🍋 Social Media Caused Banking Crisis

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Good Morning! SBF got hit with yet another criminal charge yesterday - this time for a $40 million bribe to a Chinese official. And former FTX rival Binance is in crypto trouble, too. The exchange has seen over $2 billion in outflows the past few days as legal troubles mount.

The Chinese conglomerate Alibaba will spin off into six different units and explore IPOs. Health insurer Cigna says they only spend an average of 1.2 seconds deciding whether or not to pay out claims thanks to AI.

And news for Tweeters as Elon Musk says only verified accounts will be shown in the recommended feed starting next month. And you’ll have to pay for the service if you want to vote in polls, too.

We got the results of yesterday’s survey, and only 41% of you had heard of First Citizens before it bailed out SBV.

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1. Story of the Day: Social Media Caused Banking Crisis

The Senate held its first hearing on SVB’s collapse yesterday, and the finance world is still scrambling to make sense of the aftermath. But regulators are starting to point the finger at an unlikely target - social media.

In the lead-up to SVB's downfall, social media platforms like Twitter, Slack, and WhatsApp lit up with anxious depositors and investors sounding the alarm. Their warnings went viral, spreading like wildfire and ultimately contributing to the bank's demise.

Bank runs have always been inherently psychological, but social media takes things to a whole new level. Rumors can spread across the country at a record speed, leaving banks with little time to react. And with the rise of digital banking, customers can now withdraw their deposits instantly, meaning banks can fail fast.

Citigroup's CEO, Jane Fraser, minced no words when she declared that social media has forever changed the game when it comes to bank failures.

Takeaway: In today’s day and age, even one rumor or viral post can irreparably damage a bank’s reputation and stability. And regulators aren’t sure what to do next. While SVB may have been a “perfect storm”, be on the lookout for ways regulators try and prevent another crisis.

2. Markets Rundown

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Stocks closed lower as nvestors assess regulators’ comments about banks.

Movers & Shakers

• (+) Peloton ($PLTN) +27% after the company announced Q4 earnings.

• (+) Advanced Micro Demographics ($AMD) +27% after the company's earnings exceeded analyst expectations.

• (–) Snapchat ($SNAP) -10% after poor earnings and demand for ad revenue.

Private Dealmaking

• Isar Aerospace, a rocket launch startup, raised $168 million

• IntegrityNext, an ESG compliance software provider, raised $109 million

• Graphiant, an edge services startup, raised $62 million

• EpiBiologics, an antibody protein degradation platform, raised $50 million

• ClearFlame Engine Technologies, a renewable engine developer, raised $30 million

• Workera, an enterprise upskilling platform, raised $23.5 million

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3. Top Reads

• Private equity deals in Asia plunged 44% in 2022 (CNBC)

• The difference between the bank failures of 2008 and today (Axios)

• Consumer confidence rebounds amid inflation and bank crisis (Fox)

• World Bank warns of lost decade in global growth (Reuters)

• Apple amps up its financial services (CNN)

• Social media’s new pay-for-play rules (Axios)

• The new economics of weddings (BR)

• The jobs most exposed to ChatGPT (WSJ)

• US ad forecast cut again in 2023 (Axios)

4. Shortform Book of the Day: Merchants of Doubt

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Merchants of Doubt has been praised―and attacked―around the world, for reasons easy to understand.

This book tells, with “brutal clarity” (Huffington Post), the disquieting story of how a loose-knit group of high-level scientists and scientific advisers, with deep connections in politics and industry, ran effective campaigns to mislead the public and deny well-established scientific knowledge over four decades.

The same individuals who claim the science of global warming is “not settled” have also denied the truth about studies linking smoking to lung cancer, coal smoke to acid rain, and CFCs to the ozone hole.

“Doubt is our product,” wrote one tobacco executive. These “experts” supplied it. Merchants of Doubt rolls back the rug on this dark corner of American science.

“The industry had realized you could create the impression of controversy simply by asking questions.”

5. Short Squeez Picks

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What Else to Read

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6. Daily Visual: First Citizens Share Price

_{Source: Axios}

7. Daily Acumen

“What it means to do your best:

Doing your best is about the position you find yourself in when you show up.

Over the long term, the average person who constantly puts themselves in a good position beats the genius who finds themselves in a poor position.

What looks like talent is often good positioning.

And the best way to put yourself in a good position is with good preparation.”

Source: Farnam Street

8. Memes of the Day

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