| Oh sure: 28wishes, a bougie independent ice cream parlor in downtown Los Angeles, has been gaining cash on Kalshi, the online “prediction market” app that lets users gamble on everything from political races to Met Gala looks. According to the shop’s owner, 37-year-old Jason Jiang, he’s been clearing up to $1,500 per month on the app by being bullish on cold snaps in Southern California. “Ice cream is one of the most weather-dependent products in the world,” explained Jiang, who worked in corporate banking before swirling soft serve. “We lose about 20 percent of business when the weather goes below 70 degrees… So we’re essentially hedging that profit loss on the app.” Sure. The basic situation with Kalshi is that it really wants to be perceived as a useful platform for lovable Main Street businesses to hedge real-world risks, but it is mostly a sports gambling website. So there is a steady stream of stories about companies (bars, sports teams) using Kalshi to hedge real-world sports risk with sports bets. But Kalshi is not exclusively a sports gambling website. It also offers weather bets. Every Cutesy Economics 101 textbook will tell you that ice cream sales are higher when it is hot and sunny and lower when it is cold and rainy. An ice cream shop cannot control the weather, but it can hedge its weather risk with weather bets. Cutesy Financial Derivatives 101. By the way, while ice cream shops are the standard Cutesy Economics 101 example of businesses whose income depends on the weather, they are not the only or main example in the real world. Lots of other businesses are weather-dependent and hedge their weather risk. Property insurance companies have to pay more claims when hurricanes hit, and hedge by selling catastrophe bonds. Farmers lose their crops when there is no rain, and hedge by buying crop insurance. We actually talked about crop insurance a few years ago. Despite the name (“crop insurance”), US crop insurance is often structured as a bet on rainfall: It pays out “when there is less than the usual amount of precipitation” in a given area, as measured by the government weather service, “even if the relevant farmland suffers no loss in productivity.” (It is parametric insurance, rather than loss-based insurance.) Apparently the way that the weather service measures precipitation is by putting out buckets and seeing how much water falls into them. We talked about this because some farmers were convicted of manipulating the precipitation numbers by doing things like (1) putting covers on the buckets so rain didn’t fall into them or (2) dumping out the buckets when rain did fall into them. As it happens, last month AgWeb ran a long article about those guys, titled “Rain Robbers: How Four Farmers Faked a Drought and Stole Millions in Crop Insurance”: Even on freak days when the sky pissed rain, the farms of Patrick Esch and Ed Dean Jagers remained bone-dry. Parched became payday. In one of the most madcap crop insurance scandals on record, Esch and Jagers turned moisture misery into a multi-million-dollar heist. The Colorado cowboys stole $6.5 million worth of raindrops. The farming duo manipulated U.S. weather—literally. They plugged, tipped, covered, and destroyed federal rain gauges in Colorado and Kansas, ensuring NOAA weather stations recorded zero-level rainfall. The result? A windfall in illicit gain. Before landing in USDA crosshairs, via a bizarre narrative more fitting for Jerry Springer, rather than Taylor Sheridan, Esch and Jagers set the fuse on a powder keg of family intrigue, truck-stop hijinks, cash bribes, snitches, whistleblowers, prison escapes, and dead bodies. You start by dumping out rain buckets, one thing leads to another, and eventually there are prison escapes and dead bodies. We also talked earlier this year about weather contract manipulation on Polymarket, Kalshi’s main prediction-market competitor: Apparently some Polymarket traders bet on high temperatures in Paris, and then warmed up a weather sensor to make their bets pay off. Same basic idea. Weather hedging is a lot older than prediction markets, and manipulating weather sensors to cheat on weather hedging is also a lot older than prediction markets. But prediction markets have, ehhhhhhhh, democratized it. Anyway if you run an ice cream shop and you’re pouring cold water on weather gauges to make your Kalshi bets pay off, please be in touch. The first, like, three ice cream shops that do that will definitely get mentioned in Money Stuff. Eventually it will become routine. We talked on Thursday about the fact that the president of the United States is selling early access to his policy announcements for cash payable to his personal media company. Don’t look at me, man; I just work here. The Financial Times has more on the product details and pricing: Donald Trump’s social media company has discussed charging traders and investors as much as $100,000 a month for faster access to the US president’s posts on his Truth Social platform. Trump Media & Technology Group has quoted the six-figure monthly sum in talks with prospective buyers of the “Truth API” data service, according to people familiar with the matter. Proprietary trading firms and hedge funds pay huge sums for ultrafast data feeds because every millisecond counts when reacting to market-moving news. Trump often makes major announcements on Truth Social that trigger huge fluctuations across global markets. And Bloomberg’s Annie Massa saw the pitch: The note promised “sub-second post data 24/7, including weekends and after-hours,” according to a copy of the message seen by Bloomberg News. It included an exhortation to act fast. “A number of your peers are moving forward with this product,” the email said. And if the stakes weren’t clear enough, the solicitation closed with a quote it attributed to a portfolio manager at JPMorgan Chase & Co.: “We’re one Truth Social post away from being up or down 5% every day.” Arguably the main economic policy goal of the US government these days is to maximize volatility, which makes early access to policy announcements especially valuable and thus maximizes the president’s personal revenue opportunity. Trump Media had revenue of $871,200 last quarter. If it sells just three API subscriptions at $100,000 a month each, a majority of its revenue will come from selling early access to the president’s announcements. To be fair, $100,000 a month only gets you a few milliseconds of early access. For the right firms, that’s worth it, notes the FT: The general public would not notice the difference in speed between Truth API and updates on Truth Social itself because Truth API would give an advantage of “milliseconds” to customers of the feed. “Milliseconds is a big deal in this world, high-frequency trading firms and systematic quant hedge funds would definitely want this product,” said the chief executive of a US market infrastructure company. But that’s just the public pricing, $100,000 for a few milliseconds. Pricing for the premium package — with access to policy news hours or days in advance — is available upon request, hahaha, kidding, sort of. Last Tuesday, July 14, electric vehicle trade publication EV reported that Lucid Group Inc. had hired a restructuring adviser and was considering filing for bankruptcy. Lucid’s stock, which had closed at $5.51 the previous day, fell to a low of $2.37 at 1:43 p.m. on Tuesday. Lucid denied that it was considering bankruptcy, and the stock recovered. It closed at $4.62, down 16.2% for the day, and has been up since; it finished the week at $7.36. There is just a brief sharp gash in the stock chart, just an unpleasant hour and a half. Overall, the stock was up 32.6% for the week. If you owned Lucid stock last week, you were up 32.6%. If you owned Lucid on margin, though, things were trickier. At its low on Tuesday, the stock was down 57%. If you put up $100 of your own money to buy $200 of Lucid stock, your stock was at that point worth something like $86. You definitely got a margin call. Perhaps you put up more cash, thinking “this is a temporary blip.” But probably, as Lucid approached its lows, at least some leveraged investors got blown out of their positions. At least some sellers at the lows were forced sellers. For instance there was a 2x levered exchange-traded fund on Lucid, the GraniteShares 2x Long LCID Daily ETF (LCDL), whoops. Here is its obituary: LCDL's investment objective is to "seek daily investment results, before fees and expenses, of 2 times (200%) the daily percentage change of the common stock of Lucid Group, Inc. (NYSE: LCID)." On 14 July 2026, the share price of Lucid Group, Inc. declined intraday by more than 50% from the previous day's closing price. In accordance with the Fund's governing documents and the terms of its swap agreements, the swap counterparty exercised its contractual right to close out the swap position following the intraday decline. As a result, the Fund's net asset value became negative. … The NAV per share on July 14, 2026, is -$0.016, meaning the NAV is negative. Accordingly, LCDL will be terminated. The Fund's trading status will remain halted until it is officially delisted and liquidated. Technically, 2 times the daily change of Lucid’s stock price wouldn’t have been that bad; even on its worst day, Lucid was only down 16.2% from close to close. LCDL would have been up about 57% last week if it had perfectly achieved its goal of returning 2x the daily returns of Lucid. [1] But the only realistic way to obtain twice the daily change of Lucid’s stock price is to actually own (twice as much of) the stock during the day, [2] and when the stock fell 57% intraday the game was over. Elsewhere, here’s a new paper by Chris Murray and Marco Sammon of Harvard on “The Costs and Benefits of Leveraged ETFs”: We study the costs and benefits of leveraged ETFs (LETFs) for investors. LETFs can be valuable when they provide levered exposure to diversified equity portfolios in rising markets: long broad equity-index LETFs generated more than $100 billion in investor gains, including over $40 billion relative to counterfactual investments in the underlying assets. But the same products have different economics when applied to volatile individual stocks. Single-stock LETFs are launched on stocks near the top of the volatility and past-return distributions, and products tied to more volatile stocks attract more assets after launch. As a result, these single-stock products have larger volatility drag and higher financing costs, which raise the breakeven return required to outperform the unlevered underlying asset. We also find that LETF flows differ sharply from unlevered ETF flows, as investors buy after recent losses and sell after recent gains. However, these flows do not predict future returns.
Intuitively, “people should borrow money to invest in the stock index” is actually a pretty respectable idea with a lot of good life-cycle consumption-smoothing theory behind it, so why not package it into an ETF. “People should borrow money to bet on risky electric vehicle manufacturers” ends pretty predictably. I sort of respect this? The Securities and Exchange Commission is expected to move forward with a version of its proposal to make quarterly financial reports optional, despite being inundated with public comments that overwhelmingly oppose the idea. The proposed rule-change, unveiled by SEC Chairman Paul Atkins in May, would give public companies the option to disclose their financial results twice a year, rather than on a quarterly basis. President Trump has long been a proponent of the idea and briefly explored it in his first term The SEC asked for the public’s thoughts on the idea and received over 200,000 comments, a record number, according to people familiar with the matter. Many of them argued that it would harm investors and leave them with less information on which to make decisions. Like: Obviously it is bad for public companies to report twice a year. All the comments say that it’s bad because it is. But most companies won’t switch to semiannual reporting just because that’s allowed. And the SEC’s point is not that it’s good. The point is that smallish shady-ish companies can choose to go public or not. If they don’t go public, they have to report financial results zero times a year; if they do, four times (currently) or twice (under the new proposed rules). There is some margin where some smallish shady-ish companies will go public under a twice-a-year rule but not under a four-times-a-year rule. Two is more than zero. As I wrote a few months ago: “this SEC proposal is intended to get retail investors more information, on the theory that two reports a year is better than none, and optional semiannual reporting will get more companies to go public.” On the other hand, do you want more smallish shady-ish companies to go public? I don’t have a strong view on that, but I gather that the SEC does! Every so often I write that the core use case of Bitcoin is buying drugs online, and I feel kind of guilty and people get mad at me about it. Also all the other stuff! Important uses in financial speculation, store of value, financial freedom, blah blah blah, don’t email me. But here’s a Bloomberg News story about “gray market peptide vendors,” and you will absolutely believe what currency is used to buy unapproved weight-loss drugs online: Approved medicines move through clinical trials, regulators and pharmacies like Walgreens and CVS. Much of the online peptide trade bypasses that system. Cheaper compounds are shipped directly from overseas laboratories, without prescriptions or insurance coverage, some with disclaimers that they aren’t for human use. Banks and credit card networks often won’t work with suppliers in that gray area because of the legal and regulatory risks surrounding products touted for unproven health benefits. A growing number of them take only Bitcoin. I would like to subscribe to, like, good macroeconomic research about the Land of Bitcoin. Like sure sure sure I know all about the hot-money financial flows into Bitcoin from the digital asset treasury carry trade. But what about the underlying economic fundamentals? Is Bitcoin’s main export industry — its main source of hard currency — really drugs? Has the rise of weight loss drugs been good enough for Bitcoin’s economy to offset the reversal of the DAT carry trade? Can Bitcoin stay competitive in the gray market peptide business? Will it move up the value chain? (Start inventing drugs itself?) Bitcoin’s economy is fascinating and I get only anecdotal glimpses of it, probably because so much of it is on the dark web. Longtime readers of this column know that, around here, we love a good euphemism for bribes. Bad euphemisms for bribes sound like euphemisms for bribes: chickens, tuna, chocolates, you-know-what, Scooby Snacks. Good euphemisms for bribes sound like boring business expenses: success fees, marketing expenses, commissions, consulting fees, API keys. A reader sent me this announcement from the US Department of Justice: The Scoular Company (Scoular), an agricultural supply chain company based in Omaha, Nebraska, will pay over $10 million to resolve an investigation by the Justice Department into a years-long scheme in which it relied on bribery of Mexican officials to deliver trains of goods across the U.S.-Mexico border. ... According to court documents, between 2013 and 2019, Scoular relied on multiple customs brokers to ensure that its shipments of corn and other products successfully crossed from the United States into Mexico. Under Mexican law, those shipments were subject to inspection for dirt, soil, and other impurities. To ensure that Scoular’s shipments successfully transited the border despite inspections that found such dirt, soil, and other impurities, Scoular authorized multiple third-party customs brokers to bribe Mexican officials at the border. At the direction of Scoular employees, and for Scoular’s benefit, those brokers paid bribes of approximately $2,000 per Scoular train and invoiced the bribes back to Scoular for reimbursement of reinspection fees, which Scoular paid. Scoular employees communicated about shipments and bribes via WhatsApp and other means. In total, Scoular authorized bribes of more than $400,000 and avoided fees and costs of more than $6.5 million. Like, the customs official inspects the cargo and finds impurities, so she doesn’t let it through, but then the broker is like “are you sure? why don’t you … inspect it … again,” and slides across an envelope of cash. “Reinspection fees”! Paramount-Warner Bros. Judge Pauses Deal With ‘Serious’ Concerns. Moonshot Is Creating New Winners and Losers in the AI Trade. Chinese AI Sensation Moonshot’s Gamble on Big Models Pays Off. Everyday Investors Are Over the Mag Seven and Into New AI Darlings. China’s ‘national team’ buys shares worth $9bn to prop up market. The Justice Department Is Pulling Back on Prosecuting Corporate Crime. US day traders flock to ‘the most dangerous product in crypto.’ Goldman Offers Preferred Stock Days After Post-Crisis Spread Low. The CEO Trying to Fix PayPal Has a New Option: Sell It for Billions. Griffin Wants to Buy an Old Cottage Across From New Headquarters. Miami Is Losing Its Claim to a Cheaper Cost of Living Than NYC. Rare Pair of Improbably Light ‘Super-Puff’ Planets Is Discovered. Five Cups of Coffee a Day Is Fine for Most Adults, Heart Association Says. Apollo Likens Risky Private Credit to Mere ‘Sprinkle’ on Cupcake. What’s Martin Shkreli up to? If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks! | 
