SBF takes the stand

The defendant has taken the stand. Generally a risky move when it comes to trial strategy, FTX co-founder Sam Bankman-Fried nevertheless decided to testify in his own defense at his sprawling fraud trial in Manhattan federal court. Accused of masterminding the biggest criminal scheme of the cryptocurrency era—an era that was already pockmarked with smaller implosions, failures and instances of alleged malfeasance—the once highly influential enfant terrible of the digital asset world said Thursday that, among other things, he thought he was simply following FTX’s terms of service. —David E. Rovella

As Bloomberg projected yesterday, the US economic picture in the third quarter was powerful. But new details in a Thursday report show that, at the same time, a closely watched measure of underlying inflation had cooled more than expected—to the slowest pace since 2020. While the economy has fed a steady diet of crow to Team Recession for 16 months now, the good news does mean the higher-for-longer expectation for interest rates may be around, well, even longer. “Growth this strong does not force a rate hike next week, but it means the Fed will indicate it is still contemplating higher rates,” Chris Low, chief economist at FHN Financial, said in a note. “The Fed cannot declare tightening over with growth this strong and inflation still above target.”

What about the bonds? Well, Treasury Secretary Janet Yellen argues that the surge in longer-term yields in recent months is a reflection of a strong US economy, not the jump in government borrowing driven by a widening fiscal deficit. But many bond market participants have pointed to the sharp increase in the federal deficit as being a key factor behind the increase in yields. The US government’s budget gap effectively doubled in the fiscal year that ended in September, and some recent auctions of Treasuries haven’t been well received by buyers.

Wondering why your 401(k) looks like it’s still May? That’s because a summer of gains has been wiped away. The so-called Magnificent Seven technology companies that have powered this year’s US stock rally have taken some fire of late. Many are posting disappointing earnings that have so far erased about $200 billion of market value and are even threatening to push the S&P 500 into a correction. Google owner Alphabet, Tesla and Facebook-parent Meta have all slumped since reporting. But Microsoft and Amazon are doing fine it seems.

Eli Lilly will study its blockbuster diabetes drug Mounjaro in combination with an experimental muscle-loss treatment since the sheer amount of weight patients are shedding from Mounjaro and similar GLP-1 medications has raised concern thatit isn’t just fat melting away. Mounjaro is still under regulatory consideration for treating obesity, and many doctors already prescribe it for that purpose. The drug is part of a new generation of therapies that Goldman Sachs analysts have said are poised for a $100 billion market by 2030.

Morgan Stanley’s incoming chief executive officer, Ted Pick, found out Wednesday afternoon that he had been chosen to succeed James Gorman as the firm’s CEO. On Thursday, he announced that investment banking will lead the next business cycle, and that hiring for that business will help the firm compete. “In equities and fixed income and across investment banking, we’re focused on being No. 1,” Pick said. “That next cycle is going to be investment banking led.”

Despite a world aflame with war and turmoil, from the more than 120,000 estimated killed in Russia’s war on Ukraine to the regional war potentially brewing in the Middle East, a strange thing has been happening in the background. China and the US seem to be slowly making up. Xi Jinping’s government has engaged with a flurry of US leaders since June, with the Chinese president telling a visiting senator this month there were “a thousand reasons to make US-China relations better, and no reason to make them worse.” Though relations between the two countries have been in the basement since the previous US administration’s trade war, the arrival of China’s Foreign Minister Wang Yi in Washington this week continues an upbeat trajectory. The visit may smooth the way for an anticipated meeting between President Joe Biden and Xi next month in California.

Israel’s military said it killed Hamas’s deputy head of intelligence, who it said was responsible for helping plan the Oct. 7 attacks that killed some 1,400 people. Israeli forces overnight also made a limited ground raid into northern Gaza with infantry and tanks. In the south, a small number of humanitarian aid trucks reached Gaza Thursday, but there were no indications of fuel—in short supply—being included. Israel’s relentless bombing campaign of the densely packed Strip has now killed more than 7,000 people, according to the Hamas-controlled Gaza health ministry.

The fraud trial of Sam Bankman-Fried has often felt like a flashback from the distant past. Was there really ever a time when people thought his FTX crypto exchange was a real business, when the awkward 31-year-old was a billionaire market mogul, consulted by powerbrokers for his take on market regulation, philanthropy and even the future of the human species? The collapse of FTX was so spectacular and era-ending that it’s easy to assume we’ve moved on. But as history has repeatedly shown, rarely are lessons truly learned. More often than not—and particularly in the financial world—they’re just forgotten. In the first feature length film documentary by Bloomberg Originals, we uncover the audacity and banality of the rise and ruin of FTX and its co-founder, Sam Bankman-Fried.

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