KodakFor a company that became famous for making camera film, and then became infamous, and bankrupt, for missing the shift to digital photography, Eastman Kodak Co. sure is good at capturing the zeitgeist. The last time we talked about Kodak in this column, possibly the last time anyone talked about Kodak at all, was in January 2018, the height of pivoting-to-blockchain mania, when Kodak, which had emerged from bankruptcy and was still floating around, pivoted to blockchain. It "announced the launch of the KODAKOne image rights management platform and KODAKCoin, a photo-centric cryptocurrency to empower photographers and agencies to take greater control in image rights management." It didn't make any sense to me either, we talked about it twice in 2018 and then never again, it was some sort of weird licensing deal and it no longer rates a mention in Kodak's annual report. Kodak noisily pivoted to the blockchain when that was fashionable, and then quietly pivoted away when it wasn't. But Kodak picked a good time to gesture vaguely in the direction of crypto, just a couple of weeks after Long Island Iced Tea Corp. changed its name to Long Blockchain Corp., which is a real thing that happened.[1] The day before Kodak's announcement, its stock closed at $3.10 per share, and it traded about a quarter-million shares. The day of the announcement, the stock closed at $6.80—up 119%—on volume of 71.4 million shares. The next day it closed at $10.70—up 245% from before the announcement—on volume of 107.5 million shares. Six months later it was back to $3.80 and a quarter-million shares, and by last Friday Kodak closed at $2.10 per share on volume of about 75,000 shares, but it was fun while it lasted. Anyway, blockchain, 2018, who even remembers that stuff. Today the news is Covid, and the main drivers of U.S. economic activity are (1) coronavirus drugs and (2) government bailouts. And, and, and and and, and and and and and and and: Eastman Kodak Co. shares more than tripled Tuesday on a $765 million government loan to help produce ingredients used in key generic medicines to fight the coronavirus. The development bank loan is the first of its kind under the Defense Production Act in collaboration with the U.S. Department of Defense. It's intended to speed production of drugs in short supply and those considered critical to treat Covid-19, including hydroxychloroquine, the controversial antimalarial drug touted by President Donald Trump. The money could provide a lifeline to Kodak, the storied photography giant whose business and shares were devastated by the switch to filmless cameras. Once a stalwart of American industry with a market capitalization above $30 billion, the company declared bankruptcy in 2012, forcing it into a series of attempted reinventions including forays into printers, film for movies and, briefly, cryptocurrencies. Now, the 132-year-old company will be reorienting part of its factory structure to produce drug ingredients, including at sites in Rochester, New York, and St. Paul, Minnesota, under a new Kodak Pharmaceuticals arm. … Kodak is now expected to produce several drug ingredients, including those used in hydroxychloroquine. The antimalarial medicine has been touted by President Trump as a treatment for the virus responsible for the pandemic, although scientists like the national virus expert Anthony Fauci have said it is not effective against Covid-19.
They pivoted to blockchain in January 2018, and now in July 2020 they are pivoting to accepting hundreds of millions of dollars from Donald Trump to produce hydroxychloroquine. Are they … is Kodak the smartest company in the world? I suppose the financial results would argue against it, but their sense of timing, their sensitivity to the national mood, is really just exquisite. How exquisite? The stock closed at $33.20 yesterday, up about 1,480% from Friday, on volume of 276 million shares (up about 370,000% from Friday, why not). Kodak is now a $1.5 billion market cap company; it has added almost $2 of stock market value for every dollar it is borrowing from the government. Does this make economic sense? No, argues my Bloomberg Opinion colleague Max Nisen: The loan and new business line for Eastman Kodak Co. isn't, however, anything close to a justification for its massive share-price gains — whatever day traders and Robinhood investors may say. Kodak is attempting to enter a low-margin commodity market with no particular advantage outside of the current administration's industrial policy. Unless the government money spigot keeps flowing, it's hard to imagine the company ever living up to its lofty valuation.
But the point is not to live up to the lofty valuation; the point is to get that valuation, at least briefly, by announcing the thing that is most likely to appeal to Robinhood day traders. I don't know why that's the point, there's no good reason for that to be the point, that is not really how capitalism works, but if you just accept that that's the point then this all makes more sense. The stock market is a video game that people play on their phones, and Kodak has racked up a high score. Really "microcap formerly bankrupt company with an iconic American name pivots to supplying hydroxychloroquine to Donald Trump in exchange for bushels of government money" is just the purest possible drug to feed to Robinhood. It had the expected effect: Robinhood day traders swarmed to Eastman Kodak Co. shares as the stock rallied as much as 2,760% this week. As of 3:30 p.m. in New York on Wednesday, almost 79,000 users of the investing app had added Kodak to their accounts in some form over the past 24 hours, according to website Robintrack.net, which aggregates data from the brokerage but isn't affiliated with it. The activity was 15 times more than the next most-popular stock, Heat Biologics Inc. Roughly 34,000 of the additions came over the latest four-hour span.
I would not be surprised if Elon Musk joins their board of directors tomorrow, they are so good at this, everyone else is a rank amateur and Kodak alone has figured out the capital markets. I don't know. Maybe this is good industrial policy, what do I know, maybe bringing generic drug manufacturing back to the U.S. is a good goal, maybe Kodak is the right company to do it (they know chemicals! because they missed the boat on digital cameras!), maybe a huge government loan is the right way to finance it. Or, of course, not. As Nisen says, though, that all seems almost completely unrelated to the other story here, which is what happened to Kodak's stock yesterday. It seems likely that Kodak's stock went up yesterday for a soup of reasons—name recognition, microcap status, bankruptcy, Covid, government support, Trump, the general Robinhood bandwagon effect—that are not, you know, the present value of its future cash flows. I sometimes loosely call this stuff the "Boredom Markets Hypothesis," the idea that bored traders at home are trading stocks for fun rather than out of any rigorous evaluation of their economic prospects. I hate this theory! For one thing, it tells you nothing: If you believe that people buy stocks to share in the future cash flows of the underlying companies, you can test how successfully they do that and how informative stock prices are; if you believe that people buy stocks for fun, then everything is subjective and you can't really evaluate how well they do or if the prices are wrong. It also seems to be excluded by the basic mechanics of financial markets: If people are buying stocks irrationally, without any concern for economic fundamentals, then someone else—some cold-blooded rational investor—should take the other side of the trade, selling the overpriced stocks and arbitraging them back to reality. A specifically annoying feature of the modern Robinhood market is that that mechanism seems to have broken down; the surges of retail enthusiasm are so fast and sharp and overwhelming, and often focused on such small stocks, that nobody wants to take the risk of getting on the other side of them. So you see bankrupt stocks soaring, equivalent instruments trading at wildly different prices, professionals who shake their heads at wild prices for weird tiny companies but aren't foolish enough to short them. Stock markets are supposed to be smarter than any one person, they're supposed to aggregate everyone's views about the economic future, and to have built-in mechanisms to reward well-thought-out economic views and ignore silly whimsical non-economic views. Now, though, they often just aggregate people's incoherent views about what is fun, and where is the fun in that? Kodak: The PrequelUgh fine also there is this, from the Wall Street Journal: A day before Eastman Kodak Co. received a $765 million loan from the U.S. government, shares of the onetime photography giant were already on the move. … Less than a day before the announcement, the stock was already moving higher on heavy volume. More than 1.6 million shares of Kodak were traded on Monday, a big jump from an average daily volume of 231,000 shares a day during the previous 30 trading days. The stock price gained 25% that day. The early activity was suspicious to some traders. It came well ahead of the announcement the next day.
Insider trading? Nope! Apparently Kodak told reporters about the deal on Monday, but didn't want them to report it, but it forgot to embargo the news. So the reporters published it, at which point Kodak realized it had made a mistake, and told them to unpublish it: The news stories were initially published on Monday after Kodak sent an advisory to media outlets about the initiative, according to Chuck Samuels, general manager of the ABC affiliate. The advisory didn't indicate that the information wasn't supposed to be released publicly, he said. A copy of it reviewed by The Wall Street Journal confirmed there was no embargo time on the news advisory. The CBS affiliate's story was published at 12:12 p.m. ET. In the now removed story, a Kodak spokesperson was quoted as saying the initiative "could change the course of history for Rochester and the American people," according to a copy of the article reviewed by The Wall Street Journal that was collected by Meltwater, a global media intelligence company. Both stories were then removed from their respective websites after Kodak told the stations that the information was for "background only" and not for publication.
I am perfectly happy to believe that this was not insider trading, but neither was it … best … practices? I mean I am not going to comment on best journalistic practices or anything (though: what?), but traditionally the way securities regulation works is that (1) you are not supposed to disclose market-moving news selectively, but (2) if you accidentally do that, you're supposed to promptly disclose it to everyone. Trying to unpublish it seems less good. That rule does not exactly apply here—Kodak disclosed this to the press, not to investors,[2] though obviously some investors found it and traded on it—but still, in spirit, once you've made it a little public it seems like you'd want to make it fully public. I mean, preferably you wouldn't make it a little public until you're reading to make it fully public; the actual mistake here was sending un-embargoed information to reporters when Kodak didn't want it published (presumably to give Donald Trump the glory of announcing it). But, given that mistake, this was not the best way to correct it. Maybe they'll get sued for securities fraud, but a consistent theme of this column is that everyone gets sued for securities fraud, so that's not really a big deal. The antitrust thingI suppose that if you were a tech billionaire hauled before Congress to be yelled at about antitrust, you would want to make your business seem small and embattled. "How could we possibly be a monopoly," you would ask; "we are teeny tiny and beset on all sides by fierce competitors." Obviously this is difficult if you run a trillion-dollar business, but if you have built a trillion-dollar business you are probably good at overcoming challenges. Once upon a time, back in your garage, you looked at the world and saw not what it was but what it could be, and you were able to persuade other people of your vision for something new and huge and world-changing. I guess you could run the process in reverse and persuade other people that, no, really, you're still in the garage. The big tech chief executive officers who testified before Congress yesterday—professional CEOs Tim Cook of Apple Inc. and Sundar Pichai of Alphabet Inc., but especially founder-CEOs Jeff Bezos of Amazon.com Inc. and Mark Zuckerberg of Facebook Inc.—rose to the occasion. Here is Bezos on how wee and fragile Amazon is: The global retail market we compete in is strikingly large and extraordinarily competitive. Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there's room in retail for many winners. For example, more than 80 retailers in the U.S. alone earn over $1 billion in annual revenue. Like any retailer, we know that the success of our store depends entirely on customers' satisfaction with their experience in our store. Every day, Amazon competes against large, established players like Target, Costco, Kroger, and, of course, Walmart—a company more than twice Amazon's size.
See, Amazon has only a 1% market share, if you define its market as … commerce?[3] Like, "when people exchange money for goods and services, 99 times out of 100 Amazon is not involved." By that standard I am not sure that any monopoly has ever existed, which I suppose is the point that Bezos wanted to make. And then there is Facebook. Here is how Zuckerberg responded to questions about Facebook's dominant position in U.S. social media[4]: We face a lot of competitors in every part of what we do, from connecting with friends privately to connecting with people in communities to connecting with all your friends at once to connecting with all kinds of user-generated content. … Congressman, the space of people connecting with other people is a very large space.
See, Facebook also has a tiny market share, if you define its market as … human interaction? Human behavior? "Only like 5% of human life consists of Facebook, how could we possibly be a monopoly?" I get the impulse! Antitrust law focuses on market share and market power, and the way that this is often contested in practice is in fights over market definition. If your company controls 80% of the underwater widget market, but only 2% of the widget market overall, whether you have market power will depend on whether underwater widgets are treated as a separate market or lumped together with the rest of the widget sector. If your company is dominant in online retail or social media, and you are facing hostile questioning about antitrust, you will be tempted to define the relevant market as all retail, or all social interaction. On the other hand, not as a technical antitrust matter, just as a human matter, this is not at all reassuring! The reason these people were at this hearing is that they have developed a reputation for ruthlessly crushing their competitors to consolidate their market position; the more broadly they define their market, the scarier that sounds. When Amazon says "we're not a monopoly, after all, stores exist," the implication is that Amazon wishes they didn't, and has plans to change that. When Facebook says "we're not a monopoly, there's lots of competition in the connecting-with-people space, some of our most fearsome competitors include Having Dinner With Friends and Reading Stories to Your Children," you could interpret that as a threat. Facebook is good at disposing of competitors! Maybe it will copy enough features from Reading Stories to Your Children so that people will abandon it for a Facebook product, Instagram Reads Stories to Your Children or whatever. Maybe it will acquire Having Dinner With Friends so it can merge it into the Facebook experience. These companies are where they are because they dominate their markets; if they define their markets as the world, then the world had better watch out. SPAC SPAC SPACYou know what's a great business right now? Equity capital markets at investment banks. (Disclosure, I used to be an ECM banker.) For one thing, companies are selling lots of stock and convertible bonds, so ECM businesses are getting lots of fees. But for another thing, a lot of people are dissatisfied with the process for selling stock; they think that investment banks make too much money and do not have issuers' interests at heart, and so they are looking for ways to sell stock more cheaply and to cut out the role of the investment banks. And the ways that they have discovered, the methods that they tout to cut out the middleman and free companies from the tyranny of Wall Street banks, all involve (1) hiring Wall Street banks and (2) paying them tons of money. It's so good! We have talked before about direct listings, which are an alternative to initial public offerings that do cut Wall Street banks out of some of the important parts of going public, but which don't particularly cut the banks out of the bit of the IPO where they receive big checks. The direct listings that have happened so far have paid large fees to the banks that have worked on them. Those fees have been concentrated among the few banks that actually did the work, rather than being spread out among dozens of tangentially involved lender banks as is common in an IPO, so they have probably been more lucrative, for the big banks' ECM businesses, than equivalent IPOs would have been. And now special purpose acquisition companies are the hot thing, where instead of an IPO, companies go public by merging with a shell company that had previously done its own IPO. Venture capitalists and SPAC sponsors sometimes suggest that this is a way to cut out Wall Street and avoid expense, but that is not true. Not only is the SPAC expensive because its sponsor—the person who sets up the shell company and searches for a target to take public—charges for her efforts, but the SPAC also has to pay banks to do its own IPO. And maybe to search for the target, execute the merger, and otherwise be around to provide banking services. And so, unsurprisingly, banks love SPACs: The ever-bigger deals, as well as increased interest from traditional banking clients such as private equity and hedge fund firms, has attracted Wall Street's attention. The large amounts of money to be made arranging the transactions haven't hurt, either. "They tend to be very fee-intensive deals," said Michael Heinz, a partner at law firm Sidley Austin who advises sponsors and investment banks on SPACs. "Between the front-end and back-end, it is very lucrative for banks." … Banks typically take a 2% cut of money raised from selling shares in a public listing. Once a SPAC completes a merger, the firms are then given 3.5% of initial public offering proceeds. And they can earn extra fees for every service provided along the way, for example by raising more funding for a merger or helping to find a company to purchase.
This is really the kind of business you want to be in, the kind where (1) it is so lucrative that your customers are constantly complaining that you make too much money, but (2) when they want to disrupt your business, they come to you to disrupt it and pay you even more money. The feds got themselves a Rubik's CubeThe way that securities fraud looks is that you did some bad stuff, and then the authorities came and took all your stuff, and you tried to argue that it wasn't that bad, and the authorities said no, look, it was fine, that stuff was fine, you didn't do any bad stuff, and they took it all. This is a pretty good defense, and if you go to trial and are convicted, you will probably get a lenient sentence of—"wait, no, it wasn't fine, you didn't do any bad stuff, let's give it back to the investors"—and the judge will grant you some of the bad stuff that you are allowed to keep, because, you know, what else are you doing with them. Here is a story about how the U.S. Securities and Exchange Commission "is seeking to appeal a federal judge's ruling that a New Jersey man who ran into trouble with the U.K. Serious Organized Crime Agency for his alleged involvement in London Stock Exchange-related insider trading was actually fighting for ISIS." An American-born Scottish national has been fighting in the Syrian civil war, and recently he seemed to have been thinking about sending a tweet suggesting that the U.S. government should launch "a no-fly-safe zone over Syria." I am not sure that doing that would actually provoke a no-fly-safe zone, but if I were planning to send that tweet I might have just typed it on my phone. Wait, what?Hahahaha no just kidding, I didn't write the previous section, it isn't true, I don't even know what it means. It was written by a robot. In January I wrote a little bit about GPT-2, OpenAI's artificial-intelligence language generation tool, and I said "you can put a paragraph of Money Stuff into GPT-2 and get back a new paragraph that kind of follows logically and kind of sounds like Money Stuff." Reader Phillip Ma took that as a challenge and jury-rigged a GPT-2 Matt Levine model. The section above is a sample of the output,[5] and there are more here. Here's one I liked: If you are a sophisticated financial adviser with some work to do, you want to get paid a lot of money to do a lot of work. If you are a novice adviser, you want to get paid a little money not to do much work. The thing is, the work is boring and repetitive and boring. It is not what you would call fun, or fun-y if you were objectively beautiful. And the pay is not that great. So you might just decide to automate it.
Reading them is an extremely unpleasant experience for me—do I really sound like that?—but you might enjoy them. The important thing is that from now on you will never know if any particular section of Money Stuff was written by me or by a robot trying to parody me! Good times! Things happenDeutsche Bank Revamp Gets Another Boost From Trading Rally. Credit Suisse launches restructuring after trading profit boost. Europe's Banks Take Hefty Charges as Coronavirus Impact Emerges. Steve Cohen's Point72 Closing to New Money After Raising $10 Billion. One of the Best Market Neutral Funds Is Run by a Robot. Henry Blodget profile. A $158 Billion CLO Bet Is Putting the Insurance Industry at Risk. White America Got a Head Start on Small-Business Virus Relief. Local Hamptonites to city slickers: Stay away from our schools! Fox steals over 100 shoes in Berlin. If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks! [1] As far as I can tell Long Blockchain also gave up on the blockchain in 2019. So not that long! (It's a little hard to tell because they haven't filed annual or quarterly reports since April 2019.) [2] The rule (section 243.100(a) and (b)(1) of Regulation FD) is that if an issuer "discloses any material nonpublic information regarding that issuer or its securities" to a broker, dealer, investment adviser, investment company or holder of its securities, then it has to disclose that information publicly. The scenario of selectively disclosing to the press so they make it a little public, then telling them to delete their tweets, apparently never came up when the rule was adopted. [3] Fine, retail; I exaggerate a bit. [4] This is from about about 2:20 to 2:22 in the hearing video, in response to questions from Representative Joseph Neguse arguing that Facebook was 95% of the social media market. Farhad Manjoo and others pointed out the breadth of this market definition on Twitter yesterday. [5] Actually I edited it a bit: I omitted a less silly paragraph between the two that I quoted, and I deleted one proper name because, uh, it seemed potentially libelous to leave it in? (Again, everything in those two paragraphs under "The feds got themselves a Rubik's cube" was invented by a robot, and any resemblance to any persons living or dead is a coincidence, etc.) Also the U.K. Serious Organized Crime Agency does not exist, but it did until recently, so that's cool. | 
⇉〖OpenLoad〗 2020 Superintelligence PelÃcula Completa En LÃnea released 2020. story: La vida de Carol Peters se trastorna cuando es selecci...
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