Genesis’ Bankruptcy Warning

Digital-asset brokerage Genesis is struggling to raise fresh cash for its lending unit and it’s warning potential investors that it may need to file for bankruptcy if its efforts fail, according to people with knowledge of the matter. Genesis has spent the past several days seeking at least $1 billion in fresh capital, which included talks over a potential investment from crypto exchange Binance. The rush for funding was precipitated by a liquidity crunch at the lender after the sudden collapse of FTX. Meanwhile, it turns out that Bain & Co. was among consulting firms that helped conduct due diligence for Tiger Global’s investment in now-defunct crypto exchange FTX. 

Betting Against GameStop

Billionaire investor Carl Icahn began shorting GameStop during the height of the meme-stock frenzy around January 2021 and still holds a large position in the video-game retailer, according to people familiar with the matter. Icahn started building the short when GameStop was trading near its peak of $483 per share and still holds a large bet against the retailer’s shares. The investor, who has added to his position from time to time, is betting that GameStop’s stock isn’t trading on its fundamentals and will continue to fall. GameStop became a poster child for so-called meme stocks when retail trading took off during the coronavirus pandemic, aided by no-fee trading apps and fiscal stimulus.

No Increase

Saudi Arabia denied a report that it is discussing an oil-production increase for the OPEC+ meeting next month and said it stands ready to make further cuts if needed. “The current cut of 2 million barrels per day by OPEC+ continues until the end of 2023,” Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement via the Saudi Press Agency. The Wall Street Journal reported that the kingdom and other members of the group were considering raising output by as much as 500,000 barrels a day. That would have been a major reversal after OPEC+ decided in October to cut production by 2 million barrels a day.

China Covid Lockdown

Covid control restrictions now weigh on a fifth of China’s economy as infections continue their upward march, defying the central government’s call for more targeted, less disruptive Covid Zero measures. There were 27,307 new cases recorded for Monday, just shy of the previous record in April when Shanghai’s outbreak sparked a surge in infections. The continued climb in cases has spooked local authorities into reintroducing measures like expanded testing and shuttering offices and schools in big cities, despite the new directives over a week ago that marked an easing in the official Covid Zero playbook. 

Coming Up…

European stocks are set to advance as investors continue to assess the impact of China’s Covid curbs and the outlook for Fed policy. The OECD releases forecasts that will show how officials perceive world economic risks. German Chancellor Olaf Scholz gives opening remarks at a conference in Berlin. The ECB’s Robert Holzmann speaks, as do the Fed’s Loretta Mester and James Bullard. Expected data include UK public sector borrowing. HomeServe, PGE and Medtronic are slated to report earnings.

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(Source: Bloomberg, Nov. 22-2022)