Hello there,

A magnificent Friday to you.

In brief (TL:DR)

• U.S. stocks were higher on Thursday with the Dow Jones Industrial Average (+0.98%), the S&P 500 (+1.41%) and the Nasdaq Composite (+1.67%) all up slightly.

• Asian stocks rose Friday, helped by the technology sector, before a speech by Federal Reserve Chair Jerome Powell that’s set to shape views on the pace of US monetary tightening.

• Benchmark U.S. 10-year Treasury yields rose about two basis points to 3.04% (yields rise when bond prices fall).

• The dollar was firm.

• Oil scaled $93 a barrel with October 2022 contracts for WTI Crude Oil (Nymex) (+0.92%) at US$93.37.

• Gold fell with December 2022 contracts for Gold (Comex) (-1.37%) at US$1,747.20.

• Bitcoin (-3.45%) fell to US$20,828.

In today's issue...

1. An 11th Hour Deal for Chinese Firms Listed in U.S. Emerges

2. Twitter must give Elon Musk more data on fake users, judge rules

3. FTX & Alameda Research Merge Venture Capital Function

Market Overview

A rebound in stocks and bonds from June lows has left financial conditions at easier levels than before the Fed began its aggressive tightening campaign.

The question is whether Powell will try to reset market expectations to ensure that the brakes continue to be applied to economic activity.

Meanwhile, Fed officials gathering for a conference in Jackson Hole, Wyoming conveyed a chorus of hawkish comments.

Asian markets rose on Friday with Tokyo's Nikkei 225 (+0.57%), Hong Kong's Hang Seng Index (+1.01%), Seoul's Kospi Index (+0.15%) and Sydney’s ASX 200 (+0.79%) all up.

1. An 11th Hour Deal for Chinese Firms Listed in U.S. Emerges

• As the standoff comes to a head, there are some signs that China and the U.S. are working towards a solution as no one stands to gain from a wave of delistings.

• Beijing has indicated that some Chinese companies can remain listed and submit themselves to the audit transparency requirement and a deal could already have been reached.

During the Trump administration, U.S. regulators demanded Chinese companies and auditors make financial audits available for inspection every three years or risk being forced to delist from Wall Street.

But Beijing pushed back, as China doesn’t allow foreign regulators to inspect Chinese company audits.

With a deadline to comply with Washington’s demands fast approaching, this month, five state-owned Chinese companies said they would voluntarily delist from U.S. exchanges, weighing down prices of Chinese shares at a time when the economy is facing a mounting property crisis.

As the standoff comes to a head, there are some signs that China and the U.S. are working towards a solution as no one stands to gain from a wave of delistings.

Instead of an “all-or-nothing” binary option when it comes to remaining listed in the U.S., Beijing has indicated that some Chinese companies can remain listed and submit themselves to the audit transparency requirement and a deal could already have been reached.

The U.S. Public Company Accounting and Oversight Board, an auditor watchdog, has said any agreement would include full U.S. access to Chinese auditors.

And this paves the way for a “dual track” option, where those companies that Beijing deems too sensitive to allow for full transparency on national security grounds will need to be delisted, while those in industries less “sensitive” could maintain the status quo.

News of a possible settlement has already buoyed shares of U.S.-listed Chinese companies, even as investors braced themselves for the possibility that Chinese airlines would be next to voluntarily delist.

Neither Washington nor Beijing stands to benefit from the standoff, especially as global economic conditions worsen and Wall Street stands to lose a substantial amount in fees and volume from a wave of Chinese delistings.

2. Twitter must give Elon Musk more data on fake users, judge rules

• A Delaware judge has ordered Twitter to hand over more data to Elon Musk relating to how it calculates bot and fake accounts on its platform.

• However, the judge agreed with Twitter’s view that producing the entire range of data sought by Musk on its more than 200mn mDAU was overly burdensome.

In the latest installment of the ongoing Twitter-vs-Musk saga, Musk’s team has claimed in a legal filing that 10% of the social network's daily active users who see ads were fake accounts or bots, compared with the company’s estimate of “less than 5%”.

In a separate ruling on Thursday, the judge ordered Elon Musk, Tesla’s CEO, to make the methodology behind that claim available to the social media company.

Furthermore, a Delaware judge has ordered Twitter (-1.70%) to hand over more data to Elon Musk relating to how it calculates bot and fake accounts on its platform.

But the judge stopped short of fully granting the billionaire’s “absurdly broad” requests for information on the entire user base.

Twitter has also been requested to share some material relating to other internal discussions or analyses regarding crucial metrics about its user base beyond the monetisable daily active users (mDAU) metric.

However, the judge agreed with Twitter’s view that producing the entire range of data sought by Musk on its more than 200mn mDAU was overly burdensome.

According to filings released on Wednesday, the mDAU figure had also come under scrutiny from the U.S. Securities and Exchange Commission as regulators are seeking more clarity on how Twitter’s mDAU metric had been incorrectly overinflated in 2019.

Last month, Twitter sued its largest shareholder for trying to back out of its US$44 billion buyout deal, telling the court that Musk is wrongfully breaking their agreement by doing so.

3. FTX & Alameda Research Merge Venture Capital Function

• FTX and Alameda Research merge their VC operations in an effort to consolidate parts of billionaire Sam Bankman-Fried’s vast digital asset empire.

• While the implications were small for Alameda’s staffing, they could be significant for the crypto startup industry.

What happens when one of the world’s biggest cryptocurrency exchanges combines its venture capital arm with one of the world’s biggest cryptocurrency market makers?

The cryptocurrency industry is about to find out as exchange FTX and Alameda Research merge their VC operations in an effort to consolidate parts of billionaire Sam Bankman-Fried’s vast digital asset empire.

Although both FTX and Alameda Research were founded by Bankman-Fried, they have ostensibly maintained separate operations, including with regard to venture capital.

But the Crypto Winter and what appears to be an ongoing bear market in digital assets means that even the most well-funded firms will need to consolidate to better manage costs.

According to research from PitchBook, Alameda was a prolific investor that backed more than 150 private companies with portfolio including the nonfungible token marketplace Magic Eden and crypto bank Anchorage Digital.

Caroline Ellison, Alameda Research’s CEO, said that the agreement to move its venture capital unit to FTX isn’t meant to signal a closer relationship between the two companies as the market maker will focus mainly on exchange and over-the-counter trading and decentralized finance.

Meanwhile, FTX Ventures is now completely concentrated on venture investing.

The crypto exchange FTX, the venture arm FTX Ventures and Alameda Research are all independent from one another and are operating completely as separate entities.

While the implications were small for Alameda’s staffing, they could be significant for the crypto startup industry.

FTX and Alameda have worked together on deals at times in the past. Alameda and FTX made a joint cash offer to purchase all of Voyager Digital’s assets and loans, but Voyager Digital called the offer a “low-ball bid” that disrupted the bankruptcy process.