Where finance and media intersect with reality


Stuff I’ve been reading (Novavax, PayPal and Trudeau)

TBS Blog

(Some of these links are stale because I’ve been half-terming it, but I’ve included them anyway for commentary and record-keeping purposes.)

Finance and markets:

  • Perry Mehrling gathers a bunch of high-level money geeks for his 2022 “Money View” symposium. I was one of them.
  • It’s been a bad week in markets.
  • The disconnect between public fintech valuations (collapsed) and private ones (holding steady) is reaching a new phase of disreality.
  • What’s going on with PayPal?

    Lots has been written about the original stablecoin in the last few days – but nobody has really talked about the major elephant in PayPal’s room: the company’s interest rate exposure. For me, memories of MF Global abound. From the company’s latest 10K (my emphasis):

    We are exposed to interest rate risk relating to our investment portfolio and from interest-rate sensitive assets underlying the customer balances we hold on ourconsolidated balance sheets as customer accounts.

    As of December 31, 2021 and 2020, approximately 40% and 30%, [IK – which means 60-70% is not] respectively, of our total cash, cash equivalents, and investment portfolio (excluding restrictedcash and strategic investments) was held in cash and cash equivalents. The assets underlying the customer balances that we hold on our consolidated balance sheets as customer accounts are maintained in interest and non-interest bearing bank deposits, time deposits, and available-for-sale debt securities. We seek to preserve principal while holding eligible liquid assets, as defined by applicable regulatory requirements and commercial law in certain jurisdictions where we operate, equal to at least 100% of the aggregate amount of all customer balances. We do not pay interest on amounts due to customers. If interest rates increased by 100 basis points, the fair value of our available-for-sale debt securities investment portfolio would have decreased by approximately $272 million and $173 million at December 31, 2021 and 2020, respectively.

    As of December 31, 2021, we had $9.0 billion in fixed rate debt with varying maturity dates. Since these notes bear interest at fixed rates, they do not result in any financial statement risk associated with changes in interest rates. However, the fair value of these notes fluctuates when interest rates change. As of December 31, 2021, we also had revolving credit facilities of approximately $5.2 billion available to us. We are obligated to pay interest on borrowings under these facilities as well as other customary fees, including an upfront fee and an unused commitment fee based on our debt rating. Borrowings under these facilities, if any, bear
    interest at floating rates. As a result, we are exposed to the risk related to fluctuations in interest rate to the extent of our borrowings. As of December 31, 2021, we had approximately $98 million outstanding under these credit facilities. No amounts were outstanding as of December 31, 2020.”

  • Investors are the first casualty of war, says Niall Ferguson.
  • Online advertising is the internet’s original sin.
  • There’s a cyber war dimension to the Ukraine crisis.

World War 3 watch:

  • WION’s Palki Sharma explains the info war between the KGB and the CIA. (If you haven’t been watching Palki Sharma on WION, you’ve been missing out. She’s gearing up to be the next big internet phenomenon, I reckon.)
  • Here’s Palki Sharma again, but this time on what China will do if war breaks out in Ukraine.
  • As you can see below, occasionally Boris Johnson writes me emails:

    Sadly, they’re just incredibly personalised circulars. Nonetheless, one thing did catch my eye from his latest missive on “living with Covid”:

    “We are refreshing our biosecurity strategy to protect the UK against natural zoonosis and accidental laboratory leaks, as well as the potential for biological threats emanating from state and non-state actors.”

  • Vladimir Putin orders Russian forces to “maintain peace” in Ukraine. (This peacekeeping language is obviously just trolling the west, right?)
  • Meanwhile, I remembered today that this happened in the Poland vs Russia game (in Warsaw) in the European championships of 2012.
  • I’ve been told this Red Line podcast on private militaries
    is very good. (Haven’t listened to it yet).
  • Sanctions are coming.
  • The Petro-war of Chrystia Freeland.
  • Why the US is not ready for a peer-to-peer fight in Europe.
  • Pre-casting is now a confirmed military tactic. Which means: Russia didn’t invade Ukraine last Wednesday mainly because the West cunningly exposed the plan.

Authoritarian watch:

  • Trudeau is having a totalitarian turn, says the Spectator.  But even the New York Times says “the protestors have a right to be noisy and even disruptive”.
  • Some guy called Daniel Dickin was worried about Trudeau’s authoritarian tendencies back in December 2014.
  • Covid policy became a form of epidemiological communism, with imposed equality, even if it was equality of misery, says Prof Mark Woolhouse in a devastating new assessment of Covid lockdowns.

Covid origins:

  • The NIH continues to withhold critical documents that could shed light on the origin of the coronavirus pandemic.

Big pharma:

  • Novavax bets fears over mRNA technology will give its Covid jab an edge, says the FT.

    As I mentioned on Twitter, I marvel at the construction of this story. Why? Because it happily takes claims from Novavax’s president of R&D regarding the safety of mRNA vaccines at face value. At the same time — in the same paragraph no less — it states quite matter of factly that the mRNA platform “has become a target for misinformation by antivax campaigners”. This is extraordinary in my opinon on two levels. On the first level, it seems to imply that when normal people are fearful of vaccine side-effects or flag the very same issues the Novavax exec is flagging they are rightly to be slurred as “antivax campaigners”, a derogatory and toxic label that can get you deplatformed and even defunded. But when an actual competitor to the mRNA system (with a vested interest in implying that the vaccines are more dangerous than they are!) flags safety issues, he’s to be taken seriously, with no reputational reperucssions.

    Yes, the story later cites a John Hopkins epidemiologist countering some of the claims. But this is hardly the character assassination most others have been put through for saying pretty much the same thing. We have come to a point in the narrative formation about vaccines where only COMPETITORS have the right to challenge the accepted consensus about safety issues. It’s truly bizarre.

    Here’s what the exec says: “Myocarditis. I mean it really happens,” Glenn tells the FT. “The assessment has been made today that the risk and the outcome of that, which is you know not infrequent, is balanced with the risk of getting Covid . . . But the presentation is pretty bad. People who have myocarditis- they have severe chest pain, it’s difficult for the family and 96 per cent get hospitalised.” Said by anyone else, this would be flagged on social media with a fact check, a warning or potentially even moderated.

    On the second level, the story seems to be entirely oblivious about its own self contradiction. I will leave readers to speculate as to why that may be the case.

  • The WSJ notes Covid-19 vaccines were deadly in rare cases. Governments are now weighing compensation.

    (Again it’s the prose that fascinates me in this story. “U.S., U.K. plan to review suspected cases of serious vaccine side effects for potential payouts, while Norway has already awarded damages” but “it’s rare, rare, rare!” notably “Most of the side effects resolve quickly, but others in rare cases have required hospitalization and ongoing medical care. In even rarer instances, regulators and researchers tracking them say, side effects have been deadly.” But yes, governments are lining up for claims. Also worth stressing is the scale of the potential indemnity situation. If, and I’m not saying it is, but if — and I think it’s only prudent to consider the “if” without being branded a conspiracy theorist — if, these vaccines turn out to have sub-optimal health implications for those who had little to fear from covid itself because they were young or otherwise healthy, then is it conceivable that some governments might be on the hook for a 2008-scale de facto bailout of pharma companies? Fingers crossed these findings really are rare. But sovereign bond investors should be tuned into the risk that they might not be – and if they’re not, it’s potentially a very similar story to 2008, because short-term gains will have been privatised, while long-term costs will have been socialised.)


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