Cashing Out

“Thanks for everything, but I’ll be leaving now. I’m a crypto magnate.”

Is what Aziz McMahon, Goldman’s (former) managing director and head of emerging market sales in London, said, as he walked away from the bank after making a fortune in Ether and Dogecoin.

That’s not an actual quote. I have no idea how McMahon explained the situation to Goldman. But it’s a real story.

According to a trio of former employees and colleagues who spoke to CNBC, McMahon made around £10 million on crypto bets. Goldman confirmed McMahon left the bank, but declined to provide a reason. McMahon “was not immediately available for comment.”

The Guardian reported the news earlier this week, as did efinancialcareers. Now, it’s front page news on CNBC. What a time to be alive.

On that note, global equities (You remember those, right? Stocks are what people used to trade before making $14 million was as easy as putting money on the right Shiba Inu and praying for an Elon Musk tweet) looked to close out a harrowing week with gains. Despite Friday’s upbeat tone, it was a rough stretch (figure below).

The Nasdaq was poised for a fourth consecutive weekly decline, even as US stocks tried to build on Thursday’s rebound into the weekend.

Inflation fears were all that mattered this week. Everyone knew hot prints were coming. And everyone was well aware the Fed would be inclined to persist in the “look through” and “transitory” talking points in all but the most extreme scenarios. But it took just one round of above-consensus data (CPI and PPI) to upset the apple cart.

Maybe that’s a testament to how stretched valuations are in some corners. Or maybe it’s a testament to how jittery folks are about the prospect of a macro regime shift when modern market structure was built atop an entirely different regime.

“There’s no ‘happy ending’ that springs to mind with all the conflating problems we have right now,” Rabobank’s Michael Every said, before running quickly through the different permutations as follows,

Inflation and rate hikes? Bad. Inflation and no rate hikes? Still bad. Stagflation? Very bad. Deflation? Really bad. And let’s not get started on the underlying big picture risks. Nonetheless, markets are going to market while they can: by focusing on getting stocks higher.

Bloomberg dutifully provided Friday’s narrative, noting that “markets appear to be regaining their equilibrium at the end of their biggest retreat in 11 weeks, with the focus of the benefits of an economic rebound overriding worry about the negative side-effect of inflation.”

On the virus front, Americans are allowed to go maskless now, provided they’ve been fully vaccinated. Of course, it’s not as if a police officer is going to stop you and demand you present your vaccine card if you’re caught without a face covering at the grocery store, so it wasn’t obvious the new CDC guidance would serve as an incentive for those who haven’t yet been inoculated. More on that later.

Germany, meanwhile, vaccinated almost 2% of the population on May 12 and 13, Health Minister Jens Spahn said Friday. Around 36% of Germans have received at least one dose.

“The UK is worried about new variants, the US is loosening mask rules, Singapore is tightening rules, India’s case count may have peaked, and Germany’s has fallen back encouragingly,” SocGen’s Kit Juckes wrote, summing up an uneven global epidemic recovery to match the uneven economic rebound. “Either the US inflation uptick is temporary, or the Fed is dangerously complacent,” he said, of this week’s market obsession. “Either way, we’re going to see tolerance of higher inflation tested further in the months ahead.”

Coming full circle, Rabobank’s Every noted that “Colonial [Pipeline] paid Russian hackers a ransom of $5 million IN CRYPTO, which could not make a clearer case for why the SEC might want to be step in.”

At least Aziz McMahon cashed out in time.