The attention on Gary Gensler, the S.E.C. chair, could return today as the regulator is expected to decide on whether to approve a new Bitcoin E.T.F.Credit…Jonathan Ernst/Reuters
Decision day for Bitcoin?
The famously volatile price of Bitcoin briefly experienced more whiplash than usual on Tuesday, after a post on an official S.E.C. social media account said that the agency had approved long-awaited investment products tied to the cryptocurrency.
Its price just as quickly sank after Gary Gensler, the S.E.C.’s chief, threw cold water on the post, saying that the agency’s account had been hacked. But the wild market reaction may serve as a preview of the S.E.C.’s actual decision on those Bitcoin products, which is expected today.
For 15 minutes, the crypto community was euphoric. At 4:11 p.m. Eastern, the @SECGov account on the platform X said that the S.E.C. had approved spot Bitcoin exchange-traded funds, investment products tied directly to the price of the digital currency.
The crypto community has been eagerly awaiting that announcement, because such products — including those proposed by investment giants like BlackRock and Fidelity — could help make buying into Bitcoin easier for mainstream audiences. (The exchange Coinbase, for instance, posted a celebratory banner.) Investors plowed money into Bitcoin, with its price rising 2.5 percent to a weeklong high of $47,893 on the post.
Gensler dashed that excitement at 4:26 p.m. Eastern, writing on his personal X account that his agency’s account had been compromised and that “an unauthorized tweet was posted.” The S.E.C., he added, still had not approved Bitcoin E.T.F.s. The price of Bitcoin slumped sharply on his message.
Bitcoin boosters — already exasperated by the agency’s tough scrutiny of their industry — quickly grew angry at the S.E.C., questioning whether the agency was guilty of negligence or market manipulation. (X’s corporate safety team said that a hacker had obtained control of a phone number associated with the account, and that the handle did not have additional security measures in place.)
But there may yet be cause for crypto backers to celebrate. Today is the deadline for the S.E.C. to decide whether to allow any spot Bitcoin E.T.F.s — though there is a way to delay a decision — with the industry still largely hopeful.
That could lead to a wave of money pouring into Bitcoin as many of those E.T.F.s prepare to start trading as soon as Thursday. Some analysts predict that those funds could see as much as $100 billion in inflows by the end of the year. That flood of cash, they say, could push the price of Bitcoin closer to $200,000 by the end of 2025, up from its current level of more than $45,000.
HERE’S WHAT’S HAPPENING
The United States and Britain say they repelled a big barrage of drones and missiles fired from Houthi forces against commercial ships in the Red Sea. The attacks, tied to protests against Israel’s war against Hamas, are forcing shipping companies to reroute traffic from the Red Sea and raising delivery times and costs for Western importers.
The World Bank warns of a “wasted” decade. In its latest Global Economic Prospects report, the institution projected that global growth would slow to 2.4 percent this year from 2.6 percent last year. That would be the worst half-decade for growth in three decades; contributing factors include the wars in Ukraine and Gaza, the weakened Chinese economy and climate change.
Elliott Management is said to take aim at Match Group. Paul Singer’s $59 billion activist investment firm has taken a roughly $1 billion stake in the dating app operator and plans to push for changes in strategy, according to The Wall Street Journal. Shortly after the report was published, Match announced that it had named Faye Iosotaluno as the C.E.O. of Tinder, appointing the first permanent leader for the company’s most popular app in nearly two years.
Boeing’s chief is “shaken to the bone”
An emotional Dave Calhoun, the Boeing C.E.O., told a companywide gathering on Tuesday that the plane maker would own “our mistake.”
Those words hardly reassured investors. The stock hasn’t bounced back, off nearly 10 percent since a blowout in the sky on Friday forced the emergency landing of a Boeing 737 Max 9 operated by Alaska Airlines.
Boeing’s crisis looks far from over. Hopes of getting hundreds of Max 9s back in the air were dashed on Tuesday when airlines were given revised instructions about how to inspect the grounded planes. The delay is expected to put further strains on the country’s air traffic network. “The safety of the flying public, not speed, will determine the timeline,” the F.A.A. said.
Friday’s episode left Calhoun “shaken to the bone.” He vowed “complete transparency” in getting to the source of the problem that tore off a portion of the fuselage of the Alaska flight, miraculously killing nobody. But the incident has again shaken public confidence in the company’s top-selling Max that was involved in two fatal accidents in 2018 and 2019.
The mistakes at the center of the faulty door plug can “never happen again,” he said.
The pressure is mounting on Calhoun, who promised to fix the company. The former G.E. and Blackstone executive became C.E.O. four years ago, pledging to refocus the company on engineering after the two fatal crashes.
But delivery and quality control problems persisted even before the latest incident. And critics said that moving the company’s headquarters to Northern Virginia from Chicago in 2022 took it even farther from its manufacturing roots near Seattle.
Boeing’s big underlying problems may be left to his successor. Analysts say the company needs to cut its debt load and diversify the business beyond the 737. Stephanie Pope, the head of Boeing services division, started as C.O.O. on Jan. 1 and has been flagged as a potential next leader. She will have a front-row seat to the complex challenges the company faces.
Investors have been mostly quiet this year, with the S&P 500 down 0.2 percent this month. That may change soon, with Wall Street looking for signs of optimism in the latest batch of inflation data on Thursday and the start of earnings season on Friday.
The Bureau of Labor Statistics is set to release the December Consumer Price Index report on Thursday at 8:30 a.m. Eastern. Here’s what economists are forecasting:
The disinflation trend is continuing, the data is expected to show. The markets got a pleasant surprise on Dec. 22 when the Personal Consumption Expenditures report, a measure closely watched by the Fed, showed that inflation had fallen a tad closer to the central bank’s 2 percent target.
Thursday’s report is expected to show more progress, with core inflation — which excludes food and fuel prices — rising 0.2 percent month-on-month and the annual rate hovering around 3.8 percent. That would be the lowest level since mid-2021.
Another positive sign: The New York Fed’s monthly survey of consumers released this week showed short-term inflation expectations falling to the lowest recorded point in three years.
But risks abound. Economists are monitoring the situation in the Middle East, especially in the Red Sea. Escalating tensions could drive up shipping prices, making goods more expensive for consumers, Michael Gapen, the chief U.S. economist at Bank of America, warned in a research note this week. (Domestically, Gapen sees “sticky” rental prices as a wild card that could slow progress on inflation.)
Will the C.P.I. report influence the Fed’s outlook on interest rates? Jay Powell, the Fed chair, signaled last month that a trio of cuts could be in order this year, only for a number of Fed officials to try to walk back that dovish forecast.
Traders seem to be getting the message. The odds of a March rate cut have fallen to a two-out-of-three (67 percent) coin toss on Wednesday from near-certainty (96 percent) at the start of the year.
A new front line in the U.S.-China tech war
President Biden and Xi Jinping, China’s top leader, have tried to stabilize relations in recent months. But a fault line remains over access to technology, especially when it comes to chips.
The latest potential fight is over American-born technology called RISC-V that is crucial to building the processors that power everything from smartphones to Wi-Fi routers, according to The Times.
RISC-V provides a kind of common language for designing processors, and it’s a key tool for Chinese groups trying to match U.S. chip-making abilities. It’s free to download and was patterned after open source software like Linux, a category typically excluded from U.S. export controls.
Silicon Valley executives say trying to control RISC-V would be an extreme step. U.S. regulations limit RISC-V companies from exporting chip designs to China based on certain metrics. But some warn that trying to restrict the underlying instructions would be like trying to control words or letters.
“It’s like saying, ‘Well, the Chinese can read a book on nuclear weapons that’s written in English, so let’s solve the problem by banning the English alphabet,’” Dave Ditzel, the chief technology officer of Esperanto Technologies, told The Times.
The blowback comes as U.S. companies are reassessing operations in China. Microsoft is one of the largest U.S. tech firms still there, and runs one of the world’s most important artificial intelligence research labs in Beijing.
Top Microsoft executives are debating what to do with the lab, according to The Times, amid pressure from U.S. officials who view A.I. as a national security issue.Some of the potential risks include China hacking the lab or Microsoft researchers leaving to join local companies that work closely with the government, according to people with knowledge of Microsoft’s thinking.
Microsoft has blocked its researchers from working on politically sensitive projects, and its C.E.O., Satya Nadella, hasn’t pushed to shut it down. But the company does have a Plan B: relocating researchers to Canada, where it has a big presence and can obtain visas for technical talent.
THE SPEED READ
Keith Rabois, the outspoken venture capitalist and entrepreneur, is returning to Khosla Ventures from Peter Thiel’s Founders Fund. (Forbes)
Two Circles, a sports marketing company whose clients include the N.F.L. and Wimbledon, is said to be near a sale to Charterhouse Capital Partners for around $315 million. (Sportico)
Chinese tech companies are reportedly stripping Nvidia gaming graphics cards to repurpose their chips for A.I. tasks, to get around U.S. export limits on high-powered semiconductors. (FT)
Parag Agrawal, the former C.E.O. of Twitter, is said to have raised about $30 million for his new A.I. venture, with funding led by Khosla Ventures. (The Information)
Best of the rest
The financier Bill Ackman is backing an effort by four fellow dissident Harvard alumni to gain seats on one of the school’s powerful governing bodies. (Reuters)
“No, That’s Not Taylor Swift Peddling Le Creuset Cookware” (NYT)
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