It all comes full circle, via the Financial Times:

Meta will use conversations people have with its chatbots to personalize advertising and content across its platforms, in a sign of how tech companies plan to make money from artificial intelligence.

The owner of Facebook, Instagram and WhatsApp on Wednesday said it would use the content of chats with its Meta AI to create advertising recommendations across its suite of apps.

“People will already expect that their Meta AI interactions are being used for these personalization purposes,” said Christy Harris, privacy and data policy manager at Meta.

A New York district court dealt the latest setback to a jilted Credit Suisse junior creditor cohort yesterday, throwing out a lawsuit from some additional tier 1 (otherwise known as contingent convertibles, or CoCos) bondholders seeking $370 million in damages. Recall that the Swiss government wiped out some $17 billion of Credit Suisse CoCos following the besieged lender’s March 2023, all-stock shotgun marriage with local peer UBS, even while preserving $3.25 billion in equity value, which typically resides at the bottom of the capital structure.  

“Switzerland’s first argument for dismissal is that it is immune from suit under the Foreign Sovereign Immunities Act,” wrote Judge David Ho. “The court agrees.”  The zeroed-out creditors, who vowed to appeal the ruling, have also pursued more than 100 claims in Switzerland and elsewhere in Europe “with little success so far,” Bloomberg notes.

Yet that March 2023 mini-banking crisis has ushered in a windfall for other AT1 holders, as Bloomberg’s Banks Tier 1 CoCo Index has since returned 57% in dollar terms, blowing past the iShares High Yield Corporate Bond ETF’s 33% return and marking the niche credit category’s strongest ever bull run. “AT1s are well positioned to continue outperforming, supported by robust technical factors, declining rate volatility and solid fundamentals in the European banking sector,” commented Sébastien Barthelemi, head of credit research at Kepler Chevreaux.

Those fair-weather conditions have redounded to the benefit of Deutsche Bank’s 10% junior subordinated perpetuals. The object of a bullish Grant’s Interest Rate Observer analysis (“A kind word for ‘CoCos’”) on April 7, 2023, those securities have since rallied above 110 cents on the euro from 96 while delivering that double-digit coupon.

“The bank has evolved into a more focused, profitable, and resilient organization, with management recently emphasizing franchise growth and operational leverage,” S&P Global concluded in July, with its Common Equity Tier 1 ratio improving to 13.8% of risk-weighted assets as of March 31 from 13.4% at year-end 2022. For reference, those CoCos are designed to be converted to (presumably worthless) equity if Deutsche Bank’s CET1 ratio slips below 5.125%. The rating agency projects modest annual loan losses of 25 to 35 basis points through 2027, below the 38 basis points reported last year.

Even so, today’s percolating risk appetite elicits alarm in some quarters, as option-adjusted spreads on Bloomberg’s AT1 gauge have ebbed to 245 basis points – the narrowest since at least 2014 – while a mid-August, $1.25 billion tier 1 offering from Allianz SE drew a bustling order book of more than $12 billion.  

“What we learned from 2003 to 2007 is that exuberance from very strong technical [factors] can drive down investor protection,” Laurent Frings, head of European credit research at Aegon Asset Management, told Bloomberg late last month. “A lot of investors are still taking the view that this is a bull market, there’s still a lot of cash and therefore you still want to be invested and taking those structural risks, rightly or wrongly. That may work in the short term, [but], over the long term, history tells you you’re in for a surprise.”

The fiscal fourth quarter began in typically bullish fashion, with stocks shaking off modest early weakness to grind higher by another 0.3% on the S&P 500, while Treasurys also caught a bid led by a five-basis point dip on the two-year yield to 3.55%. WTI crude slumped below $62 a barrel, gold chugged higher to $3,864 per ounce, bitcoin advanced to $117,500 and the VIX stayed above 16.

- Philip Grant

From the Financial Times:

An influential financial think-tank has called on the U.K. government to amend a bill to force workplace pension default funds [as in pre-set or standard] to invest more in U.K. equities, proposing an allocation that could drive more than £75 billion ($101 billion) into British stocks by the end of the decade. 

New Financial said on Thursday that there is a “window of opportunity” for the government to create U.K.-weighted default funds across the defined contribution (DC) pension system, suggesting a target domestic allocation of 20 to 25% of all equity holdings, up from a current level of less than 9%. 

British pension funds have rapidly moved away from U.K. equities in recent years, with DC fund allocation to UK stocks falling from more than 40% of total equities in 2013 to 9% by 2023.

It’s been a week to forget in the cryptocurrency complex, with digital assets logging a 7.5% aggregate decline since Sunday morning per data from Coinmarketcap.com, equivalent to $300 billion in market value. Bitcoin logged its worst weekly showing since March with a 5% dip, while a 12% decline in ethereum left that token below $4,000 yesterday for the first time since early August. The store of value known as fartcoin fell to $0.58 this morning from $1.67 in late July.

“We are seeing a de-risking across the board,” Lex Sokolin, managing partner at Generative Ventures, told Bloomberg. “Memecoins, or assets without strong fundamentals, are the first to get hit and tend to be more reflexive up and down. A lot of the positive catalysts – regulation, digital asset treasury [companies], interest rate cuts – have been priced in and so the market needs a fresh narrative to continue the momentum.”

The corporate bitcoin bid has indeed ebbed substantially from its feverish mid-summer pace, with net purchases by publicly-traded treasury firms registering at 15,500 in September compared to 64,000 in July according to data firm CryptoQuant.

A bearish reversal of fortunes accompanies that stark slowdown. Shares of Strategy – the original crypto treasury outfit helmed by bitcoin evangelist Michael Saylor – have seen a 57% year-to-date advance as of July 16 whittled to 7%, now trailing the underlying token’s 16% gain for 2025. The FT likewise relayed Tuesday that at least five crypto treasury outfits have turned to stock buybacks in hopes of stemming share-price declines below the value of their digital asset portfolios. “It’s probably the death rattle for a few [of these companies],” Adam Morgan McCarthy, senior research analyst at crypto analytics company Kaiko, told the pink paper.  “A lot of these [firms] are like a house of cards and are going to collapse very quickly.” See “Bitcoin goes corporate” in the June 20 edition of Grant’s Interest Rate Observer for a closer look at the financial fad.

Alongside the growing prospect of a crypto-Treasury winter, industry players contend with rising regulatory heat.  The Wall Street Journal reports that the Securities and Exchange Commission and Financial Industry Regulatory Authority have each “raised concerns about what they say were unusually high trading volumes and sharp stock-price gains” ahead of key corporate announcements. FINRA has sent formal communiques to several firms, a move which often augurs deeper scrutiny, former SEC enforcement lawyer David Chase told the WSJ: “When those [missives] go out, it really stirs the pot.  It’s typically the first step in an investigation.”

Stocks staged a solid rebound from recent weakness with a 0.6% advance on the S&P 500,  while Treasurys steepened a bit with two-year yields ticking to 3.63% from 3.64% yesterday and the long bond rising two basis points to 4.77%. WTI crude stayed above $65 a barrel, gold rallied to $3,765 per ounce, bitcoin consolidated its recent selloff near $109,000 and the VIX sank 1.5 points to 15 and change.

- Philip Grant

From the Financial Times:

Regional U.S. casinos are benefiting at the expense of Las Vegas as gamblers cut back on expensive vacations to the city, in another symptom of the growing consumer caution sweeping the U.S.

Gross gaming revenue — the difference between sums wagered and the winnings paid out — was up 5% in July and by 6%  in August at casinos outside Nevada, compared with the same months in 2024, according to published state gaming reports collated by Barclays Research. . .

Almost 8% fewer people visited Vegas in the year to July compared with the same period in 2024, according to figures from the Las Vegas Convention and Visitors Authority.

Number go up, and up. . .The stock market’s rapid post Liberation Day ascent leaves the S&P 500 priced at more than 40 times its cyclically adjusted price-to-earnings ratio, eclipsing the 38.6 times logged in fall 2021 to mark the richest reading in history after the dot-com bubble, which saw a 44.2 CAPE in fall 1999.

With that metric up some seven turns over the past six months, Wall Street has labored to keep pace, with the average sell-side strategist’s year-end price target roughly 3% below current levels per Bloomberg. Only in 1999 and 2024 have those typically-optimistic forecasts lagged current prices at this time of year, even after strategists at Goldman Sachs, Deutsche Bank and other firms have “repeatedly” boosted their year-end bogey in recent months. “What we have been surprised by is the unrelenting nature of the advance, without any material pullback at all,” Julian Emanuel, chief equity and quantitative strategist at Evercore ISI, told Bloomberg.

The virtually-uninterrupted rally spurs a growing supply response, as initial public offerings have raised $14.6 billion since July 1 according to Renaissance Capital. That’s the best quarterly showing since late 2021, with September’s $7.6 billion output itself approaching the highest subsequent single quarter of $8.9 billion logged from April to June of 2024.  “With a solid quarter of activity behind us and more deals lining up in the pipeline, the long-awaited IPO pickup appears to be underway,” analysts at Renaissance conclude. “Solid returns, stable market conditions and a robust private backlog bolster a strong outlook for the rest of the year.”

Today’s freewheeling backdrop likewise helps flip the leveraged finance issuance machine into high gear, with the month-to-date supply of new junk bonds topping $35 billion as of this morning by Bloomberg’s count, on  pace to log the most active single month since September 2021. An eye-catching deal, meanwhile, took shape across the Atlantic this morning, as Renault SA sold €850 million ($1.04 billion) in green bonds due 2030 at a 3.875% yield, as a €3.4 billion order book allowed the double-B-plus rated automaker to slash 50 basis points off initial price talk.  For context, Bloomberg’s European high-yield gauge changes hands at 5.64%, while French five-year government bond yields top 2.8%.

Stateside, cash-flush creditors turn to derivatives to enhance returns. Citing data from Barclays, Bloomberg reports that net sales of the investment-grade CDX Index (which consists of credit default swaps on a collection of 125 North America-based entities) have reached $110 billion, up 29% from the same time in 2024 and the highest such tally in at least three years.  

Informing that build-up: the sum of interest and principal payments has outpaced new supply by some $75 billion in the year-to-date according to BNP Paribas, spurring managers to get creative in deploying new capital as option-adjusted spreads on the ICE BofA U.S. Corporate Index crouch at just 74 basis points, their lowest since 1998. “The money keeps coming in, and it needs to be invested,” Travis King, head of U.S. investment-grade corporates at Voya Investment Management, told Bloomberg.

Stocks came under some pressure, with the S&P 500 retreating 0.6% to give back a piece of its recent gains, while Treasurys enjoyed a bull-steepening move with 2-year yields dropping eight basis points to 3.53% while the long bond ticked to 4.73% from 4.77% Monday. WTI crude pushed towards $64 a barrel, gold rose another 1.2% to $3,786 per ounce, bitcoin slumped below $112,000 and the VIX remained on the front foot, approaching 17.  

- Philip Grant

Don Draper, call your office. From ARS Technica:

Days after someone revealed the news on social media, Samsung confirmed today that it is showing advertisements on some U.S. customers’ smart fridges. Samsung said the ads showing on some Family Hub-series fridges are part of a pilot program, but we suspect that they may become more permanent additions to Samsung fridges and/or other types of screen-equipped smart home appliances.

In a statement sent to Ars Technica, Samsung confirmed that it is “conducting a pilot program to offer promotions and curated advertisements on certain Samsung Family Hub refrigerator models in the U.S. market.”

From green to red: overseas investors are shedding U.S. dollar exposure at “an unprecedented pace,” Deutsche Bank relayed on Monday, with rolling three-month inflows into currency-hedged exchange traded funds outpacing those of unhedged products for the first time this decade.

“The FX implications are clear – foreigners may have returned to buying U.S. assets. . . but they don’t want the dollar exposure that goes with it,” wrote Deutsche Bank’s global head of currency research George Saravelos. “For every hedged dollar asset that is bought, an equivalent amount of currency is sold to remove the FX risk.”

That dynamic may help explain the greenback and stock market’s diverging fortunes, as the U.S. Dollar Index is down 11% in the year-to-date with the S&P 500 up a near reciprocal figure.  With the Fed telegraphing more rate cuts following Wednesday’s quarter-point downshift as the European Central Bank enters stand pat mode and the Bank of Japan considers tightening policy in the coming months, those currency hedges could grow more alluring for foreign investors. “My sense is [that] the bulk of the adjustment is still ahead,” Sahil Mahtani, London-based director at Ninety One Asset Management’s Investment Institute, told Bloomberg today.

The Trump administration’s asset price-minded, E-Z money push has already ushered in a major adjustment in a certain yellow metal, with the price of gold logging more than 30 daily record highs so far this year on its way to a 40% gain. That heady move has roused the heretofore-sleepy mining complex to the tune of a 110% year-to-date rip for the NYSE Arca Gold Miners Index. 

That gauge, which finally broke above its 2011 highs on Sept. 5, has tacked on 8% of upside over the past two weeks (including a 4.5% advance today).  Underscoring the group’s potent momentum:  VanEck’s Gold Miners ETF saw its Relative Strength Index top 70 – signaling overbought conditions on a technical basis – for 13 consecutive sessions earlier this week, the longest such streak since the vehicle’s 2006 inception, according to Bloomberg.

Yet on a fundamental view at least, the sector is hardly out over its skis. Global mining firms are now collectively valued at $550 billion according to analysts at Bank of America, equivalent to 0.39% of worldwide stock market capitalization.  That’s roughly equivalent to the ratio logged five years ago and far below the 0.71% seen in 2011. “We wonder,” muses the BofA team, “if the current cycle were to continue for a sufficient period of time, could the 0.71% [ratio] be seen again? It seems possible in our view.”

Hasten the day! In the meantime, see the current edition of Grant’s Interest Rate Observer for a bullish analysis on a pair of gold industry players sporting unimposing valuations alongside clean balance sheets, while operating in friendly jurisdictions and presenting potential upside in their respective production profiles.

Stocks enjoyed another 0.5% rise in the S&P 500 with notably disparate results elsewhere, as the small-cap Russell 2000 dropped 0.8% while Goldman Sachs’ basket of heavily-shorted names jumped 1.4%. Treasurys saw some bear steepening with the long bond ticking to 4.75% from 4.72% Thursday, WTI crude fell to $62 a barrel, gold advanced to $3,682 per ounce, bitcoin hovered above $115,000 and the VIX finished at 15 and change, up slightly on the week.

- Philip Grant

From CNBC:

Frontier Airlines CEO Barry Biffle fired back at his counterpart at United Airlines who said the deep discount model in the U.S. is dead. “That’s cute,” Biffle said Wednesday at the Skift Global Forum, a travel conference in New York. “If he’s good at math he would understand that we have a [flight] oversupply issue in the United States.”

Biffle’s comments were a response to United CEO Scott Kirby, who said last week at an airline conference in Long Beach, California that he thought the largest U.S. discounter, Spirit Airlines, would go out of business. Spirit in August entered its second bankruptcy in less than a year after failing to find sturdy financial footing.

When Kirby was asked why he thought Spirit would shut down, he responded, “Because I’m good at math.” . . Both Frontier and United, along with other airlines like JetBlue Airways, have announced that they’re adding new flights on major Spirit routes to win over its customers as it struggles.

Open sesame: Americans gave their wallets a workout this summer according to the Commerce Department, which reported yesterday that advance retail sales jumped by 0.6% month over month in August, topping each of the 67 economist estimates collected by Bloomberg, who collectively called for a 0.2% gain. The government agency likewise revised the July and June sequential growth rates to 0.6% and 1%, respectively, from 0.5% and 0.6%. 

“We’ve all been spooked by a slower jobs market, [but] the consumer data are telling us that households are still spending,” Wells Fargo economist Shannon Grein told Bloomberg, adding the following caveat: “some of that is just due to higher prices of product, not necessarily more volume.”

Some find those higher product prices easier to swallow than others, as the post-Covid inflation alongside rollicking asset prices renders today’s economic edifice increasingly top-heavy. The wealthiest 10% of consumers by income distribution accounted for 49.2% of total spending during the second quarter, Moody’s Analytics found earlier this week, up from 48.5% during the first three months of the year to mark the highest reading on record dating to 1989.  “As long as [the well-to-do] keep spending, the economy should avoid recession,” Moody’s chief economist Mark Zandi commented yesterday on X. “But if they turn more cautious, for whatever reason, the economy has a big problem.”

Beyond those wealth-effect beneficiaries in the upper crust, signs of strain grow more visible. Average 30- and 60-day delinquency rates among subprime automobile lenders stand at 11.1% and 5.2%, respectively, Bloomberg relayed last week, marking the highest for each data series since at least 2018 and far above the 4% and 1% levels seen during the Covid-era stimmie-fueled sugar rush.

“Elevated vehicle prices continue to support bonds backed by auto loans but are squeezing affordability, leading to more late payments,” Bloomberg strategist Rod Chadehumbe wrote last week. Average new vehicle prices tip the scales at $49,100 according to Cox Automotive, up nearly 33% from the summer of 2019, while the tally of new models offered at $25,000 and below has shrunk to just five from 25 a decade ago.

Yesterday brought a broader signpost of consumer balance sheet erosion, as the nationwide average FICO credit score slipped to 715 in April from 717 in the same month last year, marking the largest drop since 2009 and the second consecutive annual decline following more than a decade of steady improvement. “We’ve seen a K-shaped economy where those with wealth tied to stock market portfolios and rising home values are doing well and others are struggling with high rates and affordability problems,” Tommy Lee, senior director at Fair Isaac Corp., told CNN.  

Treasurys and stocks alike saw a status quo-type response to the Fed’s 25 basis point rate cut, with 2- and 30-year yields each ticking higher by a single basis point to 3.52% and 4.66%, respectively, and the S&P 500 finishing just below unchanged for a second straight session. WTI crude pulled back to $64 a barrel, gold slipped to $3,660 per ounce, bitcoin stayed near $116,000 and the VIX ebbed below 16.

- Philip Grant

From Reuters:

Exxon Mobil is introducing a unique shareholder voting mechanism that will allow retail investors to automatically cast ballots in step with board recommendations during annual meetings, a move that may help the top U.S. oil producer fend off activist campaigns.

On Monday, the U.S. Securities and Exchange Commission said in a letter that it would not object to the plan from Exxon as long as the company met certain conditions, including providing annual reminders to investors who opted into the mechanism about their participation. . .

Nearly 40% of the company's shares are held by individuals but just a quarter of them vote during proxy season, though they mostly support the board, Exxon said. Retail investors hold about 30% of most large U.S. companies. They are a sought-after pool when companies face close board elections or campaigns for ideologically charged shareholder resolutions.

It’s good enough for government work: Municipal bonds are all the rage these days ahead of the Fed-telegraphed rate cuts, as state and local government debt funds logged $3.09 billion in net inflows over the seven days through Sept. 10, EPFR finds. That’s the strongest single-week figure since late 2020.

Bloomberg’s benchmark muni gauge and its high-yield peer racked up 148 basis points and 174 basis points of returns last week, respectively, each marking their second-best weekly showings of 2025. Long-dated bonds accounted for 63% of tax-exempt trading volume on the secondary market over that stretch. Comparing to a three-month average of 57%, the uptick “signal[s] a clear bid for duration” per Bloomberg analyst Karen Altamirano. S&P’s Municipal Bond Index settled on Friday at a 3.63% yield-to-worst, down 30 basis points in just over a week and nearly a percentage point below its early April highs.

Notably, today’s brisk demand persists in the face of a potent supply impulse, as year-to-date issuance reached $400 billon Friday, up 17% from last year’s record pace (full year 2024 volumes registered at $513.6 billion per the Securities Industry and Financial Markets Association).  With the Trump administration opting to maintain municipal debt’s tax-advantaged status in the One Big Beautiful Bill package which passed over the summer, a solid value proposition takes center stage. 

On a yield-to-worst basis, the 3.63% on offer from S&P’s muni index equates to just under 90% of the (taxable) 10-year Treasury note, well above the 65% to 70% ratio that has typically served as fair value according to David Hammer, head of municipal-bond portfolio management at PIMCO.  See the Feb. 14 and May 21 editions of Grant’s Interest Rate Observer for a look at several potentially attractive investment opportunities within the famously fragmented debt category, which span some 1.1 million securities across 55,000 different issuers. “Whoever dreamt up the strong form of the efficient market hypothesis probably wasn’t thinking of tax-exempt bonds,” Grant’s quipped in May.

Indeed, recent events starkly illustrate the importance of prudent security selection. A Friday Bloomberg bulletin documented the travails of the Easterly Funds’ ROCMuni High Income Municipal Bond Fund, which saw half its net asset value evaporate last week after the vehicle was forced to sell unrated positions “for pennies on the dollar to meet investor redemptions.”

Easterly, which focuses on obligations financing private sector projects with public benefits (e.g., waste treatment and assisted living facilities), advertised a 6.7% yield as of May 31, the richest on offer among more than 60 high-yield muni funds tracked by Morningstar.  

Yet roughly one-third of its 90-odd bond holdings were in default as of that date, SEC filings show, including debts backing a Kentucky biodiesel plant and a Texas wharf, which changed hands at 3 cents and 6 cents, respectively, over the summer. Easterly had last marked those positions at 70 and 90 cents, respectively, based on third-party assessments. “A lot of [illiquid asset valuations are] in the eye of the beholder, but what makes it definitive is if someone tries to transact on the valuation and the market gives you the Mike Tyson punch in the face,” Municipal Market Analytics founder Tom Doe told Bloomberg.

Stocks maintained their seemingly-perpetual upward momentum as the S&P 500 tacked on another half-percent advance, while Treasury yields ticked lower by one to two basis points across the curve with the Federal Open Market Committee set to gather tomorrow. WTI crude climbed above $63 a barrel, gold charged higher to $3,681 per ounce, bitcoin ebbed to $115,000 and the VIX rose towards 16.

- Philip Grant

From the Financial Times:

Chinese government bond yields have climbed to their highest since November as investors shift into equities on expectations that the world’s second-largest economy can move past its deflationary pressures. . .

 “Anti-involution has started to ease deflationary pressures,” said Barclays analysts, referring to Beijing’s campaign against overproduction that has fueled excessive price competition. “We expect a firm pick-up of CPI towards year end after some near-term volatility, and upstream reflation to continue for PPI,” said Citi analysts.

China is joining a global sell-off of long-dated government debt that has been matched by a surge in gold prices, as investors signal concerns over inflation and growing fiscal deficits around the world. “It’s a sign of growing long-term global inflationary expectations,” said Albert Saporta, group chief executive of GAM Holding. “Thirty-year rates are going up everywhere.”

Behold a high-end housing craze in one of New York City’s foremost suburbs: the number of $10 million-plus homes sold in Greenwich, CT reached 25 from January through August, Bloomberg reports, citing data from Compass real estate agent Mark Pruner. 

That tally tops all full-year figures dating to 1999 and is on pace to more than double last year’s total of 17.  Total transaction volumes starting at the eight-figure price point could approach $600 million this year, set to obliterate the existing record of $314 million established in 2023.

“Clearly, the market is accelerating for the very high-end deals,” Pruner commented, noting that his team brokered a $21 million transaction in February which he anticipated would mark the highlight of the year, before arranging a $43.5 million deal over the summer. “It’s remarkable because we’re seeing sales exceed what we saw during the peak of the housing bubble in 2007 and the height of the Covid rush.”

Considering those eye-popping prices, brisk transaction speeds lend instructive context to today’s market. “When I’m dealing with a high-end luxury property, I always advise the seller not to expect a quick sale – they have to be prepared for the house to be on the market for 200 to 365 days,” Houlihan Lawrence agent Michele Tesei relayed to Bloomberg. “We’ve seen sales way quicker than that.”

Though no metropolis, the southern Connecticut enclave represents a potent property bellwether, with its local board of realtors counting more than 800 members. That’s equivalent to 1.2% of the population as of the 2020 U.S. Census, matching the ratio seen nearly four decades ago.

The tony town’s proximity to Manhattan likewise positions it as a handy barometer of Wall Street weather. “By any standard, Greenwich is a case study in the happy confluence of financial bull markets [and] abundant credit,” Grant’s Interest Rate Observer pointed out in a Jan. 25, 1988 analysis, after average house prices reached $706,150 in 1987, up more than 50% from two years prior. In turn, a 2006-era cartoon from the esteemed pen of cartoonist Hank Blaustein captured the hedge fund-centric zeitgeist of the pre-crisis epoch:

Indeed, Greenwich’s percolating mansions market marks an enduring signpost of extreme monetary abundance. Nationwide household net worth vaulted by $7.1 trillion over the three months through June, freshly released data from the Federal Reserve show, representing the largest quarterly increase on record barring stimmies-soaked 2020. Gains in equities – held either directly or indirectly (i.e., via mutual fund) – accounted for $5.5 trillion of that sum. For reference, the largest single-quarter updraft in total household wealth prior to the pandemic was just over $6 trillion. 

Positions in corporate equities, miscellaneous other equities and mutual funds accounted for 40% of household net worth as of June 30.  That compares to 32% in the summer of 2006 and 24% in 1988.

A stand pat week leaves Reserve Bank credit at $6.557 trillion. The Fed’s portfolio of interest-bearing assets is down $37 billion from this time last month, and 26.5% from the March 2022 high-water mark.

A warm, if largely inline reading of August CPI was sufficient to send stocks skyward once more, with the S&P 500 bounding by nearly 1% to bring year-to-date returns above 13%.  Treasurys enjoyed bull-flattening strength with 2- and 30-year yields dipping two and four basis points, respectively, to 3.52% and 4.65%, while WTI crude retreated towards $62 a barrel and gold edged lower to $3,634 per ounce. Bitcoin advanced above $114,000 while the VIX slipped below 15.

- Philip Grant

From CNBC:

Wedbush Securities’ Dan Ives is joining a new company focused on accumulating Worldcoin (WLD), the native token of the blockchain used in OpenAI creator Sam Altman’s biometric identity verification startup, World.

Eightco Holdings, a tiny company that currently trades on the Nasdaq under the ticker “OCTO,” announced Monday that Ives, Wedbush’s global head of technology research, is now chairman of the board of directors. It also announced a $250 million private placement to implement a buying strategy around Worldcoin as its main treasury asset.

“As someone that’s so passionate about the AI revolution and the future of tech, I view World as really the de facto standard for authentication and identification in the future world of AI,” Ives told CNBC. . . Ives’ move is similar to one made by another widely-followed Wall Street forecaster, Tom Lee of Fundstrat, who in June joined the ether accumulator BitMine Immersion Technologies as chairman. BitMine shares have [rocketed] more than 800% since Lee announced his involvement.

Eight-hundred percent is for pikers: OCTO, which finished Friday’s trading at $1.45, settled just above $45 (after topping $83 intraday), good for a 3,000% move. Trading volumes registered above 200 million shares, compared to 13,627 during the prior trading day.

Compensation is evaporating in the corporate credit complex ahead of an all-but-certain rate cut at next week’s Fed meeting: the ICE BofA US Corporate Index reached an effective yield of 4.79% on Friday, down more than half a percentage point in the year-to-date to mark an 11-month low. The Bloomberg High Yield Index settled at 6.66%, down nearly 100 basis points from year-end to reach its lowest since the Fed began lifting benchmark borrowing costs from near zero in spring 2022.

Option-adjusted spreads across high yield now stand at an average of 90 basis points per turn of leverage (i.e., net debt to Ebitda) among index components, the lowest figure in at least seven years.  The double-B-rated portion of that junk gauge, meanwhile, wrapped up last week at a 78-basis point premium to triple-Bs, nearing the narrowest premium for higher rated junk paper to lower-rated investment grade credits since late 2019. “A dovish Fed is good for risk assets, in our view, while investors should look to lock in attractive yields while they can,” strategists at Bank of America wrote Monday, by way of summarizing the bull case.

“Spreads are compressed everywhere,” Stephanie Doyle, portfolio manager for investment grade corporate strategies at JPMorgan Asset Management, told Bloomberg. “The market is really reacting to a lot of strength on the demand side.”  “Corporate and household balance sheets are healthier than average, maybe way healthier, so that justifies [the rally] a bit,” added TwentyFour Asset Management portfolio manager Gordon Shannon. However, “it is the unrelenting technical [factor] of inflows driving it, and that is bubbly.”

Today’s torrid debt demand extends far beyond Wall Street. The Financial Times relays that issuance of so-called Bowie bonds, or obligations backed by song rights from the likes of Lady Gaga, Pink Floyd and The Beatles, has surpassed $4.4 billion in the year-to-date. That compares to $3.3 billion throughout 2024 and just $300 million in 2021.

“There is so much capital in the world, an enormous amount, and that capital is asset-seeking,” one investor in the heretofore-niche credit category told the FT.  Bob Valentine, CEO of Nashville-based music firm Concord, added that the number of would-be investors appearing at pitch meetings has tripled over the past three years.

They don’t ring a cowbell at the top.  

Stocks floated higher to the tune of 0.2% on the S&P 500 as the broad index mostly erased Friday’s post-payrolls decline, while Treasurys in bull-flattening rally mode with 2- and 30-year yields dropping two and nine basis points, respectively, to 3.51% and 4.69%. WTI crude ticked back above $62 a barrel, gold ripped higher to $3,637 per ounce, bitcoin advanced to $112,000 and the VIX remained just above 15.

- Philip Grant

From Stefan Bondy of the New York Post:

Roughly 36 years after he was robbed of an Olympic championship, Roy Jones Jr. tearfully accepted the gold medal from the man who controversially beat him — Park Si Hun of South Korea. 

Park, now 59, initiated the meeting by traveling to Jones’ ranch in Pensacola, Fla., where he surprised his former foe by gifting him the 1988 medal. The sentimental reunion occurred over two years ago but is just now being released in a short video directed by Emmy-winning filmmaker Johnny Sweet. . .

Park’s 3-2 decision victory over Jones remains one of the most infamous moments in boxing history. Dominated from opening to final bell, Park benefitted from home cooking by judges — the ’88 Olympics were held in Seoul, South Korea — as Marv Albert announced to the American TV audience, “Park Si Hun has stolen the bout.” For 16 years, that light-middleweight fight represented Jones’ last non-disqualification defeat. . .

“I was pretty quick for a middleweight, but Jones was at a different level,” Park recalled to the AP. “A boxer just knows whether he had won or lost 

Meet the new sheriff, same as the old sheriff: the Nasdaq exchange is cracking down on a Wild West-type corner of the stock market, announcing new proposed listing standards in response to “potential pump-and-dump schemes in U.S. cross-market trading.” 

Thus, listed firms would need at least $15 million in unrestricted, publicly-held shares rather than the current $5 million bogey, while China-based operators would be obliged to raise at least $25 million in proceeds to list on the bourse.  The new rules also include accelerated delisting of firms which decline below $5 million in market value.

As the Financial Times documents, the prospective crackdown follows a spate of suspicious price action from Chinese microcaps, with seven of those outfits abruptly tanking 80% in July, erasing a combined $3.7 billion in paper wealth. Shares of Regencell Bioscience Holdings – which generates no revenue after nearly a dozen years in business – vaulted 82,000% over the first five-and-a-half months of 2025 (Almost Daily Grant’s, June 19) before retreating  83%, leaving the firm valued at more than $6 billion. In July, the FBI detailed a 300% year-over-year increase in investor complaints “referencing ramp and dump stock fraud.”

The tech-centric bourse’s newfound regulatory focus extends beyond the Middle Kingdom.  The Information reports today that Nasdaq “is stepping up its scrutiny” of so-called crypto treasury firms, requiring “some companies” to secure shareholder approval to mimic Strategy boss Michael Saylor’s digital asset accumulation strategy, on pain of trading suspension or even delisting for those failing to comply.

“What they’re doing is really saying [that] if you invest in a Nasdaq company, stockholders will generally have a say before that company undergoes something really transformational in terms of its ownership or its operations,” Daniel R. Kahan, partner at law firm King & Spalding, told The Information. On that score, better late than never: 124 U.S.-listed firms have detailed plans to purchase cryptocurrencies so far this year, advisory firm Architect Partners finds. The Nasdaq hosts 94 of those companies compared to only 17 for the New York Stock Exchange.

That crackdown comes ahead of a potential watershed moment for the original crypto treasury firm and stock market at large. Bloomberg points out today that Nasdaq-listed Strategy “has surfaced as a potential S&P 500 entrant” after reporting positive net income during both its most recent quarter and a trailing 12-month basis thanks to January’s enacting of new fair-value accounting standards, which permit the firm to credit unrealized gains on its digital asset portfolio to the bottom line. Then, too, Strategy’s $90 plus billion market cap easily clears the current $22.7 billion threshold for inclusion, while the company boasts the best float-adjusted liquidity profile of any of the 26 candidates for S&P 500 inclusion identified by investment bank Stephens.  

“It was a strong statement that [S&P] wants to build out this [crypto] industry group when they included Coinbase” in May, Melissa Roberts, head of strategic opportunities and index rebalancing research at Stephens, told Bloomberg. “They care about building representation of leading companies in the S&P 500. So, if someone is a big player in the space, it’s hard to ignore them.”

For its part, the S&P 500’s only current crypto concern marked a speculative milestone Wednesday, announcing that it will permit up to 50-times leverage on international perpetual futures contracts, up from a prior 20-times leverage limit.

 “A bunch of traders asked for this update,” Coinbase CEO Brian Armstrong commented on social media, asking his followers to “let us know what else we can add!” Surely, they will think of something.

Reserve Bank credit ticked lower by $8.7 billion over the past seven days, leaving the Fed’s portfolio of interest-bearing assets at $6.557 trillion. That’s down $36 billion from the first week of August and 26.5% from the early 2022 peak.

Stocks rallied again with the S&P 500 gaining 0.8% to carve out fresh highs, while Treasurys continued their bull-flattening move with 2- and 30-year yields ebbing two and four basis points, respectively, to 3.59% and 4.86%. WTI crude settled at $63 and change, gold pulled back to $3,545 per ounce, bitcoin retreated towards $110,000 and the VIX finished just above 15.

- Philip Grant

There’s more than one way to ease policy, via Reuters:

U.S. regulators are pulling back on some bank exams and the use of confidential disciplinary notices, a sign [that] lenders are already benefiting from a softer touch under President Donald Trump’s administration, said more than half a dozen industry executives.

In recent months, the Office of the Comptroller of the Currency, the Federal Reserve and the Consumer Protection Bureau have postponed, scaled back or canceled bank exams.

If at first you don’t succeed: Klarna Group is set to try again on the New York Stock Exchange, preparing an initial public offering which would value the Swedish buy-now, pay-later outfit at around $14 billion. Klarna, which famously rode a SoftBank-led funding round to a $46 billion valuation during the 2021 bacchanal before returning to earth during the subsequent correction, put its IPO plans on ice this spring following the Liberation Day episode.

The fintech bellwether has company in its renewed efforts to tap the public spigot, as Stubhub filed an updated form S-1 last month ahead of its own planned IPO in the coming weeks. 

The tickets reseller, which targeted a $16.5 billion valuation this spring before also pulling the plug, is prepared to accept a lower figure this time around, The Information reports, following soft first-half results. Revenues over the first six months of the year registered at $828 million, below the company’s $885 million projection, while Ticketmaster parent Live Nation disclosed a “mid-single digit” decline in second quarter resale volumes “due to increased market-based pricing in concerts and sports along with several lower-performing sporting events.”

With IPO market conditions remaining largely inhospitable in spite of high-profile winners like stablecoin outfit Circle, downshifting ambitions are something of a prerequisite for firms hoping to take the plunge.

Thus, PitchBook relays in its August Venture Capital Valuations and Returns Report that “down rounds are the new normal,” as “nearly every major company to list publicly in the second quarter debuted below its peak valuation.”  Nearly one-sixth of VC transactions so far this year have been down rounds, the largest share since at least 2015, while 44% of the unicorn population, which tops 1,200 according to CB Insights, has not raised new capital since 2022 or before.

Investor distributions as a share of net asset value, meanwhile, registered at just 10.6% over the 12 months through June, barely half its 10-year average of 19.6%, while net cash flow – or distributions less new contributions – have remained firmly in negative territory over the past three years.

Will the supersonic artificial intelligence boom serve to turn things around? VCs are certainly counting on it:  AI startups hoovered up 64% of all funding during the first half of 2025 per PitchBook, while a quintet of super-sized rounds accounted for 37% of the second quarter total. Tuesday brought word that Anthropic has clinched a $13 billion funding round, upsized from an initial $5 billion bogey, which values the AI firm at $183 billion on a post-money basis. That’s nearly triple the $61.5 billion figure garnered six months ago.

“A lot of these fallen unicorns are just trying to figure out what the end game is, how do we right the ship,” Nnamdi Okike, co-founder of 645 Ventures, told Bloomberg. “Meanwhile, you have this other world, which is even more extreme than it was in 2021. I just really wonder why VCs have gotten that carried away.”

Stocks came under pressure but managed a solid late rally to pare the S&P 500’s losses to 0.7%, while weakness in the Treasury complex left 2- and 30-year yields at 3.66% and 4.97%, respectively, up seven and five basis points on the session. WTI crude advanced towards $66 a barrel, gold ripped nearly 2% to reach fresh highs at $3,536 per ounce, bitcoin edged higher at $111,000 and the VIX settled below 18 after topping 19 in late morning.   

- Philip Grant