Hits & Takes
Thank you to Tim Benedict of FTSE Russell who helped me check off a bucket list entry by inviting me to attend a New York Knicks game at Madison Square Garden. It was quite the event, even if the Knicks did not win.~JJL
My panel at Rates Evolved starts at 10:25 AM EST today.~JJL
I took the PATH train to New Jersey yesterday to meet with a client. I had not been on a train underwater since I took the Chunnel from London to Paris.~JJL
Jim Oliff has joined the board of cannabis company Revolution Enterprises. His appointment was announced alongside that of Tony Hunter, former CEO of Tribune Publishing.~SD
It is crazy to be running up two trillion dollars in new government debt while the economy is at full employment. It is just stupid economics, and ultimately terrible politics.~JJL
Trump has said he will put off the State of the Union address till the shutdown is over.~JB
In other news, Ken Griffin did not buy another home today.~JK
CEOs sour on Trump policies, warn they hurt business, investment
Jessica DiNapoli and Soyoung Kim – Reuters
From centre-stage in Davos last year, President Donald Trump told the world’s corporate bosses that America is a great place to invest. It hasn’t quite turned out that way.
Foreign direct investment to the United States fell in 2018, and companies gathered at the World Economic Forum in the Swiss Alps this year say they are worried Trump’s trade war with China will dampen the global economy and business investments even further.
***** Yes, businesses are at risk, but more importantly, lives are at risk.~JJL
After Surviving 9/11, Young Investment Analyst Charted a New Career Course; Jason Spindler co-founded i-Dev International to provide funding for firms in developing countries
When Jason Spindler moved to New York from his native Houston in 2000 to join the investment bank Salomon Smith Barney, he told his parents he loved Wall Street and saw his future there.
***** From the depths of grief come inspiring stories.~JJL
This Is What Happens When You Try to Sue Your Boss; Millions of American workers sign away legal rights without knowing what they’re in for: Arbitration Hell.
Max Abelson – Bloomberg
The proof that the fight between Alex Beigelman and UBS had descended into absurdity was the dispute over the granola bar. It was the fifth day of arbitration hearings, and a lawyer for UBS, the financial conglomerate where Beigelman had worked, seemed to be having some windpipe trouble. “I tried to eat a Kind bar really quickly,” the bank lawyer said. “And I have all of that granola crunchy stuff stuck in my throat.”
*****I would never take myself to arbitration. I don’t trust myself.~JJL
Wednesday’s Top Three
Our top story of the day on Wednesday was the tale of a trader who lost some serious money on the brokerage platform Robinhood, in Marketwatch’s Trader says he has ‘no money at risk,’ then promptly loses almost 2,000%. Second was the WILD announcement Women in Listed Derivatives Announces the 2019 North American Board. Third was the ESMA announcement, Esma Updates Commodity Derivatives Transitional Transparency Calculations for Mifid II/ MIFIR
140,435,825 pages viewed; 23,392 pages; 216,359 edits
UK watchdog lays out oversight of cryptocurrencies
Britain’s markets watchdog set out which aspects of the nascent cryptocurrency industry it regulates on Wednesday, as volatile digital assets come under greater scrutiny.
Junior traders are leaving Goldman Sachs and Morgan Stanley to pursue technology careers
Goldman Sachs and JPMorgan want to keep their technology staff happy. Goldman has hiked pay for its technology juniors and JPMorgan is letting some of its junior staff take a technology masters course while they work. However, both banks might want to think about keeping their salespeople and traders contented too.
‘Fat Finger’ Blamed as Centuries-Old Conglomerate Briefly Loses $41 Billion
Abhishek Vishnoi, Sofia Horta e Costa and Livia Yap – Bloomberg via Yahoo
Stock plunged as much as 83 percent in pre-market trading; Exchange says trading was orderly, no sign of manipulation
Jardine Matheson Holdings Ltd., Singapore’s largest company by market value, plunged 83 percent on Thursday before quickly rebounding. The exchange said an influx of pre-market sell orders caused the dramatic drop.
Cboe’s Bitcoin ETF Application Pulled After Repeated SEC Delays
Benjamin Bain – Bloomberg
Cboe Global Markets Inc. pulled its application to list the first Bitcoin exchange-traded fund, blaming the U.S. government shutdown.
Money Is Flooding Out of London While the U.K. Bickers Over Brexit
The big banks were among the first to plan to move assets out of London, with Frankfurt standing to benefit handsomely. Five of the largest banks looking to serve continental European customers now intend to move 750 billion euros ($855 billion) of balance-sheet assets to Frankfurt, according to people familiar with the matter.
Brussels to sue UK over tax breaks for commodities traders; Commission goes to ECJ over City of London creating VAT loophole
Jim Brunsden and Mehreen Khan – FT
Brussels is to sue the UK in Europe’s highest court over tax breaks for commodities traders, according to EU diplomats briefed on the plans, escalating a battle that Britain said risked damaging the post-Brexit competitiveness of the City of London.
Barclays Chief Jes Staley Says a New Financial Crisis Is Likely
Stefania Spezzati and Harry Wilson – Bloomberg
Staley says investment bank mergers aren’t the answer; CEO confident in bank’s strategy, but warns of Brexit shocks
Barclays Plc’s top banker said it’s “more than likely” there will be another financial crisis, but his industry is unlikely to be the trigger this time.
$40bn Jardine share plunge raises ‘fat finger’ fears; One of Asia’s largest conglomerates briefly loses more than $40bn in market value
Alice Woodhouse and Philip Stafford – FT
Jardine Matheson, one of Asia’s biggest conglomerates, briefly lost more than $40bn in market capitalisation on Thursday as its shares collapsed in the opening minutes of trading in Singapore.
A $41 Billion Flash Crash in Singapore Gives Traders a Fright
Livia Yap and Joyce Koh
January 24, 2019, 6:15 AM EST
Jardine Matheson shares plunge 83%, then quickly recover; Exchange says trading was orderly, no sign of manipulation
What was shaping up to be a ho-hum market open in Singapore suddenly became the most dramatic session in years, with a haphazard spree of sell orders causing a $41 billion crash in the city’s biggest stock.
How an $8tn market came to blows over a lower-case ‘o’; Case of a Dutch cable operator puts credit default swaps under further scrutiny
Robert Smith – FT
The $8tn market for credit-default swaps enables financial institutions to hedge their debt portfolios while allowing sophisticated investors to place bets on the creditworthiness of companies.
Hong Kong Stock Exchange CEO Casts Doubt on Crypto Miner IPO Filings
Yogita Khatri – Coindesk
New comments from the chief executive of the Hong Kong Stock Exchange (HKEX) may have dampened the hopes of several cryptocurrency mining giants that have filed for initial public offerings (IPOs).
The record-breaking purchase of a New York City penthouse is the latest in a string of multimillion-dollar real-estate deals by the hedge-fund manager
Katherine Clarke – WSJ
Billionaire Ken Griffin, who is becoming almost as known for his prodigious purchases as he is for his investment acumen, has closed on a New York penthouse for roughly $238 million. The deal sets a record for the highest-priced home ever sold in the U.S.
***** Here is the Bloomberg version of this story and the FT version
Philip Hammond pulls out of key panel on Europe in Davos
Chris Giles – FT
Philip Hammond has pulled out of a key discussion on the future of Europe at the World Economic Forum in Davos, which included the Irish taoiseach. The UK chancellor had been due to appear with Ireland’s Leo Varadkar, Dutch prime minister Mark Rutte and Mateusz Morawiecki, Polish prime minister, and was still on the programme on Thursday morning, but it was abruptly altered when the chancellor cancelled his appearance.
More U.S. Companies Separating Chief Executive and Chairman Roles; The percentage of S&P 500 companies whose chief executive also was chairman reached a decade low in 2018
Mengqi Sun – WSJ
A push by corporate governance experts, shareholders and, in some cases, regulators to untangle the chairman and chief executive positions at U.S. public companies is gaining traction.
Patrick Melia Joins R.J. O’Brien as Senior Vice President, Commodity Sales in New York; Brings 35 Years of Experience to Growing Energy/Metals Clearing and Execution Business
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, today announced that Patrick J. Melia has just joined the firm as Senior Vice President, Commodity Sales, working out of the New York office. Melia has more than 35 years of experience in energy exploration and in trading, brokering and marketing energy derivatives, including expertise in hedging and risk management strategies.
Exchanges, OTC and Clearing
HKEX chooses Traiana for central clearing connectivity of FX deliverables; Market participants can access HKEX’s OTC Clear service for FX forward and swaps via Traiana’s CCP Connect.
Hayley McDowell – The Trade
CME Group’s Traiana has said it is now providing direct central clearing connectivity to Hong Kong Exchanges & Clearing’s (HKEX) OTC Clear business for FX derivatives.
Traiana Provides Central Clearing Connectivity to HKEX OTC Clear for FX Deliverables
Traiana, a leading infrastructure service which provides trade life-cycle and risk management solutions, today announced that it has provided direct central clearing connectivity to the Hong Kong Exchanges (HKEXs) and Clearing’s OTC Clearing Hong Kong (OTC Clear).
Corentine Poilvet-Clediere appointed Head of RepoClear and Collateral Management, LCH SA
Responsible for LCH SA’s euro-denominated debt and repo clearing business
RepoClear continues to grow and expand its service; LCH, a leading global clearing house, today announced that Corentine Poilvet-Clediere has been appointed Head of RepoClear and Collateral Management, LCH SA, effective immediately. Based in Paris, Corentine is responsible for LCH SA’s euro-denominated debt and repo clearing service, RepoClear, as well as the clearing house’s collateral management function.
Bolsa de Valores de Panamá (BVP) Launches New Nasdaq Matching Engine
Nasdaq Inc. (Nasdaq:NDAQ) and Bolsa de Valores de Panamá (BVP) have announced that BVP has successfully gone-live with its new trading system. The system is operating on Nasdaq matching engine technology, allowing BVP to meet their strategic growth plans and leverage the modular functionality to offer additional services to their members and clients.
SGX reports 2Q FY2019 net profit of S$97 million
Singapore Exchange (SGX) today reported 2Q FY2019 net profit of S$96.5 million (S$88.4 million), against revenues of S$224.1 million (S$205.0 million). Operating profit was S$113.7 million (S$103.0 million), with earnings per share at 9.0 cents (8.2 cents). The Board of Directors has declared an interim dividend of 7.5 cents (5 cents) per share, payable on 12 February 2019.
Advocacy Groups Urge FTC to Pursue Facebook Breakup; The agency has been weighing possible penalties against the social media company for privacy violations
John D. McKinnon – WSJ
Several advocacy groups are urging the Federal Trade Commission to seek a breakup of Facebook Inc. FB -2.22% as it weighs possible penalties against the social media company for privacy violations.
Inside Google’s Team Fighting to Keep Your Data Safe From Hackers; Google likely has ‘the most useful data set available to any private company for tracking state adversaries and intelligence services,’ an expert says
Robert McMillan – WSJ
Shane Huntley and his team have tracked Iranian hackers as they spread disinformation in the U.S., unmasked North Korea’s responsibility for a crippling global computer virus and probed Russians linked to the 2016 hack of the Democratic National Committee.
‘AI’ to hit hardest in U.S. heartland and among less-skilled: study
The Midwestern states hit hardest by job automation in recent decades, places that were pivotal to U.S. President Donald Trump’s election, will be under the most pressure again as advances in artificial intelligence reshape the workplace, according to a new study by Brookings Institution researchers.
smartTrade Technologies Strengthens Its Organization to Support Strong Continuous Growth
smartTrade Technologies, a multi-asset electronic trading pioneer, continues to strengthen its position as the leader of multi-asset technology platforms for the buy and sell side and accelerates its expansion within new regions.
TNS Broadens Service Offerings for Financial Markets with Strategic R2G Acquisition
Transaction Network Services (TNS) today announced the acquisition of Chicago-based market data, connectivity and hosting specialist R2G Services. With this acquisition, TNS is now a unique full-service managed infrastructure provider that can meet the demanding needs of financial market participants through a single supplier relationship.
John McAfee Flees US After IRS Charges Him With “Unspecified Crimes”
David Kimberley – Finance Magnates
Cryptocurrency maverick and US presidential candidate John McAfee took to Twitter on Tuesday evening to announce that he is fleeing America’s shores. According to McAfee, tax authorities in the US are pursuing him, his wife and four of his colleagues for what are, the former anti-virus software entrepreneur says, unspecified charges.
New Exchange Claims It Can Tokenize Shares of AirBnb, Uber, SpaceX
Nikhilesh De – Coindesk
Crypto startups Zilliqa and MaiCoin have teamed up to create a centralized security token exchange in Singapore that will apply blockchain technology to the trading of traditional asset classes.
Ken Rogoff: Possibility of cryptocurrency taking over fiat money is basically zero
Lianna Brinded – Yahoo Finance
Cryptocurrencies have had a wild ride over the last year. On a World Economic Forum (WEF) panel called Building a Sustainable Crypto-Architecture in Davos, Switzerland, one of the world’s most prominent economics professors said cryptocurrency is “a classic bubble. “I think its transparently a bubble and there will be many papers on it,” said Ken Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics, Harvard University.
Oxford man arrested over £8.7m cryptocurrency theft
A man has been arrested on suspicion of fraud, theft and money laundering after £8.7m in cryptocurrency was stolen from 85 people. The Europe-wide investigation involved state police from Hesse in Germany, Europol and the National Crime Agency. Police arrested a 36-year-old man in Oxford on Wednesday and seized computers, drugs and cash.
Crypto Markets Unfazed by Latest ETF Withdrawal
Sebastian Sinclair – Coindesk
The cryptocurrency markets remain unfazed after an ETF withdrawal announcement on Wednesday did little to affect bitcoin’s price.
Blockchain.com to Launch ‘Primers’ for Cryptocurrency Newcomers
David Kimberley – Finance Magnates
Anyone who has switched on the news recently will, if they were not immediately overwhelmed by ‘orange man bad’ Trump stories, have come across blockchain. It’s the talk of the town. The star of the fintech show. A diamond in the digital asset crown. But how many crypto enthusiasts actually know what blockchain is? And of those people, how many will actually admit that they don’t?
Nasdaq, Citi Join Novogratz in Funding Blockchain Firm Symbiont
Alastair Marsh – Bloomberg
Symbiont CEO says blockchain is entering more realistic phase; Nasdaq Ventures was the lead investor in $20 million funding
Nasdaq Inc. and Citigroup Inc. are among firms that are investing $20 million in Symbiont.io Inc., a New York-based company that’s applying blockchain technology to capital markets.
WiV attracts investment, strengthens board and moves into Asia; The move into Asia extends WiV’s potential network beyond Europe for the first time
Scott Thompson – Coinrivet.com
Wine Vault, the company behind WiV, a blockchain-based trading platform for fine wines, has made a significant step towards long-term viability by attracting investment from Singapore-based Holland Park Capital. As a result of the move, Holland Park’s founding partner, Frank Holle, has joined WineVault’s board of directors and WineVault has opened an office in Singapore, extending its reach into Asia.
Stories from Alternative Crypto Sources
Elections Canada Consults With Political Parties on Crypto Donations
Jessie Willms – Bitcoin Magazine
Google’s head of account security has fix for cryptocurrency SIM-swapping
David Canellis – TNW
They Build Spacecraft and Fight Epidemics for America. The Shutdown May Scare Them Away.
Campbell Robertson – NY Times
When things overheat, corrode and stop working, that is when they call in Gustavo Costa. It’s a rare expertise, critical to everything from space travel to fracking, and it keeps him in steady demand as a contractor at NASA’s John H. Glenn Research Center. It has also put Dr. Costa, a United States citizen since August, within reach of his ultimate dream: working directly for NASA, a government agency as well-known as Coca-Cola back in his little Brazilian hometown.
The Wheels of Justice Are Grinding to a Halt; FBI agents say the government shutdown is costing them confidential sources, postponing indictments, and shutting down investigations.
Natasha Bertrand- The Atlantic
FBI agents have lost irreplaceable sources. Joint Terrorism Task Force officers can’t get into the bureau’s computer systems. Federal investigations are being stymied by a lack of resources. The partial government shutdown, now in its 33rd day, has become a serious national-security threat, the FBI Agents Association said on Tuesday.
Young Voters Keep Moving to the Left on Social Issues, Republicans Included
Dan Levin – NY Times
As a self-described political conservative, Reagan Larson might seem to be a natural fit for the Republican Party. The 19-year-old college student from South Dakota grew up in a Catholic household that objected to same-sex marriage, and she remains firmly opposed to abortion.
Deutsche Bank queried by House panels on Trump ties
Deutsche Bank has received an inquiry from two important committees of the U.S. House of Representatives on the lender’s ties to U.S. President Donald Trump, it said on Thursday.
Democrats Probe Trump ‘Favoritism’ of Oil Industry in Shutdown
Jennifer A Dlouhy – Bloomberg
House hearings will investigate Interior work on oil drilling; Permit efforts may violate federal spending law, Democrats say
Lawmakers are intensifying their scrutiny of the Interior Department’s decision to keep churning out drilling permits and restart work on offshore oil leasing despite the government shutdown.
SEC Sues Statim Holding Hedge Fund and Shutdown Stayed the Case
Simone Foxman and Matt Robinson – Bloomberg
The day after Christmas, a hedge fund manager who made the remarkable promise that he would never lose investors’ money was accused of stealing from his clients by U.S. regulators.
Former Barclays chief dishonestly misled market, jury told
Caroline Binham – Financial Times
The former chief executive of Barclays and three of his senior colleagues lied to the market in official documents detailing two emergency fundraisings in 2008 that enabled the bank to avoid a UK taxpayer bailout, a jury has heard.
John Varley on Wednesday became the first chief executive of a major bank to sit in the dock to face a jury trial over actions taken during the financial crisis.
Market Volatility Drives FINRA’s Volume to New Record in 2018; Daily Market Activity Soars 87 Percent to New Record
Exceptional market volatility generated an unprecedented amount of processing volume for FINRA in 2018 – 66.7 billion electronic records per day, an 87.4 percent increase over the average daily volume in 2017. FINRA’s pioneering cloud strategy allowed it to handle the record-setting volume smoothly while continuing to perform vigorous regulatory oversight of securities trading.
FINRA Releases 2019 Risk Monitoring and Examination Priorities Letter
FINRA today released its 2019 Risk Monitoring and Examination Priorities Letter, highlighting new priorities as well as identifying areas of ongoing concern that FINRA will continue to review in the coming year. This year’s letter’s focus on materially new issues may help firms better identify those priorities that are relevant to their business.
2019 Annual Risk Monitoring and Examination Priorities Letter
Each year, FINRA publishes its Annual Risk Monitoring and Examination Priorities Letter to highlight issues of importance to FINRA’s regulatory programs.
Trends in the high-cost short-term credit market – January 2019
We have published new data on insights and trends in the high-cost short-term credit (HCSTC, also known as ‘payday lending’) market.
German FinMin declines to provide details of talks with lenders
Germany’s finance ministry holds talks with Commerzbank in connection with its holding in the lender, the ministry said, when asked to comment on a report that the finance minister had met with representatives of the bank to discuss a potential merger with Deutsche Bank .
Investing and Trading
Fed Pot Shots at Davos Met With Big Bets on Interest-Rate Limbo
John Ainger and Cecile Gutscher – Bloomberg
Billionaire Ray Dalio called out the Federal Reserve in Davos on Tuesday, echoing a sentiment that’s firing up some big managers to load up on duration.
Too Many Americans Will Never Be Able to Retire; Without more babies and immigrants, the country won’t be able to support its aging population.
Noah Smith – Bloomberg
Traditionally, Americans could look forward to a comfortable retirement. After four decades in an office or a factory, sometime in their 60s they would lay down their burdens and enjoy a final couple of decades with time to relax, spend time with family and friends, and reflect on their life. But since the financial crisis, older Americans have been increasingly staying in the workplace:
What Caused Jardine Matheson Holdings $41 Billion Slump?
Abhishek Vishnoi, Sofia Horta e Costa and Livia Yap – Bloomberg
Jardine Matheson Holdings Ltd., Singapore’s largest company by market value, plunged 83 percent on Thursday before quickly rebounding. The exchange said an influx of pre-market sell orders caused the dramatic drop.
The New Hedge Fund Manager Flies Economy and Stays in Hostels; Dwindling returns and the rush to index funds have made starting a hedge fund harder than ever.
Suzy Waite – Bloomberg
Brant Rubin started a hedge fund last year only to find it wasn’t the easy path to riches it used to be.
Ex-Pimco CEO Bill Thompson rejoins bond giant as chairman emeritus
Richard Henderson – FT
Pimco has lured back a former chief executive to take on an advisory role as chairman emeritus at the $1.6tn bond giant.
BMO poaches Kristi Mitchem from Wells Fargo; New CEO will head the $240bn investment arm of the Bank of Montreal
Jennifer Thompson and Chris Flood – FT
BMO Global Asset Management has poached Kristi Mitchem from Wells Fargo Asset Management to become chief executive of the C$320bn ($240bn) investment arm of the Bank of Montreal.
Einhorn’s Greenlight Hit by Investor Redemptions; Billionaire hedge-fund manager David Einhorn’s Greenlight Capital Inc. faced a wave of redemptions in recent months, pushing his assets below $3 billion.
Rachael Levy – WSJ
Billionaire hedge-fund manager David Einhorn’s Greenlight Capital GLRE 1.53% Inc. faced a wave of redemptions in recent months, pushing his assets below $3 billion.
Running a Hedge Fund Isn’t All Bad; Also the shutdown, Robinhood, Bono, index funds, BBB bonds and typos.
Matt Levine -Bloomberg
Here’s some career advice from billionaire hedge fund manager John Paulson:
Gundlach Returns to Twitter After ‘Suspicious Activity’ Ruled Out
Jim Jia – Bloomberg
DoubleLine Capital LP Chief Executive Officer Jeffrey Gundlach said in a tweet that he won’t be suspending his Twitter account after all. His firm has concluded that the potentially suspicious activity which prompted him to delete his handle was “in fact innocuous.”
China’s Oil Old Guard Is Dabbling in Wind Power
China’s offshore oil and gas experts are dipping their toes in wind power, bringing their experience working on the ocean floor and adding a new twist to their portfolios.
China, After Years of Market Meddling, Tries a Lighter Touch; Beijing moves toward a freer market as economic growth slows and trade tensions simmer
Shen Hong – WSJ
Beijing has sped up financial liberalization in recent months, seeking to attract foreign capital and revive an anemic stock market.
China Slashed U.S. Soybean Imports in Half in 2018 After Trade War
China, the world’s biggest soybean buyer, almost halved imports of the commodity from the U.S. in 2018 after a trade war with America hurt shipments from the Asian nation’s second-largest supplier.
China Risks Real Hard Landing This Time
Nathaniel Taplin – WSJ
China’s economy is at risk of its long-feared “hard landing”—a rapid slowdown in growth that would hit employment hard and could trigger big problems in global debt and currency markets.
Dutch say 250 firms interested in Brexit move
Dutch officials are in contact with more than 250 companies about a possible post-Brexit move, the government said Wednesday, after Sony revealed it would shift its base to the Netherlands.
Airbus Calls Brexit Process a Disgrace, Threatens to Leave U.K.
Benjamin D Katz – Bloomberg
CEO Enders says many countries would love to build plane wings; Planemaker has 14,000 workers, supports 110,000 jobs in U.K.
Airbus SE said it could be forced to move future investments out of the U.K. in case of a no-deal divorce from the European Union, slamming the “madness” of Brexit supporters who assume the planemaker won’t abandon Britain.
No-Deal Brexit Risk Recedes as Calls Grow to Delay Divorce
Alex Morales – Bloomberg
Momentum builds behind Cooper-Boles plan to force extension; German, French officials indicate delay could be an option
The risk of a no-deal Brexit appears to be receding after calls for a delay to the U.K.’s exit from the European Union won powerful backing in London and other EU capitals. The pound rose.
Citigroup’s Brexit Warning for London
Elisa Martinuzzi – Bloomberg
If you weren’t listening extremely carefully, you’d be forgiven for missing it. But slipped into a broader conversation about Brexit’s impact on banking, a global finance chief has signaled that one of most dreaded, longer-term effects on the City of London is a real possibility.
BuzzFeed to Cut 15% of Its Workforce; Layoffs could affect about 250 jobs across the digital publishing company
Lukas I. Alpert and Benjamin Mullin – WSJ
BuzzFeed is planning to lay off about 15% of its workforce, according to people familiar with the situation, as the company seeks to reorient itself in a shifting digital-media landscape.
Gannett lays off journalists across the country
Another brutal day for journalism. Gannett began slashing jobs all across the country Wednesday in a cost-cutting move that was anticipated even before the recent news that a hedge-fund company was planning to buy the chain. The cuts were not minor.