Hey, welcome to today's Bay Area Times daily newsletter. If you haven't yet already, follow us on Twitter!

Top stories today:
1. Instagram testing Twitter-like app, launch is expected late June
2. Biden and McCarthy to meet today on debt ceiling, after bad weekend
3. Yellen repeats U.S. may have no money on June 1; June 15 is default day
4. Bitcoin conference weekend: Taproot Ordinals x Bitcoin maxis

0. Data and calendar

1. Instagram testing Twitter-like app, launch is expected late June

• Same username, followers, and bio as Instagram.

  • May be compatible with other apps like Mastodon.

  • Text updates of <500 characters; links, photos, and videos of <5 minutes. - ICYMI

• Instagram was down for a few minutes on Sunday, but very likely it was unrelated to this news. - The Verge

Our view: Zuckerberg is great at copying

• He's done it many times before:

  • Instagram and Facebook Stories were copies of Snapchat: it worked perfectly, with Stories overtaking Snapchat as the most popular platform for disappearing photos.

  • Reels was a rip-off of TikTok: OK success, but it failed to overtake TikTok, and now even Youtube Shorts is more popular than Reels, according to some metrics.

  • And now this new text app is copying Twitter: the problem here is that Instagram's and Twitter's audiences are very much different.

    • Twitter attracts intellectuals, politicians, nerds; Instagram attracts celebrities, younger people, the masses.

    • Can Zuckerberg manage to make this app a success? We'll have to wait and see, but don't bet on it overtaking Twitter anytime soon.

2. Biden and McCarthy to meet today on debt ceiling, after unproductive weekend

• Both sides are sticking to their initial positions, with 11 days to go until June 1:

  • McCarthy: “It seems as though [Biden] wants default more than he wants a deal.”

  • Biden: “Now it’s time for the other side to move from their extreme positions because much of what they’ve already proposed is simply, quite frankly, unacceptable.” - Bloomberg

  • Biden OK with 14A: I’m looking at the 14th Amendment as to whether or not we have the authority — I think we have the authority. The question is, could it be done and invoked in time that it would not be appealed, and as a consequence past the date in question and still default on the debt.” - The Hill

• Negotiators meet for 2.5 hours on Sunday, but nothing came of it. Steve Ricchetti, a senior Biden adviser, said that they would keep talking. - WSJ

• GOP has lowered spending cap demands from 10 to 6 years.

  • White House wants only 2.

Our view: the spending cuts are healthy, but high GDP growth would be even better

The GOP proposal would decelerate the growth of debt-to-GDP by about 50%, from 2 p.p. a year to 1 p.p. a year:

• Debt problems would be solved if the U.S. grew at 4%+ rather than 1-2%.

  • What matters most for U.S. economic growth is innovation, i.e., new technologies. What can really accelerate that is not macro but microeconomics, e.g., how long it takes for the FDA to approve a drug.

  • Micro/regulatory reform, in all sectors of the economy, would be the greatest unleasher of economic growth.

3. Yellen repeats U.S. may run out of money by June 1; June 15 is the day debt interests must be paid

• Yellen stuck with the June 1 deadline, saying that the odds of the Treasury reaching June 15 with cash were “quite low.” - NBC

  • Goldman estimates June 8/9 when the government will run out of money. - Bloomberg

  • June 15 is the big default deadline, i.e. when many debt interest payments must be made.

Our view: Biden can avert the debt ceiling by issuing high-coupon bonds

• High-coupon bonds are the least controversial way to avert the debt ceiling: Replace existing bonds with others with high coupons. They would have the same face value (the law's criteria for the debt ceiling), but a very different selling price, which is money inside the Treasury's coffers. - NYT

  • For example, the Treasury could buy 5% 1-year bonds at around 100 cents on the dollar, and then issue 25% bonds at 120 cents on the dollar. This can raise an unlimited amount of money for the government: need more money, increase the coupons.

Riskier alternatives include the $1T platinum coin and the 14th Amendment

Both are controversial and would likely face legal challenges — that's why we think the high-coupons bonds would be a smarter move:

• $1T platinum coin: The Treasury has the power to issue platinum coins with any face value, so why not issue a $1T one and deposit it at the Fed? Literally printing money. Wikipedia

• “Section 4 of the Fourteenth Amendment to the Constitution states that “The validity of the public debt of the United States … shall not be questioned.” - Robert Reich

4. Bitcoin conference weekend: Taproot Ordinals x Bitcoin Maxis

The current fight in the Bitcoin community is between:

• Taproot Wizards: those who support NFTs (Ordinals) and DeFi being built on Bitcoin.

• Bitcoin maxis: those who support using the Bitcoin blockchain only for BTC transactions, its original purpose - Bloomberg

For a good deep dive into the debate, check out the Wizards x Maxis panel on Bitcoin 2023, starting at 1:47 on this live stream:

Or this Chopping Block episode with Eric Wall, one of the co-founders of Taproot Wizards:

• Beautiful photo slide of the conference. - WSJ

5. 55% of Chinese support full-scale war against Taiwan: 2021 poll

• Rare poll: The poll was conducted in 2021 but was published just last week. We are publishing it here mostly because of its rarity.

• Conducted with 1,824 participants.

Our view: as with most dictatorships, the government has popular support

• It is not surprising that most Chinese support their government's position on Taiwan. Most dictators have popular support: part of it is government propaganda, certainly, but part is just normal conformity.

  • 95% of Chinese were satisfied with the Beijing government, according to a 2020 poll from the Harvard's Kennedy School of Government. - HBR

  • Putin, as another example, has a 83% domestic approval rating, which jolted significantly after the Ukraine war started:

• This poll is likely accurate, as it has been done a monthly basis by the Russian nongovernmental research organization Levada.

  • The jump post-war is also evidence that the poll is accurate, because approval ratings usually go up during wars (see Bush or Zelensky's approvals).

6. Other headlines

AI

• AI global standards: G7 leaders call for it, but no concrete plan.

• Neeva, AI search engine, shutting down.

• Duet AI for Google Workspace: a mostly positive review.

Tech

• Twitter no longer high risk after Yaccarino hired as CEO: top ad group.

• Wise shares fall after CFO leaves, CEO goes on paternity leave in Sep.

• Apple files trademark for xrProOS, likely name of headset pro OS.

• Elon Musk: on how he's outspoken at home but deferential globally.

• Samsung abandons idea of changing default browser from Google to Bing.

• Meta talking to Magic Leap about multiyear augmented reality partnership.

• Military Silicon Valley complex: a look at defense startups and the slow DoD.

• PhonePe, India's most valuable fintech, raises another $100M at $12B valuation.

• Jeffrey Epstein allegedly threatened Bill Gates over affair.

Biotech

• Longevity biotech landscape: infographics.

• FDA refuses to approve NASH therapies that actually work.

Business

• Fed's Kashkari: “object” to saying we're done lifting rates.

• Minerals for EVs: a look at how the U.S. seeks to diversify from China.

• G7 makes statement saying they are not “decoupling” from China.

• China called G7 an “anti-China workshop.”

• China seeks to launch its own Starlink competitor.

• Micron: some products barred from China after “security review.”

• India removes ~$20 bill from circulation, increasing govt. surveillance.

• Activision deal: China approves it, Microsoft to appeal UK decision.

• The Messenger: new $50M-funded news website faces criticism.

Crypto

• Tornado Cash hijacked by hackers, potentially government, token -30%.

• Gemini says Genesis parent DCG missed $630M payment.

• Crypto miners’ attempts to pivot to AI seem hard to succeed.

• Gary Vee moving VeeFriends and web3 consulting into AI.

• Metamask says they won't withhold taxes on crypto transactions.

• Tokenized bonds now surpass $200M.

• Michael Lewis’ new book to launch at SBF trial start.

• Celsius: Apollo and Fortress execs back different groups to restart platform.

• Strike expands to 65 countries, moves global HQ to El Salvador.

U.S. politics

• Trump +7, 47 × 40 Biden at Harris poll; Trump just +1 on RCP average.

• Sen. Thune, #2 Republican in the Senate, to endorse Tim Scott.

• Left x right spectrum is meaningless: Reason.

World

• Russia, with help of private group Wagner, takes control of Bakhmut.

• Ukrainian forces push to encircle Bakhmut, not giving up.

• Zelensky asks for aid at G7 meeting, which included BRICS’s India, Brazil.

• India, Brazil, Indonesia not convinced by G7’s view on Ukraine.

• F-16s: Biden reversed after Russia backed down on nuclear threats.

• Why F-16s: they are good enough but not a threat to deep strikes in Russia.

• Biden says US-China relations set to improve “very shortly.”

• Paul Whelan confident “wheels are turning” towards his release.

• China shutting down events without explanation.

7. Interesting tweets, memes, and images

Was this newsletter forwarded to you? Sign up here. Liked it? Forward it to friends and get rewards (see below).

Thank you for reading Bay Area Times. Got any tips? Email us at [email protected].

Disclaimer: The Bay Area Times is a news publisher. All statements and expressions herein are the sole opinions of the author. The information, tools, and material presented are provided for informational purposes only, are not financial advice, and are not to be used or considered as an offer to buy or sell securities; and the publisher does not guarantee their accuracy or reliability. You should do your own research and consult an independent financial adviser before making any investments. Assets mentioned may be owned by members of the Bay Area Times team.