Banks turn to blockchain in search for high-quality trading assets; Binance promoted terra as ‘safe’ investment before $40bn collapse

May 23, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

Friday was the last day of trading on the 1997 trading floor of the CME Group that was dubbed “The Arboretum” back in the day in honor of former CBOT Chairman Patrick Arbor. The massive trading floor that could fit a 747 airplane was his response to the threat of electronic trading. Firms wanted more space on the trading floor to conduct business, he told me in an interview, and those demands drove him to deliver this huge trading floor.

This is the trading floor where the CME Group combined the CBOT and CME contracts after the CME bought the CBOT. The building that houses this trading floor has been sold to ComEd to become a substation.

Former New York Federal Reserve President Gerald Corrigan has died at the age of 80. Corrigan led the bank through several market shocks in the 1980s and 1990s, including the stock market crash of 1987, Bloomberg reported.

The FT added to their Special Report on Exchanges, Trading and Clearing. Here are the stories:

The future of crypto trading is futures; While traditional exchanges push for a slice of lucrative crypto action, specialist platforms are trading highly regulated US derivatives – Eva Szalay – FT
EU aims to unify capital markets with live trading databases; Brussels believes a so-called ‘consolidated tape’ will make the bloc’s exchanges more attractive to investors – Philip Stafford

One of my favorite movies when I was in college was “Chariots of Fire.” Not only was it a great movie, but I enjoyed the music enough that I bought the CD at the time. Well, Vangelis, the composer who wrote the music for ‘Chariots of Fire’ has died at the age of 79, The New York Times reported.

Bevon Joseph of the Greenwood Project was interviewed by the team at Greater Than Zero Percent in this YouTube video.

J. Christopher Giancarlo, Mark Wetjen and Christopher Perkins published an op-ed on Forecast titled “A bipartisan case for why the US needs a Web3 regulatory overhaul.” The subhead line is: In a special op-ed, 2 former CFTC chiefs and a crypto executive make the case for why the US must prioritize policies that support the new Web3 economy.

HKEX CEO Nicolas Aguzin has written a commentary for the World Economic Forum website titled “How capital markets can help shape a post-pandemic recovery.”

The Federation of Euro-Asian Stock Exchanges (FEAS) has an interview with Peter Fredriksson and Tore Klevenberg of Baymarkets in this YouTube video. They talked about Bay Markets becoming a new member of FEAS, Baymarkets technology, future plans, and more.

I went out to dinner with Jeremy Grant and his wife, who were in Chicago, last Friday. It was 20 years to the week that Jeremy had come to Chicago as an FT reporter to cover the exchange sector and other beats. After dinner, just a couple of blocks away, there was a shooting at Chicago and State near the subway station. We did not hear the shooting, but it was about the same time we were leaving the restaurant.

In New York, a man shot Sunday on the subway was a Goldman Sachs employee.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL

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Robbert Booij of ABN AMRO Clearing Reflects on Ukraine Impact, UK Consultation, ESG in FIA Boca 2022 Interview
JohnLothianNews.com

Robbert Booij, CEO of the European region for ABN AMRO Clearing Bank N.V., told JLN at FIA Boca 2022 that the firm’s lack of proprietary trading and focus on clearing clients’ trading, along with their real time risk management model, allowed them to focus on the tremendous volatility brought on by Russia’s Ukraine invasion and to escape without any direct exposure.

Watch the video »

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Things Are Looking Up for CloudMargin, CEO Says
JohnLothianNews.com

Stuart Connolly, the CEO of CloudMargin, told John Lothian News at FIA Boca 2022 that the company’s infrastructure has become even more critical because of events like the Ukraine war for moving collateral reliably as part of the whole collateral workflow. He said the company is growing with new clients and deals, retaining present clients and seeing growing acceptance of the cloud.

Watch the video »

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Request your invitation here: Acuiti Event

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Davos Forum Is Back With Less Billionaire Starpower and No Snow; Dimon and Solomon won’t be going, but Fraser and Moynihan will; Bill Gates, Gautam Adani are the richest people set to attend
Anders Melin – Bloomberg
Ask some of the world’s rich and powerful descending on Davos this week and they’ll tell you: After a two-year pandemic-enforced hiatus from the Swiss ski resort, the annual meeting of the World Economic Forum just isn’t going to be the same. The guest list is hundreds of names shorter, with many titans of finance conspicuously absent. The chiefs of Goldman Sachs Group Inc. and JPMorgan Chase & Co. aren’t going. Neither is BlackRock Inc.’s Larry Fink or Steve Schwarzman, the private-equity billionaire.
/jlne.ws/3ySVag7

***** For the 10th year in a row, I will not be attending Davos. I will be attending to Indy and Bella, however.~JJL

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A Hot, Deadly Summer Is Coming With Frequent Blackouts; There won’t be enough energy supplies to go around as sweltering heat boosts power demand in the months ahead, putting lives at risk.
Dan Murtaugh, Rajesh Kumar Singh, and Naureen S Malik – Bloomberg
Global power grids are about to face their biggest test in decades with electricity generation strangled in the world’s largest economies. War. Drought. Production shortages. Historically low inventories. And pandemic backlash. Energy markets across the planet have been put through the wringer over the past year, and consumers have suffered the consequences of soaring prices. But, somehow, things are on track to get even worse.
/jlne.ws/3G98mPr

****** This is your good bad news Monday story. Sorry.~JJL

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Companies Plan to Hire More Interns as Battle for Talent Heats Up; Firms expected to bring on 22.6% more interns than last year, bolstering their entry-level pipelines.
Paulina Cachero – Bloomberg
The fight for talent in the tightest labor market in decades has arrived at a new phase: the battle over interns. Companies are struggling to recruit employees as the number of job openings hit an all-time high in March, with nearly two open jobs for every unemployed person. Now, they’re trying to get a leg up against their competitors by hiring more interns to bolster their entry-level pipelines.
/jlne.ws/38c93v2

*****Is middle school too early to hire interns? That is not child labor, it is more tween labor. ~JJL

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Head of Ho Chi Minh City Exchange Fired for Work Violations
Mai Ngoc Chau – Bloomberg
The Vietnam Stock Exchange fired the head of Ho Chi Minh City’s bourse for “very serious” shortcomings at work, the latest in a string of dismissals in an ongoing investigation into securities violations. Le Hai Tra was terminated on May 20, the Ho Chi Minh City exchange said in a statement late Friday. Tran Anh Dao, the exchange’s deputy general director, will now be in charge of the bourse’s executive board, it said in a separate statement.
/jlne.ws/3NvEvTI

******Not the first time an exchange CEO was fired, but this one looks like an interesting story.~JJL

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Friday’s Top Three
Friday was a Bloomberg trifecta. Our most read story on Friday by far was Bloomberg’s Griffin’s Citadel Nears Tipping Point on Chicago Exit Over Crime. Second was a tie between Bloomberg’s If Tesla Isn’t Good Enough for an ESG Index, Then Who Is? and The Math Prodigy Whose Hack Upended DeFi Won’t Give Back His Millions, also from Bloomberg. And third was Jerome Kemp Is Bullish On DLT To Transform Cleared Derivatives, Enhance FCM Model, a John Lothian News video interview.

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MarketsWiki Stats
26,836 pages; 238,549 edits
MarketsWiki Statistics

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Lead Stories

Banks turn to blockchain in search for high-quality trading assets; BNP Paribas joins JPMorgan-powered platform that has traded more $300bn of intraday repo deals
Eva Szalay – FT
BNP Paribas has joined JPMorgan in using digital tokens for short-term trading in fixed income markets as some of the world’s biggest investment banks step up efforts to modernise the $12tn market with blockchain technology. The French bank has joined a blockchain-powered network run by its US rival, which has already attracted more than $300bn of deals since its launch in December.
/jlne.ws/3wHS6km

Binance promoted terra as ‘safe’ investment before $40bn collapse; World’s biggest crypto exchange marketed stablecoin lending scheme offering nearly 20% yield
Adam Samson and Joshua Oliver – FT
Binance promoted terraUSD as a “safe” investment just weeks before the stablecoin and its counterpart luna collapsed in a $40bn wipeout that shook the crypto industry. The world’s biggest crypto exchange advertised on April 6 an investment scheme in which clients lend out their terra to earn a yield of almost 20 per cent as a “safe and happy” opportunity, according to a message Binance sent on its official channel on the Telegram messaging app.
/jlne.ws/3LIMtHP

The Airbnb of Wall Street Wants to Free Up Trapped Bank Capital; Capitolis, backed by JPMorgan and Silicon Valley, is using investor money to help banks do more lending and trading
David Benoit – WSJ
Wall Street banks are running out of room to keep the markets humming. The sharing economy could hold the solution. That is the idea behind Capitolis Inc., a startup backed by some of the biggest names on Wall Street and Silicon Valley. In the same way Airbnb turned vacant homes into vacation rentals, Capitolis is turning the unused capital of investing giants like BlackRock Inc. into assets that banks can use to facilitate all kinds of transactions.
/jlne.ws/3sQCD0c

Exodus From Midtown Manhattan Led by Tech and Banks; New buildings in trendy neighborhoods downtown and on the West Side are luring companies from the corporate corridors of older, staid offices
Kate King – WSJ
Companies are bypassing prime blocks in Midtown Manhattan for neighborhoods further west or downtown, as Park Avenue fades from prominence after decades as a magnet for some of the world’s biggest companies. With many employees preferring to work remotely or from home, companies are giving priority to state-of-the-art office towers with outdoor space and buildings in trendier neighborhoods in an effort to lure workers back to their desks.
/jlne.ws/3MGL8CG

Former BitMEX CEO Sentenced to House Arrest on Anti-Money-Laundering Charges; Arthur Hayes was sentenced to serve six months of house arrest and two years probation for violating anti-money-laundering law
Richard Vanderford – WSJ
Arthur Hayes, a co-founder and former chief executive of cryptocurrency derivatives exchange BitMEX, has been sentenced to serve six months of house arrest for violating U.S. law by failing to establish a compliant anti-money-laundering program.
/jlne.ws/3wEM9pe

DeFi Believers Never Say Die, Even After They See Terra’s Demise; Justin Sun’s new USDD stablecoin is offering a yield of 30%; Sun sees need for assets outside the control of central banks
Muyao Shen – Bloomberg
Hardcore believers in the future of decentralized finance aren’t giving up on algorithmic stablecoins even after the spectacular collapse of TerraUSD (UST), saying they remain key for moving to a world without intermediaries such as banks and brokerages. “An algo stable will exist in the next five-to-seven years,” said Hassan Bassiri, a portfolio manager at Arca, which was an investor in Terra. “And it has to exist or else what are we even doing in this space?”
/jlne.ws/3PDqDZy

Day Traders Relish Demise of Hedge Fund They Tormented on Reddit; WallStreetBets members celebrate symbolic defeat of Melvin Capital a year and a half after their initial famed short squeeze.
Claire Ballentine and Misyrlena Egkolfopoulou – Bloomberg
The closure of Gabe Plotkin’s Melvin Capital Management is vindication for legions of retail traders who banded together last year against Wall Street, providing a rare bright spot for the Reddit crowd as stocks and crypto continue to plunge. Plotkin’s decision to shut down his $7.8 billion fund was met with celebration on the forums that fueled the initial revolt against his short positions in GameStop Corp. and other troubled companies that became the favorite meme stocks of 2021. At the time, an army of traders on Reddit’s WallStreetBets targeted Melvin and other hedge funds, which they argued were a manifestation of Wall Street’s greed.
/jlne.ws/3luHP5V

Singapore Still Rules China Futures Market as Hong Kong Edges In; Hong Kong now has 4% market share by volume of contracts; But Singapore is still far ahead in the key trading segment
Ishika Mookerjee and John Cheng – Bloomberg
Six months after Hong Kong introduced equity index futures to make it easier for international investors to bet on Chinese stocks, Singapore still rules the market, although its Asian rival is making inroads. Hong Kong’s contracts linked to one index of 50 of the largest mainland-listed companies accounted for about 4% of volume in the segment in April, according to Bloomberg calculations based on data from the exchanges. By value, the share rose to 15%.
/jlne.ws/3LFX0n7

SEC Probe Looms Over Auditors’ Fastest-Growing Businesses; Potential conflicts of interest increase as profits from nonaudit work soar
Jean Eaglesham and Dave Michaels – WSJ
When the two top executives of a hot electric-vehicle startup made share purchases that later drew scrutiny, they were helped by accounting firm BDO USA, according to the auto company. BDO was also the auditor of the company they ran. The dual roles that BDO played at Electric Last Mile Solutions Inc. are typical of potential conflicts of interest faced by auditors. Relationships like this one are under scrutiny by the Securities and Exchange Commission, people close to the inquiry said. The car maker said it took an internal probe to figure out that BDO was advising its chairman, Jason Luo, and Chief Executive Officer James Taylor. Both executives resigned and their deals for company stock are being investigated by the SEC, the company said in March.
/jlne.ws/3NqIIZ0

Coffee Shipped by Sailboat Is a Whimsical Way to Lower Your Emissions; A small band of importers and sailors are trying to overthrow dirty cargo ships’ command of the high seas and deliver lower-carbon coffee beans.
Irina Anghel and Eamon Akil Farhat – Bloomberg
There’s never been a more dreamy way to have your coffee delivered than a sailboat across the Atlantic. A small number of specialty roasters in Europe are now offering beans that have been sailed — rather than shipped via fossil-fuel burning vessels — from South America. While they’re a rare luxury compared with standard bags of supermarket coffee, these wind-blown beans may inspire some imaginative ideas for finding and stamping out carbon emissions from your everyday life.
/jlne.ws/3wG9VAe

Credit Suisse CEO Says We’ll Never Go Back to Office Full Time; ‘Unrealistic’ to expect staff to go back to office full time; Swiss bank only has 37% of global employees in the office
Marion Halftermeyer and Sridhar Natarajan – Bloomberg
Credit Suisse Group AG Chief Executive Officer Thomas Gottstein doesn’t think banks will ever return to working full-time from the office. “It’s unrealistic and it is not what employees want,” he said in an interview at the World Economic forum in Davos on Monday. “We are in a soft way trying to encourage people to come back, but it’s counterproductive if you push too hard.”
/jlne.ws/389viBN

Hedge Funder Invokes Specter of Madoff as New Bad Assets Explode; One of the biggest players in the lucrative world of side-pockets has a sobering message for investors drawn by their rich returns.
Nishant Kumar – Bloomberg
Wasim Rehman is a go-to person for investors desperate for an exit in the messy world of trading troubled, hard-to-sell assets — a sector that’s set to explode as sanctions against Russia and the ongoing equities meltdown create mountains of illiquid holdings. But Rehman — who has invested in more than 200 funds in liquidations in the 13 years since retiring at age 28 as the youngest partner of hedge fund giant Marshall Wace — has a message for those tempted by the steep discounts of so-called side-pockets that money managers create to separate out their problem bets: Sometimes it takes more than just patience.
/jlne.ws/3PCu8PT

How $60 Billion in Terra Coins Went Up in Algorithmic Smoke
Muyao Shen – Bloomberg
Record Food Costs Throw Spotlight on How China Will Feed Itself; Country depends on imports for 85% of its soybean supplies; Nation now the biggest corn importer and a top wheat buyer
Jasmine Ng – Bloomberg
China has been long obsessed with finding ways to ensure there is enough food for its population, and with good reason. With almost a fifth of the world’s people, limited farmland and the increasing challenge of climate change, President Xi Jinping’s government has exhorted farmers to maximize harvests and consumers to minimize waste. It’s built up huge stockpiles to cope with shortages and created new seeds to boost output.
/jlne.ws/3G7Vklg

How shadow banks threaten the global economy; This realm beyond regulators is where the next crisis will arise
Ruchir Sharma – FT
As the US Federal Reserve raises interest rates, debate rages over whether this tightening cycle will trigger a recession or not. History suggests an interesting answer: since the second world war, Fed tightening has led to a range of outcomes for the economy, from hard to softish landings, but has always led to financial crises somewhere — including every major global crisis in recent decades.
/jlne.ws/3GpaIKt

HSBC suspends banker after climate risk comments, Financial Times reports
Reuters
HSBC Holdings (HSBA.L) has suspended its head of responsible investing pending an internal investigation after he said central bank policymakers and other global authorities are exaggerating the financial risks of climate change, the Financial Times reported on Sunday citing people with knowledge of the process. HSBC senior banker Stuart Kirk made the comments at a conference hosted by the FT on Thursday, drawing criticism from climate activists.
/jlne.ws/3sQTr7c

Davos Meetings Are Full of Potential But Rarely Full of Solutions; The World Economic Forum is gathering again and the list of economic problems facing the world is long and getting longer.
Mohamed A. El-Erian – Bloomberg
I have never taken up the opportunity to attend the Davos meeting and I will pass again this year. That, however, does not mean that I do not follow its evolution and outcomes. I am certainly interested in what could emerge from a meeting that brings together so many leaders of governments, civil society and business. In an ideal world, this year’s meeting would prove catalytic in two important ways. First, it would trigger greater awareness of ongoing watershed developments in the global economy and draw attention to how differently these are viewed around the world. And second, it would point to ways in which an increasingly “zero-sum” view of international coordination can be reshaped to contribute to collective resilience and inclusive prosperity.
/jlne.ws/39JU4bQ

How Does the Davos Elite Deal With War in Ukraine?; Global elites have yet to confront the harsh realities of power politics and nationalism.
Martin Ivens – Bloomberg
When the global elite meets at the Swiss resort of Davos this week, for a spring gathering of the World Economic Forum (WEF), war will have forced its way to the top of the agenda. The pandemic has shrunk the annual jamboree of the great and the wealthy. Absent will be Russian oligarchs who hung around in “outer Davos” mostly uninvited and yet heavily present in private chalets and meetings. Now they’re under Western sanctions and under the radar.
/jlne.ws/3NnQ0MY

Crypto Might Have an Insider Trading Problem; Anonymous wallets buy up tokens right before they are listed and sell shortly afterward
Ben Foldy and Caitlin Ostroff – WSJ
Public data suggests that several anonymous crypto investors profited from inside knowledge of when tokens would be listed on exchanges. Over six days last August, one crypto wallet amassed a stake of $360,000 worth of Gnosis coins, a token tied to an effort to build blockchain-based prediction markets. On the seventh day, Binance—the world’s largest cryptocurrency exchange by volume—said in a blog post that it would list Gnosis, allowing it to be traded among its users. Token listings add both liquidity and a stamp of legitimacy to the token, and often provide a boost to a token’s trading price. The price of Gnosis rose sharply, from around $300 to $410 within an hour. The value of Gnosis traded that day surged to more than seven times its seven-day average.
/jlne.ws/3lwRIzP

Gerald Corrigan Led New York Fed During Wall Street Turmoil; Regulator and banker, who has died at age 80, played a central role in the Federal Reserve’s responses to the 1987 stock-market crash, and Drexel Burnham Lambert and Salomon Brothers crises
Jon Hilsenrath and James R. Hagerty – WSJ
Gerald Corrigan, who served as president of the Federal Reserve Bank of New York during episodes of Wall Street turmoil in the late 1980s and early 1990s, died Tuesday. He was 80 years old and had Alzheimer’s disease. “I thought of Corrigan as a kind of John Madden of finance,” Timothy Geithner, who later ran the New York Fed, wrote in a memoir. Mr. Corrigan was “big, gruff, old-school, a well-respected student of the game, with a similarly animated rhythm to his commentary.”
/jlne.ws/3LzOw18

Ukraine Invasion

Moody’s Downgrades Ukraine as Drawn Out War Raises Debt Risk; Company cut Ukraine’s rating to Caa3, third-lowest level; Rise in debt likely unsustainable in the medium term: Moody’s
Maria Elena Vizcaino and Amelia Pollard – Bloomberg
Moody’s Investors Service cut Ukraine’s credit rating to the third-lowest level as a more drawn out war than expected increases risks around the nation’s debt sustainability. The agency downgraded Ukraine by a notch to Caa3, now rating it on par with serial defaulters like Ecuador and Belize. At the Caa3 rating level, Moody’s expects a recovery in the event of default of typically between 65% to 80%, according to a statement published Friday.
/jlne.ws/385IJT8

Finland Loses Main Gas Supply After Refusing Payment in Rubles; Fuel accounts for just 5% of the nation’s energy mix; Supplies continue to arrive via pipeline from Estonia
Kati Pohjanpalo – Bloomberg
Russia has cut Finland off from its natural gas supplies as relations between the two neighbors sour over the Nordic nation’s decision to join defense alliance NATO. Finland is the third European country to lose gas from Russia after refusing to pay for the fuel in rubles. Flows on a main pipeline from the region’s top supplier were halted in the early hours of Saturday, according to a filing by Finnish importer Gasum Oy. Poland and Bulgaria had their taps turned off last month for the same reason.
/jlne.ws/3MBIq1z

How an Energy Expert Triggered Vladimir Putin With One Word; The judgment of history is shifting a little bit, says Yergin; Big question is can Europe fill storage to get through winter
Michael P. Regan and Vildana Hajric – Bloomberg
Daniel Yergin was at the St. Petersburg International Economic Forum in 2013 when he got a daunting request: Could he pose the first question from the audience to Vladimir Putin? “I started to ask a question, I mentioned the word ‘shale,'” he recalls, referring to a once-unconventional source of oil and natural gas that by then was flowing freely in the U.S. due to advances in production techniques. “And he started shouting at me, saying shale’s barbaric.”
/jlne.ws/3wAcAg3

Senior Executives, Board Members Leave Russian Oil Giant Rosneft; Former German Chancellor Gerhard Schröder is stepping down from board of state-controlled company
Anna Hirtenstein and Joe Wallace – WSJ
Russian state oil giant Rosneft Oil Co. is losing several senior executives and board members, a brain drain that stands to weaken a prime driver of the country’s economy while Moscow wages war on Ukraine. Former German Chancellor Gerhard Schröder and Matthias Warnig, a longtime friend of President Vladimir Putin, are leaving the board of directors, the company said Friday. Chief Executive Igor Sechin’s two top lieutenants, first vice presidents Didier Casimiro and Zeljko Runje, are leaving the company, people familiar with the departures said. Their exit means Mr. Sechin, a close associate of Mr. Putin, will have to navigate a crisis in Russian oil markets without his most experienced deputies.
/jlne.ws/3PCr8my

Russia Pays Bond Coupons Ahead of Likely U.S. Payment Block; Move comes ahead of a likely change in U.S. sanctions next week that is expected to curtail Moscow’s ability to keep paying its sovereign debt
Alexander Saeedy – WSJ
Russian finance officials said Friday that they had pushed through around $100 million in interest payments due under some of the country’s foreign-currency debts, ahead of a likely change in U.S. sanctions next week that is expected to curtail Moscow’s ability to keep paying its sovereign debt. Russia’s Finance Ministry said it had submitted roughly $71.3 million due under a dollar-denominated bond due 2026 and 26.5 million euros, equivalent to about $28 million, under a euro-denominated bond due 2036, according to Russian state media agency TASS.
/jlne.ws/39JPHxt

The EU is replacing Russian oil with solar energy; Solar is the secret sauce to less reliance on oil
Cate Lawrence – The Next Web
This week has been a big one in the EU, with the European Commission going all-in on renewable energy and, in particular,solar. In March 2022, following the invasion of Ukraine by Russia, the European Union committed to entirely phase out its dependency on Russian gas, oil, and coal imports. It asked the European Commission to develop a plan on how to do so by the end of May 2022. The REPowerEU plan is the result.
/jlne.ws/3lv56Ez

To Quit Putin’s Gas, Europe Must Tack With the North Sea Wind; Together, Denmark, Germany, Belgium and the Netherlands take a big step toward European energy independence and carbon neutrality.
Andreas Kluth – Bloomberg
Arthur Conan Doyle obviously caught the North Sea in optimal weather on that particular day. But as the briny made him surge with love, it should now make us giddy about its wind.
/jlne.ws/3wzHEwn

Exchanges, OTC and Clearing

The Foro Medcap returns to its live, face to face format bringing together 110 companies with over 150 investors
BME-X
– The benchmark event for small and medium-sized companies, Foro Medcap 2022 runs till Thursday 26th, featuring more than 1,000 private meetings between companies and investors.
– Javier Hernani, CEO of BME, and Thomas Zeeb, Global Head of Exchanges at SIX, will be keynote speakers on the opening day.
– During this edition of the Forum, such topics as New Challenges facing companies, Energy Transition, technology and the effects of the geopolitical crisis will take centre stage
/bit.ly/3wHqVWI

Building the market for ESG derivatives
Eurex
ESG is among the fastest growing segments of capital markets today. However, many challenges remain from fragmentation of data to low liquidity in listed instruments. Eurex spoke with Julien Nizard, European Head of Equity Derivatives Trading at J.P. Morgan, about the market for ESG derivatives in equities and how the firm was helping clients meet their mandate.
/bit.ly/3wBdCqQ

The future of FX futures
Eurex
Momentum is building for the adoption of FX futures, with regulatory impetus bringing the product’s qualities to investors’ attention. Eurex caught up with Scotte Moegling, Institutional Trading at Flow Traders to discuss the futurization of FX and the opportunities available in block trades.
/bit.ly/3wEyU8m

FEX Global recognised as an MLO exchange
FEX
In accordance with the National Electricity Rules, clause 4A.G.23, the
Australian Energy Regulator (AER) has reviewed and subsequently approved
the application by FEX Global Pty Ltd to be a MLO exchange through which
market liquidity obligations (MLO) may be met.
Participants now have the opportunity to trade MLO products on either ASX24
or FEX Global, as these are both designated MLO exchanges.
/bit.ly/39Fg5IZ

2022 Annual Attestation and Inspection Programme – Self-attestation of
Compliance Questionnaire
HKEX
Reference is made to the circular (Ref. No.: MSM/005/2022) dated 26 April 2022 regarding the
Annual Attestation and Inspection Programme 2022 (the “Programme”)
/bit.ly/3sUJcPd

Regulator’s Column: Live engagement and voting expected at all AGMs for FYs ending 30 June 2022 or after
SGX
Shareholders must be able to make decisions on an informed basis. This is true when making decisions on whether to buy, hold or sell securities, as well as when voting on corporate actions and other resolutions at shareholder general meetings.
/bit.ly/3LFj6X9

Fintech

Credit Algos Aren’t Sweating Market Stress Like They Did in 2020; High volatility is no longer shutting down pricing algorithms; Trouble early in the pandemic helped firms fine-tune systems
Jack Pitcher – Bloomberg
When the onset of the coronavirus pandemic roiled financial markets just over two years ago, credit trading algorithms were flummoxed. In many cases, dealers turned their algos off and handled corporate bond trading the old fashioned way — over the phone and through instant messages. Now, traders say robots are better equipped to price bonds during periods of market stress, in part because of data gathered during the 2020 turmoil. With volatility ramping up quickly as the Federal Reserve tightens financial conditions, new and improved algos are again being put to the test — and so far they’re passing.
/jlne.ws/39EElei

Elon Musk’s Crazily Banal Week; From overbidding on Twitter to becoming a Republican to settling a sexual-harassment claim, he’s acted the part of a garden-variety mogul.
Liam Denning – Bloomberg
And so, we reach the end of another week of drama in the Elon Musk show. But what really stands out about this one is how drearily banal it was. Think of it reduced to a few headlines, just as the man himself reduces it to (so many, many) tweets.
/jlne.ws/3sOHK0P

‘Elon Musk’s Crash Course’ shows the tragic cost of his leadership
Eric Deggans – NPR
Just as his effort to buy Twitter has led the world to focus on Elon Musk’s management style and business strategies, FX and The New York Times have stepped up with a documentary taking a close look at how Musk responded to crashes involving the Autopilot function in cars from his company, Tesla. For those watching Musk’s fitful attempt to buy Twitter, the film also serves as a pointed comparison; showing how his penchant for bold moves and provocative statements can lead fans to see what they want in his words – regardless of whether what he says is actually possible.
/jlne.ws/38IsUSL

LedgerEdge integrates with S&P Global’s thinkFolio platform; The collaboration will allow traders to access enhanced DLT-enabled corporate bond liquidity and trading services.
Wesley Bray – The Trade
Start-up bond trading platform LedgerEdge has integrated with S&P Global Market Intelligence’s investment management platform, thinkFolio. The thinkFolio platform provides portfolio modelling, order management and trading, cash and FX management capabilities. LedgerEdge utilises DLT to modernise institutional-grade trading services for the $41 trillion global corporate bond market.
/jlne.ws/3NpNVjC

Valérie Noël: The adoption of DLT, blockchain and digital assets; Valérie Noël, head of trading at Syz Group, speaks to The TRADE about the evolving landscape surrounding DLT, blockchain and digital assets including institutional adoption and application on the trading desk.
Wesley Bray – The Trade
What is driving institutional adoption of DLT, blockchain and digital assets and where do the final hurdles to institutional adoption lie?
/jlne.ws/3wzUJ8X

Cryptocurrencies

BitMEX Founder Hayes Avoids Prison on Bank Secrecy Charge; Hayes pleaded guilty over money-launder laxity, gets probation; BitMEX in August agreed to pay $100 million over its practices
Chris Dolmetsch – Bloomberg
BitMEX co-founder Arthur Hayes was spared from prison despite admitting he failed to guard against money laundering at the pioneering cryptocurrency exchange, which the US blames for hundreds of millions of dollars in shady transactions. On Friday a federal judge sentenced Hayes to two years’ probation, after Hayes and BitMEX’s other founders were charged in 2020 with violating the Bank Secrecy Act, which requires the establishment of such safeguards, including verifying the identities of an exchange’s customers.
/jlne.ws/39HbJB4

First a Hum and Then a Bang: Niagara Falls Residents Forced to Reckon With Crypto Mining
Eliza Gkritsi – CoinDesk
An explosion and subsequent fire rocked a Blockfusion crypto mining facility in upstate New York last week, resulting in thousands of mining rigs going offline. About three miles away, another bitcoin mine owned by U.S. Bitcoin Corp. had previously drawn the ire of some residents for being too noisy. The result: The city of Niagara Falls has imposed a moratorium on new bitcoin mining operations while it works on ordinances to control impact of mining on the local community.
/jlne.ws/3wA880C

Winklevoss Twins Have Fortunes Riding on Crypto Startup Comeback; Brothers’ firm makes bets on many futuristic digital companies; Upheaval in crypto may elevate scrutiny of blockchain projects
Scott Carpenter – Bloomberg
The family office of billionaires Cameron and Tyler Winklevoss will serve as a test case for the staying power of crypto startups after TerraUSD’s collapse and as interest rates and recession fears rise. Through Winklevoss Capital Management, the 40-year-old twins have investments in crypto startups from trading platform Slingshot to tax facilitator Taxbit to Praxis, which vows to build “the city-cryptostate to realize a more vital future.” Between their family office and the venture arm of their digital asset exchange Gemini, they have stakes in about 50 crypto or blockchain startups, according to portfolios they’ve posted online.
/jlne.ws/3MDX3Bd

Crypto Startup Tries to Claw Its Way Back From Luna Disaster; Value locked on DeFi protocol Stader plunged after Terra crash; ‘We had a 40% hit on revenues,’ co-founder Amitej Gajjala says
Sidhartha Shukla – Bloomberg
The implosion of the algorithmic stablecoin TerraUSD and its sister Luna token sent shock waves through the cryptosphere, crashing prices and roiling the entire ecosystem behind the coins. The fallout reached across geographies, too. Stader Labs, based in Bengaluru, India, is among the many crypto startups that were engulfed by the crisis.
/jlne.ws/3MDKlT0

Novogratz Warns ‘Picking Bottoms Is Dangerous’ as Bitcoin Slide Resumes; Bitcoin turns lower as stocks sink into bear market territory; Prices, exuberance could collapse during downturn: Belshe
Vildana Hajric – Bloomberg
Everyone knows crypto’s been having a tough time of late. Bitcoin’s lost a third of its value this year, and altcoins are faring even worse with prices sliding again Friday. Despite calls within the community — propagated largely over Twitter — to hoard more coins whenever there’s a selloff, market-watchers say to be wary of predictions that call a bottom to the slide. Mike Novogratz, the founder of Galaxy Digital Holdings Ltd. who this week issued a mea culpa over Terraform Labs’s imploded stablecoin, noted that some smaller tokens are down 80% from their highs. And should their losses accelerate to the same degree they did in 2018, those coins could lose an additional 70%.
/jlne.ws/3sOIxPl

Ethereum Co-Founder Buterin Says He’s No Longer a Billionaire
Scott Carpenter – Bloomberg
Vitalik Buterin, co-founder of the Ethereum blockchain platform, is the latest casualty in the dramatic collapse of crypto fortunes. “I’m not a billionaire anymore,” Buterin, 28, wrote Friday in a Twitter post. Buterin created Ethereum in 2014 and is the owner of a digital wallet that as recently as November contained holdings worth about $1.5 billion. Since then, the price of the Ether token that’s associated with the blockchain has fallen by 55%.
/jlne.ws/39LyqnT

How to Donate Cryptocurrency to Charities; As more people invest in digital currencies, they also are looking to use the asset as part of their annual giving
Dan Weil – WSJ
As investing in cryptocurrency has grown, so has donating in cryptocurrency. Customers of Fidelity Charitable donated $331 million of cryptocurrency in 2021, up from $28 million in 2020, according to the independent charity created by Fidelity Investments. Findings in a separate study conducted by Fidelity Charitable also indicate that one-third of cryptocurrency investors in general have donated digital currency to charities. “There’s greater awareness among investors that this is an asset that can be donated,” says Tony Oommen, vice president of Fidelity Charitable, where $50 billion in assets were under management in donor-advised funds as of last June.
/jlne.ws/3NnI7aq

Britain’s Crypto List: Here’s Who to Watch; Meet six more of the industry’s key players in the second part of our list.
Emily Nicolle and Tanzeel Akhtar – Bloomberg
The UK’s crypto landscape is maturing, and regulators and lawmakers are taking a greater interest in the industry. The Financial Conduct Authority is gearing up to create new rules for digital assets, and crypto companies are trying to make sure those guardrails aren’t too disruptive.
/jlne.ws/38KGTY3

Crypto lender Celsius Network stung by sell-off in digital asset market; Value of customer assets deposited on platform has shrunk by half since the start of 2022
Kadhim Shubber and Scott Chipolina – FT
Crypto lender Celsius Network has suffered a 50 per cent decline this year in the value of assets deposited on its platform, a sign of the pressure the industry is facing in the wake of falling digital token prices. Celsius, which borrows cryptocurrencies from its customers and lends them out to earn a return, had just under $12bn of assets as of May 17, according to its website, down from more than $24bn in late December 2021.
/jlne.ws/39L5g88

Shaken NFTs may yet survive — and develop their own star quality; The speed of the market turnround is arresting but believers think these assets can outlast the current crash
Elaine Moore – FT
Where is Paris Hilton when you need her? After boosting non-fungible token investments on late night US chat shows, the reality star has gone quiet. NFTs, the most speculative of speculative assets, are crashing. The value of an index developed by cryptocurrency researchers is down 78 per cent from its high point last October. That is a steeper drop than tech stocks and bitcoin.
/jlne.ws/3G8ohOb

Politics

Democracies Can Out-Compete the China-Russia Alliance; As Beijing and Moscow turn inward, democratic allies need to create a network of shared self-sufficiency.
Hal Brands – Bloomberg
The economic trauma of the Ukraine war is only beginning: Energy shocks, food-supply disruption and commodity shortages will have growing impact as the conflict persists. The war, moreover, is just part of an accelerating geo-economic realignment. The golden age of globalization, when countries pursued interdependence with minimal fear of insecurity, is over. The global economy is now being reshaped by competition and conflict. That will create some opportunities for the US to strengthen its position — as well as a whole lot of worldwide turmoil.
/jlne.ws/39JToDl

Colombia’s Entire Free Market Model Is at Risk, Candidate Says; Presidential hopeful Federico Gutierrez speaks in interview; Gutierrez says Ecopetrol should move into fertilizer business
Oscar Medina and Andrea Jaramillo – Bloomberg
Colombian voters face a stark choice between radically different economic models in presidential elections this month, according to one of the top two candidates. Federico “Fico” Gutierrez, 47, said he would run an investor-friendly administration, looking to trim deficits and regain Colombia’s investment grade credit rating. “What’s at stake here is the country’s model,” Gutierrez said Thursday, in an interview in Bogota. “I defend business freedom, I defend the free market, and I defend private property.”
/jlne.ws/3MEud3J

Crypto’s Bankman-Fried Gave $16 Million to Super PACs in April; Latest donations place FTX CEO among the top political donors; Democrats running for House are focus of groups he supported
Bill Allison – Bloomberg
Crypto billionaire Samuel Bankman-Fried poured $16 million into super PACs in April, making him one of the top donors to outside groups as the primaries get into full swing, according to the latest filings with the Federal Election Commission. Bankman-Fried gave $10 million to Protect Our Future, a super PAC that says it’s supporting candidates who can help prevent the next pandemic. The group has spent $19 million to influence elections so far, all in Democratic House races. Its biggest outlay was $10.5 million to back Carrick Flynn, who ran for an open seat in Oregon’s 6th congressional district. Despite the support, he lost the primary to Andrea Salinas, a state lawmaker who could be Oregon’s first Latino woman elected to Congress should she win the seat in November.
/jlne.ws/3ME6xg2

Republican Judges Don’t Care for Restraint; Conservative judicial activists are showing scant respect for precedent or the prerogatives of other parts of the government. Expect the elected branches to fight back.
Jonathan Bernstein – Bloomberg
If you had any doubt that Republican objections to judicial activism would melt away if conservative judges gained the upper hand, Supreme Court Justice Samuel Alito and some of the judges on the US Court of Appeals for the Fifth Circuit, in Texas, should put it to rest. The two relevant data points are the leaked draft of an opinion by Alito that would overturn the 1973 abortion-rights precedent Roe v. Wade and a Fifth Circuit decision this week challenging the authority of the Securities and Exchange Commission (for an excellent discussion of that one, see my Bloomberg Opinion colleague Matt Levine). We don’t know yet what the final result of the abortion case will be, and the SEC case is for now just the work of two mid-level judges. But Alito reportedly has the majority of the court, and it’s likely that the Fifth Circuit decision will prevail, too, in some form or another.
/jlne.ws/3wzWDGv

Musk Hoists GOP Banner, Tears Into Biden as US Probes His Empire; Tesla and SpaceX CEO has ramped up criticism of Democrats; Musk vows to vote Republican, says Biden captured by unions
Dana Hull and Josh Wingrove – Bloomberg
The world’s most famous entrepreneur is ratcheting up a battle with its most powerful government, as Elon Musk sharpens his critiques of President Joe Biden and aligns himself with Republicans in an acrimonious US culture war. Musk on Friday complained that the White House “has done everything it can to sideline & ignore Tesla.” That’s after saying earlier this week that he would vote Republican, an embrace of a new, more partisan identity for someone who has never fit neatly into Washington’s tribal politics.
/jlne.ws/3wBcKnt

Investors Urge US to Extend Russian Bond Payment Waiver; ICI calls on OFAC to extend carve-out deadline to August; Says ending waiver does not have a commensurate harm on Russia
Libby Cherry – Bloomberg
Investors are lobbying the US government to extend a key waiver that’s allowed them to receive payments on Russian bonds despite sanctions. The temporary exemption, which has helped Russia avoid a default, is due to expire on May 25, and Treasury Secretary Janet Yellen has indicated that the US will likely let it lapse. In a letter to the Treasury’s Office of Foreign Assets Control dated May 12, the Investment Company Institute, whose members manage about $31 trillion in the US, asked that OFAC extend the waiver by three months.
/jlne.ws/3PEsEoC

White House LNG Task Force Compared to Secretive Cheney Oil Group; Activists want more details about the US-EU energy task force developing a blueprint to wean Europe off Russian gas.
Jennifer A Dlouhy – Bloomberg
Activists are accusing a White House-backed task force of illegally operating in secrecy as it develops a plan to wean Europe off Russian energy supplies. The panel’s work has unfolded behind closed doors since late March, when US President Joe Biden and European Commission President Ursula Von de Leyen charged the group with helping Europe diversify its gas supply amid Russia’s war on Ukraine. A lack of transparency violates federal advisory committee law, anti-corruption group Global Witness alleges in a letter being sent to Biden on Monday. Environmentalists have separately filed an open records request seeking more information on the group’s work.
/jlne.ws/3LHqYaq

US Treasury Set to Push Russia Closer to Default; US sanctions exemption is set to expire on Wednesday; Russia’s last foreign default was under Lenin a century ago
Daniel Flatley – Bloomberg
The US Treasury Department is expected to tighten sanctions this week on Russia, threatening about $1 billion owed to bondholders for the rest of this year and putting the country once again on the edge of default.
/jlne.ws/39Ll0bb

Why Sweden’s Stance on Kurds Riles Turkey’s Erdogan
Niclas Rolander and Ott Ummelas – Bloomberg
At the heart of Turkey’s threat to stop NATO’s Nordic expansion is a clash of viewpoints over Kurdish political groups. Sweden, which along with Finland is seeking entry into the North Atlantic Treaty Organization, has been one of Europe’s most willing recipients of migrants fleeing conflict, including Kurds. Turkey opposes Kurdish demands for statehood and its president, Recep Tayyip Erdogan, has called Sweden a “nesting ground for terrorist organizations.” Since NATO admits new members only by unanimous consent, his views can’t easily be ignored.
/jlne.ws/3NrmJRz

Lies weaken Russia in its trial of strength with the west; The US and its allies specialise in hypocrisy but their open systems permit the uncovering of painful truths
Gideon Rachman – FT
Vladimir Putin has a name for the west. He calls it the “empire of lies”. The Russian leader’s announcement of his “special military operation” in Ukraine was laced with angry references to western duplicity in Kosovo, Iraq, Libya and beyond.
/jlne.ws/3LDGtQR

Regulation

Ex-Panamanian President’s Sons Get 3 Years for Money Laundering; Father Ricardo Martinelli governed Panama from 2009 until 2014; Brothers pleaded guilty to Odebrecht money-laundering scheme
Patricia Hurtado and David Voreacos – Bloomberg
The Martinelli Linares brothers made a brazen run from justice that included slipping out of the US by boat, taking an Uber from El Salvador to the Guatemala border, then boarding the family’s private jet to return home to Panama. Their attempt failed as their lawyers were negotiating plea deals with federal prosecutors in Brooklyn, New York. But the law caught up with Ricardo Alberto Martinelli Linares, 42, and his brother Luis Enrique, 40, sons of former Panamanian president Ricardo Martinelli.
/jlne.ws/3wHtx6X

UK Regulator Scrutinizes Terra Fallout; Recent instability will need to be taken into account: FCA; The watchdog is working with the Treasury to develop new rules
Emily Nicolle – BLoomberg
The UK’s market regulator is paying close attention to the chaos in crypto markets after the implosion of Terra, one of the biggest experiments in decentralized finance. The recent market instability in stablecoins “will absolutely need to be taken into account” when the watchdog starts working with the Treasury to develop and implement new rules for cryptoassets later this year, said Sarah Pritchard, executive director for markets at the Financial Conduct Authority.
/jlne.ws/3MAGuq7

SEC Charges Wells Fargo Advisors With Anti-Money Laundering Related Violations
SEC
Washington D.C., May 20, 2022 —
The Securities and Exchange Commission today announced charges against Wells Fargo Advisors for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021. Wells Fargo Advisors, the St. Louis-based broker-dealer, has agreed to pay $7 million to settle the charges.
/bit.ly/3PBC97R

Wells Fargo to Pay $7 Million Over Alleged Anti-Money-Laundering Glitches; Bank unit settles SEC investigation stemming from alleged failure to properly test new anti-money-laundering system
Richard Vanderford – WSJ
A Wells Fargo & Co. unit has agreed to pay $7 million in a settlement with the Securities and Exchange Commission after alleged glitches in a new anti-money-laundering system let suspicious transactions escape initial notice.
/jlne.ws/3yOJ9bz

ESMA study looks at reasons for lower costs in ESG funds
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published a study looking at the potential reasons behind the relatively lower ongoing costs, and better performance, of environmental, social and governance (ESG) funds compared to other funds, between April 2019 and September 2021.
/bit.ly/3lxzRsy

Outcome of MBIE/FMA review of funding and levies 2021
FMA
MBIE has published the outcome of the 2021 review of the FMA’s funding and levies. More details can be found on the MBIE website.
/bit.ly/38D96Ah

UK authorities look to strengthen resilience of Money Market Funds
FCA
The FCA, jointly with the Bank of England, and with the endorsement of the Treasury, has today published a Discussion Paper on Money Market Fund (MMFs) reform. This seeks views to inform the development of MMF reform proposals. The FCA has also published guidance on the UK MMF Regulation.
/bit.ly/3Px9qkJ

Study Group on Digital and Decentralized Finance Interim Report
FSA
The FSA published the “Study Group on Digital and Decentralized Finance” interim report, which presents the results of discussions of the four meetings from July 2021 to November 2021, focusing on policy responses to stablecoins, for which prompt regulatory responses are needed.
/bit.ly/3G8kqAs

Investing and Trading

Global Business Is Enduring a Synchronized Slowdown: Eco Week; Economists see drops in all 15 PMI gauges due in US and Europe; Interest-rate hikes expected in New Zealand and South Korea
Craig Stirling – Bloomberg
Days after global finance chiefs described the widespread economic fallout inflicted by Russia’s war in Ukraine, business surveys may show an increasingly synchronized slowdown. That’s the impression likely to be on display on Tuesday — three months since the outbreak of the conflict — as purchasing manager indexes for May are released within hours from major economies around the world. Surveys of economists on the probable outcomes of 15 gauges of the indicators from the US and across Europe predict a decline in every single one.
/jlne.ws/3lAt0ic

A 900% Jump in Hedging Costs Looms Over Commercial Mortgages; As the Fed hikes rates, fees for adjustable loans soar: Like paying for flood insurance as a “hurricane is making landfall”
John Gittelsohn – Bloomberg
A fee on US commercial mortgages has surged so high that borrowers can’t ignore it and may not be able to afford it. Adjustable-rate loans on commercial real estate — including about $350 billion of commercial mortgage-backed securities — almost always require interest-rate caps, a kind of insurance to protect monthly debt payments from soaring out of control when the Federal Reserve boosts rates.
/jlne.ws/385N34L

Global Market Swings Focus G-7 as Inflation Blamed on Russia; Meeting concludes near Bonn with pledge to keep tightening; Officials will watch markets ‘given recent volatility’
Birgit Jennen and William Horobin – Bloomberg
Global finance chiefs committed to keep an eye on financial markets after recent declines and pledged further monetary tightening as they placed the blame for the current inflation shock squarely on Russia. The Group of Seven nations “continue to closely monitor markets given recent volatility,” according to a communique released on Friday. Central banks “will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, ensuring that inflation expectations remain well anchored, while being mindful to safeguard the recovery.”
/jlne.ws/3a47U9c

Stock Alarms Ring Louder as Leveraged Firms Defy Credit Warnings; Weakest companies beat stronger as credit cycle signals danger; HSBC’s Kettner warns on risky, leveraged stocks as rates rise
Denitsa Tsekova and Thyagaraju Adinarayan – Bloomberg
Believe it or not, companies with fragile balance sheets are still beating their stronger peers in the stock market, even as the leverage cycle unravels in the world of corporate bonds. To many, the divergence is looking unsustainable — giving equity naysayers fresh reason to snub US benchmarks that are already flirting with a bear market. Even as credit spreads widen toward the ‘danger zone,’ shares of leveraged companies continue to outperform those with healthy financial metrics by the most since 2013 in Goldman Sachs Group Inc. data.
/jlne.ws/3G8UNzz

Venezuela Investors Meet in Davos as US Weigh Sanctions; Canaima, Illiquidx hosting meeting of dozens of creditors; Rare Venezuela event to focus on opportunities in oil sector
Nicolle Yapur – Bloomberg
Venezuela creditors are holding a rare meeting in Davos next week to discuss potential opportunities in the oil sector amid increasing optimism for investment in the country as the US floats easing some sanctions. London-based brokerage IlliquidX Ltd. and Canaima Capital Management, a fund focused on distressed debt, are hosting the May 23 meeting with more than two dozen creditors in Davos on the sidelines the World Economic Forum to explain the implications of a potential opening in Venezuela’s oil sector.
/jlne.ws/3wKPpyx

Retailer Rout Erased $500 Billion, Stirs Worry of More Ahead; Walmart and Target plunged 19% and 29% respectively this week; Dollar General, Macy’s and Costco have yet to report earnings
Katrina Lewis and Janet Freund – Bloomberg
The wild swings in consumer stocks this week that erased about $500 billion in market value are far from over with earnings reports from well-known retailers including Dollar General Corp., Macy’s Inc. and Costco Wholesale Corp. still to come. Volatility in consumer stocks reached levels not seen since the early days of the pandemic-driven rout as retailers from Walmart Inc. to Target Corp. cut their annual profit forecasts and stoked concern over the impact of rising inflation and the challenge to pass on higher costs to consumers.
/jlne.ws/3wBdRn9

Bull Market Near-Death Experiences Are Weirdly Common in History; Traders dip their toes back in when S&P falls about 20%: Maley; Similar reversals happened in 2018, 2011 and 1998: Evercore
Vildana Hajric and Lu Wang – Bloomberg
It could only matter to a statistician: the S&P 500’s late-day bounce kept it from closing 20% below its last record, averting the most curmudgeonly definition of a bear market. For now. To Wall Street analysts trying to keep pace, it’s another twist in a baffling year. But for market historians, it can’t help but ring a faint, bullish bell. For the record: the S&P 500 fell all the way to 3,810 during Friday’s session, or roughly 20.6% below its record close of Jan. 3, then rebounded to cut the loss to 18.7%. The levels could be dismissed as trivial except for a nagging fact: history holds an improbably large number of examples of such rebounds lasting. In 1998, 2011 and 2018, the benchmark slid either below the 20% level or very near it on an intraday basis — only to reverse itself and never test the bear-market waters again.
/jlne.ws/3lydNOE

ECB’s Euro Talk Goes Unheeded by Traders Running From Risk; The weak currency is getting more attention at the ECB; ‘We are still living in a risk-off world:’ Citi’s Gkionakis
Libby Cherry – Bloomberg
The dramatic weakness in the euro is getting a lot of attention at the European Central Bank, but the market isn’t noticing. More hawkish commentary from the ECB and talk about a 50 basis-point hike, should theoretically support the euro. But this time, other forces, such as the supremacy of the dollar and fears about a recession, are dominating the market, strategists say.
/jlne.ws/3yRtM23

A $5 Trillion ‘Wealth Shock’ Is Cracking Americans’ Nest Eggs; Outsized wealth gains that worsened inequality now in reverse; Housing downturn seen having broader impact as rates surge
Ben Steverman – Bloomberg
The world’s richest nation is waking up to an unpleasant and unfamiliar sensation: It’s getting poorer. Americans’ collective net worth had been climbing at a dizzying rate for the past two years, even as families and businesses contended with the ravages of Covid-19. Households piled up an extra $38.5 trillion from early 2020 to the end of last year, bringing their collective net worth to a record $142 trillion, the Federal Reserve estimates.
/jlne.ws/385tZDK

If only they were this easy to spot; If only they were this easy to spot.
John Authers – Bloomberg
The Bears Are Toying With Us
Arbitrary round numbers matter, even though they shouldn’t. The definition of a “bear market” as any peak-to-trough drawdown of 20% or more is unhelpful. The difference between losses of 19.95% and 20.05% is minimal. But the definition is often cited, and it has an impact on how people behave. Which brings us to Friday’s trading, when the proximity of the 20% landmark combined with options expiry to create some fun.
/jlne.ws/39L7btF

The Stock Market’s Drop Is Hitting Many 401(k)s Harder This Time; Target-date funds, a popular retirement-savings option, are more heavily invested in stocks than investors might think
Anne Tergesen – WSJ
Millions of workers and retirees are more exposed to the stock-market slide than they might expect. Many Americans spent the past decade putting more of their retirement money into target-date funds, a type of set-it-and-forget-it investment product pitched as an easy way to invest in a diversified portfolio of stocks and bonds. The product works by shifting from stocks to bonds over time, giving an investor a more conservative mix as retirement age draws nearer.
/jlne.ws/3MUH2Y5

Environmental, Social and Corporate Governance

Chinese, Australian Investors Battle for Largest Lithium Deposit; AVZ may lose control of Congo project, according to Boatman; Company disputes Zijin’s claim to Manono lithium project
Michael J Kavanagh – Bloomberg
Australia’s AVZ Minerals Ltd. is battling to retain control of what is potentially the world’s largest untapped lithium deposit amid ownership claims from Chinese investors, according to Boatman Capital. AVZ’s interest in the Manono lithium project in the Democratic Republic of Congo could fall to 36% from 75%, London-based short-seller Boatman said in a research report on Friday. That may follow its planned sale of a 24% stake this month and a flurry of lawsuits from companies, including Zijin Mining Group Co., claiming ownership, documents published by Boatman show.
/jlne.ws/3LBoz0X

Bigger Shocks Are Coming With Your Electricity Bills; Forward contracts are baking-in huge price increases for the UK and Europe.
Javier Blas – Bloomberg
An oil crisis hits the economy like a big wave breaking on the beach: The impact is immediate and dramatic as the crest plunges onto the shore. An electricity crisis is another kind of shock: Akin to a rising tide, it is slow but relentless and then, surprise, you are overwhelmed.
/jlne.ws/3MDvRCX

Investor John Doerr: Silicon Valley Should ‘Triple Down’ on Clean Tech; At a climate tech investment conference, the venture capitalist acknowledged the market turmoil but said the current period is “a boom.”
Mark Bergen – Bloomberg
Venture capitalist John Doerr, who bankrolled some green technology firms that collapsed a decade ago, believes the current explosion in clean energy financing won’t repeat history, even as investing markets begin to sour.
/jlne.ws/38JPtqa

Australia Voted for Climate Action. Here’s How Elections Impact Carbon Cuts; Climate experts have long said that elections and advocacy matter most. A 2021 research analysis estimated just how much.
Eric Roston – Bloomberg
Targeted political contributions are a more effective climate pollution-fighting tool than buying voluntary carbon offsets, even valid ones. That’s the qualified conclusion of three researchers who last year introduced the notion of voluntary “political carbon offsetting” in a thought experiment that estimates the greenhouse-gas implications of voting and campaign donations.
/jlne.ws/3yODdiN

Green investment could help UK levelling-up, says think-tank; Increasing efforts on net zero capabilities would address regional economic disparities
Valentina Romei – FT
Net zero investment has the potential to drive economic growth and help the government with its levelling-up agenda in poorer, low productivity areas of the UK, a study has found. The report, titled Growing clean and published on Monday by the Resolution Foundation and London School of Economics, said green investment could contribute to the UK’s future prosperity and help reduce regional inequalities.
/jlne.ws/3Gpbjfb

Watchdogs tackle the murky world of greenwash; Government enforcers are on the hunt for companies making misleading claims about their so-called ‘eco-friendly’ products
Patrick Temple-West – FT
From dubious claims about bamboo-based products to climate funds that are not quite what they seem, regulators have been increasing their scrutiny of corporate claims to be green.
/jlne.ws/3wEGtvq

Investors seek out ‘S’ factor in ESG; Post-pandemic, ‘social responsibility’ is becoming much more important
Kristen Talman – FT
More than ever, companies are coming under scrutiny for their environmental, social and governance policies. Of these three ESG criteria, the “E” used to attract most attention, with the “S” factor sometimes downplayed, or even ignored. But then the Covid-19 pandemic struck.
/jlne.ws/3sTcopP

Why Shale Drillers Are Pumping Out Dividends Instead of More Oil and Gas; Compensation plans that once paid executives to boost output without regard to energy prices now foster cost cuts and shareholder returns
Ryan Dezember, Matt Grossman – WSJ
Shale drillers have been hamstrung by pipeline constraints, rising prices for oil-field supplies and shortages of roughnecks and rigs. But there is another reason the highest oil and gas prices in years haven’t tempted U.S. drillers to boost output: Their executives are no longer paid to.
/jlne.ws/3MDIvlp

Institutions

Anatole Hedge Fund Stems Losses After ‘Disastrous’ China Bets; Fund managing $1.9 billion lost 22% in the first four months; Anatole started to bargain hunt some China stocks in late 2021
Bei Hu – Bloomberg
Anatole Investment Management Ltd.’s flagship hedge fund stabilized in April after the firm scaled back its bullish wagers on stocks. The fund, which was hurt by bargain hunting for Chinese shares since late last year, dropped less than half a percentage point in April, according to people familiar with the matter who asked not to be named discussing private information. The fund has lost about 22% this year, the people said. It managed $1.9 billion as of March, one of the people said.
/jlne.ws/39EFz9n

Why Your Index Fund Won’t Protect You From Tech’s Collapse; The S&P 500 is dominated by big tech, which was good news on the way up. Not so much on the way down.
Suzanne Woolley – Bloomberg
Investors who thought their S&P 500 Index fund is diversified are getting a rude shock. The benchmark stock index fell for a seventh straight week, its longest losing streak since 2001, but its drop would be far less dramatic if it wasn’t so heavily weighted to mega-cap tech stocks like Apple Inc., Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc. The S&P 500 is, after all, a momentum play, since stocks with the largest market capitalizations carry the most weight, and tech’s dominance gives it outsized influence on the index’s performance. That was positive for investors on the way up as the high-fliers surged, and now even savvy investors are getting a lesson on just how much of an impact a few stocks can have on the way down.
/jlne.ws/3wAeygr

HSBC suspends banker over climate change comments; Executives criticise Stuart Kirk despite speech’s theme and content having been agreed internally
Owen Walker – FT
HSBC has suspended a senior executive pending an internal investigation into a presentation he made at an event last week, according to people with knowledge of the process.
/jlne.ws/3sRG7zw

Capital Group’s EUR8bn European bank sell-off was driven by single fund manager; Nick Grace sold large stakes in lenders after Russia invaded Ukraine
Stephen Morris and Owen Walker- FTY
A single portfolio manager at Capital Group drove an EUR8bn sell-off of European bank stocks this year, after the war in Ukraine and the threat of a global recession caused the investment giant to sour on the sector.
/jlne.ws/3PFOYxR

‘Do-good’ measures don’t do at all; A multitude of methodologies to rate businesses is causing confusion for ethical investors
Oliver Balch – FT
Individual investors who entrust their money to funds espousing environmental, social and governance principles may — unwittingly — be helping finance companies that “make climate change worse, not better”.
/jlne.ws/3NvcOKZ

Wellness Exchange

I Used This $150 Device to Track My Covid Risk. I Got Covid Anyway; A carbon dioxide monitor helped me understand what places are safe in the midst of a pandemic — and which places aren’t.
Emma Court – Bloomberg
My boyfriend wasn’t feeling well. Then again, that wasn’t too surprising. We had just spent a weekend at New Orleans’ annual jazz festival, where we spent long days baking in 90 degree weather and drinking plenty of beer to stay cool. But hangovers and heatstroke weren’t the only potential culprits. The risk of Covid was everywhere. I knew that because for weeks I had been carrying around a palm-sized, $150 carbon dioxide monitor that assesses exactly that.
/jlne.ws/3wIXaor

Covid Hits Apple Again, Disrupting Office Plans and Supply Chain
Mark Gurman – Bloomberg
From product shipment delays to return-to-office plans to masking within stores, Covid-19 is once again disrupting Apple. Also: The AR/VR headset approaches, and a senior machine-learning executive leaves for Google. Last week on Power On: Apple’s electric car project stands to benefit from the downfall of Canoo. For a brief period earlier this year, it felt like Apple Inc. was in the clear from further Covid-19 upheaval.
/jlne.ws/3sQ7Hgo

Monkeypox Likely Spreading Among People Via Intimate Contact
Fiona Rutherford – Bloomberg
Monkeypox is likely being spread from person-to-person by close, intimate or sexual contact with someone who has an active rash, US senior health officials said. The one US case of the virus, usually contracted from infected animals, has no known link to Africa, where the disease is most commonly found, said the officials, who spoke without being identified as a condition of participating in the call. While the risk to the general public is low, health workers are being alerted to monitor possible cases and use protective equipment when needed, they said.
/jlne.ws/3wCkfKR

Pfizer to seek US emergency approval of Covid vaccine for under 5s; Jabs for youngest children offer potential new market amid global glut of adult doses
Jamie Smyth and Hannah Kuchler – FT
Pfizer has said it will seek emergency authorisation in the US for its Covid-19 vaccine for children under the age of five after interim results from its clinical trial showed the jab is safe and highly effective. The US drugmaker said on Monday that three doses of its children’s jab — each about a tenth of the size of an adult dose — produced a strong immune response with a favourable safety profile similar to a placebo in the age group.
/jlne.ws/3NArQPL

Regions

China’s Covid Zero Policy Is an Anchor on Commodities Prices; Boost from government stimulus may not show up until 2023; China’s dependence on foreign soybeans is an inflation worry
Bloomberg News
Industrial commodities prices in China have regained some of their poise after Shanghai issued a road map for opening up and the central bank cut interest rates on long-term loans. The monetary easing on Friday looks to have been aimed at the embattled housing market in particular, which would be helpful to metals demand. But it’s still difficult for stimulus to gain much traction if large swathes of the economy — including, now, Beijing — are threatened by the kind of disruptions that have engulfed Shanghai for two months and counting.
/jlne.ws/39M6IHl

Indian steelmakers face hit on Europe deals over export tax, Jindal executive says
Sudarshan Varadhan and Aftab Ahmed – Reuters
Indian steel firms could be forced to cancel European orders and suffer losses after an overnight decision to impose export taxes on steel products, V R Sharma, managing director at Jindal Steel and Power (JNSP.NS) told Reuters. India imposed an export tax of 15% on eight steel products late on Saturday, at a time steelmakers are looking to make up for tepid local demand by increasing market share in Europe, whose supplies have been hit by Russia’s invasion of Ukraine. “They should have given us at least 2-3 months of time, we did not know about such a substantial policy,” Sharma told Reuters in an interview.
/jlne.ws/3MHI7lC

Malaysia to Halt Chicken Exports From June Amid Shortage
ByAnisah Shukry and Yantoultra Ngui – Bloomberg
Malaysia will halt exports of 3.6 million chickens a month from June 1 and scrap the approved permit requirement for importing wheat until production and prices stabilize, Prime Minister Ismail Sabri Yaakob said. The government set a ceiling price of 8.9 ringgit ($2) per chicken and said it would recognize more slaughterhouses abroad in a bid to boost local supplies and curtail rising prices, according to a statement on Monday.
/jlne.ws/3MJ0JSo

Polish PM Calls on Norway to Share Oil and Gas Profits Windfall
Maciej Martewicz – Bloomberg
Norway should share the “gigantic” profits it’s recently made as a result of higher oil and gas prices, especially with Ukraine, said Polish Prime Minister Mateusz Morawiecki. Morawiecki, answering a question about his government’s energy policy Sunday at a meeting of a youth group, said coal-reliant Poland plans to switch to renewables and nuclear energy, while shedding oil and gas deliveries from Russia and at some point from “Arab” countries as well. “But should we be paying Norway gigantic money for gas — four or five times more than we paid a year ago? This is sick,” he said. “They should share these excess profits. It’s not normal, it’s unjust. This is an indirect preying on the war started by Putin.”
/jlne.ws/3GhnsCM

Zimbabwe Effectively Lets Currency Slide With Interbank Rate; Interbank rate used widely to quote for goods and services; Southern African country had temporarily banned bank lending
Godfrey Marawanyika and Ray Ndlovu – Bloomberg
Zimbabwe’s acceptance that most business will take place at a newly introduced interbank rate for the Zimbabwe dollar amounts to an effective devaluation of the local currency, a policy maker said. The Reserve Bank of Zimbabwe introduced the interbank rate on May 9, two days after President Emmerson Mnangagwa temporarily barred banks from lending and introduced a raft of other measures in a bid to halt the plunge of the Zimbabwe dollar on the black market. The government sets its official rate at a weekly auction.
/jlne.ws/3luI2pJ

Turkish Reserves Lost ‘Shocking’ $4.8 Billion in Just One Week
Paul Abelsky – Bloomberg
Turkey’s gross foreign-currency reserves fell the most this year, providing further evidence that an effort to support the lira is coming at an increasingly steep cost. The stockpile shrank by $4.8 billion in the seven days ended May 13, according to central bank figures published on Friday. That brought total holdings, which exclude gold reserves, to a 10-month low of $61.2 billion. The weekly decline was “shocking” and a sign that Turkey is “unsuccessfully leaning against the wind,” Cristian Maggio, the head of portfolio strategy at TD Securities in London, said in a note to clients.
/jlne.ws/3NyxKRr

Saboteurs Threaten to Exacerbate South Africa’s Power Blackouts; Cable cut on Friday adds to incidents intended to impair units; Theft also taking place as power cuts headed for record
Paul Burkhardt – Bloomberg
South Africa’s state-owned power utility already struggling to avoid breakdown at its plants and nationwide blackouts, has another crisis on its hands: sabotage. Eskom Holdings SOC Ltd. has reported cables being cut intentionally and rising theft at its plants, with the latest incident Friday, according to South Africa’s Minister of Public Enterprises Pravin Gordhan. Power cuts have become a daily occurrence over the last two weeks as the most industrialized nation on the continent heads for a record year of outages, disrupting daily life and crimping economic growth.
/jlne.ws/3wAmdLC

Saudi Arabia to Use Oil Windfall to Boost Private Sector
Salma El Wardany – Bloomberg
Sign up for our Middle East newsletter and follow us @middleeast for news on the region. Saudi Arabia will use this year’s oil windfall to accelerate the economy’s diversification from fossil fuels, according to a minister.
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Gazprom’s UK energy supply business considers rebrand; Country’s biggest provider of gas to companies examines name change to distance itself from Russia
Gill Plimmer and Jim Pickard and Guy Chazan – FT
Gazprom Energy is examining a rebrand as Britain’s biggest gas supplier to business seeks to distance itself from its Russian owners after the invasion of Ukraine. The Manchester-based business supplies more than a fifth of the gas used by British companies, making it a crucial part of the country’s energy system. It is considering a subtle rebrand to GM&T, the name of its UK parent, to increase its chance of survival.
/jlne.ws/38D1xJW

North Sea’s biggest oil and gas producer warns against UK windfall tax; Harbour Energy chief says levy would make some projects uneconomic and could be ‘detrimental’ to energy security
Nathalie Thomas – FT
The biggest producer of oil and gas in UK waters has pushed back strongly against government threats of a windfall tax on the industry’s surging profits, warning it would make some North Sea projects uneconomic and could be “detrimental” to the country’s energy security.
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Miscellaneous

The cold call is back and worse than ever; We all had a break from nuisance calls during the pandemic — so now they seem even more intrusive
Pilita Clark – FT
The other day I was sitting at home trying to write something in a hurry when the phone rang. “Hi Pilita, it’s James here,” chirped a man who turned out to be a total stranger from a public relations firm, who wanted me to talk to an executive from a company I had never heard of about a topic so dull I cannot remember it. What I do recall is a monstrous sense of outrage that he had had the gall to call at all. Didn’t he know I was busy? And at home?
/jlne.ws/3aiI7dJ

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