National

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Closer

Axios Closer

And you thought cargo pants were out of style.

State of play: You were wrong, if sales at Abercrombie & Fitch are any indication.

Cargo pants sold "quite well during back-to-school" shopping, Abercrombie CEO Fran Horowitz said Tuesday on an earnings call. "We didn't have enough."

It's part of a broader trend toward "non-denim bottoms," he said.

What others are saying: "They're effortless, cool, trendy and so comfortable," EOnline reports.

The bottom line: Celebrities are apparently leading the way, with Kylie Jenner herself wearing them this summer.

Other celebs embracing the "throwback trend" include Halle Berry and Hailey Bieber, according to Parade.

Cargo pants are back: Abercrombie can't get enough

A man in a pink shirt and cargo pants walks the sidewalk

NBA player Shai Gilgeous-Alexander is seen in cargo pants on Nov. 16, 2022, in Washington, DC. Photo by THE HAPA BLONDE/GC Images

Fashion

As sports gambling sweeps across the nation, pressure is building on sportsbooks, regulators and leagues to ensure that no one gets an unfair advantage.

Why it matters: Suspicious betting on a recent UFC fight cast a spotlight on the need to ensure a level playing field for gamblers.

State of play: After a slew of bettors appeared to get a heads up on a pre-fight injury, officials turned to a little-known but increasingly powerful firm called U.S. Integrity to investigate.

“At our core we are an anomaly detection company, so we look for abnormalities across the sports betting ecosystem and then highlight them,” Scott Sadin, COO of Las Vegas-based U.S. Integrity, tells Axios in an exclusive interview.

Catch up quick: A featherweight fight on Nov. 5 between Darrick Minner and Shayilan Nuerdanbieke ended suddenly in the first round in a cloud of suspicion after the odds on the fight “moved dramatically in the hours leading up” to it, ESPN reported.

“Bettors were convinced that not only would Nuerdanbieke win, but he would do so in the first round."

What they're saying: Sadin declined to address the UFC investigation, but said the company is focused on exposing the “misuse of insider information, potential game manipulation and match-fixing concerns,” zeroing in on “abnormal” bets, officiating, roster decisions, plays and coaching maneuvers.

How it works: U.S. Integrity uses algorithmic analysis, sifting through betting data in real time on behalf of certain clients — and in other cases analyzing wagers after the fact upon request.

The company takes those insights and then uses old-fashioned, shoe-leather investigative techniques to assess whether any manipulation took place or whether anyone got an unfair edge. 

Clients include the largest sportsbooks — such as DraftKings, BetMGM and Caesars — as well as sports leagues.

“There is very much a balance we have to strike between art and science,” Sadin says. “It’s a combination of both.”

The big question: What constitutes an unfair edge? It’s not necessarily illegal to make a bet based on personal knowledge about a player’s health, for example.

But leagues and sportsbooks don’t like it — and anyone they catch doing it can be punished, Sadin says. Gamblers, for example, can be banned from certain sportsbooks or limited to smaller bets.

"Whether it’s illegal or not we want to highlight it for the key stakeholders so that operators can move forward,” Sadin says.

Worth noting: U.S. Integrity’s duty is to its clients, not to the public. 

Sadin says the company does not feel a responsibility to report matters to the public. That’s up to the leagues, sportsbooks or regulators, he says.

The bottom line: With the proliferation of legalized sports betting across the country, sportsbooks and leagues must work to assure the public that the market isn't rigged.

Meet the secretive company that investigates suspicious sports betting activity

Illustration of a die wearing a burglar mask.

Sports betting

Veteran crypto boss Barry Silbert, chief and founder of Digital Currency Group, in a letter to shareholders Tuesday tried to shore up confidence in the crypto conglomerate as speculation around the health of its subsidiary Genesis reached fever pitch. 

Why it matters: When Silbert talks, the crypto industry tends to listen. That he would speak out in defense of his business and its main subsidiaries suggests that the FTX-catalyzed contagion has had an impact.

Driving the news: "Taking a step back, let me be crystal clear," Silbert said in a letter seen by Axios. 

"DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system."

Context: Concerns about the health of the DCG enterprise started when its lending subsidary, Genesis, halted redemptions and new loan originations.

The firm reportedly was struggling to raise $1 billion in capital over the past weekend and had been rebuffed by high-profile shops, crypto-native and not. 

What he's saying: Silbert led with Genesis' situation, but stopped short of providing any more information about it. Rather, he emphasized DCG's health and made clear its Genesis-related and unrelated liabilities.

"DCG currently has a liability to Genesis Global Capital of ~$575 million, which is due in May 2023.  These loans were used to fund investment opportunities and to repurchase DCG stock from non-employee shareholders," he said. 

"Aside from the Genesis Global Capital intercompany loans due in May 2023 and the long-term promissory note, DCG’s only debt is a $350M credit facility from a small group of lenders led by Eldridge."

What others are saying: "It seems Genesis has 'days, not weeks' to reach a creditor agreement in order to avoid Chapter 11," founder and chief of Messari Ryan Selkis tweeted Monday, adding that he is optimistic about DCG. 

The intrigue: The day seemed a brighter one for another DCG company, Grayscale. Grayscale Investments Bitcoin Trust's, or "GBTC," market-defying jump on Tuesday pushed the price of the world's largest bitcoin fund closer to its net asset value. 

Shares were up 3% near the closing bell Tuesday, outperforming bitcoin. 

Crypto boss Barry Silbert breaks silence amid feverish speculation

The Digital Currency Group chief tried to shore up confidence in the crypto conglomerate as speculation around the health of its Genesis subsidiary reached fever pitch.

Illustration of a person in a suit holding an umbrella made of money

Cryptocurrencies

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Crypto

Axios Crypto

FTX bankruptcy judge on Tuesday gave a win for customer privacy — but it wasn't really just about privacy. It was about money.

Driving the news: The post-Sam Bankman-Fried FTX appeared before the Delaware Bankruptcy Court on Tuesday asking — among other things — that the names of everyone (everyone!) it owes money to be redacted from the official record, for the time being.

Why it matters: On the one hand, a core value of the U.S. bankruptcy system is transparency. On the other, by listing everyone's names, it could put a target on the backs of FTX customers, who have it bad enough right now.

Zoom out: The attorneys for the FTX family of companies made a case that they are dealing with a gigantic mess that could take longer to untangle than typical bankruptcies.

"Your honor, what we have is a worldwide organization, but an organization that was run effectively as a personal fiefdom of Sam Bankman-Fried," James Bromley, a partner at Sullivan & Cromwell who is representing FTX, said in his opening remarks.

Yes, but: The motion for redaction was definitely not just about privacy. FTX new executives believe that the customer list that FTX has is a valuable asset, one they could potentially even sell in order to recoup more funds to repay creditors.

What they're saying: "We are talking about information, and information here is an asset," Bromley said.

Further, in a filing in advance of the hearing from restructuring firm Alvarez & Marsal, managing director Edgar W. Mosley II wrote: "Public dissemination of the Debtors’ customer list could give the Debtors’ competitors an unfair advantage to contact and poach these customers."

Two attorneys rose in support of the motion to redact, on behalf of two different groups of customers.

Judge John T. Dorsey granted an interim motion to redact the names of all creditors, but that will be revisited on Dec. 16. 

Eye-popping stat: The estate currently estimates that there could be a million or more customers owed money. 

In the weeds: Cryptocurrency customers are unique, Sullivan and Cromwell argued. "Many customers invest in cryptocurrency in part not to be publicly identified," Brian D. Glueckstein argued on behalf of the debtors. "Identifying the personal contact of the customers, particularly at this time, could put them in the crosshairs of bad actors."

He also hinted that knowing all the bigger names on the list could do more harm than good, saying such revelations might lead to "further destabilizing the broader crypto markets."

We are watching one industry pillar wobble right now.

The other side: Representing the U.S. Trustee, Ben Hackman argued that case precedent shows that in a bankruptcy proceeding, companies should expect to be in a "fishbowl."

The U.S. Trustee, part of the Department of Justice that advocates for the public in bankruptcy cases, objected to redaction, particularly when it comes to institutional clients.

"We submit that overbroad redactions do not serve transparency," Hackman said.

The upshot: "I need to make sure I'm protecting the interest of these individuals. This is a space where everything is done over the internet," the judge said. "Hacking happens all the time."

There will be another hearing on Dec. 16 before he issues a final order.

Flashback: This focus on privacy comes after an outcry in the bankruptcy case of crypto lender Celsius Network, which earlier this year filed with court the names and crypto transactions of thousands of users.

Doubtless, few users of either service ever suspected their identities or holdings might be exposed in this way.

Of note: Several other matters were also resolved with little objections over the course of the hearing.

The securities regulator in the Bahamas agreed to the proceeding in Delaware, though with some matters left unresolved. 

Various attorneys and contractors were approved. 

The judge approved motions to pay critical vendors and employees. The attorneys estimated that 260 employees remain.

The bottom line: "Those who are involved today in running FTX understand the concern and the outrage to what has happened. We are working day and night to bring order to disorder," Bromley said in his opening remarks. 

Judge in FTX case grants privacy to customers, for now

Delaware court agrees that publishing customer names could put them at risk.

Illustration of a hand in a suit pulling a shade down on a computer screen

Congress isn't looking to shake off the recent Ticketmaster fiasco over Taylor Swift tickets, announcing a new hearing that will dig into the ticketing service's recent troubles over the Eras Tour presale.

Why it matters: The announcement comes after Ticketmaster's website experienced glitches, high fees and cancellations during the Swift presale event, a situation that Swifties will remember all too well.

Driving the news: Sen. Amy Klobuchar (D-Minn.) said in a release emailed to Axios Tuesday that she and Sen. Mike Lee (R-Utah) will hold a hearing before the Senate antitrust panel about the "lack of competition in the ticketing industry" following the Ticketmaster chaos.

"The high fees, site disruptions and cancellations that customers experienced shows how Ticketmaster’s dominant market position means the company does not face any pressure to continually innovate and improve," Klobuchar said in a release. "That’s why we will hold a hearing on how consolidation in the live entertainment and ticketing industry harms customers and artists alike."

No date or time was given for the hearing.

Flashback: Klobuchar may have some bad blood for Ticketmaster, as she wrote a letter to the company last week saying she had concerns about the service's lack of competition. 

The Tennessee and North Carolina attorneys general are also investigating Ticketmaster over antitrust violations.

The big picture: Swift shattered Ticketmaster's all-time record for most tickets ever sold for an artist in a single day during the presale for her first tour in five years, but the demand also broke the ticketing service's website, Axios reports.

Ticketmaster said its website experienced multiple technical glitches and created "a terrible experience" for anyone trying to buy tickets.

Swift apologized for the situation, saying the debacle "really pisses me off."

Taylor Swift condemns "excruciating" Ticketmaster experience for fans

Ticketmaster cancels general public sale after Taylor Swift shatters record

Tennessee AG investigating Ticketmaster after Taylor Swift presale outages

Senators to dig deeper into Ticketmaster fiasco

The announcement comes after Ticketmaster's website experienced technical glitches and left fans with bad blood.

Taylor Swift winner at the 2022 American Music Awards.

Taylor Swift winner at the 2022 American Music Awards. Photo: Sarah Morris/FilmMagic

Taylor Swift

Pro Rata

Axios Pro Rata

"Ohio is where venture capitalists go to die, and you're not ready to die yet."

That's what Mark Kvamme says he was told by a friend in 2012, when he and fellow Sequoia Capital vet Chris Olsen launched a Columbus-based firm called Drive Capital.

Since then, Drive has amassed $2.2 billion in AUM, backed several unicorns and expanded its two-person team to nearly three dozen.

But 2022 has become a year of transition (some say turmoil) at Drive, headlined by Kvamme's recent decision to step back from day-to-day operations.

Why it matters: Ohio's tech ecosystem has come a long way since Drive first opened shop, including Intel's $20 billion plan to build a chipmaking fab in the state. Drive, however, remains by far Ohio's largest homegrown venture firm, able to attract outside co-investment but not new neighbors.

State of play: Business Insider last week reported that Kvamme was "raising" something akin to an Ohio-focused sovereign wealth fund.

This came as news to Drive's limited partners, who'd been told that Kvamme not only would remain a general partner with Drive's current fund, but also that he'd signed a separation agreement that would prohibit him from raising a competitive fund to Drive.

The firm sent out a letter to LPs, which was first reported by TechCrunch. It included the line: "All of us at Drive were surprised by this news."

Olsen and Kvamme called me together yesterday, with Olsen saying that Drive's surprise wasn't that Kvamme was considering this new effort, but in the report's suggestion that he was actively fundraising.

Or, as Kvamme put it: They were not aware I was officially fundraising [because] I am not... I'm just talking to folks about the potential of the fund and getting peoples interest in the possibility." He adds that he's always been intrigued in aiding Ohio's economic development by forming the idea of something like Temasek, but that he believes it would need to be funded by Ohio individuals and institutions.

Kvamme, a longtime friend and ally of former Ohio Gov. John Kasich, also acknowledges that he's had informal talks about running for public office, possibly as a challenger to Sen. Sherrod Brown in 2024.

Elsewhere: Drive also has lost a pair of longtime execs in recent months. Former COO Yasmine Lacaillade recently launched SineFine, a VC fund-of-funds focused on women-led firms, while partner Bob Hatta left in August.

LP reax: I spoke with three limited partners in Drive funds, each of whom was under the impression that Kvamme had begun cutting back before his formal announcement.

None had prior knowledge that he was considering the launch of "The Ohio Fund," and two felt that Drive's LP letter added to their confusion (although they didn't seem too bothered).

Drive Capital's original limited partnership agreements included "key man" provisions were either Kvamme or Olsen to leave the firm, but it's since been expanded to require a larger number of individuals to depart.

The bottom line: Drive, once viewed as a novelty, is now an institution with more than a decade of history. And the growing pains that go with it.

Ohio's Drive Capital moves forward as co-founder Mark Kvamme takes detour

Mark Kvamme, a longtime friend and ally of John Kasich, may challenge Sen. Sherrod Brown.

Illustration of a chess piece with the shape of Ohio on top.

Ohio

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Southeastern Grocers, parent company of the Winn-Dixie and Harvey supermarket chains, is exploring a sale, according to The Wall Street Journal. 

Why it matters: This comes shortly after Kroger agreed to buy Albertsons for $24.6 billion, putting pressure on others in the industry to consolidate.

Background: The Jacksonville, Fla.-based retailer canceled IPO plans last year. In early 2018, when owned by Lone Star Funds, it filed for Chapter 11 bankruptcy protection. 

The bottom line: Southeastern Grocers could become a consolation prize for either Kroger or Albertsons, were their merger to be blocked by antitrust regulators. But, as Axios Pro's Richard Collings notes, it also may be removing itself as a bidder for the hundreds of stores that Kroger would need to divest were its Albertsons deal to go through.

More grocery consolidation as Winn-Dixie explores a sale

Move comes as antitrust regulators dig into Kroger's megamerger with Albertsons.

Illustration of a bag of groceries surrounded by shapes and zoomed in sections of a dollar bill.

Supermarkets

Retail

Media Trends

Axios Media Trends

A key shareholder vote on Tuesday served as a lifeline for the financial future of Donald Trump's Twitter alternative, Truth Social, while the status of Ye's plans to acquire Parler remains cloudy.

Why it matters: Elon Musk's reinstatement of both Trump and Ye's accounts is creating major growth challenges for both Truth Social and Parler.

Driving the news: Shareholders in Digital World Acquisition Corp., the blank check company trying to take Truth Social public, approved a merger extension until next September, after several vote postponements.

This does not, however, guarantee that the deal will close, particularly as it remains the subject of multiple government investigations. It also doesn't provide any upfront cash to Truth Social, which previously said its financial runway only extends until next April.

Be smart: Musk's populist takeover of Twitter is likely to pull momentum from "free speech" Twitter alternatives.

After joining Parler a month ago, Ye has fewer than 60,000 followers on the platform.

Sources say that odds are growing longer that Ye's takeover of Parler will close by year-end, as originally anticipated, and the company didn't respond to a request for comment.

Donald Trump has a little over 5 million followers on Truth Social, but that pales in comparison to the 88 million followers he has on Twitter.

Of note, it's unclear what impact Trump's 2024 presidential run would have on Truth Social.

The former president is "generally obligated" to post on Truth Social for a limited time period before posting on other social media sites, according to a regulatory filing, although there is a carveout for "political messaging" that would allow him to post on his personal accounts at any time.

Truth Social and Parler in limbo as Elon Musk forges ahead

Musk is soaking up all the social media oxygen.

 Photo: Chirs Delmas/AFP via Getty Images.

Truth Social

Markets

Axios Markets

The market capitalization of Coinbase just dropped below $10 billion. This time last year, it was more than $70 billion. 

Why it matters: The amount of value lost in Coinbase stock is probably greater than the loss of value of FTX equity plus the loss of customer funds held at FTX. 

The big picture: The fallout from FTX's implosion is rippling across crypto markets in the U.S., causing a loss of trust in all the major players.

BlockFi and Genesis have blocked withdrawals, with Genesis reportedly warning that it, too, might have to file for bankruptcy.

The bottom line: Coinbase is trying hard to make the case that as an SEC-regulated public company, it's more trustworthy than its rivals. If there's any kind of flight-to-quality trade in Coinbase's favor, however, it's not visible in the share price. 

Crypto exchange Coinbase shed 85% of its value in a year

That's probably greater than direct FTX-related losses.

A chart showing Coinbase market value from April 14, 2021, to Nov. 21, 2022.

West Texas Intermediate crude oil futures

Oil prices whipsawed Monday as news about what the OPEC oil price cartel would decide at its meeting next month sent traders scurrying. 

Driving the news: A story in the Wall Street Journal, suggesting that OPEC was considering a 500,000 barrel-a-day increase in production, jolted the crude oil markets at around 9 am ET. 

U.S. benchmark crude oil prices fell more than 5% in response, to about $75 a barrel. 

Context: The news came as a surprise to oil industry observers, especially in light of the fact that just last month, OPEC and its petro-ally Russia announced plans to cut oil production sharply in an effort to prop up prices.  

But, but, but: A statement from Saudi Arabian Authorities later in the day seemed to knock down the Journal's reporting. 

What they're saying: “The current cut of 2 million barrels per day by OPEC+ continues until the end of 2023,” Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement issued by the Saudi Press Agency.  

Oil prices promptly reversed course and surged, briefly going positive before ending the day down less than half a percentage point, at just under $80 a barrel. (They're up another 1% Tuesday morning to about $81.) 

The bottom line: If the trading activity is any indication, the actual announcement from OPEC and Russia after a meeting on Dec. 4 in Vienna could be a real market mover. 

Oil prices boomerang on OPEC headlines

Saudi Arabia rebuffed the contention that the cartel may increase output.

A chart show West Texas Intermediate crude oil prices per minute from 6:22pm Nov. 20 to 4pm Nov. 21, 2022.

Bob Chapek, when he was CEO of Disney, struggled constantly against the fact that he was, in the words of former U.K. finance minister Norman Lamont, "in office but not in power." That's not his fault, so much as it's the fault of the Disney board, and especially of former board chair Bob Iger. 

Why it matters: Succession planning is really hard, especially for hard-driven CEOs who consider themselves to be irreplaceable.

Flashback: When Iger took over as Disney CEO for the first time, in 2005, the succession was handled in a smooth and professional manner. Iger was named the CEO-apparent in March; there was a clearly-delineated six-month interregnum where outgoing CEO Michael Eisner brought him up to speed; and he became sole CEO in October.

When Iger took over as Disney CEO the second time, this week, the Financial Times led its front page with the word "Putsch."

In between was the elevation of Chapek to CEO, which was orchestrated by a board led by Iger. 

Between the lines: Iger was a legendary CEO, but was terrible at succession planning. 

Iger had 15 years as CEO to find a successor, and never really succeeded. Candidates like Tom Staggs and Kevin Mayer would be considered the heir apparent, only to be passed over. 

Even when Iger finally settled on Chapek, he was reluctant to really hand over power, installing himself as "executive chairman" — a hands-on full-time employee who was also Chapek's boss. 

The big picture: Chapek, who came from the theme-park arm of Disney, inherited a streaming strategy that was built by Iger and Mayer and that very deliberately involved spending billions of dollars to create a world-beating streaming platform. 

That strategy was common across the media world, as Netflix and Warner Brothers and Paramount and Amazon can attest. 

The stock market embraced that strategy in 2021, and then punished it in 2022, across the board. 

The Disney board, however, which had imposed the strategy on Chapek, then blamed him for it. 

The bottom line: While Iger embraced bold strategic shifts, he and his board wouldn't give Chapek the same freedom. In the end, the board seemed more willing to listen to former Iger lieutenants than they were to his handpicked successor.

Disney just revealed how not to do a CEO succession plan

Former CEO Bob Chapek was "in office but not in power."

Illustration of two cartoon hands: one making a thumbs-up, the other making a thumbs-down.

Disney

Waves of layoffs and departures from Twitter last week led many users to fear the service might face a sudden crash of some kind, as hashtags such as #RIPTwitter and #TwitterDown trended in the U.S.

Yes, but: It's far more likely that the social network will experience an increasing volume of glitches, delays and decay around the edges, as small breakdowns pile up and the teams responsible for fixes have been decimated.

Driving the news: The gutting of half of Twitter's staff and most of its contractors and top executives, along with a slew of rushed product updates over the past two weeks, have left Twitter vulnerable and put users on alert for problems.

The breakdowns so far aren't in the core functions of Twitter — posting and reading messages — but around the edges.

Copyright: Twitter’s automated copyright takedown system was no longer functional as of Sunday evening, Forbes reported, allowing users to upload chunks of copyrighted movies that remained online for hours before getting taken down. 

Hacked accounts: Users who have reported hacked accounts say the company has been slow to respond with solutions to recoup their profiles. One journalist who Axios spoke to said Twitter didn't respond to their report for days, and when it did, couldn't offer a viable solution to recover it. 

Security: Last week, some users reported problems trying to generate two-factor authentication codes via SMS text messages that would help them log into their accounts. 

Downloading data: Others reported issues trying to download archives of their data, per Wired. 

Advertisers are more concerned than everyday users.

Twitter tech glitches mount as staffers depart

The service is less likely to suffer the catastrophic failure some users fear than to break down in smaller ways over time.

Tuesday's economy & business stories