🍋 Everybody Lies

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"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks." — Jack Bogle

Good Morning! Spirit Airlines announced that they've rejected an acquisition offer from JetBlue because they don't believe antitrust regulators would clear the transaction. "YOU'RE breaking up with ME?!"- JetBlue, probably. In more deal uncertainty, Twitter says that there is a risk of losing employees and advertisers as the future of the company is musky, I mean murky. One thing that's clear, inflation needs to cool it. Founder of Citadel, Ken Griffin, said that if inflation drops to 4%, the Fed will be able to take the foot off the monetary tightening pedal. Let's hope so because we're all sick of having to pay $10 for a cup of coffee.

1. Story of the Day: Everybody Lies

James Im, a former senior trader at Nomura, took the stand in his defense against an SEC lawsuit, and admitted that he would lie to clients in regards to bond prices. He tried to make his case by saying it was common practice in the industry, and never had an impact on his clients' investment decisions.

Im ran Nomura's CMBS desk from 2009 to 2014. During that time frame, he apparently lied to clients about the prices he was buying/selling bonds at. He also used the tactic of pretending he was negotiating with an imaginary third party. Clearly, he likes playing pretend because he went further and said he didn't believe these lies added up to cheating clients. Why? Because apparently, the clients were lying to him about prices too...

Im believes the lies on both ends never impacted investment decisions, because it had no effect on the value of the bond's collateral. The sophisticated investors who his desk interacted with apparently knew not to take traders' statements at face value. Other traders have used this argument in similar cases in the past. 

Im was one of the last people rounded up in a crackdown on questionable methods used by traders after the 2008 financial crisis. Nomura agreed to pay customers $25 million in July 2019 to resolve the claims that they failed to supervise their traders who were making false claims. Over 20 traders were dismissed from their jobs during the investigation. Eight of them were criminally charged, of which at least four were from Nomura.

Short Squeez Takeaway: Many Wall Street banks changed policies in response to the SEC probes. It is interesting to note that Nomura had to "outlaw" lying to customers following the 2013 arrest of trader Jesse Litvak, the first person charged in the crackdown. That still didn't stop Im, who made huge alleged gains from his lies. $3.79 million to be exact. For his sake, I hope he put all that bonus in Bitcoin because he'll probably have to pay all of that back plus a lot more.

Source: Bloomberg

2. Markets Rundown

Markets traded sideways before ending the day slightly up, as it seems they have found footing after a rough April.

Movers & Shakers

  • (+) Moderna ($MRNA) +6% after announcing that its COVID vaccine for children under 6 will be ready for FDA review in June.
  • (+) Align Technology ($ALGN) +7% because they announced a $200 million accelerated stock repurchase program.
  • (–) Moody's ($MCO) -5% on the company cutting its full-year earnings guidance.

Private Dealmaking

  • Indian insurance comp platform, Turtlemint, raised a $120M Series E funding round
  • Tribe Capital led a $50M Series B funding for LinearB, a workflow optimization startup
  • Belgian blockchain wallet startup, Venly, raises €21M in Series A funding
  • GI Partners will buy GTY Technology for around $400M
  • Olympus Partners buys Planet Fitness franchisee
  • Bausch + Lomb could be the year's second-largest IPO

3. Top Reads

  • Ulta apologized after major marketing mess up (BB)
  • Vice Media looking for a buyer (CNBC)
  • Where's the cyberwarfare red line? (BB)
  • Staten Island Amazon workers reject union (CNBC)
  • Barclays hiring 18 people from Credit Suisse's prime-brokerage unit (BB)
  • Grindr was selling data through ad networks (WSJ)
  • Citi says trader's error was responsible for European flash crash (BB)
  • Activist Ancora has 1% stake in Hasbro (WSJ)
  • Qatar back on top as world's top LNG exporter (BB)

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4. Book of the Day: Love and Work: How to Find What You Love, Love What You Do, and Do It for the Rest of Your Life

You've long been told to "Do what you love." Sounds simple, but the real challenge is how to do this in a world not set up to help you. Most of us actually don't know the real truth of what we love—what engages us and makes us thrive—and our workplaces, jobs, schools, even our parents, are focused instead on making us conform. Sadly, no person or system is dedicated to discovering the crucial intersection between what you love to do and how you contribute it to others.

In this eye-opening, uplifting book, Buckingham shows you how to break free from this conformity—how to decode your own loves, turn them into their most powerful expression, and do the same for those you lead and those you love.

"It's not what you achieve, it's what you overcome. That's what defines your career."

5. Short Squeez Picks

  • 800º GO is changing the pizza game by having robots make the pies for you. They have already raised $3M from over 2,000 investors. Get a piece of the $660 billion pizza industry with 800º GO's pizzeria of the future that is doubling profit margins. Invest now (deadline is tomorrow, May 4th!)
  • Hackers see open season on Russian networks
  • It's ok to tell your kids "good job" every once in a while

6. Daily Visual: Four Fed Charts

How the Fed impacts different metrics

Source: Axios

7. Daily Acumen: Luck vs Fundamentals

Over 12 months, luck is 33x as powerful as market fundamentals.

Over the long-term, market fundamentals are 33x as powerful as luck.

Source: Dividend Sensei

8. Crypto Corner

  • Fort Worth, TX first city in US to mine Bitcoin
  • Crypto's celebrity craze
  • Crypto industry under attack by the SEC
  • Backlash over Yuga Labs' Otherdeeds NFT mint
  • Bitcoin miners rebut Democrat claims
  • New York missing the mark in pursuit of crypto fraud?

9. Memes of the Day

                                     

                                   

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