This week’s world-famous-news-haiku-competition™ is about how Bitcoin and Gold are surging against the dollar, following the Treasury’s interventions in the bond market and our national debt surpassing $40 trillion. Send me your entry — to haiku at cheddar dot com — by noon ET Thursday, for consideration by your Cheddar peers. (Don’t worry if you get a bounceback email. The mailbox is working, it’s just been inundated with haikus lately, thank goodness!)

Matt Davis — Need2Know Chedditor

Table of Contents

What’s the Stock Market Up To, Eh?

$SPX ( ▲ 0.32% )   $DJI ( ▲ 0.3% )   $NDX ( ▲ 1.59% )  

Companies Mentioned in Today’s Newsletter

$JPM ( ▲ 0.08% )   $SPCX ( ▲ 2.19% )   $ANTHZZX ( ▲ 0.42% )   $DKS ( ▼ 30.68% )   $NKE ( ▼ 3.12% )   $ADDYY ( ▼ 1.46% )   $FLOSZZX ( ▼ 0.04% )  

Billionaire in AI-Written Bonds Op-Ed Controversy

Imagine being U.S. Treasury Secretary Scott Bessent. Just last year, you fawned over your legendary mentor, hedge fund manager Stanley Druckenmiller, telling the Financial Times that “in macro, there’s Stan and then everybody else.” You were probably hoping for a proud nod from the master. Unfortunately, Druckenmiller outsourced roasting Bessent in a Wall Street Journal op-ed to an AI-bot, instead. As the FT noted, there are “some tell-tale signs of AI involvement in this WSJ op-ed.” 

And what a computerized slap! Stan, or rather, Stan’s bot, savaged the Treasury’s bond buybacks, declaring that “this wasn’t liquidity management, it was price management.” The AI-crafted rhetoric grew dramatically philosophical, warning that “every basis point of artificial yield suppression is a subsidy to procrastination.”

The Drucken-bot also warned that “once markets believe Treasury is defending a price, every rise in yields becomes a test of official resolve, and the operations must grow to survive the tests.” It ended with an accusation of playing politics: “Debt management that even appears to follow the political calendar spends the one asset that took two centuries to accumulate: the credibility of the Treasury market.”

Ultimately, if your idol is going to demolish your credibility, it’s a bit of a silver lining to know they probably did it via copy-paste, I suppose. Druckenmiller told journalists “of course” the column was written with AI, yesterday. “I write everything using AI now,” he said. Although the journal is yet to respond to requests for comment.

Quote of the Day

JPMorgan Eases Lending Rules for AI Nouveau-Riche

There is nothing Wall Street loves more than "disrupting" its own ancient, sacred rules when a giant pile of new money is up for grabs. Usually, if you’re a newly public company insider, JPMorgan Chase $JPM ( ▲ 0.08% ) treats your stock like a volatile hot potato. The bank’s standard policy dictates waiting a solid 135 days after an IPO before accepting those shares as collateral for loans. But if you're a SpaceX $SPCX ( ▲ 2.19% ) engineer or sitting on millions of dollars of Anthropic $ANTHZZX ( ▲ 0.42% ) stock, congratulations! You get the VIP fast-track.

JPMorgan has shortened the timeline, eagerly letting AI's nouveau-riche borrow against their holdings sooner. Why sell stock and suffer the indignity of taxes when you can live on cheap debt secured by highly volatile, newly minted paper wealth? Anthropic’s valuation has skyrocketed from $18 billion to $965 billion, with a potential $2 trillion October float. With some engineers sitting on tens of millions of dollars in stock, banks are salivating. And of course, what goes up will never come down again, ever.

When asked about this sudden flexibility, JPMorgan told the FT, “Our practices exceed regulatory requirements, and we have always assessed transactions on a case-by-case, client-by-client basis, factoring in elements such as market liquidity.” 

Rules continue to be for poor people.

Sneaker Stocks Slide as Consumers Tighten Wallets

The greatest threat to global capitalism isn't, let’s say… geopolitics. It’s your refusal to buy another pair of $200 sneakers. Because Foot Locker owner Dick’s Sporting Goods $DKS ( ▼ 30.68% ) (don’t Google it…) saw its stock plunge as much as 27 percent this week after admitting that consumers are stubbornly refusing to play along. Executive Chair Ed Stack said the “industry is carrying too much inventory” while shoppers have grown “even more cautious than expected.”

With the cost of basics rising, the head of the Boston Federal Reserve noted this week that poorer Americans are struggling to “make ends meet.” And the first victim of this cost-of-living crisis? Discretionary spending.

But Stack had an even more tragic excuse for the pile of unsold shoes gathering dust in warehouses. Apparently, “certain legacy footwear silhouettes and apparel franchises are simply not resonating the way they once did.” That means your favorite classic kicks are officially uncool, and Dick's is stuck with a mountain of them. Bad news for Nike $NKE ( ▼ 3.12% ) and Adidas $ADDYY ( ▼ 1.46% ) , too, I’d say.

Until fuel prices settle down and the world stops sliding into chaos, I’ll be happily walking around in my un-resonant old sneakers for a while.

Song of the Day: Cleo Sol, ‘Gentlewoman’