partners has not let the party pass it by. The firm co-led a $150 million Series E with Kleiner Perkins for San Francisco-based logistics startup Motive. The round values the automated operations platform developer at $2.85 million.

Motive, formerly KeepTruckin, offers an AI-powered platform that helps improve driver safety and track fleet spending. The platform also offers other logistics and management tools.

Venture-backed freight and logistics companies continue to see heavy investor interest after a record-setting 2021, according to Crunchbase data. Last year, investors poured more than $21.5 billion into freight and logistic startups—more than doubling the $9.8 billion 2020 realized.

(ZH) Switzerland Risks Power Shortages Next Winter

Switzerland Risks Power Shortages Next Winter

Switzerland’s power supply remains uncertain for next winter and troubles with enough electricity capacity cannot be ruled out, the Swiss Federal Electricity Commission, Elcom, said in its annual news conference this week.

Swiss nuclear power generation could be lower in the winter, but more importantly, some of Switzerland’s neighboring countries, mostly France, could export less electricity.
Due to the expected lower availability of French nuclear power generation and of France’s power exports to Switzerland, the Swiss imports of power generated in France is likely to be much lower this winter compared to previous winter seasons, Elcom said.
Therefore, Switzerland may need to cover its electricity import needs of around 4 gigawatt hours (GWh) from imports from its other neighbors Germany, Austria, and Italy. Yet, the power export availability of those countries would heavily depend on the available fossil fuels, mostly natural gas, according to Elcom.
Various uncertainties remain about the security of power supply in Switzerland next winter, the Federal Electricity Commission noted.
According to a poll Elcom carried out among 613 Swiss electricity providers, most operators expect electricity tariffs to jump by around 47 percent, which means that household electricity prices would rise by around 20 percent.
The higher power prices have been driven by the surge in natural gas, coal, and carbon prices in recent months, Elcom said, adding that the lower nuclear power generation in France in recent months has also played a part in the price hikes.
Switzerland, as well as the rest of Europe, is bracing for a surge in power prices in the winter, as the EU—of which Switzerland is not a member—looks to cut its dependence on Russian natural gas. Russia, for its part, has already cut off gas supply to Poland, Bulgaria, Finland, the Netherlands, and customers in Denmark and Germany that have refused to pay in rubles for gas.

WSJ : Search Continues for Source of TerraUSD Crypto Bank Run

Search Continues for Source of TerraUSD Crypto Bank Run
In decentralized finance, it isn’t easy to understand who provides money for loans, where the money flows or how easy it is to trigger currency meltdowns

Cryptocurrency investors are still trying to figure out what led to May’s spectacular meltdown of a pair of digital tokens that were worth more than $40 billion earlier in the month.

Last week, analytics firm Nansen pointed to lending firm Celsius as one of a handful of users that contributed to the collapse of the luna and terraUSD cryptocurrencies. While Celsius disputes the account, the search for information about the cause of the wreckage highlights the opacity of the world of decentralized finance.

In DeFi, it isn’t easy to understand who provides money for loans, where the money flows or how easy it is to trigger currency meltdowns. This is one reason regulators are concerned about the impact of DeFi on investors and the broader financial system.

Many investors put their assets in crypto products that offer healthy returns; those services then lend out the funds to others. The value of assets held on DeFi platforms, termed “total value locked,” skyrocketed from $600 million at the beginning of 2020 to a peak of $317 billion on Dec. 26, 2021, according to the website DeFi Llama. It is now down to about $106 billion, falling in tandem with a decline in prices in the overall cryptocurrency market.

The Anchor Protocol was a popular service for terraUSD holders because it offered users a 19.5% interest rate on loaned crypto. But in May, a flood of investors started pulling their money out of Anchor, which ultimately led to the fall of terraUSD and luna. It is unclear who prompted the selling and whether they meant to trigger the collapse.

Nansen’s report argues that Celsius was one of a handful of users that first withdrew hundreds of millions of dollars from Anchor early, possibly triggering the broader selloff on the platform.

Celsius said that its risk-management group recognized “shifts in the stability” of the platform that prompted it to remove its assets only for the sake of protecting its customers’ money. The company didn’t profit from the instability, it said.

Celsius accepts customers’ deposits and then lends that money out to other users, like exchanges and market makers. It collects a fee for the service and then passes on that revenue to its users as an interest payment. Celsius offers users yields of up to about 14%, so Anchor’s 19.5% yield was attractive to the firm.

“It’s similar to traditional securities lending,” said Steven Ehrlich, the chief executive of Voyager Digital, a Canadian-listed company that offers a variety of crypto-focused financial services, some of which offer a stated yield. “It’s almost identical to what happens in the traditional world.”

But these products and services aren’t operated like traditional financial services.

“It’s being marketed as a better savings account and it’s not,” said Cory Klippsten, chief executive of crypto-services firm Swan Bitcoin.

There are no standards for issues of custody, risk management, or capital reserves. There are no transparency requirements. Investors often don’t know how their money is being handled or who the counterparties are.

“What you really are doing is, you’re an unsecured lender,” Mr. Klippsten said. “They’re gathering retail loans and investing it out the back end in lightly regulated activities.”

For instance, it wasn’t clear to investors that their money in a Celsius account might have been invested in the Anchor platform. Celsius, Voyager and others in the industry don’t usually disclose their counterparties.

Regulators have increasingly been uneasy about the risks of these lending platforms. In April, Celsius, pressed by regulators, stopped accepting new interest-earning deposits from nonaccredited investors in the U.S. A similar program planned by Coinbase was dropped after opposition from U.S. regulators.

Also, unlike traditional bank accounts, there is no deposit insurance. If a DeFi service collapses or gets hacked—and they are notorious for getting hacked—users are largely on their own.

“In the world of crypto, anyone and their dog can release a product,” said Michael Rosmer, the founder of DeFiYield, which publishes software for auditing DeFi projects. “We discovered very quickly you have this plethora of complex instruments and products, and there’s no vetting.”

>>> US Close Dow - 1,05% S&P -1,63% Nasdaq -2,47% Russell -0,77%

Closing Market Summary

The stock market retreated on Friday, sending the major averages back into negative territory for the week. The Nasdaq (-2.5%) underperformed throughout the session, surrendering 1.0% for the week, while the S&P 500 (-1.6%) and Dow (-1.1%) lost a respective 1.2% and 0.9% since last Friday. Small caps held up a bit better with the Russell 2000 (-0.8%) giving back 0.3% this week.

Equity indices had to contend with weak sentiment from the open after it was reported that Tesla (TSLA 703.55, -71.45, -9.2%) CEO Musk sent an email to other executives at his company, expressing concern about the economy. Mr. Musk said that he has a "super bad feeling" about what is ahead, and that Tesla's workforce needs to be reduced by about 10%.

In addition to the warning from a prominent CEO, the market received a better than expected jobs report for May, which didn't offer much of an argument for a slowdown in the Fed's rate hike plans. That said, employment in retail trade declined by 61,000 in May and the number of persons employed part time for economic reasons increased by 295,000 to 4.3 million, reflecting an increase in employees whose hours were cut due to slack work or business conditions.

Ten out of eleven sectors finished the day in negative territory with cyclical groups like consumer discretionary (-2.9%), technology (-2.5%), and communication services (-2.4%) spending the day at the bottom of the leaderboard.

The discretionary sector lagged after showing relative strength earlier this week with Tesla making a significant contribution to today's underperformance. Top component Amazon (AMZN 2447.00, -63.22, -2.5%) finished a bit ahead of the sector but still lost more than 2.0%. The stock will begin trading on a split-adjusted basis on Monday.

Like the consumer discretionary sector, top-weighted technology was also pressured by some of its largest components. Apple (AAPL 145.38, -5.83, -3.9%) slid from this week's high back to its opening level from last Friday after Morgan Stanley expressed concern about weak May revenue growth in the company's App Store, which could be setting the stage for a disappointing quarter for the company's services division.

Micron (MU 69.94, -5.94, -7.2%) was the worst performer in the tech sector, falling back below its 50-day moving average (72.09) after being downgraded to Underweight with a $70 price target at Piper Sandler. The downgrade also invited notable weakness in NVIDIA (NVDA 187.20, -8.72, -4.5%) since the company buys memory chips for its products from Micron.

The commodity-sensitive materials sector (-1.0%) could not avoid a lower finish while energy (+1.4%) showed continued resilience. The sector returned toward its high from Monday, aided by a higher price of oil. WTI crude rose $2.40, or 2.1%, to $119.22/bbl, pushing past Monday's high (119.98) in electronic trade that followed today's pit close.

Treasuries finished a down week on a lower note with the 10-yr yield rising four basis points to 2.96%. The 2s10s spread ended the week at 28 bps, unchanged from last Friday as yields on the 2-yr note and the 10-yr note increased by 22 bps during the abbreviated week.

Reviewing today's economic data:

  • May nonfarm payrolls increased by 390,000 (consensus 325,000). The 3-month average for total nonfarm payrolls decreased to 408,000 from 516,000. April nonfarm payrolls revised to 436,000 from 428,000. March nonfarm payrolls revised to 398,000 from 424,000.
    • May private sector payrolls increased by 333,000 (consensus 301,000). April private sector payrolls revised to 405,000 from 406,000. March private sector payrolls revised to 385,000 from 424,000.
    • May unemployment rate was 3.6% (consensus 3.5%), versus 3.6% in April. Persons unemployed for 27 weeks or more accounted for 23.2% of the unemployed versus 25.2% in April. The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 7.1%, versus 7.0% in April.
    • May average hourly earnings were up 0.3% (consensus 0.4%) versus an unrevised 0.3% increase in April. Over the last 12 months, average hourly earnings have risen 5.2%, versus 5.5% for the 12 months ending in April.
    • The average workweek in May was 34.6 hours (consensus 34.6), versus 34.6 hours in April. Manufacturing workweek was unchanged at 40.4 hours. Factory overtime dipped 0.1 hours to 3.2 hours.
    • The labor force participation rate increased to 62.3% from 62.2% in April.
    • The employment-population ratio increased to 60.1% from 60.0% in April.
  • The ISM Non-Manufacturing Index for May decreased to 55.9% (consensus 56.6%) from 57.1% in April. The dividing line between expansion and contraction is 50.0%. The May reading marks the 24th straight month of growth for the services sector, but it is the lowest reading since February 2021.
    • The key takeaway from the May report is that business activity for the non-manufacturing sector slowed for the second straight month as businesses continued to grapple with pricing pressures, supply chain issues, and labor supply constraints.
  • The IHS Markit Services PMI dipped to 53.4 in the final reading for May from 53.5 in the preliminary reading.

There is no economic data on Monday's schedule.

  • Dow Jones Industrial Average -9.5% YTD
  • S&P 400 -11.2% YTD
  • S&P 500 -13.8% YTD
  • Russell 2000 -16.1% YTD
  • Nasdaq Composite -23.2% YTD

WSJ : Mike Novogratz’s Crypto Comeback Faces a Trial by Fire

Mike Novogratz’s Crypto Comeback Faces a Trial by Fire
The Wall Street star became so enamored with cryptocurrencies he had one of them tattooed to his arm. Then the market crashed. ‘I’m arguing the system is gonna hold.’

Seven years after heavy losses shuttered his hedge fund, Mike Novogratz was in his SoHo office watching his computer screen flicker prices of cryptocurrencies, his new favorite investments. They were all collapsing.

The former college wrestler who once worked for Goldman Sachs Group Inc. GS -1.72% and Fortress Investment Group had reinvented himself as one of Wall Street’s biggest digital-currency proponents, a cult figure for thousands of amateur investors who followed his appearances on television, social media and the conference circuit. His new venture, Galaxy Digital Holdings Ltd. GLXY -4.07% , sells crypto-investment funds, handles trades for other big investors and advises digital-asset companies on acquisitions.

But now markets were once again turning on Mr. Novogratz. One of Galaxy’s most prominent recent bets—an upstart cryptocurrency called Luna that inspired a tattoo of a wolf that Mr. Novogratz had applied to his left biceps—lost 99% of its value in just three days. Bitcoin and other cryptocurrencies also fell sharply as inflation and rising interest rates rattled the markets for digital assets. Shares in Mr. Novogratz’s firm, which is publicly traded in Canada, are down 69% this year.

The crypto crash is testing investors of all sizes who piled into digital assets. Mr. Novogratz’s Galaxy averted disaster with skillful trading, adopting the kinds of risk-management techniques employed by traditional investment banks. It sold certain crypto positions, including at least part of its Luna stake, before the selloff deepened in May, according to securities filings and people close to the matter. Mr. Novogratz remains a billionaire based on his stake in Galaxy and his other investments, according to some of these people.

His earlier public bullishness, however, attracted attention once Luna collapsed. One investor who lost money said Mr. Novogratz’s endorsement of Luna encouraged him to make a disastrous bet on TerraUSD, a related token that also tumbled in May. On Twitter, one post replaced Mr. Novogratz’s arm tattoo with the image of a chart tracing Luna’s stunning decline.

In an interview, Mr. Novogratz said that while he had been publicly optimistic about the future of Luna and other cryptocurrencies, he made sure to include words of caution. “It’s painful to me that too many people lost too much of their earnings” in Luna and TerraUSD, Mr. Novogratz said. “I always said don’t put too many eggs in one basket.”

Digital currencies will rebound before stocks and the current downturn will prove healthy, he added. “It washes out people who came late, testing the system,” he said in the interview. “I’m arguing the system is gonna hold.”

A true convert
Long before Mr. Novogratz’s emergence as a crypto convert, the 57-year-old billionaire had a Wall Street career marked by successes and setbacks.

A standout wrestler at Princeton University, Mr. Novogratz made friends easily in college and relished the spotlight, said Pete Briger, a fellow Princeton alum who later worked alongside Mr. Novogratz at Fortress.

Mr. Novogratz served in the New Jersey National Guard before heading to Goldman, one of the biggest investment banks on Wall Street, and quickly made his mark in finance as a so-called macro investor trading on economic and geopolitical trends. Mr. Novogratz became a Goldman partner at age 33 and by 2000 had left the firm. He later joined Fortress, a hedge-fund giant, where he was one of the firm’s principals when it went public in 2007.

Then, as now, he stood out for his willingness to champion outside interests. Mr. Novogratz once organized a match between U.S., Russian and Iranian wrestlers in New York’s Grand Central Terminal to help persuade the International Olympic Committee to keep the sport in the Games. He donates freely to organizations aimed at reforming the criminal-justice system, and chairs the Bail Project, which posts bail for detainees who otherwise couldn’t afford it. He also was an early investor in companies involved in psychedelics.

Mr. Novogratz learned about bitcoin from Mr. Briger, Fortress’s co-CEO, and others. During his time at Fortress, Mr. Novogratz and his partners bought cryptocurrencies for their own personal investment accounts, said people familiar with the situation.

His most serious career stumble came in 2015, when Mr. Novogratz’s macro fund suffered deep losses on investments on Brazilian and other investments and closed. He quit Fortress to start a firm to invest his own wealth. He kept investigating bitcoin and other cryptocurrencies, becoming more serious about the investments.

Over time, Mr. Novogratz came to see them as a “really cool new technology” that was likely better capable of storing value amid rising inflation than alternatives, he said at a recent conference. Soon, he was a true convert, buying $10 million of bitcoin and another cryptocurrency called ether partly because he sensed a lack of trust in global currencies, he said.

In 2018 Mr. Novogratz merged his family office into Canada’s Bradmer Pharmaceutical to create Galaxy, a crypto-focused firm catering to institutions and companies rather than individual investors. Mr. Novogratz’s portfolio of personal crypto investments moved onto the publicly-traded Galaxy’s balance sheet.

Galaxy came to handle many tasks for the crypto world. It sells crypto-investment funds to institutions, and its investment-banking division advises digital-asset and blockchain companies on financings and acquisitions. The firm’s trading desks handle orders from more than 800 investors, and Galaxy’s Principal Investments arm has stakes in 93 portfolio companies. The firm has more than $2 billion of digital assets on its balance sheet.

Mr. Novogratz was not shy about expressing his optimism publicly. He became a vocal fan of the fast-growing Terra blockchain network, the platform underpinning a number of cryptocurrencies. These included Luna and TerraUSD, a so-called algorithmic stablecoin designed to maintain its value at $1 per coin and not backed with traditional assets. In March 2021, Mr. Novogratz tweeted: “Pumped to be an Anchor investor,” referring to the Anchor Protocol, a kind of crypto bank based on Terra’s network. Anchor attracted billions of dollars of investors’ money by offering annual yields of nearly 20% on deposits of TerraUSD.

“My role—because I can’t stop talking—has been to preach,” he told a major bitcoin convention in Miami in early April.

‘I’m officially a Lunatic’
The confidence Mr. Novogratz and a few other well-known investors expressed in crypto encouraged others to make similar bets.

Kevin Newby, a former information-technology worker outside of Detroit, said Mr. Novogratz’s endorsement was one of the reasons he overcame his initial skepticism about the Anchor Protocol and put money in it. Mr. Newby lost over $200,000 when TerraUSD collapsed in May.

Mr. Newby had earned hundreds of thousands of dollars from crypto investing. He and his wife dreamed of buying vacation homes in the U.S. Virgin Islands and moving to the Caribbean. But those dreams ended in May. Mr. Newby had kept most of his crypto profits in TerraUSD deposited in Anchor Protocol, attracted by the high yields.

Now, he is planning a return to the workaday world. “I’m back to square one, polishing my résumé and looking for a job,” Mr. Newby said.

One of the Galaxy bets that attracted attention from the outside world was Luna. It first invested in late 2020, when the price was well under $1, becoming one of Luna’s most prominent backers. The value of the investment had risen to roughly $400 million in December of last year.

Mr. Novogratz tweeted to his followers on March 26, 2021, that he would get a tattoo if Luna hit $100. Galaxy began to take profits on its gains last year as Luna climbed, according to people familiar with the situation.

Mr. Novogratz followed through on his tattoo pledge in January of this year. That was not long after Luna surged as high as $103.33 in late December, according to data provider CoinMarketCap. An image he tweeted in January showed a tattoo of a wolf howling beneath a moon and a “Luna” banner. “I’m officially a Lunatic!!!” the tweet said. Luna hit a record of $119.18 in early April, according to CoinMarketCap data.
At a bitcoin conference in Miami, two days after Luna hit an all-time high, Mr. Novogratz told thousands of attendees that “we’re moving to a digital world” with nations and others adopting cryptocurrencies. He said TerraUSD will be a “part of that,” while adding “it’s not without risk.” He also said he was confident about the future of the stablecoin and was complimentary of Do Kwon, the creator of TerraUSD.

Robert Bogucki, a Wall Street veteran who is Galaxy’s co-head of trading, became concerned by the level of enthusiasm demonstrated by the attendees of the same Miami bitcoin convention as well as the impact of the Federal Reserve’s decision to raise interest rates. Soon, he was taking bearish positions in Galaxy’s trading account on various cryptocurrencies, though not TerraUSD or Luna, according to people familiar with the trades. Those moves paid off for Galaxy, which also saw gains from lending activities generated by a group run by Jason Urban, the firm’s other co-head of trading, according to those people.

Starting on May 7, TerraUSD dropped below its $1 peg, prompting investors to withdraw billions of dollars from Anchor in the crypto equivalent of a bank run. That in turn prompted a selloff of Luna, which had helped back TerraUSD’s value. The collapse of the two cryptocurrencies wiped out around $40 billion in value within days.

Galaxy reported on May 9 that it sold at least part of its Luna stake during the first quarter of 2022. Realized gains on sales of Luna and other assets totaled $355 million in the period ending in March, the firm said. Galaxy hasn’t said if it was still holding any of the currency when it lost nearly all its value in May.

Mr. Novogratz praised his team during a May 9 earnings call for navigating the broader crypto selloff during the first quarter. “The balance sheet team did an excellent job of outperforming the drawdown in the overall market,” he said. “Lost some money, but minimal relative for the volatility we saw. “

On May 18, Mr. Novogratz issued a letter assuring investors that “crypto is not going away,” though the setback for the sector was significant. He said the experience had reinforced “a few core tenets of investing” including the need to keep a diversified portfolio and “take profits along the way...Galaxy did all of these with regards to our investment in LUNA.” He didn’t address the selling of any positions in his recent letter.

When Mr. Novogratz posted his letter on his Twitter feed on May 18, some of the more than 1,000 replies reminded him of earlier bullishness. One tweet asked: “Do you feel regret and shame shilling luna to small retail investors who lost their life savings in it?”

Mr. Novogratz remains upbeat about cryptocurrencies, he said in the recent interview. As for his Luna tattoo, he’s keeping it. “It’s a good reminder that not everything you do works out,” he said.

FT : Roman Abramovich-owned UK telecoms group to be sold for £1 to tech entrepre

Roman Abramovich-owned UK telecoms group to be sold for £1 to tech entrepreneurs
Future of Truphone — valued at £410mn in 2020 — thrown into doubt after sanctions imposed on Russian billionaire

British telecoms group Truphone, owned by Russian oligarch Roman Abramovich and his associates, is being bought for £1 by two European tech entrepreneurs.

Truphone appointed restructuring specialist FRP Advisory to conduct a sale of the assets of the company after sanctions imposed on the Russian billionaire by UK and European authorities threw the group’s future into doubt.

The company was valued at £410mn in 2020 and has received more than £300mn in investment from Abramovich and his two Russian business partners Alexander Abramov and Alexander Frolov.

Hakan Koç, a German businessman who co-founded the used car company Auto1, and his business associate Pyrros Koussios, a former telecoms executive and private equity investor, will own 90 per cent and 10 per cent of the company, respectively.

The fire sale gives an early indication of the fate that is likely to befall companies that have become enmeshed in Russia’s invasion of Ukraine.

Companies across the west that had imposed sanctions on individuals on their board, or among their owners and investors, have battled a litany of problems since the invasion in February, including a loss of customers, difficulty accessing finance and damage to their public reputations.

Abramovich has been forced to sell Premier League football club Chelsea after being hit by sanctions, with a £4.25bn deal agreed last month.

Truphone, in which Abramovich holds a 23 per cent stake and Abramov and Frolov most of the rest, has recorded 15 consecutive years of losses, including £16mn in 2020.

The telecoms group sells contracts to corporate customers including banks that want a secure network and to avoid roaming charges for employees. It also provides embedded sims to a range of technology companies, including Apple.

Koç listed Auto1, formerly backed by the Japanese conglomerate SoftBank, on the public market in Germany last year, raising €1.8bn and valuing the company at €10bn.

Though Auto1 previously received funding from Target Global, a venture capital firm formerly run by Frolov’s son, Koç says that neither he nor Koussios have a direct relationship with any of Truphone’s current owners, and have never met them.

As part of the sale, which is expected to complete this month, the current owners have committed to invest more than £10mn into the business, and will take on certain contractual liabilities, according to people familiar with the deal.

One-off payments and debts — including a $660,000 fine from the US regulator the Federal Communications Commission linked to a misrepresentation of the company’s ownership structure — will be paid by Truphone’s existing owners.

Under the arrangements of the sale, if the company performs well and crystallises its value through a market listing or capital raise, the current Russian owners will receive up to a third of the original funds that they invested, said people briefed on the deal. If Abramovich remains sanctioned at that time, he will not receive those funds.

The proposed sale of Truphone to Koç was first reported by The Times.

FT : Google co-founder Sergey Brin’s airship start-up grows rapidly

Google co-founder Sergey Brin’s airship start-up grows rapidly
San Francisco-based Lighter Than Air Research prepares to trial 120 metre-long aircraft after ramping up spending


Google co-founder Sergey Brin’s secretive project to build huge electric airships is scaling up rapidly, as Lighter Than Air (LTA) Research prepares its first major test flights later this year.

The tech billionaire is hiring hundreds of aerospace engineers in Silicon Valley and Akron, Ohio, at a site made famous by the Goodyear blimp, to build airships intended to run humanitarian missions to remote areas or disaster zones.

LTA was incorporated in 2014, before Brin stepped down from executive duties at Google’s parent company Alphabet in 2019. The start-up’s headquarters are at Moffett airfield in the San Francisco Bay Area, a Nasa-owned facility a short drive from Google’s headquarters that the US space agency began leasing to the tech company in 2015.

LTA’s payments to Google for the use of Moffett have risen more than tenfold in the past three years, according to parent company’s Alphabet’s most recent annual proxy filing, which has disclosed the “arm’s length” transactions with Brin’s company since 2017.

After starting at just $131,000 five years ago, those payments rose from $1.1mn in the year to March 2019 to $10.9mn in the most recent period ending in March 2022, suggesting that LTA is accelerating its development.

LTA hopes to reinvent the blimp for the 21st century with “zero emissions” flights. The company’s first full-sized airship, the 120 metre-long Pathfinder 1, is scheduled to begin test flights over Silicon Valley this year.

An even bigger dirigible, Pathfinder 3, is in development at the air dock in Akron, which became the world’s largest building when it was completed in 1929 and remains one of the world’s largest aerospace facilities today. A recruitment drive in Akron will double LTA’s total headcount to more than 400 people over the coming months.

Alan Weston, a former Nasa programme director who has led LTA since 2016, told local news reporters in Ohio in May that the company was building “the largest air vehicle on earth” in Akron. The 185 metre-long Pathfinder 3 will eventually be capable of carrying up to 96 tons across a range of up to 10,000 miles, or 16,000km, when it is completed next year, Weston said.

Pathfinder 3 is 60 metres shorter than the ill-fated Hindenburg-class airships that promised to revolutionise passenger flight in the 1930s until a disastrous accident in New Jersey killed 36 people and shattered the industry’s ambitions.

Brin’s day-to-day involvement at LTA is unclear but he is one of 13 inventors named on a key US patent granted to the company in April last year. The patent covers “methods and apparatus for constructing airships”, using 3D printing and carbon-fibre tubing to reduce costs and speed up production.

Weston said: “We believe lighter than air technology has the capacity to speed up humanitarian aid by reaching remote locations with little infrastructure, and to lower carbon emissions for air and cargo transportation.”

Among the many open positions for which LTA is hiring is a “flight test engineer” in Silicon Valley with “experience with first flight efforts of experimental aircraft”. Advertised perks include free lunches, “swag and the occasional airship ride”.