Carl Icahn Bet on the 'Big Short 2.0.' Now He Says the Game Was Rigged; Inside the Explosive Rise of Ultra-Risky 0DTE Options Trading; Hedge Funds Must Tell SEC Which Companies They Sell Short Under New Rules; As Red States Curb Social Media, Did Montana's TikTok Ban Go Too Far?; Sam Bankman-Fried's Closest Friends Become His Foes in Courtroom Clash; An incredible story by my friend Artem of how our donations are saving lives

1) It was in part because of the potential for manipulation by other market players that I didn't buy credit-default swaps on asset-backed securities filled with subprime mortgages and other toxic garbage going into the global financial crisis – one of the biggest mistakes of my career. I could have been one of the people profiled in The Big Short!

It can indeed be a rigged game, as Carl Icahn is learning the hard way. He made $900 million on this bet in 2020 and instead of banking his profits, he got greedy and is paying the price... Carl Icahn Bet on the 'Big Short 2.0.' Now He Says the Game Was Rigged. Excerpt:

Four years ago, legendary Wall Street investor Carl Icahn made a huge bet against the future of the U.S. shopping mall in what was called the Big Short 2.0. His wager pitted him against huge asset managers and hedge funds that routinely deal in a notoriously complex and contentious market.

The bet used credit-default swaps, essentially insurance policies insuring bonds against losses, tied to an index tracking bundles of loans to malls and other commercial properties. Purchasers pay a monthly premium, but the policies can pay out potentially huge sums if the bonds take a loss.

In interviews in 2020, Icahn described the short as "one of the best I've ever seen." At that point, the Covid-19 shutdowns were layering on hurt for malls – and credit-default swap, or CDS, positions held by his publicly traded Icahn Enterprises finished the year up about $900 million, according to corporate filings.

Over the year, Icahn – a veteran poker player – upped his bet, increasing his money at risk from $622 million at the end of 2019 to up to $2.1 billion in 2020.

Now, Icahn, 87 years old, is watching some of his jackpot slip away. In 2022, Icahn Enterprises' credit-default swap positions took a $742 million paper loss, according to corporate filings, and the firm's short credit positions have also been losers so far in 2023. Adding insult to injury: When Crossgates's debt recently sold for nearly $100 million less than its previous value, the price was just high enough to avoid triggering a payout on some derivatives Icahn used to bet against malls.

2) For most investors, speculating in options is usually a bad idea... but doing so with options that expire that day – so-called "zero days to expiration" or "0DTE" options – is batsh*t crazy. Here's a Wall Street Journal video on this: Inside the Explosive Rise of Ultra-Risky 0DTE Options Trading.

I think the SEC should simply ban this for retail investors...

3) The headline of this WSJ article is quite misleading: Hedge Funds Must Tell SEC Which Companies They Sell Short Under New Rules. The SEC is not requiring individual hedge funds to disclose individual short positions, as funds with more than $100 million in assets are required to do for their long positions in quarterly 13-F filings. Instead, only the total amount of each company's shares that are being shorted will be disclosed publicly. Here's an excerpt from the article:

The first rule requires institutional money managers with large short positions to file a new SEC form detailing their bets at the end of each month. The agency will then aggregate the data and publish it for the market. The positions and identities of individual short sellers won't be published, but investors will get a new window into which companies are being shorted.

4) I have a short answer to the question posed by the headline in this New York Times article: NO! As Red States Curb Social Media, Did Montana's TikTok Ban Go Too Far? Excerpt:

Many of the world's largest consumer technology companies will be closely monitoring a federal court hearing in Montana on Thursday that could decide whether TikTok will have to stop operating in the state next year.

The popular video-sharing app is suing Montana to halt a first-of-its-kind state law that would ban TikTok in the state on Jan. 1. The law was drafted by Montana's Republican attorney general and signed by its governor in May. TikTok is asking the court to block the ban through a preliminary injunction.

Montana is at the forefront of a crusade by state Republican officials to rein in Big Tech. Republican governors, attorneys general, lawmakers, and conservative policy groups say internet platforms like TikTok, Instagram and Snap are undermining conservative family values and preventing parents from protecting their children from harmful content and online predators.

Many also believe that such platforms censor conservative political views and that TikTok, whose parent company, ByteDance, is based in China, poses security risks to American users.

As I've written many times before, TikTok should be banned in the U.S. until it's 100% owned by a U.S. company or investors.

5) Things are quickly going from bad to worse for obvious fraudster Sam Bankman-Fried: Sam Bankman-Fried's Closest Friends Become His Foes in Courtroom Clash. Excerpt:

So far, three members of his inner circle – Mr. Yedidia, the FTX co-founder Gary Wang and Mr. Bankman-Fried's former girlfriend, Caroline Ellison – have testified against him. At least one other ally – the FTX executive Nishad Singh, a childhood friend of Mr. Bankman-Fried's younger brother, Gabe – is slated to testify.

Mr. Bankman-Fried is hardly the first defendant to have close associates turn on him. But rarely has a group as tightknit as FTX's leadership dissolved so quickly, and the sheer number of friends turned foes stands out, legal experts said.

Former associates often play a key role in organized-crime cases, but "to have those kinds of close relationships – former girlfriend, a former best friend – is not as typical," said Paul Tuchmann, an ex-prosecutor who now works in private practice.

Mark my words, Bankman-Fried will be convicted and be sentenced to at least 20 years in prison.

6) This is a truly incredible story my friend Artem just texted me...

He's an award-winning cinematographer who, despite having no military experience, immediately volunteered to join Ukraine's Territorial Defense Forces after the Russian invasion and now leads a unit on the front lines near Bakhmut (for further background on him, see the e-mail I sent out on May 4).

Here's a picture of Artem and me visiting the wonderful charity, TAPS, in Dnipro in March:

A couple of months ago, after I received generous donations from two friends and was making decisions about where to allocate the money, I texted Artem to ask if he had any urgent needs.

He replied that a Russian artillery shell had landed close to his unit and destroyed all of their night-vision goggles, so I immediately wired him $15,000 and he purchased some.

On Wednesday, Artem texted our mutual friend Chad and me:

My group was f*cked like never before. We have more than 100 dead and injured people. Trying to at least get our dead bodies back. I need drones, night visions, and cheap 4x4 cars. I'm driving now – haven't slept for the last two days. I need rest to clear my head.

On Friday, he sent us a 12-second video (posted here) saying:

Tonight I'm going on some mission to rescue guys and just want to let you know, if something happens to me, just take care of Irusya .

Chad and I were worried sick that we had seen the last of Artem, so we were so relieved when he texted us yesterday evening:

I made it back! Last night I rescued eight guys who were surrounded by Russians. Accompanying me were two Australians, professional soldiers Mitch and Blaze, who are very tough and experienced. Here's a picture of us before our mission:

I'm actually not supposed to go on missions like this because I don't have special forces training. But everybody else was tired, dead, or injured and they needed an English speaker to go with the Australians because the guys in the trenches don't speak English.

We had to lead the guys we rescued two kilometers through the forest to an evacuation point. Russians were everywhere: 300 meters to the right, 500 meters ahead, and 700 meters to the left. We got lucky. Russians had surrounded another battalion and weren't focusing on us, so we got into position the first night and got out the next night with the guys. There was only one small contact, and it was just friendly fire towards us.

We also recovered heavy weapons like a Browning M2 machine gun and VOG-17 grenade launcher and we took the patches from the bodies of our dead comrades with their names and battalion numbers to bring them to their families. The smell of blood and rats were everywhere.

We couldn't have done it without the night vision with thermal adapter I bought with the money you sent me.

It just saved eight people. Thank you, Whitney!

To get evacuated, we had to jump on top of a moving car because it was already full of people and a second car broke (that's me on the left with two of the guys we rescued):

You are a hero, Artem! Stay safe!

If you want to help Artem's unit (and many more like it), just make a donation at www.taps.org/Tilson and I'll immediately transfer the money to pay for drones, night vision, and vehicles.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.