Welcome back to Opening Bell, team. I'm Phil Rosen. In light of all the crypto hubbub last week, today we're skipping the econ lesson and pivoting instead to history.
You've seen the movie "The Big Short," right? It gives maybe the clearest, most entertaining breakdown of how many, many very bad bets on subprime mortgages kickstarted the 2008 Financial Crisis.
The most serious domino to fall 14 years ago was Lehman Brothers, the classic too-big-to-fail behemoth that did in fact go under.
All this is a roundabout way of saying the collapse of Sam Bankman-Fried's crypto exchange, FTX, is severe and dramatic enough to warrant its own movie in a few years.
If this was forwarded to you, sign up here>$4. Download Insider's app here.>$4
1. In the last few days, I've had many conversations with Wall Street and blockchain execs who have drawn comparisons between FTX's demise and that of Lehman Brothers in 2008.
My main question has been: $4
The consensus seems to be a resounding "kind of."
Reminisce with me for a moment: In the years leading up to 2008, Lehman Bros loaded up its balance sheet with huge amounts of $4.
But virtually overnight the value of those holdings evaporated as the housing market collapsed. Lehman went under, and the world sunk into its $4.
Meanwhile, the FTX empire similarly collapsed last week because its balance sheet was weighed down by an asset — its native FTT token — that saw its value virtually hit zero overnight. It raised serious concerns about the $4 and sparked a domino effect that led to$4.
But Jan Szilagyi, chief executive of financial services firm Toggle AI, told me that the size of Lehman, for starters, made for a much more $4 than anything a crypto firm could bring.
"An organization like Lehman would be at the heart of a relatively complex financial system, fixed and extended into mortgages, extended to consumer loans, extended into obviously trading and so on," Szilagyi said.
Because $4 to pay for mortgages or credit cards, he added, there's less risk of a contagion hitting mainstream markets.
That doesn't mean contagion $4, however.
"The crypto ecosystem has been made fragile by leverage and interconnectedness, just as the traditional financial system was fragile because of leverage and interconnectedness in 2008," Hilary Allen, a financial regulation expert at American University, told me a couple days ago.
"The primary use of crypto is speculation, and so its failure is unlikely to have broader repercussions so long as the traditional financial system has $4," she noted.
Lehman or not, risks remain for players big and small in the digital asset space.
There's no lender of last resort for a crypto firm today, unlike in 2008 with Wall Street, but David Siemer, CEO of Wave Financial, told me a $4 could emerge from FTX's ashes. In his words:
"The industry $4 before it can recover, whether this comes from enhanced government policies on how to interact with crypto, or more sophisticated asset managers handling the movement of large sums of assets."
What do you think is the more likely result of the fall of FTX?
A) Significantly tighter regulation of crypto in the US and globally
B) The market recovers and it's eventually back to business as usual
Let me know on Twitter (@philrosenn>$4) or email me (prosen@insider.com).
In other news:
2. US stock futures fall early Monday, after voting member Christopher Waller said the Fed's not "$4" on inflation and the endpoint of rate hikes is likely "a ways off". $4
3. Earnings on deck: SMC Corp., Tyson Foods Inc., and more, all $4.
4. America's biggest wealth manager explained why he's telling clients that going all-in on stocks is the right move now. Acclaimed expert Peter Mallouk shared how he's recommended people invest in stocks and bonds amid uncertainty — $4
5. Stocks could see a bull run in 2023 but that doesn't mean inflation won't stay sticky. Bank of America analysts forecasted that prices will remain high heading into next year and the Fed will keep hiking rates — $4.
6. The former chief economist of PIMCO said the Fed has smashed the housing market and killed rampant speculation. He pointed to the doubling of mortgage rates and trouble in crypto as signs that the Fed has sufficiently tightened its monetary policy. $4
7. The latest CPI report was a game changer for the stock market and a 25% rally could be coming in the next 50 days. That's according to Fundstrat's Tom Lee. He thinks favorable inflation data could repeat again next month, $4
8. Goldman Sachs shared an options trading strategy with an 18-year track record of adding income to investors' portfolios. As forecasts over consumer price data and recession fears loom, the firm laid out which bets can withstand a choppy macro environment. $4
9. The manager of an international Fidelity fund broke down why he invests without obsessing over traditional valuation metrics. This portfolio manager runs the firm's market-crushing international small-cap, and revealed why it's set to keep outperforming even as a recession nears. $4
10. El Salvador didn't have any bitcoin holdings in FTX. At least that's what Binance's CEO tweeted out: "I exchanged messages with President Nayib a few moments ago. $4
Keep up with the latest markets news throughout your day by checking out $4, a dynamic audio news brief from the Insider newsroom. $4
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn>$4 or email prosen@insider.com
Edited by Max Adams (@maxradams>$4) in New York and Hallam Bullock (@hallam_bullock>$4) in London.