10 things before the opening bell

Welcome to 10 Things Before the Opening Bell.

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Let’s get into it. 

1. The DOJ has short-sellers in its crosshairs. Muddy Waters founder Carson Block was reportedly served with a search warrant related to an investigation into illegal trading activity. The Department of Justice seized hardware, trading records, and private messages, according to a WSJ report. Andrew Left of Citron Research is another prominent short-seller that’s been caught up in the DOJ’s action. 

So far, the Justice Department has ensnared nearly 30 investment and research firms known to engage in short-selling — though no one yet has been charged or accused of anything.

The main question is whether short-sellers conspired together to drive down stock prices by sharing reports critical of certain companies ahead of their publication. 

The investigation is focused on “spoofing” and “scalping,” two tactics that could lead to big gains for those in the know.

A bit more context:

• Banned in 2010, “spoofing” happens when a trader floods the market with fake orders in an attempt to influence a stock price.
• “Scalping” is related to activist short-sellers shedding their positions for profits without disclosing it.
• Still, some believe short-sellers play an important role in exposing fraudulent companies that sometimes go bankrupt.

2. US stocks are slipping lower with Russia-Ukraine still in the driving seat. The White House says it sees no sign Russia is pulling troops out, leaving investors to keep watching the headlines. Here are the latest moves on the market.

3. Tech-investing whiz Ryan Jacob explained why he’s steering clear of large-cap growth stocks more than ever. As investors anticipate rising rates, growth stocks have sold off. Jacob shared which two small-cap names he’s betting on for 2022.

4. Earnings on deck: Alliant Energy, BJ’s Restaurants, and Invesco Mortgage Capital, all reporting. 

5. US Senator Sherrod Brown said Super Bowl crypto ads didn’t address fraud and scams in the space. The ads were trying to woo newcomers but left out all the risks inherent in the nascent digital asset sector. He urged regulators to tackle these issues “before it’s too late.”

6. Cryptocurrencies will suffer massive losses as the Fed puts an end to “crazy” speculation by hiking rates, said JPMorgan. Strategist David Kelly said it’s “all fairy dust” and remains vulnerable to higher interest rates. See why else he thinks a crypto plunge is on the way.

7. Charlie Munger sounded the inflation alarm at Daily Journal’s annual meeting. Warren Buffett’s business partner discussed rampant market speculation, China, tech stocks, vaccines, and more. Here’s a breakdown of his best comments.

8. The New York Stock Exchange wants to do for NFTs and crypto what it does for stocks. The exchange registered patents for several crypto-based products with the US Patent and Trademark Office — it wants to be a marketplace for both of the popular assets.

9. A value-focused portfolio manager shared which stocks to buy amid rising geopolitical risk. Causeway Capital Management’s Ellen Lee isn’t panicking even though rising rates and overseas tension is spooking investors. See her six stock picks.

10. A massive commodity supercycle is driving a 20% surge in food inflation — but a macro hedge fund manager laid out four strategies to leverage and five stocks to buy even as prices skyrocket.

Event invite for Insider subscribers: The stock market remains volatile as the Federal Reserve prepares to undo its pandemic-era policies. Join us on February 23 for a webinar with two top strategists on how investors should approach the weeks ahead. Sign up here.

Compiled by Phil Rosen. Feedback? Email prosen@insider.com or tweet @philrosenn.

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