Jamie Dimon’s Annual Message of Doom

Plus: Milk wants you to know it’s cool again ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

April 5, 2023

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TOGETHER WITH

Good morning.

Much like the Houston Astros signing away their stadium’s naming rights to Enron in 1999, the Miami Heat play in a home arena whose name is suddenly synonymous with financial fraud. We’re talking, of course, about FTX, which agreed in 2021 to pay $135 million over 19 years to the team and Miami-Dade County to have their name plastered all over the venue.

But the FTX Arena era is finally coming to a close. On Tuesday, the county signed a $117 million, 17-year naming rights deal with Miami-based software firm Kaseya Ltd., after a search that the Heat’s business ops head described as anything but leisurely. Let’s just hope that despite the rush, they left plenty of time for vetting.

Morning Brief

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Jamie Dimon sounds off.

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Branson, we have a problem.

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Milk wants its groove back.

Banking

Jamie Dimon Dishes on Banking Crisis in Annual Shareholder Letter

America’s shadow Treasury Secretary would like you to check your inbox.

On Tuesday, JPMorgan Chase chief Jamie Dimon released his annual letter to shareholders and, like every year, it’s more of a manifesto than a greeting card. As big banking’s longest-tenured chief executive and the only leader who knew life at the helm before the 2008 financial crisis, Dimon unsurprisingly had plenty to say — and fingers to point — about the banking industry’s current turmoil. Consider this the SparkNotes.

Screamin’ and Yellen

So who does Dimon blame for the collapse of Silicon Valley Bank, Signature Bank, and Credit Suisse? Well, not the banks, exactly. Nor their panicky, wealthy depositors, either. Sure, banks failed to adjust for The Fed’s (none-too-surprising) rate-hiking adventure, leaving their large portfolios of US treasury bonds exposed and plummeting in value as money got more expensive. But regulators encouraged such behavior, Dimon insists, and conducted annual stress tests that failed to account for the implications of rate hikes. “This is not to absolve bank management — it’s just to make clear that this wasn’t the finest hour for many players,” Dimon wrote.

Ominously, “America’s Banker” claimed that the crisis is “not yet over.” But that’s just one man’s take. Actual Treasury Secretary Janet Yellen also made public remarks about the banking mess on Tuesday, inadvertently placing her and the elder Wall Street statesmen at loggerheads:

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“We should not aim for a regulatory regime that eliminates all failure but one that reduces the chance of failure and the odds of contagion,” Dimon wrote, adding that increased or knee-jerk regulations could exacerbate big banks’ shrinking appetite for more democratic consumer services, like home mortgage lending.

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Yellen took a different tack, claiming “matters are stabilizing,” and adding that officials “need to decide what regulatory and supervisory changes need to be put in place that maybe this episode has highlighted. But we don’t have a weak banking system.”

Sunday Nights on HBO: Succession is on everyone’s minds these days, including the 67-year-old Dimon. He assured in his letter that the question of his eventual replacement “is on the agenda every time board members meet — both when they are with me and when I am not in the room.” It’s a question that is now almost a decade old.

Frankly, My Dear: Perhaps explaining why Dimon’s note was particularly prickly this year is a certain arraignment that occurred in Lower Manhattan Tuesday afternoon when the Department of Justice charged Charlie Javice, founder of college financial planning platform Frank, with defrauding JPMorgan of $175 million when the bank acquired the startup in 2021. Oh, did you think we were talking about a different arraignment?

– Brian Boyle

Aerospace

Virgin Orbit Files For Chapter 11

And I think it’s gonna be a long, long time…

In a move that wasn’t totally out of the blue, Richard Branson’s satellite launch company Virgin Orbit filed for bankruptcy protection in the US Tuesday morning. The company had furloughed staff and halted operations last month as it foraged for extra funding which evidently didn’t materialize.

Failure To Launch

Virgin Orbit is a smaller sibling to Virgin Galactic, Branson’s space tourism company, which theoretically positioned the company as a rival to US billionaire-backed space-race companies. Branson managed to beat Jeff Bezos into space by nine days aboard a Virgin Galactic flight, but his satellite ambitions have fallen to Earth. Bloomberg reported that while Branson has fronted a total of $1 billion to keep Virgin Orbit afloat, including $60 million in the last six months, he seems to have boarded an escape pod during the company’s last desperate bid for funding.

Virgin Orbit’s woes crystallized in January when its maiden launch, and the first satellite launch ever from British soil, was a failure:

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The company used a modified Boeing 747 as its launcher, and officials told reporters that a missing filter in the rocket’s second-stage engine may have been the culprit. “This is like a $100 part that took us out,” CEO Dan Hart said.

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“Questions surrounding the technological reliability and capability of Virgin Orbit’s Boeing 747-400 launch platforms have the potential to dissuade future investors,” Madeline Wild, an aerospace analyst at GlobalData, told The Daily Upside. But she also added that Virgin’s questionable kit wouldn’t necessarily be off-putting to potential buyers.

Bankruptcies are not uncommon in the commercial satellite sector, and they don’t necessarily signal heat death. In 2020, three satellite communications companies went belly up in the span of three months. One of those, a UK company called OneWeb, received a government bailout and has launched over 600 satellites to date. Considering the UK’s current economic health, Virgin Orbit should not expect a bailout

Insult to Injury: As if Virgin didn’t have enough humble pie on its plate, its UK broadband service got taken down by a widespread outage for a few hours early Tuesday morning. If you think a failed rocket launch is bad, try dealing with a bunch of angry Brits before they’ve had their morning cup of tea.

– Isobel Asher Hamilton

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Agriculture

Milk Wants To Be Cool Again

(Photo credit: Unsplash/Brian Suman)

Time to milk milk.

Big Milk is trying to reinvent itself as a performance-enhancing beverage in an attempt to recapture younger consumers, according to a feature in The New York Times. The Milk Processor Education Program, an industry group based in Washington DC, is trying to market cow’s milk to young women athletes and gamers.

Crying Over Spilt Almond Milk

While millennials may have broken ground for oat lattes, it’s the generation after them that have the milk industry worried. Market research firm the Brightfield Group found 8% of Gen Z buy traditional cow’s milk for themselves, compared to 37% of baby boomers. “We have to reclaim milk’s mojo,” MPEP CEO Yin Woon Rani told the Times.

Health and environmental concerns have been big factors in younger generations turning their nose up at milk. The plan now is to try to rehabilitate milk’s reputation on the health side of the equation, and that’s potentially the smarter half to target, as the US dairy industry isn’t getting any greener:

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The US dairy industry has undergone waves of consolidation in the last 20 years, according to an analysis by The Guardian. That means most of the farms that remain today are big, ecologically problematic, factory farms.

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“The get big or get out push from our political and industry leaders has come true,” Sarah Lloyd, a Wisconsin dairy farmer, told The Guardian. “And enabling this concentration has led to the withering of small and medium farms.”

A Steer Is Born: If the dairy industry needs a mascot that speaks to Gen Z, it may have found the hero it deserves. A cow in the UK named Doris achieved viral fame last week after her farmer shared footage of her quiet quitting – that is, “pretending” to be asleep to get out of milk duty.

– Isobel Asher Hamilton

Extra Upside

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Let There Be Liquids: London City Airport scraps 100 mL liquid limit from security lines.

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Sweet Relief: home sale prices fell 5% in Manhattan in Q1.

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Just For Fun

A scroll through history.

How romantic.

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