Good Morning and Happy Friday! Hope y'all were able to enjoy a nice Thirsty Thursday/Cinco de Mayo 2-for-1 combo. Stocks did not have a good Thursday, taking a dive as jitters around Fed policy murked the market. Also likely taking a dive are Wall Street bonuses this year. Unlike in 2021, when bonuses (and pretty much everything) went up, 2022 bonuses are expected to fall back to Earth, based on a slower "war for talent" and expense watching. Elon Musk isn't worried about bonuses of course. He's preoccupied with being the CEO of two (or five?) of the world's biggest companies. Musk agreed to be the temporary CEO of Twitter if the deal closes, and investors in his other companies say "distraction worries" are very real. Y'all sort it out because he raised another $7 billion from the likes of Larry Ellison, Sequoia Capital, Andreessen Horowitz, Binance, and VyCapital in equity commitments for the deal.
Getting ghosted on a dating app sucks. Being catfished is even worse (DEFINITELY not speaking from experience😩). Having $8 million stolen from you through a dating app though, that's a whole different level.
Divya Gadasalli, a 25 year old Texan Tinder user, was apparently fleeced by someone she never met for a ridiculous $8 million. This particular type of theft is colloquially known as "pig butchering," where victims' are manipulated by having their crypto accounts grown, and then having the rug pulled from under them. (tbh sounds a lot like every cryptocurrency)
Jerry Bulasa, the person she thought she was getting to know, began chatting up Gadasalli on WhatsApp (red flag #1), after matching on Tinder, while she was in a very vulnerable state. She was taking a break from school at University of Texas Permian-Basin, and thinking about how nice it would be to be financially independent. She reached out to her mother who controls the estate of her father, who was murdered by an ex-business partner and asked for some money to "invest" with Busala.
Busala said she could be a "financial hero" for her family, which honestly doesn't sound like something they really needed. Being the good daughter she is though, Gadasalli wired $10k to a TD Bank account held by a Dong Lian (someone Busala frequently traded crypto with). The transfers continued with $86k, $100k, $200k. The "returns" were impressive and she was able to withdraw $30k a month, with which she said, "Here you go, Mom!"
Busala convinced her to go deeper, with a new account that would give her dividends on top of appreciation. Initially $3 million in Tether, then $6 million, which seemed to grow to $10 million. All seemed great as she was able to withdraw $60-70k a month, but then there were "taxes." These "expenses" caused her exposure to reach $8 million, which finally made her suspicious.
She reached out to the FBI and a lawyer, while learning more about crypto scams, and eventually sent Busala a lawsuit via WhatsApp. His response? "LOL," before deactivating his account.
Short Squeez Takeaway: This Busala guy makes the Tinder Swindler look like an amateur. While that guy got $10 million, it took him several victims to get there. Busala basically did it in one fell swoop. Gadasalli is doing her best to recoup the funds she's lost, suing the crypto exchanges involved, but it's a fairly novel situation she's in. Her case will likely set some precedent in how crypto scams go through our legal systems, and it doesn't seem like many people are very interested in making her whole. Binance, one of the exchanges involved, even moved to dismiss her suit entirely. Lesson of the day is be careful who you meet on the internet. (& pls don't wire them $8 million)
All markets finished sharply lower, with the Nasdaq clocking in its worst one day move since June 2020. Higher yields, like the 10 year Treasury, at a year high 3.04%, were the instigators.
Movers & Shakers
The price of Ethereum (ETH) has fallen over the last few weeks (-20% over the last month) with rising interest rates and growing inflation causing some investors to move out of riskier asset classes like cryptocurrencies.
At the time of writing, ETH was trading at $2,720 but will it be over the $2,900 mark tomorrow?
Will $ETH be above $2,900 on May 7, 2022?*
With a recent price shift in shares on Polymarket, traders are currently predicting a 11% probability that ETH will be above the $2,900 mark on Saturday, May 7th. What do y’all think? Follow the odds now on Polymarket!
During one crazy week in January 2021, a motley crew of retail traders on Reddit’s r/wallstreetbets forum had seemingly done the impossible—they had brought some of the biggest, richest players on Wall Street to their knees. Their weapon was GameStop, a failing retailer whose shares briefly became the most-traded security on the planet and the subject of intense media coverage.
The Revolution That Wasn’t is the riveting story of how the meme stock squeeze unfolded, and of the real architects (and winners) of the GameStop rally. Drawing on his years as a stock analyst at a major bank, Jakab exposes technological and financial innovations such as Robinhood’s habit-forming smartphone app as ploys to get our dollars within the larger story of evolving social and economic pressures.
The surprising truth? What appeared to be a watershed moment—a revolution that stripped the ultra-powerful hedge funds of their market influence, placing power back in the hands of everyday investors—only tilted the odds further in the house’s favor.
Online brokerages love to talk about empowerment and “democratizing finance” while profiting from the mistakes and volatility created by novice investors. In this nuanced analysis, Jakab shines a light on the often-misunderstood profit motives and financial mechanisms to show how this so-called revolution is, on balance, a bonanza for Wall Street. But, Jakab argues, there really is a way for ordinary investors to beat the pros: by refusing to play their game.
“GameStop became the most-traded security in the world, appreciating more than 20,000 percent from what it had been worth months earlier.”
Annual annual advertising revenues for top companies that have reported earnings in 2021
Vanderbilt left his heirs a hefty inheritance of approximately $300 billion when adjusted for inflation. Within 50 years, it was all gone.
In between, sat three generations whose primary purpose was to compete on who could build the largest house or spend the most on lavish things.
As one of the last Vanderbilt heirs to inherit significant wealth, Reggie had inherited a great deal. As a 21st birthday gift, he received $12.5 million, about $350 million today.
Family biographer Arther Vanderbilt writes:
Reggie’s two loves were brandy and gambling. The first left him dead at age 45, with cirrhosis so severe, the blood flow from his liver was cut off and pushed up to his esophagus, where the veins abruptly ruptured and left him choking in a pool of blood.
*Trading is not available to people or companies who are residents of, or are located, incorporated or have a registered agent in, the United States or a restricted territory.
Excel & PowerPoint shortcuts will be sent on 5/16/22 at 6am ET.