Glutted Oil Markets’ Next Worry: Subzero Prices; Coronavirus poses ‘serious threat’ to financial system, IMF warns

Apr 15, 2020

First Read

Hits & Takes
By John Lothian & JLN Staff

A Harvard study said social distancing may need to last until 2022. Byron Loflin, the global head of board engagement at Nasdaq, says, “The coronavirus crisis will speed the end of shareholder primacy.” And the number of unemployed is reaching the worst case scenarios from the first weeks of the outbreak.

Social distancing just delays the number of people who have the coronavirus at one time, so Harvard may be on to something. The May 1 start up date is looking increasingly unrealistic for many activities. Universities have cancelled summer in-person classes, and the fall semester is even in doubt. One college professor wrote he would not send 18-year-old high school graduates to college in the fall because they would not gain genuine college experience if classes were all online. Without cafeterias, college sports and other mingling experiences, college would not be worth the money, he wrote.

As for shareholder primacy, Loflin is making a great point that firms will be judged not by how much money they made, but by their commitment to the greater good during this time when we are all in this together. As Dr. Richard Sandor always says, “Do well by doing good.”

Doing good means more than just cutting a check for first responders or food banks. It means pointing your company’s creative juices and production at producing something that matters. GM making ventilators is a good example. And it should not be the government telling you to do something, it should be the firm taking initiative.

In a reminder to stay safe, JLN has added “Stay Safe!” to its logo. Stay safe!

FIA reported the March 2020 SEF tracker showed trading volume on SEFs reached $1.03T in average notional value per day, the second highest level ever recorded. Record trading occurred in every category except in the forward rate agreement sector.

NFA has an employee named Rich Guy, a network & PC support supervisor for information technology. They featured his career in a promotion of careers at NFA. It would seem like his name needs a risk disclosure.~JJL


The law firm K&L Gates would like to remind you that their virtual fireside chat with digital asset industry experts takes place this afternoon, Wednesday, at 3:00 pm Chicago time. If you haven’t already, you can register here for “COVID-19: A Boom or Bust for Digital Assets, Cryptocurrencies and Stablecoins?” ~Thom Thompson


Mark de Souza: Revolution CEO Connects the Dots Between Risk Management, Canna Business

A CME Group member since the early 1990s, Revolution Global Chief Executive Officer Mark de Souza is taking his experience in risk management and applying it to the challenge of establishing a viable cannabis company. Having learned to pivot in real time pays off, he says, and helps the company stay ahead of the curve while facing the hurdle of COVID-19.

Listen to the Podcast Here


Harvard Researchers Say Some Social Distancing May Be Needed Into 2022
John Tozzi – Bloomberg
Much is still unknown about the virus and humanity’s response; Infections could return after measures lifted, researchers say
People around the world might need to practice some level of social distancing intermittently through 2022 to stop Covid-19 from surging anew and overwhelming hospital systems, a group of Harvard disease researchers said Tuesday. Lifting social-distancing measures all at once could risk simply delaying the epidemic’s peak and potentially making it more severe, the scientists warned in an article published Tuesday in the journal Science.

***** This did not surprise me. I had us going into 2021 before some sense of normalcy returns, but I see more events and activities being pushed back.~JJL


The coronavirus crisis will speed the end of shareholder primacy; This moment in time has realigned the values of society and business, paving the way for stakeholder capitalism, writes Nasdaq’s global head of board engagement.
Byron Loflin – Fast Company
We will not know the lasting effects of COVID-19 on the global business community for some time, but the immediate impact has taught us many lessons about globalism, innovation, and the value of stakeholder interests. Businesses have played a crucial role in addressing the full scope of this crisis—from maintaining important channels of communication through innovative technology, ensuring access to capital through open markets, and supporting supply chains with transportation and logistics teams deemed essential workers.
*****Byron Loflin is the global head of board engagement at Nasdaq.~JJL


Post-Virus Reopening Is More About Ethics than Science; But scientists can give us the information we need to make an informed decision.
Faye Flam – Bloomberg
There is no safe way to emerge from our collective shelter-in-place orders and restart the economy before an effective Covid-19 vaccine arrives — but there are smart, science-based ways to do it. The question can’t be left entirely up to experts. It’s not a safety problem so much as an ethical one; many of us would accept a certain risk of death for the chance to return to a more fully lived life. But putting ourselves at risk means putting others at risk — and some are much more likely to die.

*****It will be about individual decisions. Companies will decide when to open up. Employees will decide when to come back to work. Each person has the freedom to make their own decision, weighing the ethics, science, economics and health factors.~JJL


Tuesday’s Top Three
Our top story Tuesday by a long shot was How Ronin Capital fell from grace as COVID spread, from Crain’s Chicago Business. Second was JLN’s Buck Haworth – Open Outcry Traders History Project – Part 2. Third was Hedge Fund Managers Claiming Bailouts as Small Businesses from Bloomberg.


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Lead Stories

Glutted Oil Markets’ Next Worry: Subzero Prices; Traders of physical barrels of crude brace for the possibility of negative pricing; traders of energy derivatives also wary
Sarah Toy – WSJ
The coronavirus pandemic is turning oil markets upside down. While U.S. crude futures have shed half of their value this year, prices for actual barrels of oil in some places have fallen even further. Storage around the globe is rapidly filling and, in areas where crude is hard to transport, producers could soon be forced to pay consumers to take it off their hands—effectively pushing prices below zero.

Coronavirus poses ‘serious threat’ to financial system, IMF warns; Deep recession could expose or worsen faultlines despite radical easing measures, says fund
Robin Wigglesworth – FT
The severe global recession triggered by coronavirus could expose “cracks” in the financial system, despite the unprecedented action taken by central banks led by the US Federal Reserve, the IMF has warned.

The world economy is now collapsing; A microbe has overthrown our arrogance and sent global output into a tailspin
Martin Wolf – FT
In its latest World Economic Outlook, the IMF calls what is now happening, the “Great Lockdown”. I prefer the “Great Shutdown”: this phrase captures the reality that the global economy would be collapsing even if policymakers were not imposing lockdowns and might stay in collapse after lockdowns end. Yet, whatever we call it, this is clear: it is much the biggest crisis the world has confronted since the second world war and the biggest economic disaster since the Depression of the 1930s. The world has come into this moment with divisions among its great powers and incompetence at the highest levels of government of terrifying proportions. We will pass through this, but into what?

Social distancing in the US may have to be endured until 2022 if no vaccine is quickly found, scientists predict
Leah Asmelash and Maggie Fox – CNN
The US may have to endure social distancing measures — such as stay-at-home orders and school closures — until 2022, researchers projected on Tuesday. That is, unless, a vaccine becomes quickly available. That’s according to researchers from the Harvard T.H. Chan School of Public Health, who published their findings in the journal Science on Tuesday. Those findings directly contradict research being touted by the White House that suggests the pandemic may stop this summer.

Oil Glut May Overwhelm Global Storage Tanks Within Weeks
Grant Smith – Bloomberg
Consumption to fall by 9.3 million barrels a day in 2020: IEA; Storage may be exhausted by mid-year despite OPEC+ cutbacks
Global oil demand will plunge by a record 9% this year due to coronavirus lockdowns, thwarting efforts by OPEC+ to contain the resulting glut of crude, the International Energy Agency said. A decade of demand growth will be wiped out in 2020, when consumption will slump by just over 9 million barrels a day, the agency said in its monthly report. April will suffer the hardest hit, with fuel use contracting by almost a third to the lowest level since 1995.

COVID-19 Crisis Poses Threat to Financial Stability
Tobias Adrian and Fabio Natalucci – IMF
The COVID-19 pandemic has caused an unprecedented human and health crisis. The measures necessary to contain the virus have triggered an economic downturn. At this point, there is great uncertainty about its severity and length. The latest Global Financial Stability Report shows that the financial system has already felt a dramatic impact, and a further intensification of the crisis could affect global financial stability.

Oil Demand Projected to Fall by Record Amount; IEA projects that April’s demand will drop to levels not seen in a quarter of a century
David Hodari – Bloomberg
Global oil demand is expected to fall by a record 9.3 million barrels a day this year as government-implemented lockdowns keep the economy at a near standstill, the International Energy Agency said Wednesday. In its closely observed monthly oil-market report, the IEA projected that demand for crude would drop in April by 29 million barrels a day to levels not seen in a quarter of a century. That would equate to roughly 29% of the world’s 100-million-barrel daily oil-demand figure from 2019.

Finance Regulators Pledge Further Help to Industry for Pandemic
Silla Brush – Bloomberg
Financial Stability Board coordinates relief on capital demand; Authorities commit to unwinding temporary easing of regulation
Global financial regulators vowed to keep easing rules to cope with the coronavirus pandemic. In a report ahead of a virtual meeting on Wednesday of Group of 20 finance ministers and central bank governors, the Financial Stability Board said it stood ready to coordinate additional relief on capital requirements, upcoming regulatory deadlines and other standards.

Mnuchin’s Partnership With Powell Blurs Lines Between Fed and Treasury
Saleha Mohsin – Bloomberg
Treasury, Federal Reserve blur lines between responsibilities; ‘Fiscal dominance’ may lead to crises, former official says
Treasury Secretary Steven Mnuchin has forged a crisis partnership with Federal Reserve Chairman Jerome Powell, giving the central bank a bigger role in U.S. fiscal policy and blurring the lines between the agencies as they unleash $4.5 trillion in stimulus to combat the coronavirus.

Hedgie with a ‘higher purpose’ to run world’s biggest sovereign fund; Nicolai Tangen will pay millions in wealth tax to swap London for Oslo
Richard Milne – FT
Most people expect a hefty pay rise when they become chief executive. Nicolai Tangen will have to pay his employer to take the job. Mr Tangen, a successful hedge fund manager in London, will move back to his native Norway in September to become chief executive of its $930bn oil fund, the world’s largest sovereign wealth fund. In doing so he estimates he will have to pay as much as NKr70m ($6.8m) in wealth tax to the Norwegian government, significantly more than his expected salary of about NKr7m.

Companies must prioritise the public good; The aim is to emerge with a sterling reputation, staff trust and solid financial base
Robert Armstrong – FT
In a time of crisis, what does business owe the public good? And what can the government require companies to do? If the crisis is deep enough, the answer to the latter question is: almost anything.

Keep Workers On, or Lay Them Off? Small Businesses Face Hard Choices; The $349 billion Paycheck Protection Program is intended to help small employers weather the pandemic. But whether it does isn’t clear.
Amy Haimerl – WSJ
When Joseph Levey logged in to Chase Bank’s lending portal early Tuesday, he hoped he would finally be able to submit his law firm’s application for a federal stimulus loan. He had been trying since the previous Friday.

The TRADE Talks Podcast: Is It Back On?
The Trade
Now in the fourth week of the lockdown, The TRADE’s editorial team delve into the latest news and sit down with Gareth Coltman from MarketAxess to discuss the Open Trading platform.

Webinar: Should Financial Markets be Closed?
GU – Centerfor Financial Markets & Policy
The continued spread of COVID-19 throughout the world has posed serious uncertainty and volatility in global financial markets in recent weeks, prompting debate about whether markets should remain open during times of crises.

Exchanges, OTC and Clearing

FIXML Enhancement: Managing Multiple Trades for Post-Trade Processing Using One FIXML Message – Effective April 20, 2020
CME Group

Delivery Intents for BTIC+ Positions Will Allow Delivery into OCC Cross-Margin Accounts – Effective April 20, 2020
CME Group
An upcoming enhancement to CME’s delivery intent process for maturing BTIC+ and TACO+ positions will allow an OCC cross-margin TMF and position account to be specified if so desired. The inclusion of these fields on the intent will allow the resulting BTIC or TACO transaction to be directly booked into a firm’s OCC cross-margin position account.

Thai stock exchange president says new measures have reduced market volatility ‘significantly’
Eustance Huang – CNBC
Volatility in Thai markets has fallen “significantly” since a series of measures were introduced last month, according to the president of the country’s stock exchange, Pakorn Peetathawatchai.

Malaysia, Shenzhen stock exchanges to widen investment opportunities, cross-border collaboration
Liz Lee – Nasdaq
Malaysia’s stock exchange has entered into a memorandum of understanding with Shenzhen Stock Exchange to broaden opportunities in investment and facilitate further cross-border collaboration between the two countries, it said in a statement on Wednesday.
Bursa Malaysia Bhd BMYS.KL said both exchanges would collaborate on several areas of mutual interest aimed at strengthening the ties and promoting the flow of investment.


Coronavirus shutdown and stimulus: Fintech’s opportunity as consumers turn to PayPal, Square, SoFi, Stripe, Chime, and others
Jen Wieczner – Fortune
In the wake of the Great Recession, as lawmakers passed the Dodd-Frank legislation to rein in an ignominious financial industry, one paragraph of the law also validated a rebel contingent of reform-minded entrepreneurs. The passage mandated that banks must make consumers’ data available to them “in an electronic form.” And so was born the fintech industry.

Major Fintech and Blockchain Backer SoftBank Expected to Lose $12.5 Billion
Michael Kapilkov – CoinTelegraph
SoftBank Group Corp (SFTBY), the parent company of Fortress Investment Group is expected to lose $12.5 billion for the fiscal year that ended in March, per an April 13 report from Bloomberg.

BidFX adds SEB as liquidity provider to FX platform; FX EMS provider has said it has seen a surge in interest for specialised and local liquidity.
Kiays Khalil – The Trade
BidFX has expanded its forex execution management system (EMS) with the addition of Skandinaviska Enskilda Banken AB (SEB) as a liquidity provider.


The bitcoin halving: what it is and why it matters
Michael McSweeney – The Block
Whether you’re a member of the crypto faithful or just a passer-by who happened to notice a bitcoin headline, you’ve likely come across the halving. The roughly quadrennial event is arguably an important one in the progression of the bitcoin network. For all the adjustments and changes to bitcoin’s code since its launch – and the evolution of the ecosystem and industry around it – the issuance cycle and bitcoin’s predetermined supply have never been altered.

More Investors Are Holding Bitcoin Ahead of the Halving, Data Suggests
Omkar Godbole – Coindesk
Investors may be accumulating bitcoin (BTC) ahead of next month’s miner reward halving. The seven-day moving average of the total number of bitcoin held in exchange addresses fell to 2,214,365 on April 14 – the lowest level since last June – according to numbers from blockchain intelligence firm Glassnode. As of Tuesday, the average was down nearly 8 percent from a high of 2,404,786 registered on Jan. 17, 2020.

Andreessen Horowitz aims to raise $450m for second cryptocurrency fund
Miles Kruppa – FT
Andreessen Horowitz is aiming to raise $450m for a second cryptocurrency investment fund, two people briefed on the matter said, deepening the venture capital firm’s commitment to the sector as the global coronavirus outbreak rattles start-up investors. Best known for backing social media companies such as Facebook and Twitter, Andreessen was one of the first venture firms with a large fund dedicated to cryptocurrencies, raising $350m in 2018 for start-ups working on the blockchain technology underpinning digital coins.

China is set to launch its national blockchain platform next week
Yogita Khatri – The Block
China’s national blockchain platform, the Blockchain-based Service Network (BSN), is set to launch on April 25. The initiative, led by the Chinese government agency, The State Information Center, aims to help companies deploy blockchain applications faster and cheaper. “High-cost deployment, operation and maintenance structure is the main current bottleneck toward blockchain development […] thus, there is an urgent need within the industry to create a public infrastructure network,” said the BSN Development Association in its latest whitepaper (attached below).

Another Bitcoin Mining Firm Warns COVID-19 Pandemic May Harm Its Business
David Pan – Coindesk
Hut 8 Mining Group, a publicly traded cryptocurrency mining firm, is concerned about coronavirus-related delays of new machine deliveries from potential suppliers such as Bitmain and MicroBT. During an earnings call last week, CEO Andrew Kiguel said his firm was grappling with a vague timeline for the delivery of crypto mining machines to support its farms, saying that while in February, “you thought” machines could be delivered between March and April, these timelines have since shifted due to the ongoing pandemic. He did not have a revised timeline either.

Riot Blockchain Moves Part of Bitcoin Mining Operation to Upstate New York
David Pan – Coindesk
Riot Blockchain, one of the few publicly traded bitcoin mining companies in the U.S., has executed a co-location mining services contract with a crypto data center Coinmint. Announced Tuesday, the Colorado-based firm will send a portion of its S17 bitcoin mining machines from its facilities in Oklahoma City to Coinmint’s power plant in upstate New York. The move came two months after Riot purchased 1,060 Bitmain S17 Pro Antminers for that facility. The addition is part of Riot’s recent expansion in bitcoin mining.

Google Removes 49 Phishing Extensions That Steal Cryptocurrency Data
Adrian Zmudzinski – Cointelegraph
Google recently removed 49 phishing Google Chrome web browser extensions after receiving reports about their activity. Harry Denley, director of security at cryptocurrency wallet startup MyCrypto, explained in an April 14 Medium post how he got the extensions removed from Chrome’s store within 24 hours with the help of phishing-specialized cybersecurity firm PhishFort. The removed extensions include ones that targeted the owners of hardware wallets produced by Ledger, Trezor and KeepKey, and users of software wallets Jaxx, MyEtherWallet, Metamask, Exodus and Electrum.

Law, licensure, and technological innovation
Stephen Palley – The Block
You might think that the title of this essay is a contradiction in terms, but I’d submit to you that law and innovation can be surprisingly hand-in-glove. Legal change takes time. It usually follows technological innovation instead of preceding it. New technologies arrive before their impact is understood by courts, legislators and lawyers, and lacking an adequate legal framework to guide their development. Knowledge and vocabulary gaps complicate this. Engineers and lawyers speak different technical languages and serve different functions.

‘Black Thursday’ losses spur $28 million class-action lawsuit against Maker Foundation
Celia Wan and Michael McSweeney – The Block
A proposed class-action lawsuit seeking more than $28 million from the Maker Foundation and several of its affiliates is set to be filed in U.S. federal court, according to documents obtained by The Block. In a draft complaint, the Maker Foundation – a non-profit organization supporting the development of the MakerDAO decentralized finance (DeFi) protocol – was accused of misrepresenting the protocol’s risks to investors and failing to protect investor interest.

G-20 Urges Unified Stablecoin Framework Ahead Of Facebook’s Libra
The Financial Stability Board (FSB) – the regulatory watchdog of the Group of 20 (G-20) – warned global regulators that possible stablecoin disruptions should be addressed before Facebook’s Libra is released, according to a consultation report released on Tuesday (April 14).


Trump finds little support for ‘total authority’ claim; US president’s assertion of power puts him at odds with state governors — and the constitution
Kadhim Shubber – FT
Donald Trump’s claim that he has “total authority” to reopen the US economy has put him at odds with the state governors whose “stay at home” orders he is eager to lift — as well as the weight of US constitutional history.

Coronavirus Has Us Wondering Who’s in Charge Here; States are fending for themselves, some better than others.
Mark Gongloff – Bloomberg
Some day in, say, 2023, when California is an independent nation and New Yorkers are citizens of the Free Republic of Cuomostan, we might look back at this pandemic as the moment when the whole “United States” thing went kablooey.

Trump’s GOP Blames China for Coronavirus With Eye on 2020
Mario Parker and Billy House – Bloomberg
President’s campaign accuses Beijing of ‘lying’ about outbreak; Republicans assail Democrats who defend Chinese people
Republicans are ratcheting up efforts to paint China as the villain in the coronavirus pandemic, seeking to shift blame as President Donald Trump faces increased criticism of his handling of a crisis that has shuttered the U.S. economy.

Larry Kudlow’s War Bonds Are Coming But in a Plain Vanilla Wrapper
Liz McCormick and Saleha Mohsin – Bloomberg
Treasury to sell record debt to fund virus-related stimulus; U.S. may spin 20-year bond reboot with patriotic flavor
President Donald Trump’s top economic adviser Larry Kudlow may get the war bonds he wants as the U.S. swells its debt pile to levels unlike anything seen since World War II.

Stimulus Checks May Be Delayed As Trump Requires U.S. Treasury to Print His Name on Them
Daniel Villarreal – Newsweek
Late Monday evening, the U.S. Treasury Department ordered the Internal Revenue Service to print President Donald Trump’s name on the stimulus checks it is sending to millions of Americans nationwide, reports The Washington Post.
The Treasury Department’s order could cause the checks to be delayed by several days or longer, senior agency officials told the publication.

Trump Says Dimon, Cook Among Dozens of CEOs to Advise on Economy
Jordan Fabian and Jennifer Jacobs – Bloomberg
Forms ‘economic revival’ groups across a range of industries; List includes Jeff Bezos, a frequent target of president’s ire
President Donald Trump said he’s tapping the country’s most prominent business executives, including Jamie Dimon, Tim Cook and Doug McMillon, to help revive the economy as the coronavirus pandemic shows signs of easing in some parts of the country.

China Blasts Trump’s Move to Pull WHO Funding, Pledges Support
Bloomberg News
U.S. president says WHO took China’s word ‘at face value’; UN says it’s not the time to reduce resources, seeks unity
China criticized U.S. President Donald Trump’s move to temporarily halt funding to the World Health Organization and pledged to support the global health body.

Bill Gates says Trump’s decision to halt WHO funding is ‘as dangerous as it sounds’
Christina Maxouris, CNN Business
President Donald Trump’s decision to withhold funding to the World Health Organization pending a review of its handling of the coronavirus pandemic is “as dangerous as it sounds,” Bill Gates said Wednesday.

Vast majority of tax provision in coronavirus law goes to millionaires, JCT finds
Jeff Stein – The Washington Post
More than 80 percent of the benefits of a tax change tucked into the coronavirus relief package Congress passed last month will go to those who earn more than $1 million annually, according to a report by a nonpartisan congressional body expected to be released Tuesday.
The provision, inserted into the legislation by Senate Republicans, temporarily suspends a limitation on how much owners of businesses formed as “pass-through” entities can deduct against their nonbusiness income, such as capital gains, to reduce their tax liability. The limitation was created as part of the 2017 Republican tax law to offset other tax cuts to firms in that legislation.

Rep. Trey Hollingsworth says letting more Americans die of coronavirus is lesser of two evils compared to economy tanking
Paul LeBlanc – CNN
An Indiana congressman said Tuesday that letting more Americans die from the novel coronavirus is the “lesser of two evils” compared with the economy cratering due to social distancing measures.
Speaking with radio station WIBC in Indiana, Republican Rep. Trey Hollingsworth asserted that, while he appreciated the science behind the virus’ spread, “it is always the American government’s position to say, in the choice between the loss of our way of life as Americans and the loss of life, of American lives, we have to always choose the latter.”

Cuomo invokes Alexander Hamilton in war of words with Trump over who has ‘ultimate authority’ on when to reopen businesses
Quentin Fottrell – MarketWatch
New York Gov. Andrew Cuomo, a Democrat, and President Trump are embroiled in a war of words over who has the “ultimate authority” to reopen the economy. As cases of COVID-19 continue to climb, the prospect that the state’s lockdown will continue for weeks, if not longer, also increases.


Federal Court upholds ASIC’s product intervention order on short term credit
On 20 September 2019, Cigno Pty Ltd (Cigno) filed a judicial review application in the Federal Court of Australia seeking to challenge ASIC’s product intervention order in respect of short term credit. Cigno’s review application was dismissed by the Court and the product intervention order remains in force.

ASIC updates guidance on internal market making
ASIC has updated Information Sheet 230 Exchange traded products: Admission guidelines (INFO 230). INFO 230 provides additional guidance to firms, including licensed Australian exchanges, product issuers and market making execution agents, on better practices for internal market making in non-transparent, actively managed funds that are traded on exchange markets.

Securities Helpline for Seniors: Celebrating 5 Years of Senior Investor Protection
With about 10,000 Americans reaching 65 years old every day, FINRA is committed to the protection of senior investors and other vulnerable adults. That’s why FINRA launched the Securities Helpline for Seniors.

CFTC Unanimously Approves 3 Proposed Rules, 2 Final Rules at April 14 Open Meeting
Washington, D.C. — The Commodity Futures Trading Commission at its open meeting today unanimously approved three proposed rules and two final rules. This open meeting marks the ninth since Chairman Heath P. Tarbert took office.
Proposed Rule: Amendments to Part 190 Bankruptcy Regulations
Proposed Rule: Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR
Proposed Rule: Amendments to Part 50 Clearing Requirements for Central Banks, Sovereigns, IFIs, Bank Holding Companies, and CDFIs
Final Rule: Amendments to Part 23 Margin Requirements for the European Stability Mechanism
Final Rule: Amendment to Part 160 Consumer Financial Information Privacy Regulation

Statement of Chairman Heath P. Tarbert in Support of Long-Awaited Updates to the CFTC’s Bankruptcy Regime
In his 1926 novel The Sun Also Rises, Ernest Hemingway offers what is perhaps the best chronicle of the anatomy of a typical bankruptcy. In the novel, the character Mike Campbell is asked how he went bankrupt. He answers: “two ways . . . gradually and then suddenly.”

Statement of Support by Commissioner Quintenz Regarding Part 190 Bankruptcy Regulations – Notice of Proposed Rulemaking
I am pleased to support today’s proposal to amend the Commission’s regulations governing the bankruptcy proceedings of commodity brokers.[1] This proposal makes the first comprehensive change to these regulations since they were first issued in 1983.

Statement of Commissioner Rostin Behnam Regarding Part 190 Bankruptcy Regulations
I respectfully support the Commodity Futures Trading Commission’s (the “Commission” or “CFTC”) issuance of a proposed rule (the “Proposal”) to amend Part 190 of its regulations, which govern bankruptcy proceedings of commodity brokers. First and foremost, I want to thank Commission staff for all of their hard work on this Proposal. If finalized, it will be the first major update of the CFTC’s existing Part 190 since 1983, when it was originally implemented by the Commission.

Statement of Commissioner Dawn D. Stump Regarding CFTC Open Meeting on April 14, 2020; Teamwork – An Essential Core Value
The Commodity Futures Trading Commission (“CFTC” or “Commission”) CFTC may have only recently established core values in an official manner, but they have long-existed within the agency. Over the past month, the CFTC has done a remarkable job of demonstrating those core values of commitment, forward-thinking, teamwork, and clarity.

Statement of Commissioner Dan M. Berkovitz on Proposed Amendments to CFTC Bankruptcy Regulations
I support the proposed comprehensive amendments to the Commission’s bankruptcy regulations. These regulations specifically address the disposition of assets, particularly customer property, of a bankrupt futures commission merchant (FCM) or derivatives clearing organization (DCO).

CAT Now Open for Reporting by Broker-Dealers
Press Release
NEW YORK, NY, April 14, 2020 – Consolidated Audit Trail, LLC (CAT LLC) today announced that, as of Monday April 13th, the CAT is now live for broker-dealer reporting.
The CAT Operating Committee, composed of representatives of FINRA and exchanges (together, self-regulatory organizations or “SROs”) are cognizant that many broker-dealers represent that the COVID-19 pandemic has impeded their ability to report. In response, the Securities and Exchange Commission (SEC) staff granted “no action” relief, until May 20th, to the SROs from enforcing their CAT Compliance Rules with regard to the CAT implementation deadlines against broker-dealers.

Investing and Trading

Coffee climbs as locked-down consumers seek caffeine fix; Industry wrestles with uncertainty over inventories, labour and long-term demand
Emiko Terazono and Andres Schipani – FT
The coronavirus pandemic set off a scramble for coffee beans last month as roasters worked flat out to meet demand from stockpiling consumers while shutdowns disrupted supply.

Don’t Count the Fracking Industry Out Just Yet; These businesses have worked through tumbling oil prices before. If anything, it made them stronger.
David Fickling – Bloomberg
There’s one obvious group of losers from the global deal to cap oil output that’s just been thrashed out: U.S. shale producers. For an industry that needs crude prices in the low $40s to break even, current levels below $30 a barrel seem so obviously bad that America isn’t even being asked to offer a mechanism to deliver an expected output cut of 2 million barrels per day or more. Sheer economics should drive a fall of that magnitude, without any need for the sort of direct intervention that some U.S. regulators have proposed.

Shale Billionaire Harold Hamm Sees Oklahoma Limiting Oil Output
Rachel Adams-Heard – Bloomberg
Continental Resources Inc. founder Harold Hamm told Texas oil regulators he expects neighboring Oklahoma to adopt crude-production limits in a bid to bolster energy prices. Hamm’s comments came during a marathon hearing Tuesday of the Texas Railroad Commission on whether to enact quotas amid the worst crude-market crash on record. Oklahoma, the fourth-largest U.S. oil-producing state, plans to consider imposing caps on May 11.

The Great Recession Was Bad. The ‘Great Lockdown’ Is Worse; The IMF predicts this year’s economic slump will be the worst since the Great Depression. Bloomberg Opinion columnists weigh in.
James Greiff – Blomberg
The International Monetary Fund on Tuesday issued a stunning global economic forecast after most of the world’s biggest nations shut down almost all nonessential businesses amid the coronavirus pandemic: The unfolding recession will be much worse than the 2008-09 financial crisis and may be surpassed only by the Great Depression.

Money Is Losing Its Meaning; By throwing trillions of dollars at the coronavirus problem, governments risk undermining trust in currencies.
Jared Dillian – Bloomberg
Doing “whatever it takes” to save the global economy from the coronavirus pandemic is going to cost a lot of money. The U.S. government alone is spending a few trillion dollars, and the Federal Reserve is creating another few trillion dollars to keep the financial system from collapsing. A custom Bloomberg index measuring M2 figures for 12 major economies including the U.S., China, euro zone and Japan shows their aggregate money supply had already more than doubled to $80 trillion from before the 2008-2009 financial crisis.

Wall Street Turns a Blind Eye to Catastrophic U.S. Economic Data
Steve Matthews, Sarah Ponczek, and Vivien Lou Chen – Bloomberg
A partial shutdown of the economy reveals little about outlook; Economists say unemployment claims best measure of the decline
Wall Street’s interpretation of economic data has always been a curious thing. There are times when bad reports are bad news and prompt traders to unload stocks, and times when bad is good and sparks furious rallies. Then there’s now, when bad data seem to mean almost nothing. The figures documenting the coronavirus-induced collapse are so horrific — like 6.6 million new jobless claims last week alone — it’s hard to fathom them.

Oil Price Crash Threatens Green Transition, IEA Warns
Jess Shankleman – Bloomberg
The pain felt by Big Oil from the coronavirus-led plunge in demand may derail global efforts to cut pollution, the International Energy Agency said.

JPMorgan Says Volatility Turning From Market Foe to Friend
Joanna Ossinger – Bloomberg
Panigirtzoglou sees price swings easing across asset classes; Sundial sees VIX below 50-DMA as a sign worst may be over
Volatility in stocks and bonds has ebbed to levels that could boost markets rather than fuel more turbulence, according to JPMorgan Chase & Co. Price swings are getting muted as central banks and governments around the world provide unprecedented packages of stimulus to cushion the economic hit from Covid-19. That’s improving conditions in funding markets, market liquidity and deleveraging by value-at-risk sensitive investors — three key areas for volatility — according to strategists led by Nikolaos Panigirtzoglou.


Goldman Sachs profit halves on mounting loan loss provisions
Goldman Sachs Group Inc (GS.N) reported a 49% fall in quarterly profit on Wednesday, as the bank put aside nearly $1 billion to meet future loan defaults and booked heavy losses on its debt and equity investments.

Banks exchange $1 trillion in collateral from phase one of uncleared margin rules; Initial margin collected by phase one firms for their non-cleared derivatives totalled $173.2 billion, an increase of 10% compared to year-end 2018.
Joe Parsons – The Trade
Over $1 trillion in collateral was collected from banks and swaps dealers that fell under the first phase of the initial margin rules for uncleared derivatives exchanged, according to the derivatives industry body.

Bank of America Profit Falls 45% As It Prepares for Loan Defaults; The bank set aside an additional $3.6 billion for potential bad loans, a reflection of the darkening economic outlook
Ben Eisen – WSJ
Bank of America Corp. said Wednesday that profit fell 45% in the first quarter and the bank set aside billions of dollars to cover potentially bad loans during the coronavirus crisis.

GAM pushes ahead with staff cuts as investors withdraw funds; Swiss asset manager suffered 26% drop in assets during coronavirus market rout
Siobhan Riding – FT
Investment manager GAM has been forced to ramp up its cost-cutting efforts after suffering a 26 per cent drop in assets during the coronavirus-induced market rout.

Wall Street’s Biggest-Ever China Bet Rides on These Bankers
Cathy Chan and Lulu Yilun Chen -Bloomberg
UBS, Morgan Stanley among firms targeting China bank opening; Global firms face competition from entrenched Chinese lenders
UBS Group AG’s David Chin wants to double the size of his China investment-bank team. Morgan Stanley’s Wei Sun Christianson plans to build a brokerage business from scratch. And Todd Leland at Goldman Sachs Group Inc. sees “infinite growth” in asset management.

China’s Data on Symptom-Free Cases Reveals Most Never Get Sick
Bloomberg News
China for the first time publicized a breakdown of people testing positive for the novel coronavirus without outward signs of being sick, revealing that those among them who remain symptom-free throughout infection are in the majority.

JPMorgan, Wells Fargo Offer Reality Check on Profit Outlook
Michelle F Davis and Hannah Levitt – Bloomberg
Dimon says bank is being conservative in bracing for bad loans; But ‘if the economy gets worse we’ll bear additional loss’
With the biggest U.S. banks facing an unprecedented economic standstill and new accounting rules, most analysts expected them to double what they set aside for bad loans a year ago. Those predictions weren’t nearly pessimistic enough.


China’s `Aircraft Carrier’ Can’t Sink Wall Street; A potential merger of the two biggest brokerages is a sign of anxiety rather than confidence.
Nisha Gopalan – Bloomberg
A planned merger between China’s two biggest brokerages is a sign that firms are worried about the impending arrival of wholly owned foreign competitors. They should be. China has started the process of potentially merging Citic Securities Co. and CSC Financial Co., Bloomberg News reported Tuesday, citing people familiar with the matter. The two would have a combined market value of $67 billion, surpassing Goldman Sachs Group Inc. and Morgan Stanley.

China Money Manager Makes 58% This Year by Doing Nothing at All
Bloomberg News
Luo Weidong hasn’t changed makeup of flagship fund in years; Fund bought handful of firms; up 1,835% since 2015 launch
Luo Weidong’s secret to making good money in China’s volatile equity market is not trading.


Fishing rights threaten to stall Brexit talks; No UK proposals for access for European boats included in latest documents sent by London to Brussels
Peter Foster and Jim Brunsden – FT
Britain is holding out on submitting detailed proposals on fishing rights to Brussels, increasing tensions with the EU just as the two sides seek to restart talks about the future relationship.

Brexit Is Back. Even Covid-19 Can’t Stop It
Therese Raphael – Bloomberg
The coronavirus pandemic has closed schools, shuttered restaurants, emptied office buildings, put Prime Minister Boris Johnson in intensive care and forced much of the U.K. economy into cryogenic suspension. So far, though, it hasn’t derailed Brexit. Fronting the daily U.K. press conference Tuesday, Chancellor of the Exchequer Rishi Sunak affirmed that the government was committed to its current timetable for trade talks with the European Union, which resume Wednesday.

EU Chief Brexit Negotiator Barnier Back at Work Post Coronavirus
Sarah Jacob – Bloomberg
The European Union chief Brexit negotiator Michel Barnier said he is back in his office after having tested positive for coronavirus in March.

Does the UK want the EU to emerge stronger from the virus crisis?
Tony Barber – FT
For politicians and activists in the UK’s ruling Conservative party, the killer argument for Brexit was and remains their suspicion that the EU is hell-bent on becoming a superstate. But the coronavirus pandemic is testing this proposition, which was, in any case, always more of a neuralgic British fantasy than a European reality. Far from being on an unstoppable course towards closer unity, both the 27-nation EU and the 19-nation eurozone are struggling to maintain a spirit of common endeavour in this crisis.


After Coronavirus, Colleges Worry: Will Students Come Back? The pandemic has already cost universities millions of dollars. As they consider the possibility of remote classes into the fall, they’re worried about losing students, too.
Anemona Hartocollis – NY Times
For years, Claire McCarville dreamed of going to college in New York or Los Angeles, and was thrilled last month to get accepted to selective schools in both places. But earlier this month, she sent a $300 deposit to Arizona State University, a 15-minute drive from her home in Phoenix. “It made more sense,” she said, “in light of the virus.”
/ Students Left Behind When College Campuses Empty Out Due to

Coronavirus Fears; Some who can’t go home find themselves alone in their dorms, on quiet campus lawns and standing six feet from anyone else they can find
Melissa Korn – WSJ
Every weekday morning, Siân Lewis calls her brother on FaceTime and spends an hour doing yoga, stationed on the porch outside her apartment on the campus of Davidson College.

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