🏀 Congress' ball

Plus: Lowest since 2005 | Friday, December 02, 2022

Open in app View in browser   Presented By Paramount   Axios Markets By Emily Peck and Matt Phillips · Dec 02, 2022 🥳 Happy Friday! In just a bit we'll get the November jobs numbers — will the strong labor market show any signs of weakness? Stay tuned. Meanwhile, a bill to avert a rail strike is headed to President Biden's desk later today. Today's newsletter is 830 words, 3.5 minutes.     1 big thing: Congress and crypto CFTC chair Rostin Behnam testifies before the Senate Ag committee on FTX. Photo: Bloomberg/contributor   The first Congressional crypto hearing of the post-FTX era went down on Capitol Hill yesterday, Axios' Crystal Kim reports. Why it matters: The spectacular flameout of crypto exchange FTX — and the contagion that preceded and followed it — could finally provide momentum for U.S. regulation of the industry. The perception of many outside Washington is that while crypto collapsed, Congress and regulators dithered, as the Washington Post recently reported. Driving the news: At yesterday's hearing, the Senate agriculture committee chairwoman Debbie Stabenow highlighted the "lack of clear, consistent rules" that have allowed the industry to flourish, while American consumers lose billions. "When exchanges accept customer funds for trading, they must not be allowed to gamble with those funds," Sen. Stabenow (D-MI) said, referencing one of the issues behind FTX's unwinding. Go deeper: Commodity Futures Trading Commission chairman Rostin Behnam was the sole witness at the hearing. He emphasized the need for lawmakers to grant his agency the authority to create rules and oversee crypto trading. "We need surveillance of market activity," Behnam said. Worth noting: Behnam also expressed support for Stabenow's Digital Commodities Consumer Protection Act (DCCPA) — which he says would have "prohibited" some of the actions at FTX from taking place. Catch up fast: The most recent version of the proposed measure would place many cryptocurrencies under the purview of the CFTC. Stabenow during the hearing said that the legislation would still allow the Securities and Exchange Commission to have oversight over crypto that it deems securities. Yes, but: The DCCPA has received criticism for its connection to none other than FTX and its disgraced founder, Sam Bankman-Fried — it's been called the "SBF bill" due to their perceived influence over it. The intrigue: While crises can be big motivators for elected leaders to reactively push through regulations, some lawmakers may not want to do anything that appears to legitimize cryptocurrency right now, as Axios' Brady Dale wrote. An op-ed in FT Alphaville argues just that. "Just let crypto burn," wrote Stephen Cecchetti of Brandeis International Business School and Kim Schoenholtz of NYU's Stern School of Business. "Actively intervening would convey undeserved legitimacy upon a system that does little to support real economic activity," they wrote. What we're watching: Yesterday's hearing was presumably just the beginning. Notably absent was "any witness who can speak on behalf of the banking industry or the FDIC, Fed, Treasury, OCC, or CFPB," said Jenny Lee, a former bank regulator who's now a partner at the law firm Reed Smith, in an email. Next up: The House financial services committee scheduled a Dec. 13 hearing entitled "Investigating the Collapse of FTX, Part I." Bankman-Fried himself hinted that he may even testify.     2. Catch up quick 🚛 Tesla begins delivering its first Semi trucks. (Axios) 🛑 Ye is no longer buying Parler, and got banned from Twitter again. (Axios) (Axios) 💸 AGs file a new request to stop Albertsons' dividend. (Axios) ⚖️ Independent examiner to be appointed in FTX bankruptcy. (Axios)     3. Savings plunge Data: Bureau of Economic Analysis via FRED; Chart: Axios Visuals Americans are spending most of what they're earning these days, Emily writes. The savings rate in October was the lowest since 2005 — and the second-lowest on record, per Commerce Department data released yesterday. Why it matters: Thanks to higher prices and a return to "normal" life that has folks traveling and going out again, Americans are spending more and saving less. And for now, many are sitting on a lot of savings — so they don't need to sock as much money away. Zoom out: A lot of folks built up a big cash cushion over the past couple of years (note the big spike in the chart above) but with inflation trending higher than wage increases, at some point, something's got to give. "Americans' cash war chest has been dwindling, and the spending extravaganza cannot last," writes Kroll's global chief economist, Megan Greene, in the FT.     A message from Paramount Why the world streams Paramount     From scripted hits like "Halo" to originals like "Star Trek: Discovery" and "Tulsa King," Paramount makes some of the most popular entertainment. Even better: With plans to greenlight 150 international originals, there's more great content to come. See why the world streams Paramount.     4. Factory slowdown is here Data: Institute for Supply Management; Chart: Tory Lysik/Axios Visuals A key economic indicator is flashing red: An index measuring factory activity shows a contraction for the first time since 2020, Emily writes. The Institute for Supply Management's index of manufacturing activity released yesterday pulls from a survey of manufacturers about business conditions. It dipped below the 50 threshold that separates economic expansion from contraction — driven by a decline in orders for new stuff. Why it matters: A contraction could be a signal of an economic slowdown to come. (And, as we say often, this is basically what the Fed wants.) Analysts trotted out the R-word: The level is "consistent with a stagnation in broader economic growth," Paul Ashworth, chief North America economist at Capital Economics, said in a note yesterday. Further declines could be coming, he said, "leaving it consistent with a recession." "Manufacturing's contraction is likely a harbinger of a recession that we expect to begin in Q2 2023," Oxford Economics said in a note about the data. Yes, but: Sounds scary, but keep in mind that at this point most recession forecasts are predicting a relatively mild downturn. Also, it's just one data point.     A message from Paramount Streaming popular content to the world     Driven by the expansion of Paramount+ and Pluto TV, Paramount's streaming services will reach audiences in 60 global markets by the end of the year. This includes all the major European markets, like the U.K., Italy, Germany and France. Find out more about Paramount's global streaming growth.   1 thing Emily doesn't love: "shrinkflation." It's that phenomenon where a company reduces the packaging size of a product so it doesn't have to raise the price. The one that gets me is ice cream pints that are less than 16 ounces. You'll be glad to know that a 71-year-old semi-retired lawyer named Edgar Dworsky is on the case — exposing shrunken portion sizes. The New York Times profiled him last weekend. But this isn't a new thing. The last time inflation was running hot, even gumball manufacturers got in on the trend. Making the insides of the balls hollow to save sugar costs, Bloomberg reports. Readers, have you noticed anything "shrinkflate" lately? Why stop here? Let's go Pro. Join the thousands of professionals using Axios Pro to keep up with the companies, deals and trends changing their industries.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: