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PERFORMANCE IMPROVEMENT PLAN
Facebook is making a federal case out of it. Well, kinda. Zuck and the gang announced that they were creating a “Supreme Court”- like committee to moderate content on the site after facing criticism related to questionable posts (read: stuff you should send on Snap).
The “Oversight Board” will eventually be comprised of 40 members split into 5 member teams that will make decisions on cases chosen by the committee.
Oversight Board members and supporting staff will be paid entirely separately from the firm, and committee decisions will be binding, even if company exec oppose. The only way a decision can be overturned is in the event that it breaks the law. Like, the real law … unlike how this is the fake Supreme Court. Still with me?
So who pays ‘em?
A trust is being established to pay the new board. The group will be able to hire its own employees, but in the meantime, Zuck has been so kind as to offer current Facebook employees to help get things off the ground. Employees who will be completely unbiased and definitely won’t fear for their jobs/lives should they defy Zuck.
The bottom line …
Good news degenerates, you can still post whatever the hell you want to Facebook. Whether or not the rest of the Facebook universe sees it … well, that’s going to be up to the new Oversight Board.
Whether you like Zuck and Co’s new policies or not, it looks like Jesse Eisenberg’s doppelganger is finally taking steps to protect his users. Either that, or he’s just selling the oversight board’s data to 3rd party advertisers.
“Slow your roll.” – Jay Powell to repo rates
Jerome Powell and the New York Fed did something on Tuesday that hasn’t been done since 2008: it bought $53.2B of securities to flood the repo market with much-needed liquidity. And it plans to buy up to $75B today.
WTF is a repo?
A repurchase agreement, or repo, is an agreement where party A lends cash to party B in return for a security (almost always Treasury notes). Party B will buy back the notes at a later date (sometimes just one day later) for a slightly higher rate … called the repo rate.
The repo rate is usually pretty closely aligned to the Federal Funds Rate which currently sits between 2% and 2.25%.
So, what happened?
Well, the repo market went off the rails, with rates reaching as high as 10% on Tuesday. The increase in borrowing costs means that there wasn’t enough cash in the system to borrow. Enter Jerry Interest Rates.
Although the Fed is sticking to the G-code, traders and analysts have their theories about exactly why liquidity dried up quicker than a chick who just found out you trade bitcoin …
- The “Technical Difficulty” theory: On Monday companies had to submit their quarterly federal tax payments, sucking cash out of the market. Also on Monday auctions of $78B in Treasury debt settled, which means $78B was almost instantly converted from cash to securities.
- The “Big Picture” theory: In 2017 the Fed began unloading the Treasurys it purchased to buoy the economy in the aftermath of the financial crisis.
- The “Glass Half Empty” theory: It could be a sign that there is a perception of risk in the market and this entire house of cards is about to come crumbling down on our heads …
The bottom line …
Welp, the sudden spike and the Fed’s heroics could mean the end of the world as we know it … or it could mean nothing at all. In fact, this type of injection was commonplace prior to the recession, before the Fed started buying up Treasurys.
But one thing is for sure … if the Fed didn’t stop the bleeding the increases could have trickled down to longer-term borrowing rates. Crisis averted … for now.
IN OTHER NEWS
- A familiar name is back in the news. The DOJ has filed a lawsuit against the infamous NSA whistleblower Edward Snowden, who ‘allegedly’ violated a contractual obligation he made with the US of A when he signed on with the CIA and NSA. Why now? Well, Eddy Brasco just released a new book, titled ‘Permanent Record’, which he apparently failed to run by the government for clearance. Whoops. And for those wondering: yes, he’s still living in Russia out of reach of the long arm of Johnny Law.
- “Well, that didn’t last very long.” – Juul … and your girl, probably. Juul’s sales have been halted in China, just days after expanding overseas to the world’s biggest tobacco market with its 300M cigarette smokers. Juul products went on sale last Tuesday via websites JD.com and Alibaba Group Holdings but were removed by the weekend. Neither site would say why they removed the products and also declined to say if they were asked by Chinese regulators or not … which means they were certainly asked by regulators to cease the sale of the products.
- More streaming news? You’re g*d damn right. Just a day after Netflix signed Seinfeld to a five-year deal, NBCUniversal revealed the name and initial lineup for its news streaming service. Peacock will make its debut in April of 2020, featuring more than 15k hours of shows for you to get overwhelmed by … eventually resulting in you just choosing ‘The Office’ for the umpteenth time.
+ But wait, there’s more. Not to be outdone by the show about nothing, ‘The Big Bang Theory’ was signed to a five year, nearly $500M deal by AT&T’s HBO Max. Women named Karen and retirees in the rustbelt are ecstatic.
- Aaaand… it’s gone. Hope everyone enjoyed that oil rally. Just one day after Brent crude prices jumped nearly 20%, futures fell 6.55%. Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said that the oil supply would be back online by the end of the month. In just two days, 50% of capacity lost from the attack has been restored, bringing back roughly 2.3 of the 5.7M barrels per day.
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