Some folks want to make economics seem complicated. It ain't. Any who, some charts depicting the US economy...through demographics.
First, 15 to 54 year old US population (blue line) and those employed among that population (green line). You may note the end of population growth among them in '07 and not only the end but a significant decline in employment among them since '07. This is the population segment that undertakes most of the credit (creating the new $'s via undertaking debt...vs. elderly who destroy $'s via deleveraging/paying off their loans), buys most the homes, spends the most, earns the most. The lack of growth among them is paramount in understanding what took place in '08 as potential new home buyers ceased to exist and banks gave credit to anyone to keep the party going...'08 (and what has come since) was an entirely predictable demographic caused crisis.
Same as above but plus Federal Reserve set Federal Funds Rate % (black dashed line) and it's relationship to marketable federal debt (red shaded area). When working age population growth ceased, the Federal Reserve implemented ZIRP (free money to the largest banks) and likewise free money to Congress. The explosion in debt since is entirely due to the Federal Reserve's encouragement via their interest rate policy.
Same as above but inclusive of Federal Reserve balance sheet (aka, QE...yellow line) and Wilshire 5000 (representing all publicly traded US equities...light blue line). Since the end of working age population and employment growth, virtually free money has been passed to the largest and best connected US institutions / individuals. This, alongside the Federal Reserve purchasing Treasury bonds (to artificially lower the cost of federal government borrowing and boost the supply of dollars chasing the remaining assets) and mortgage backed securities (to artificially lower mortgage rates) has resulted in an asset explosion. This explosion has rewarded asset holders with vast riches and punished young adults, the poor, those on fixed incomes. These folks in the latter group get none of the asset wealth effect but instead get the fast rising costs of living due to the asset appreciation. When the Federal Reserve continually suggests they aren't responsible for the exploding US inequality...it is a bald faced lie.
Same as above, but focusing on the 15 to 54 year old employment to population ratio (not the silly unemployment numbers the BLS puts out...just dividing the population by those employed among them...white line). The Federal Reserve has two Congressionally mandated jobs..."promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates." You can forget stable prices (as the Fed has, via a system of discounting inflation) and just focus on full employment. As you'll note, the US has achieved "full employment" four times since the inclusion of females into the workforce...'89, '00, '07, '19...each time with employment around 75% of the available population. But note the declining rates, resulting in greater debt, resulting in soaring asset bubbles (and once those failed) notice the soaring QE and zero interest rate policy...resulting in the greatest rise in asset appreciation in US history. Asset holders made rich (for being asset holders)...those with little or no assets made poor (for not being asset holders). Simple stuff.
Below, again 15 to 54 year old horizontally moving population plus falling employed among them, ever lower Federal Funds Rate, and ludicrously vertical Wilshire 5000. In case you are wondering, this asset explosion is not a naturally occurring phenomenon against over a decade of zero working age population growth and seven million fewer employed among them. Nah, this looks like a currency collapse in progress...and once it goes vertical (Wilshire, Bitcoin, etc.)...you know you haven't got much longer to go (although we likely have significantly further to go in the vertical explosion...before the whatever it is that follows).
The two charts below throw Bitcoin into the mix, putting it's meteoric rise into context against demographics and the Federal Reserve's demographically driven Treasuries buying spree (and the concurrent hard stop of foreign buying of Treasuries).
While nobody can say whether immigration will return to high levels, fertility rates and births are scraping record lows...and simply gauging the feeder population that is the 15 to 24 year olds (chart below of population / employed among them), you should have a fairly good idea of why a return to a growing working age US population isn't likely.
Finally, here's how this plays out regarding the most fundamental of human needs...shelter or housing...plus I'll stretch out to the 15-64yr/old population and employed among them versus annual housing starts and the Federal Funds Rate (%). The Federal Reserve purchasing of MBS / QE has artificially pushed mortgage rates to record lows to induce an artificial housing frenzy amid a secular turn to outright declining potential buyers and soaring quantity of potential sellers (elderly who already own homes). If I didn't know better, I'd think the Fed hates young adults and is setting them up to be the bag holder of an awful oversupply of very expensive housing when the bottom invariably falls out...again.
Some say these are the seeds of the second American revolution as a class of unelected, undemocratic central bankers enrich a tiny majority at the expense of the majority...but I just like making colorful charts.
Extra Credit - 15 to 74 year old population / employees
For those curious how this looks on the widest possible cross section of population/potential employees, the following are the same charts but showing the 15 to 74 year old population and employees among them.
Last chart is pretty important, because it really highlights the declining participation of the aging population...suggesting that "full employment" will be significantly lower than '06 and '19 at much greater expense and require significantly greater QE to enable it all.
Microsoft founder Bill Gates is pushing drastic and 'fundamental' changes to the economy in order to immediately halt the release of greenhouse gasses - primarily carbon dioxide - and 'go to zero' in order to save the planet from long-prognosticated (and consistently wrong) environmental disaster.
Changes we'll need to make in order to realize Gates' vision include:
Allocating $35 billion per year on climate and clean energy research.
Electric everything.
Widespread consumption of fake meat, since cows account for '4% of all greenhouse gases.'
Retooling the steel and cement industries, which Gates says account for 16% of all carbon dioxide emissions, to inject up to 30% of captured C02 into concrete, and create a different type of steel.
Widespread adoption of next generation nuclear energy to supplement wind and solar.
And since producing plants to make fake meat emits gases as well, Gates has backed a company which usesfungusto make sausage and yogurt, which the billionaire calls "pretty amazing."
"When you say fungi, do you mean like mushroom or a microbe?" askedAnderson Cooper in a recent "60 Minutes" interview to promote Gates' new book, "How to Avoid a Climate Disaster."
"It's a microbe," replied Gates, adding"The microbe was discovered in the ground in a geyser in Yellowstone National Park. Without soil or fertilizer it can be grown to produce this nutritional protein -- that can then be turned into a variety of foods with a small carbon footprint."
(Speaking of which, it appears that we're already rounding the corner on C02 emissions)
Gates isn't just looking to cut future carbon emissions, he is also investing indirect air capture, an experimental process to remove existing CO2 from the atmosphere. Some companies are now using these giant fans to capture CO2 directly out of the air, Gates has become one of the world's largest funders of this kind of technology.
But of all his green investments,Gates has spent the most time and money pursuing a breakthrough in nuclear energy -- arguing it's key to a zero carbon future.
He says he's a big believer in wind and solar and thinks it can one day provide up to 80% of the country's electricity, but Gates insists unless we discover an effective way to store and ship wind and solar energy,nuclear power will likely have to do the rest. Energy from nuclear plants can be stored so it's available when the sun isn't shining and the wind isn't blowing.
Gates also admits he's a hypocrite - telling Cooper "I probably have one of the highest greenhouse gas footprints of anyone on the planet," adding "my personal flying alone is gigantic."
He's atoning for his climate sins by purchasing plant-based aviation fuel, switching to an electric car, using solar panels, and buying carbon credits to the tune of $7 million per year.
Gates' climate pivot is getting afull-court media press. As Paul Joseph Watson ofSummit Newswrites:
Bill Gates has been lauded as the man to “save the world” and help the planet reach zero carbon emissions in a new report by Wired Magazine, despite such standards not being reflected in the billionaire philanthropist’s own lifestyle.
The article investigates how Gates plans to achieve a “zero carbon” world and promotes his new book which argues “it’s time we make real societal, economic and logistic changes to our way of life to avoid disaster.”
According to Gates, the planet needs to reach zero carbon emissions in order to “avoid catastrophe.”
Gates’ efforts to reduce CO2 emissions may have an environmentalist sheen, but that goal also risks reducing living standards in the west, something that Gates isn’t likely to embrace for himself.
As wepreviously highlighted, while Americans are being told that the dream of owning private property is over under a future ‘Great Reset’, Gates and other billionaires have been buying up huge amounts of farmland.
Gates is now the biggest owner of farmland in America, according to a Forbes report.
While the mainstream media continues to champion Gates’ influence, he has received harsh criticism elsewhere.
As wehighlightedlast week, Lawyer Robert F. Kennedy Jr., son of Robert F. Kennedy and the nephew of former U.S. president John F. Kennedy, wrote a comprehensive report accusing Gates of engaging in neo-feudalism.
Kennedy warns that, “To cloak his dystopian plans for humanity in benign intentions, Gates has expropriated the rhetoric of “sustainability,” “biodiversity,” “good stewardship” and “climate.”
He also accused Gates of attempting to monopolise and dominate global food production, labeling it “a dark form of philanthrocapitalism based on biopiracy and corporate biopiracy.”
Kennedy was subsequently banned by Instagram after his report was published.
As wehighlighted earlier, pro-Gates messaging has also found its way into children’s television programming.
* * *
Does Gates have a plan to force the rest of the world to adopt his vision?
Frankly, we've had it with the constant stream of lies from Robinhood and neverending bullshit from the company's CEO, Vlad Tenev.
With Tenev scheduled to testify on Thursday, alongside the CEOs of Citadel, Melvin Capital and Reddit, the apriori mea culpas have started to emerge - if a little too late - the former HFT trader spoke late on Friday on the All-In Podcast hosted by Chamath Palihapitiya, who had strongly criticized Robinhood over the trading restrictions, and Jason Calacanis, a Robinhood investor, and said that “no doubt we could have communicated this a little bit better to customers."
What he is referring to, of course, is Robinhood's outrageous decision to restrict the buying of 13 heavily shorted stocks on Jan 28 that had been driven to record highs, including GameStop, whose shares had surged more than 1,600%.
Tenev said the restrictions were necessary due to a large increase in collateral/deposit requirements by the DTCC, but that was not spelled out in automated emails sent to Robinhood customers early on Jan. 28.
Robinhood CEO Vlad Tenev
And then he decided to pull the oldest trick and deflect attention from his own mistakes by blaming "conspiracy theories."
"As soon as those emails went out, the conspiracy theories started coming, so my phone was blowing up with, ‘how could you do this, how could you be on the side of the hedge funds,’" he said.
What Tenev did not say, or explain, is why his company - which is merely a client-facing front of Citadel, which buys the bulk of Robinhood's orderflow to use it perfectly legally in any way it sees fit - was so massively undercapitalized that the DTCC required several billion more in collateral to protect Robinhood's own investors against the company's predatory ways of seeking to capitalize on the gamification of investing making it nothing more (or less) than a trivial pursuit to millions of GenZ and millennial investors, a point which Michael Burry made so vividly.
Incidentally we know why Tenev did not mention it: it's because Robinhood's back office is a shambles of a shoestring operation, one which never anticipated either such a surge in trading not a multi-billion collateral requirement; had Robinhood been a true brokerage instead of pretending to be one, and run merely to open as many retail accounts as it could in the shortest amount of time, thus generating the most profit in the quickest amount of time to allow its sponsors a quick and profitable exit, it would actually have been on top of this.
It's also why Tenev's ridiculous pleas for immediate settlement instead of the usual T+2 arrangement, which has not been an issue for any other brokers, is nothing but a strawman argument which he hopes to present in Congress.
Which brings us to a totally separate topic, and one which Teven will one way or another have to address: the fact that Robinhood is a de facto subsidiary of Robinhood, whose entire business model is to sell retail orders to a handful of HFT market makers first and foremost... Citadel. In doing so the only ones who benefited from the surge in retail trading are Robinhood itself, by pocketing millions more from selling orderflow to Citadel, Virtu, Two Sigma, Wolverine and other HFT frontrunning "market-making" venues, as well as Citadel which made billions by having an advance look at the biggest surge in retail stock and option orders flow in history, and being able to trade ahead of and around it.
As an aside, how dare we allege that Citadel was buying orderflow to frontrun it? After all, that very allegation...
... coupled with the reminder that Robinhood engages exclusively in a practice called payment-for-orderflow (or PFOF)...
... which is what allowed Robinhood to provide "free" trading in the first place, that nearly destroyed us when last June Citadel's lawyer army threatened to sue us into the ground for suggesting precisely that?
Some key phrases of note from the above text:
"'Frontrunning' is an industry term of art that refers to an illegal form of trading."
"Citadel Securites does not engage in such conduct [i.e., frontrunning] and there was no factual basis whatsoever for ZeroHedge to publish such an incendiary, false, and reckless allegation to its 742,000 Twitter followers" [it's 771,000 now].
"ZeroHedge's statement obviously disparages the lawfulness and integrity of Citadel Securities' business pratices."
"Quite obviously, this most recent iteration of this same harmful allegation was not made in jest."
"We demand that ZeroHedge immediately retract this tweet by deleting it from ZeroHedge's Twitter page... A refusal to promptly take down these remedial steps will be seen as further evidence of actual malice and will only increase the already substantial legal risk faced by you and ZeroHedge."
Well, we now officially know all about Citadel's modus operandi because just a few days after we received that letter, none other than financial regulator FINRA, revealed that Citadel Securities was censured and fined for engaging in - drumroll - "trading ahead of customer orders" as Letter of Acceptance No. 2014041859401 revealed:
Now we admit that our financial jargon is a bit rusty these days, but "trading ahead of customer orders" sounds awfully similar to another far more popular "term of art", one which we know very well: frontrunning!
Jargon aside, some of the other highlighted words we are very familiar with, such as "hundreds of thousands"... and "559 instances" in which Citadel traded ahead of customer orders.
And while we may be getting a little ahead of ourselves here, it was Citadel's own lawyers that informed us on more than one occasion that:
"frontrunning" is an unethical and illegal trading practice."
So, what are we to make of this? Could it be that Citadel was engaging in at least 559 instance of what its lawyer called "unethical and illegal trading practice." Surely not: after all the lawyers would surely know very well how ridiculous and laughable their letter and threats would look if it ever emerged that Citadel was indeed frontrunning its customers.
But wait, it gets even funnier.
Back in April 2004, long before Citadel became the dominant market maker - and buyer - of retail orderflow controlling a whopping 27% of total US equity volume market share in 2020 according to Bloomberg and a staggering 46% of retail orderflow, it was Citadel's own General Counsel, Adam Cooper, who urged the SEC to ban payment for orderflow because it "distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers."
As Cooper also revealed...
"broker-dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers. Furthermore, the parties making such payments (either voluntarily or through an exchange-mandated program) are forced to find other ways to recoup the amounts of such payments, whether through wider spreads or a reduction in other benefits that otherwise could, and should, be provided to customers."
And the punchline:
Payment for order flow is a practice that on its face is at odds with a broker-dealer’s obligations to its customers. A broker-dealer has a fiduciary obligation to obtain the best execution reasonably available for its customers’ orders under prevailing market conditions. We do not believe that a broker-dealer that accepts payment for order flow and does not pass such payments on to its customers (either directly or through reduced execution fees or commissions) can consistently fulfill its best execution obligations.
Which leads us to the one time Citadel was actually telling the truth:
Because payment for order flow creates fundamental conflicts of interest that cannot be cured by disclosure, the Commission should ban payment for order flow altogether. It is crucial that this ban include not only exchange-sponsored programs, but also payment for order flow arrangements entered into privately between order flow providers and market centers.
Little did Citadel know that just 15 years later it would be the single biggest beneficiary of paying for orderflow, a practice which has allowed Citadel founder to amass a trophy collection of some of the most expensive real estate in the world.
"Stealing from millennials to give to the rich. Robinhood app sells user customer data to make a quick buck from the high-frequency trading (HFT) firms on Wall Street," that is what we wrote last month, in one of the first articles that expressed concern over the popular Robinhood investing app for millennials, which has shady ties to HFT firms and undermines its image of an anti-Wall Street ethos.
The conclusion was a searing prediction of what would happen a little over two years later:
A few anonymous venture capitalists told Bloomberg that Robinhood has already begun to see the consequences of their cozy relationship with Wall Street firms, which has degraded the company's image.
With six million clients, most of whom are millennials -- seeking an anti-Wall Street investing culture, could soon find out, that, they too, have been conned by Robinhood founders into thinking the app offers free investing. The lesson at play: nothing in life is free, even if it is from Silicon Valley.
That said, we were not the first to expose Robinhood's ways. That honor falls to our friend Joe Saluzzi and Sal Arnuk, who for over a decade have led the crusade against high frequency trading, and who in November 2014 wrote "Beware of Those Offering Free Retail Trades."
We are always suspicious when somebody offers us something for free. Usually, the one offering the free service has other ways of making money. For example, Google offers lots of free services like Gmail, Google Maps or Youtube. While the services are free, Google is still making money by targeting ads and selling data. The latest free thing which is creating quite a buzz (the hot term for this is “disrupting”) is free retail trading by a company called Robinhood.
What is Robinhood? According to an article in the Irish Times yesterday:
“Founded by Stanford mathematics graduate Vlad Tenev and Baiju Bhatt last year, Robinhood is a stock brokerage that charges no commission.”
Robinhood is offering free stock trades and no-cost real time market data. How do they do it? According to the company:
– They don’t have brick and mortar companies and don’t spend millions on Superbowl ads.
– Technology has allowed them to eliminate much of the human intervention and paper confirms.
And how do they make money? According to their website:
“Robinhood has two key revenue streams; charging interest for margin trading, and collecting interest on cash balances.”
Call us crazy but relying on generating revenue from margin interest and collecting interest on cash balances (where the account minimum is $0) sounds a bit risky and overly ambitious in a market which has been saddled with zero percent interest rates for the past 5 years. That’s why we think Robinhood must have another way of making money. Could it be that the founders, Vlad and Baiju, are planning on taking advantage of the rebates and payment for order flow that are embedded in the equity market? But how could two guys who graduated from Stanford in 2008 know that much about the market structure of the US equity market? From their website:
“After graduating from Stanford, roommates Vladimir Tenev and Baiju Bhatt moved to New York, where they built high-frequency trading platforms for some of the largest financial institutions in the world. They began to realize that electronic trading firms pay effectively nothing to place trades in the market yet charge investors up to $10 for each trade — and thus the idea for Robinhood was born. They soon ventured back to California to begin solving the problem of democratizing access to the markets.”
Seems like Vlad and Baiju know a lot more about US equity trading than we thought. Heck, they may even know that when a retail limit order is sent to the DirectEdge stock exchange, that order could qualify for a special rebate if it is attributed and displayed as a retail order. Here is how DirectEdge describe their retail attribution program :
“With this improvement, Members sending Retail Orders may elect to display those orders on the EdgeBook Attributed data feed with the generic retail identifier “RTAL” rather than their Market Participant ID (MPID). Including a standard retail identifier gives retail brokers greater flexibility and choice to participate in the attribution program that has helped improve execution rates for retail orders.”
Talk about leading the lambs to the slaughter. Retail orders that are being attributed are basically flashing bright lights telling the world that they are retail.
We’re not sure if Robinhood is planning on selling their order flow but it is certainly something that their customers should be asking them once they do start trading. While their website does not say anything about payment for order flow, in a CNBC interview from earlier this year, Vlad Tenev did say the company would be accepting payment for order flow:
“So, Robinhood has many revenue streams on Day One. Those include margin lending, payment for order flow, interest on cash balances. We’ll have those on Day One,” Tenev said on CNBC’s “Halftime Report”.
Right now, Robinhood is still busy attracting some high profile investors which include Snoop Dog, actor Jared Leto, the venture capital fund Andreessen Horowitz and Google Ventures (Robinhood raised $13 million in their latest financing round).
Two points here: Vlad Tenev's entire background is HFT - he knew from day one that he could create a "free brokerage" if only he were to quietly sell all the orderflow to a generous sponsor, say Citadel. It's also why we find laughable his recent tweet asking, obviously rhetorically, "What exactly is high-frequency trading? And is it evil?"
Tenev then went on into a rambling, nonsensical defense of HFT and why it is not evil, concluding that "high-frequency trading is just what you get when you apply technology to trading and getting data moving faster between trading centers will enhance trading for us all"...
... what he did not say is that HFT is just a perfectly legal and widely accepted way of frontrunning retail orderflow (usually by the order of a few milliseconds, explaining the presence of lasers at the New York Stock Exchange in Mahwah), and then selling it to the highest bidder, something he knew almost a decade ago when he launched Robinhood. We almost wonder if he did so in some low-lit Chicago backroom while sitting across from Citadel's Ken Griffin (this would be the other Citadel, not the one from 2004 which found payment for orderflow loathsome and deserving to be banned, but a Citadel which now considered PFOF a source of almost unprecedented riches and profit).
The second point we would like to address from the Themis Trading 2014 post is that while back then it was unclear if RH sold their orderflow, we now know that not only is Robinhood selling your orders to other internalizers, but that sale represents the biggest source of RH revenue by orders of magnitude. And thanks to the company's just filed latest Disclosure Form 606 we know just how much Robinhood made from selling your orderflow to Ken Griffin.
The chart below shows Robinhood's monthly revenues for the full year 2020, broken down in the three key categories: i) S&P500 stocks, ii) Non-S&P500 stocks and iii) Options. And while Robinhood made a not-too-shabby $247 million in 2020 from just selling access to your retail stock orders to such non-directed orderflow venue as Citadel, Vitru, Wolverine, Two Sigma, G1X, Morgan Stanley and others, it is the sale of option orderflow that has emerged as Robinhood's golden goose, having generated an impressive $440 million in revenue in 2020.
Which then brings us to the punchline: Robinhood is kind enough to break down not only revenue by product (going down to such granular detail as market orders and limit orders), starting several years ago the company also started disclosing who its biggest clients were. And here it will come as no surprise that in 2020, Citadel accounted for more than half of all Citadel revenues, or $362.5 million, exactly 53% of the company's total revenues of $687.1 million.
Would it therefore be farfetched to say that Robinhood is nothing more than a client-facing subsidiary of Citadel, one which pretends to offer free trades to tens of millions of young, naive traders, but in reality merely allows Citadel Securities to trade ahead and/or against this orderflow for which it paid over $300 million... and to generate record revenues of $6.7 billion!
Probably not, but we won't have a definitive answer until we find out just how much profit Citadel made from buying all this critical data, which gives it an early glimpse into not only each discrete individual trade but also a sense of which way the retail horde is moving, critical and extremely valuable data which until last August was public and available to all (with a slight delay) courtesy of Robintrack, and which last August was inexplicably halted.
We are confident that this week's Congressional hearings will quickly get to the bottom of this critical question of just how profitable this orderflow - which it paid Robinhood $362 million to procure - is for Citadel, because anything less will confirm that this latest hearing is nothing but a kangaroo court meant to appease retail investors that someone in Washington is doing something... when in reality everyone knows that what Citadel wants, Citadel gets and there is no sign that Citadel will ever tire of making billions out of the same orderflow for which it paid subpennies on the dollar to Robinhood.
As for Robinhood's trite virtue signaling of taking from the rich and giving to the poor, all it took was 30 billion subpenny rebates from Citadel for the firm to remember who really calls the shots.
With the recent news that Tesla has now purchased $1.5 billion in bitcoin, there's going to be no shortage of people that follow Elon Musk and make their first foray into crypto as well. And, since a majority of the country is broke, it seems like a great time for what is essentially crypto lending to emerge.
Enter "flash loans" - a new service where borrowers can very quickly take collateral free loans from lenders and use the proceeds for whatever they want, before quickly paying the loan back - sometimes in seconds. The most popular use for these loans has been arbitraging coin prices on different crypto exchanges, according to Bloomberg. But what makes these loans different is that they are "bundled into the same block of transactions being processed on the Ethereum digital ledger and are executed simultaneously".
The loans sometimes take just seconds:
In the example, the transaction gets submitted to the network, temporarily lending the borrower the funds. If the trade isn’t profitable, the borrower can reject the transaction, meaning that the lender gets their funds back in either case. As far as the blockchain is concerned, the lender always had the funds. The user pays blockchain processing fees.
“In a way, flash loans make everyone a whale,” said Nikola Jankovic of loan provider DeFi Saver. Another player in the flash loan space, Aave, says it has already processed $2 billion in flash loans just last year alone.
The outlook for the loans is robust, according to crypto investor Aaron Brown: “I can see them becoming big. The same thing exists conceptually in the traditional financial system. I can buy and sell things for many times my total wealth during a day, as long as by the end of the day everything nets out to a positive balance. It’s just with crypto there is no settlement delay, so to do the same thing you need flash loans."
“At the end of the day, flash loans are going to be everywhere,” Stani Kulechov, Aave's CEO, said.
Jack Purdy, an analyst at researcher Messari commented: “They have the potential to greatly increase market efficiency as there are no longer high capital costs to exploiting arbitrage opportunities. When anyone in the world can execute these trades across disparate markets, it helps crypto prices converge, tightening spreads and reducing inefficiencies.”
On the other side of the "coin", however, the loans can also be used to manipulate coin prices. “Flash loans will continue to be associated with manipulation and hacks. But they’re not really essential to those things, they just mean manipulators and hackers no longer need capital,” Aaron Brown concluded.
President Joe Biden’s nominee to be chairman of the Securities & Exchange Commission, Gary Gensler, who we profiled here and is referred to as "the sheriff", could have a net worth between $41 million and $119 million.
Gensler was previously the chairman of the CFTC and a partner at Goldman Sachs. He disclosed his net worth as part of disclosures he had to file with the Office of Government Ethics, Bloomberg noted on Friday. A majority of his money was made at Goldman, where he joined in the late 1970's after graduating from the University of Pennsylvania. He became one of the youngest partners in Goldman Sachs history.
Gensler's largest holding is a stake worth $25 million and $50 million in the Vanguard Total Stock Market ETF. He also disclosed that he had between $50,000 and $100,000 in capital gains from holding shares of Tesla, the only stock that is listed individually on his disclosures. He has since sold the position.
He also disclosed that he will participate in a benefit plan from Goldman Sachs which is expected to pay out $977 per month starting at age 71.
Recall, we wrote about Gensler's nomination in mid-January.
His arrival will likely be a stark difference from the last 4 years of Jay Clayton, as Gensler's resume includes going to war with major financial titans when he was head of the Commodity Futures Trading Commission - and winning. Financial lobbyists sometimes simply called him "the enemy" during the 2010 Dodd-Frank Act battle.
Justin Slaughter, a consultant at Mercury Strategies, said: “The sheriff is coming to the preeminent financial regulator in the world. It means regulation and enforcement are about to get much tougher.”
When he arrives at his post, Gensler will not only have to deal with a Fed-induced stock market mania, but also tensions with China and the growth of private equity.
Graham Steele, who served as an aide to Senator Sherrod Brown of Ohio, said: “He developed a reputation for being adversarial to Wall Street because he came from the industry and understood the business so he could push back against their arguments when they were hollow.”
Ian Katz, an analyst at Capital Alpha Partners in Washington, commented: “What’s really unnerving to a lot of people is that it’s pretty clear that he doesn’t need them. He doesn’t need to go back there for a job, he’s made his money. He’s not terribly interested in who he ticks off or not and that’s very powerful.”
