The Fallout of FTX's Fraud. Understanding the Current Energy Landscape.

BP Make Strategic Shift Away from Green Energy.

Here is what we will be getting into today:

1. Indictments and Guilty Pleas: The Legal Consequences of FTX's Misuse of Customer Funds.

2. Understanding the Value of Energy and Crude Oil Prices.

3. BP Strategic Shift from Renewable Energy: A Cause for Concern Among Investors.

4. Inflation and Recession Risks vs. Signs of Recovery and Energy Concerns.
   

Let's Dive In!

Website: Wall Street On Parade

Title: Two Indicted Masterminds of the FTX Fraud Were Clients of Big Law Firm Sullivan & Cromwell
Link: https://wallstreetonparade.com/2023/03/two-indicted-masterminds-of-the-ftx-fraud-were-clients-of-big-law-firm-sullivan-cromwell/

Here are the key highlights:

• On January 17, 2021, Sullivan & Cromwell law partner Andrew Dietderich filed a declaration in the U.S. Bankruptcy Court for the District of Delaware revealing that the firm had been involved in over 20 legal engagements with Sam Bankman-Fried's FTX Group prior to its bankruptcy filing on November 11, 2022.

• The Securities and Exchange Commission (SEC) is now charging that FTX was a fraud from the beginning and that Bankman-Fried illegally used customer funds from the outset. This creates reputational risk not only for Sullivan & Cromwell but also for the federal court system.

• Former Sullivan & Cromwell law partner Ryne Miller was employed as General Counsel at FTX US when this fraud began to expand. Despite this information, Judge John Dorsey signed an order making Sullivan & Cromwell the lead law firm overseeing bankruptcy proceedings for over 100 companies involved in Bankman-Fried's collapsed crypto empire.

• Sullivan & Cromwell had provided legal work for corporate entities such as FTX and Alameda Research (Bankman-Fried's hedge fund) and also provided individual legal work for Bankman-Fried and Nishad Singh, who was Head of Engineering at FTX.

• As a result of these findings, Bankman-Fried has been indicted by the U.S. Justice Department on 12 criminal counts, while Singh pleaded guilty to six counts after signing a forfeiture order with criminal court in Manhattan.

• The SEC's complaint provides more damning detail than that of the Justice Department, revealing that Singh borrowed $577 million from Alameda Research, which was not intended for his personal use, but rather was used by Bankman-Fried for other purposes such as venture investments and acquisitions.

• In September and October 2022, Singh withdrew approximately $6 million from FTX for personal use, including purchasing a multimillion-dollar house and donating money to charitable causes, despite knowing that customer funds had been used by Alameda Research from the beginning in 2019.

• This situation raises significant reputational risk for Sullivan & Cromwell and the federal court system, given Judge John Dorsey's decision to make Sullivan & Cromwell the lead law firm overseeing the bankruptcy proceedings of more than 100 companies involved in Bankman-Fried's crypto empire collapse despite their involvement in multiple legal engagements with FTX prior to its bankruptcy filing.

YouTube Channel: Eurodollar University

Title: What stocks are trying to tell us about.
Link: https://www.youtube.com/watch?v=AgPqN_pwUIE

Here are the key highlights:

• Recent economic data shows positive indicators, including increased optimism in the crude oil market and a 3% rise in retail sales. However, rising energy prices can negatively impact the economy. Understanding the value of energy and monitoring crude oil prices is vital in making informed decisions.

• It's crucial to understand inventory data and the oil market to prepare for a possible recession in the third or fourth quarter. The supply constraint in the oil market is the biggest contributor to consumer prices and CPI indexes, and dismissing the possibility of a mirage in government data is not advisable. The reopening of China may benefit producers, but the limited supply and uncertainty of US imports create challenges.

• The global economy is slowing down, and the financial markets and curves indicate trouble as we head towards a recession. Job market data and oil prices should be closely monitored as reliable indicators of economic health. Current trends in the oil market suggest a potential shift towards deflation, which requires the Federal Reserve's attention to address its impact on CPI and other economic indicators.

Website: Capitalist Exploits

Title: New Bull Market or?
Link: https://capitalistexploits.at/new-bull-market-or/

Here are the key highlights:

• BP's CEO, Bernard Looney, was brought in with the mission to shift the company's focus to renewable energy, but has recently dialed back some of BP's high-profile push into renewable energy in favor of a narrower green-energy strategy. This has caused concern among some analysts and investors that BP's pledges to shift away from fossil fuels and into renewable energy could hurt the company's performance.

• The transition to green technologies has been challenging for many companies, as evidenced by BP's recent course correction. Looney plans to pursue a strategy that maximizes profits in areas where it has a competitive advantage, such as its legacy oil-and-gas operations. He also plans to place less emphasis on ESG goals so that these goals do not distract from delivering profits.

• The current market situation serves as an important reminder that transitioning away from traditional energy sources isn't always easy or profitable. It is important to remember that everyone is on board with ESG until it hurts their pockets.

• While some argue that oil and gas are still essential components of our modern lives, others suggest that there is no viable alternative at the moment. Regardless, it is clear that oil and gas are still important components of our society, powering our vehicles and providing energy for our homes. Market participants still seem to believe that oil and gas are no longer needed, but not everyone agrees with this viewpoint. Some are eager to point out all the benefits that oil and gas offer us today, including providing jobs and powering our societies.

Newsletter: Acorn Macro Consulting

Title: Acorn Weekly Commentary (2/28) - Vacation Edition.
Link: https://acornmacro.substack.com/p/acorn-weekly-commentary-228-vacation

Here are the key highlights:

• Investors need to stay informed about the current economic landscape, given the resurfacing of inflation and the possible recession risks indicated by the US yield curve and New York Federal Reserve model. Despite these concerns, PMIs have entered expansionary territory and continue to show signs of recovery. Energy prices also need to be monitored closely, with Russia's increasing aggression and Mexico's possible gains from American onshoring efforts.

• As investors turn away from US tech investments, they should also consider underweighting their exposure to Canadian Banks. The Canadian housing market has been overheating for some time now and many experts believe that it is only a matter of time before it bursts. This could have serious implications for Canadian Banks as they are heavily invested in the housing market and could suffer significant losses if the housing market collapses.

• Treasury bonds remain a positive investment option for investors, despite their recent increases in bond yields. While there may have been some losses due to the recent jump in yields, Treasury bonds remain one of the most secure investments available with relatively low levels of risk compared to stocks or other investments. Treasury bonds also offer investors stability as they are backed by the full faith and credit of the US government and provide predictable returns over the long term.

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