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U.S. inflation rose 7.7% in October / FTX lent $10B of customers' assets to Alameda / Elon Musk warns of difficult road ahead for Twitter

Plus, President Biden and Xi Jinping to meet during G-20 summit in Bali, Indonesia.

Inside.com Part of   Network November 10, 2022

U.S. inflation rose 7.7% in October compared to last year, ticking down from 8.2% recorded in September and 9.1% reported in June. Core CPI rose 6.3% in October compared to the previous year and down from 6.6% recorded in September. More: Consumer prices rose 0.4% on a month-to-month basis; core CPI rose 0.3%. Food prices rose 10.9% in October compared to last year. Energy rose 17.6%, and Shelter increased 6.9% in October compared to last year. U.S. stocks responded favorably to the downward thread in inflation. The Dow rose 1,201.43 points, or 3.7%, to 33,715.37, its largest one-day gain in over a year. The S&P 500 rose 5.54% to 3,956.37, and the tech-heavy Nasdaq rose 7.35% to 11,114.15. Though still above the Fed’s 2% target, the slowdown in inflation is likely to prompt a 0.5% interest rate increase at the Fed’s December meeting. Earlier this month, the central bank announced its fourth consecutive 0.75% rate increase.

In an investor meeting this week, FTX founder and CEO Sam Bankman-Fried said Alameda Research, a sister company to FTX, which Bankman-Fried also owns, owes FTX about $10B. According to sources, FTX lent billions of dollars worth of customer assets to Alameda to fund risky bets. More: FTX had about $16B in customer assets, which customers had deposited on the exchange for trading purposes. FTX lent roughly $10B to Alameda, more than 60% of customers' deposited assets. The crypto exchange paused customer withdrawals earlier this week after it received about $5B worth of withdrawal requests on Sunday. Alameda also took out additional loans from other financial institutions and owes about $1.5B to counterparties besides FTX. On Monday, Bankman-Fried tweeted that FTX had enough liquidity to cover all customers' holdings, adding that FTX does not invest its clients' assets. The tweet was later deleted. In related news: On Thursday morning, Bankman-Fried tweeted an apology, admitting that he "f___ed up, and should have done better." Bankman-Fried stressed that FTX's current liquidity crisis only impacts FTX.com (FTX International), and FTX US was not affected. Bankman-Fried said the company is doing everything it can to raise funds, and his number priority is doing right by FTX users. Bankman-Fried also said Alameda Research is winding down its trading.

Elon Musk sent his first email to Twitter employees late Wednesday evening, warning them to brace for difficult times ahead. The CEO noted that for Twitter to survive the changing economic climate, about 50% of Twitter’s revenue would need to come from its subscription service. More: Musk warned that Twitter might not survive the upcoming economic downturn if reliant on ad revenue alone. Twitter gets over 90% of its revenue from advertising. Musk added that was why developing and launching Twitter’s new $8 subscription plan, which comes with user verification, was prioritized in the last 10 days. Musk said the road ahead for Twitter would be arduous and require intense work to succeed. Musk also killed Twitter’s remote work policy, requiring employees to work at least 40 hours a week in the office.

The attorney general of Washington D.C. has filed a consumer-protection lawsuit against the Washington Commanders NFL team, owner Dan Snyder, the National Football League, and commissioner Roger Goodell. The lawsuit alleges the defendants deceived D.C. residents about the team’s alleged toxic culture for its financial gain. More: Attorney General Karl Racine claims the team and Snyder lied to D.C. residents about allegations of the team’s toxic culture and sexual harassment to protect its profits. Racine said that the NFL and commissioner Goodell worked with Snyder and the Commanders to mislead the public about a probe into sexual and verbal harassment allegations. Racine added that the NFL and the Commanders secretly entered into an agreement about the investigation that the public didn’t know about. The Commanders have been under investigation by the House Oversight Committee and the NFL over sexual harassment and financial misconduct accusations.

Rocket Lab released its Q3 earnings on Wednesday, reporting record revenue of $63.1M, up from $5.3M reported over the same period last year. Revenue was also up 14% from Q2. The aerospace manufacturer narrowed its net loss to $34.6M, or 7 cents a share, from $87.97M reported last year. More: Rocket lab operates lightweight Electron orbital rockets, which provide dedicated launches for small satellites. The company has completed nine launches so far this year. Rocket Lab plans to complete its first Electron launch from the U.S. in December from NASA’s Wallops facility in Virginia. Rocket Lab was founded in 2006 in New Zealand and is headquartered in Long Beach, California.  During the quarter, the company completed three successful Electron rocket missions from its New Zealand facility. Rocket Lab shares closed at $5.31 on Thursday, up ~12% for the day.

Juul Labs has secured new funds from its early investors and plans to lay off about a third of its global workforce. The e-cigarette maker told employees that it has stopped its bankruptcy preparations and is working on a cost-cutting program. More: Juul plans to lay off about 400 employees and reduce its operating expenses by 30% to 40%. The cash infusion is part of a bailout package being discussed with two of Juul’s largest investors – Hyatt Hotels heir Nick Pritzker and California investor Riaz Valani. Juul said the investment and restructuring plans were to put Juul on a better financial footing to enable it to stay in business and continue its dispute with the FDA. In June, the FDA ordered Juul to remove its e-cigarette from the U.S. market. In July, the food and drug regulator suspended the ban on Juul products pending the company’s appeal. Neither terms nor details of the investment were disclosed.

Quick Hits $250 for International Acct. Day? Demo Divvy by Nov. 10 so you can stop wasting time on expense reports and start wasting it at the beach.* Jobless claims rose by 7,000 to a seasonally adjusted 225,000 last week. According to Labor Department, the claims are still close to the pre-pandemic weekly average of 218,000. President Biden is expected to meet Chinese leader Xi Jinping on Monday during the G-20 Summit in Bali, Indonesia. The two are expected to discuss efforts to maintain communication, responsibly manage competition, and work together where interests align. A judge in Texas has ordered Infowars broadcaster Alex Jones to pay an additional $473M in punitive damages to family members of children killed in the 2012 Sandy Hook school shooting for defaming them. The award brings Jones’ total damages payment to $1.5B. President Biden plans to nominate Daniel Werfel to lead the Internal Revenue Service. Werfel led the agency for seven months during the Obama administration. If confirmed by the Senate, Werfel will lead the IRS through 2027. *This is a sponsored listing.

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Vanessa Omeokachie is a writer for Inside.com; she writes the daily Inside Business newsletter. Her interests include finance, technology, and entrepreneurship. In her free time, she enjoys reading, hiking, attending concerts and music festivals, traveling, and exploring.  Connect with her on Twitter @VanessaOmeo or on LinkedIn. Editor Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords.

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