🍋 Washington's Trading Conflict

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Short Squeez
January 18, 2022

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"If you are not embarrassed by the first version of your product, you’ve launched too late." — Reid Hoffman

Good Morning! Stock market remained closed yesterday in observance of Martin Luther King Jr. Day. Winter storms knocked out power for nearly 200,000 Americans on Monday. More than 1,400 flights have been canceled in the US as the winter storm moves Northeast. Walmart is going full Web 3 and revealed plans to create its own cryptocurrency and collection of NFTs. Price of orange juice is on the rise amid forecasts of smallest crop since 1945. Pfizer CEO Albert Bourla believes that there will be a "return to normal life" sometime in the spring. Let's hope he is right.

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1. Story of the Day: Washington's Trading Conflict

If you work in finance, especially at a bank, you know how hard it is to trade individual stocks. Either your bank doesn’t allow you to trade or you have to pass rigorous compliance checks. Apparently, the same rules don’t apply to lawmakers, who have access to insider information that can not only affect individual securities but entire industries. One line in a bill can be worth millions of dollars. Perhaps the greatest conflict of interest of all time.

Some progressive democrats and republicans are working on a proposal to ban serving lawmakers from trading individual stocks. Jon Ossoff (D-Ga.) plans to introduce an ethics bill that would ban lawmakers, their spouses, and dependent children from trading individual stocks while in office.

The bill is gaining momentum and gathering bipartisan support. Sen. Josh Hawley (R-Mo.) on Tuesday tweeted his support for a trading ban. Sen. John Hoeven (R-N.D.), the only Republican senator who has reported using a qualified blind trust for his personal investments.

House Speaker Nancy Pelosi is not a fan of losing her trading abilities. She became a meme last year after her husband bought millions of dollars worth of tech stocks. She refuses to support the trading ban saying: "We're a free-market economy. [Lawmakers] should be able to participate in that."

Short Squeez Takeaway: Many lawmakers had massive gains in the stock market last year and outperformed the S&P 500 and most hedge fund managers (who get paid millions of dollars for managing money). The outsized returns call into question how these returns were accumulated. If financial professionals with access to insider information are barred from trading, politicians should be as well. Tom Nelson puts it well: "They don’t need to be trading like Gordon Gekko or Bud Fox. Just get mutual funds and CDs like the rest of us. How difficult can that be?"

Source: Axios

2. Top Reads

  • Momentum builds to ban lawmakers from trading stocks (Axios)

  • London stock exchange proposes special listings for private companies (WSJ)

  • To get a better night’s sleep, first fix your day (WSJ)

  • Ralph Lauren CEO says metaverse is way to tap into younger generation of shoppers (CNBC)

  • It’s your growth problem, not mine (AST)

  • Is the Fed responsible for an 800% gain in the stock market? (AWCS)

  • Economists pin more blame on tech for rising inequality (NYT)

  • More than 1 million fewer students are in college. Here's how that impacts the economy (NPR)

  • How the US fell behind in lithium, the ‘white gold’ of electric vehicles (CNBC)

A Message from Masterworks: Winter is Coming

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3. Book of the Day: How We Eat: The Brave New World of Food and Drink

Our food system—how we produce, process, distribute, and consume food—is broken. But we have the opportunity to do better. Market researcher and bestselling author Paco Underhill sets out to solve these problems and show us where our eating and driving lives are headed in his newest book, How We Eat. Hailed by the San Francisco Chronicle as “a Sherlock Holmes for retailers,” Underhill takes an upbeat, hopeful, and characteristically witty approach to how we can change the way we consume. 

How We Eat reveals the future of food in surprising ways, like how the city is getting country-fied with the rise of farmer’s markets and rooftop farms; how supermarkets are on their way out with their most valuable real estate, their parking lot, for growing their own food and hosting community events; and how marijuana farmers, who have been using artificial light to grow a crop for years, have developed a playbook so mainstream merchants and farmers across the world can grow food in an uncertain future.

Paco Underhill is the expert behind the most prominent brands, consumer habits, and market trends and the author of multiple highly acclaimed books, including Why We Buy. In How We Eat, he shows how food intersects with every major battle we face today, from political and environmental to economic and racial, and invites you to the market to discover more.

“The shared meal elevates eating from a mechanical process of fueling the body to a ritual of family and community, from the mere animal biology to an act of culture.”

4. Short Squeez Picks

5. Daily Visual: Top Metro Areas for Pandemic Era Job Growth

Source: Axios

6. Daily Acumen: Escape Your Bubble

Nick Maggiulli wrote in one of his best posts of the year –

“We all live in bubbles. Some of these bubbles are made of money. Some are made of power. Some of pride. Some of hate. Some of lust. Some of loss. The question isn’t whether you are in a bubble, but how often do you get out of one? How often do you escape your bubble to see the world in a different light?

Because failing to escape can lead to a rude awakening. You can chase money or power or beauty or some other idea that eventually leads you astray. You can win that game, but lose yourself in the process. Victorious in battle, but defeated in war. Because there is more to life than what is in your bubble. You just have to escape it once in a while to find out.”

7. Crypto Corner

8. Memes of the Day

 

 

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