Hong Kong Exchange CEO to Depart Earlier Than Planned

Feb 9, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

Cboe Global Markets, Inc. announced the election of Erin Mansfield, former managing director of global regulatory relations and policy at Barclays, and Cecilia Mao, global chief product officer at Equifax Inc., as new members of its board of directors. Additionally, Joe Ratterman has chosen to step down from the board of directors of Cboe Global Markets. Ratterman joined the Cboe board in 2017 following the Bats Global Markets acquisition. Moreover, Cboe’s board of directors has declared a quarterly cash dividend of $0.55 per share of common stock for the first quarter of 2024.

Miami International Holdings, Inc. (MIH) released its January 2024 trading results, showcasing growth across its U.S. exchange subsidiaries – MIAX, MIAX Pearl, and MIAX Emerald, along with the Minneapolis Grain Exchange (MGEX). Total multi-listed monthly options volume for the MIAX Exchange Group surged to 140.5 million contracts, marking a 3.7% year-over-year (YoY) increase and a 9.5% rise from December 2023. MIAX Pearl Equities volume notably spiked by 105.3% YoY, reaching 4.6 billion shares, with a market share of 1.90% in January 2024. Additionally, MGEX experienced a 32.9% YoY increase in monthly volume, totaling 220,026 contracts.

How big a deal is this artificial intelligence thing? It is BIG. Let me put it in perspective for you. Because of Nvidia’s development and production of graphics processing units (GPUs) that are widely used in AI applications, its market value has surged to match the entirety of the Chinese stock market represented by the H shares of the Hong Kong stock market, a point highlighted by Michael Hartnett, a Bank of America strategist. Additionally, Nvidia’s $600 billion increase in market capitalization over the past two months equals the entire market capitalization of Tesla. This surge comes as Nvidia’s stock has soared by 228% over the last year, contrasting sharply with the 26% decline in the Hang Seng index in Hong Kong, MarketWatch reported.

Now take in this headline from The Wall Street Journal: “Sam Altman Seeks Trillions of Dollars to Reshape Business of Chips and AI,” with the subheadline “OpenAI chief pursues investors including the U.A.E. for a project possibly requiring up to $7 trillion.”

To give you some comparison, the Journal said, “Global sales of chips were $527 billion last year and are expected to rise to $1 trillion annually by 2030.” So, $7 trillion takes things to a WHOLE new level. (Disclosure: I own some Nvidia shares in my IRA.)

Yesterday Joe Raia of Abaxx Technologies was the guest on Trevor Rose’s podcast. The episode, #160 of Trevor Rose Podcasts, is titled “Joe Raia (Abaxx Technologies) – Building a New Commodities Exchange, Futures Contracts & LNG: The Investment Case in Plain Sight.”

Join WilmerHale on February 15, 2024, for the Crypto Currently webinar series, where it will look into the recent approval of 11 spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC). WilmerHale partner and Blockchain and Cryptocurrency Working Group co-chair Tiffany J. Smith and Amy Doberman and Special Counsel Joseph Toner will be joined by Chris Matta of 3iQ Digital Assets to explore the significance of these landmark approvals and their implications for the industry. Register now HERE.

Yesterday was the 114th anniversary of the founding of Boy Scouts of America. My daughter Kat is currently interviewing for a job with a BSA council in Ohio to be its camping director. She is graduating from University of West Virginia Institute of Technology in May with a degree in adventure recreation management. She will also be at the FIA Boca conference this year for the fifth year in a row, providing JLN with video production support.

JLN has twenty-four interviews at FIA Boca set up, with twelve of them scheduled. If you are still interested, let me know.

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


Our most read stories from our previous edition of JLN Options were:
Options Trader Wagers That Meta Shares Will Double Again from Bloomberg.
Open Outcry Traders History Project Podcast: From Trading Floors to Life’s Crossroads, Tom Gould’s Journey Through Trading and Giving Back from John Lothian News.
Two Trading Ideas from tastylive. ~JB

Subscribe to the JLN Options Newsletter HERE (it’s free).


Climate scientist wins $1mn in defamation case against rightwing bloggers; Michael Mann had sued writers for attacks launched on his work
Joe Miller – Financial Times
A prominent climate scientist who was accused by right-wing bloggers of academic fraud and compared to a notorious child molester has won more than $1mn in damages, ending a 12-year defamation case closely watched by campaigners. Michael Mann, a professor at the University of Pennsylvania who achieved a degree of fame in the late 1990s for his “hockey stick” graph predicting a sharp rise in global temperatures, had sued writers Rand Simberg and Mark Steyn, as well as their respective publishers, the Competitive Enterprise Institute think-tank and conservative magazine National Review.

***** Twelve years is a long time to seek justice, but your reputation is priceless.~JJL


Thursday’s Top Three
Our top story Thursday was Coutts poaches UBS executive after Farage ‘debanking’ scandal, from the Financial Times. Second was Chinese Bitcoin Miners Find a New Crypto Haven in Ethiopia, from Bloomberg. Third was a tie between Crypto Firm Bakkt Warns It Might Not Be Able to Remain in Business, from CoinDesk, and Thinking Crypto’s video interview with Prometheum Founder and Co-CEO Aaron Kaplan.



Lead Stories

Hong Kong Exchange CEO to Depart Earlier Than Planned; Hong Kong’s benchmark stock index has declined 7.6% so far this year, making it one of the worst performers in Asia
Tracy Qu – The Wall Street Journal
Nicolas Aguzin will step down as the head of Hong Kong’s stock exchange three months earlier than planned, as the Asian financial hub struggles with an initial public offering drought and a market downturn. Hong Kong Exchanges & Clearing said Friday that Aguzin will leave the company at the end of February, adding that he had informed the board that “he believes it would be in the interest of HKEX to accelerate the change in leadership.” Aguzin’s term was to end in May after he said in December that he wouldn’t seek reappointment.

Deutsche Borse chief ‘deeply concerned’ about rise of German far right; Comments from top executive underline mounting unease within business community over resurgent AfD
Nikou Asgari – Financial Times
The head of the German stock exchange has said he is “deeply concerned” about the rise of far-right politics in the country, warning that it threatens the future of EU markets. “If they were successful that would be fatal, not only for our democracies but also for Germany and Europe as key financial centres,” Theodor Weimer, chief executive of Deutsche Borse Group, said on Thursday. The far-right Alternative for Germany party last month told the Financial Times that it saw Brexit as a model and, if elected, would hold a referendum on membership of the EU. Alice Weidel, leader of the AfD, also said her government would seek to curb the power of the European Commission.

New SEC Rule Will Impair the World’s Most Important Market; The agency’s new regulations, an attempt to fix its past mistakes, will likely lead to excess volatility in US government securities during times of stress.
Aaron Brown – Bloomberg
Never mind the dense 247 pages. Just the title of Securities and Exchange Commission’s new rule concerning trading of US Treasuries, deemed the world’s most important market, will make your eyes glaze over: “Further Definition of ‘As a Part of a Regular Business’ in the Definition of Dealer and Government Securities Dealer in Connection with Certain Liquidity Providers.” But regardless of what the SEC calls it, this is a classic example of regulatory creep.

Global investors warn UK on overhaul of listing rules; Institutions say the proposals will erode shareholder rights and harm the country’s reputation for high corporate governance
Harriet Agnew – Financial Times
Global investors are warning that a proposed overhaul of listing rules to attract more growth companies to the UK market will erode shareholder rights, undermine the country’s reputation for corporate governance and harm its attractiveness as a financial centre. The International Corporate Governance Network, a group of global institutional investors with $77tn of assets under management, has written to UK chancellor Jeremy Hunt and to the Financial Conduct Authority regulator – which drew up the planned changes – criticising what the FCA has called “the most far-reaching reforms in the UK’s listing regime in three decades”.

Sam Altman Seeks Trillions of Dollars to Reshape Business of Chips and AI; OpenAI chief pursues investors including the U.A.E. for a project possibly requiring up to $7 trillion
Keach Hagey and Asa Fitch – The Wall Street Journal
Sam Altman was already trying to lead the development of human-level artificial intelligence. Now he has another great ambition: raising trillions of dollars to reshape the global semiconductor industry. The OpenAI chief executive officer is in talks with investors including the United Arab Emirates government to raise funds for a wildly ambitious tech initiative that would boost the world’s chip-building capacity, expand its ability to power AI, among other things, and cost several trillion dollars, according to people familiar with the matter. The project could require raising as much as $5 trillion to $7 trillion, one of the people said.

HKEX chief to step down months earlier than planned; Hong Kong stock exchange’s shares down more than 40% under Nicolas Aguzin’s tenure
Hudson Lockett – Financial Times
Nicolas Aguzin, the outgoing chief executive of Hong Kong Exchanges & Clearing, will depart months earlier than planned, as the stock exchange grapples with low trading activity and a dearth of initial public offerings from China. The early exit by the bourse’s chief executive, announced on Friday, and on the eve of the exchange’s closure for the Chinese new year holiday, will come as Hong Kong fights to maintain its status as a major financial centre.

US SEC, CFTC jointly approve new private fund reporting rules
Two top U.S. markets regulators on Thursday jointly approved new reporting requirements for private funds and investment advisers, saying this would boost the government’s ability to spot the build-up of risk in the $20 trillion private investment sector. The Securities and Exchange Commission and the Commodity Futures Trading Commission also said they had agreed to share the confidential information collected on forms routinely filed by private funds. The changes will enhance regulators’ “understanding of the private funds industry as well as the potential systemic risk posed by the industry and its individual participants,” SEC Chair Gary Gensler said in a statement. Under Gensler, the SEC has tightened oversight of the private investment sector, long criticized for its opacity. His agency last year adopted changes requiring private funds to report fees and performance on a quarterly basis and perform annual audits, among other changes.

Hedge Funds to Share More on Their Strategies Under SEC Rule
Ben Bain – Bloomberg
US regulators will begin requiring hedge funds to confidentially share more information about their investment strategies. New rules approved on Thursday will require firms to provide more details with watchdogs, including investments, borrowing and counterparty exposure. The Securities and Exchange Commission and Commodity Futures Trading Commission described the new regulations, which were proposed in 2022, as a way to better keep tabs on risk in the financial system.

CFTC Global Markets Advisory Committee Advances Key Recommendations; Commissioner Pham Applauds Stakeholder Collaboration
The Commodity Futures Trading Commission’s Global Markets Advisory Committee (GMAC), sponsored by Commissioner Caroline D. Pham, formally advanced eight recommendations to the Commission that will enhance the resiliency and efficiency of global markets, including U.S. Treasury markets, repo and funding markets, and commodity markets. To date, this is the largest number of recommendations advanced by a CFTC Advisory Committee in a single meeting.

Goldman Is Facing CFTC Probe Over Fees Charged for Futures Trading; US derivatives regulator will demand information on fees; Investigation is latest headache for Goldman with CFTC
Lydia Beyoud and Sridhar Natarajan – Bloomberg
A top US financial regulator has opened an investigation into whether Goldman Sachs Group Inc. improperly charged fees to execute some of its clients’ futures trades, the latest regulatory headache for the bank. The Commodity Futures Trading Commission privately authorized sending subpoenas to Goldman for information about fees charged for some futures block trades, according to people familiar with the matter. The probe stems from a whistle-blower tip, said one of the people, who asked not to be identified discussing the confidential probe.

SEC may be forced to declare Ethereum a security after controversial new launch
Leo Schwartz – Fortune
Prometheum plans to announce on Wednesday the launch of custodial services for Ether, the native cryptocurrency of the Ethereum blockchain, whose $280 billion market cap is second only to Bitcoin’s. The move may be part of a larger strategy by the crypto firm to get regulators to identify Ether as a security-a position widely unpopular among industry peers. So far, the Securities and Exchange Commission has avoided taking a position on Ethereum’s legal status even while declaring more than a dozen other popular cryptocurrencies to be securities. The latest gambit by New York-based Prometheum, which claims it has discovered a compliant path for crypto within existing laws, could force the agency’s hand.

India’s Stock Trading Value Surges to New High Versus Hong Kong
Alex Gabriel Simon – Bloomberg
India’s stock trading value has surged to a record high versus that of Hong Kong, in yet another sign of shifting investor sentiment in Asia. The average daily trading of stocks on India’s two largest exchanges combined stood at nearly $12 billion in 100 days through Feb. 8, compared with $8.5 billion in Hong Kong, data compiled by Bloomberg show. While India overtook Hong Kong in September, the gap has been widening since then, touching a fresh high on Thursday.

The Race to Succeed Goldman’s CEO Just Got More Complicated; Strengthening of David Solomon’s grip may cloud John Waldron’s path to the top job
AnnaMaria Andriotis – The Wall Street Journal
Goldman Sachs CEO David Solomon has tightened his grip on the Wall Street firm, potentially upending the closely watched race to succeed him. After a bruising stretch in which he had been under pressure over the firm’s ill-fated consumer expansion and questions swirled about his ability to hang on to the top job, Solomon in recent months has made it clear to top executives he plans to remain for a while. He has also been getting more involved in the day-to-day running of the firm, people familiar with the matter said.

SS&C Announces Financial Risk and Regulatory Reporting Partnership with Regnology; Partnership delivers a fully integrated risk and regulatory reporting solution for streamlined compliance and analytical insights, enabling institutions to adapt swiftly to regulatory changes
SS&C Technologies Holdings, Inc. (Nasdaq: SSNC) today announced a strategic partnership with Regnology, a leading regulatory reporting technology company, to help clients tackle upcoming regulatory requirements. SS&C Algorithmics will combine its risk calculations with Regnology’s regulatory reports to help clients meet the European Banking Authority’s Interest Rate in the Banking Book (IRRBB) reporting requirements. The deadline for implementation of the new Asset Liability Management (ALM) reporting is September 2024.

Risk of Bank Defaults Spreading to Europe, Man Group Fund Manager Says
Greg Ritchie – Bloomberg
The banking-sector jitters that are rocking the likes of New York Community Bancorp will not be confined to the US, with the potential for defaults spreading to Europe, according to a top-performing fund manager. “There are portions of the market that we think are in very deep trouble,” said Jonathan Golan, a portfolio manager at Man Group Plc in London, whose investment-grade bond fund beat 99% of peers last year in data compiled by Bloomberg. “You’ve got more banks that are coming under scrutiny, more banks falling casualty, and potentially some banks defaulting on both sides of the Atlantic.”

UBS Loses to Whistleblower in Wide-Reaching Supreme Court Decision; A win for an analyst allegedly fired for protesting unethical requests will make it easier for whistleblowers to sue
Richard Vanderford – The Wall Street Journal
A UBS unit must provide back pay to a former analyst who said he was fired for blowing the whistle on illegal pressure to change research reports, the U.S. Supreme Court said in a unanimous decision Thursday that will make it easier for whistleblowers to win retaliation lawsuits. Whistleblowers don’t have to prove they were terminated because of “retaliatory intent,” the Supreme Court said in its decision, reinstating a win at trial for analyst Trevor Murray.

Climate scientist wins $1mn in defamation case against rightwing bloggers; Michael Mann had sued writers for attacks launched on his work
Joe Miller – Financial Times
A prominent climate scientist who was accused by right-wing bloggers of academic fraud and compared to a notorious child molester has won more than $1mn in damages, ending a 12-year defamation case closely watched by campaigners. Michael Mann, a professor at the University of Pennsylvania who achieved a degree of fame in the late 1990s for his “hockey stick” graph predicting a sharp rise in global temperatures, had sued writers Rand Simberg and Mark Steyn, as well as their respective publishers, the Competitive Enterprise Institute think-tank and conservative magazine National Review.

Fireside Friday with Brown Brothers Harriman’s… Brendan Burke; The TRADE sat down with Brown Brothers Harriman’s (BBH) managing director, head of Americas FX sales and business development, Brendan Burke, to discuss the feasibility of outsourcing FX workflows, the costs associated with opening foreign trading desks, the potential benefits of distinct approaches and how the US shift to T+1 is exacerbating the need to consider these topics.
Claudia Preece – The Trades
What are the costs associated with opening a North American FX trading desk?
It’s a good question, the baseline costs associated with opening a North American desk, or a desk anywhere, includes hiring two traders minimum. One trader for full-time responsibilities, and a backup for BCP (Business Continuity Planning) purposes or holidays, etc.

Ukraine Invasion

Collapsed Russian bank VTB Capital pays City staff £6.6m; The Russian bank was forced into insolvency in the wake of the Ukraine war, but will remain in administration until the end of 2024
Paul Clarke – Financial News
The London arm of VTB Capital paid 16 UK staff £6.6m in 2023, nearly two years after it collapsed, as administrators continue efforts to recover hundreds of millions of pounds. The UK branch of the Russian bank was placed into administration in December 2022 after its parent company was hit with sanctions over Vladimir Putin’s invasion of Ukraine.

Putin Says He Is Open to Exchange of WSJ’s Evan Gershkovich for Russian Prisoner; Russian leader’s comments come in interview with former Fox News host Tucker Carlson
Alan Cullison and Drew Hinshaw – The Wall Street Journal
Russian leader Vladimir Putin said a prisoner exchange would probably lead to the release of Wall Street Journal reporter Evan Gershkovich, but he declined to give a time frame for the deal and said Gershkovich was caught committing espionage in Russia. Gershkovich has been detained since March 2023 on an espionage allegation that he, the Journal and the U.S. government vehemently deny. In a two-hour interview with former Fox News host Tucker Carlson, Putin said a prisoner swap was being discussed between the U.S. and Russia. Such talks have led to swaps in the past “and probably this is going to be crowned with success as well,” Putin said. “But we have to come to an agreement.”

Zelenskiy’s Ugly Fight With General Exposes Split in Ukraine; Fallout coincides with anniversary of the invasion by Russia; At same time, Putin gives Tucker Carlson his spin on war
Daryna Krasnolutska – Bloomberg
In the space of five years Volodymyr Zelenskiy has undergone more transformations than most politicians see in a lifetime. First he was the comedian-turned-president, then he was a wartime hero in military fatigues, and now he risks slipping into the role of embattled leader.

Israel/Palestine Conflict

Biden says Gaza fighting ‘over the top,’ pushing for a pause
Jeff Mason and Trevor Hunnicutt – Reuters
U.S. President Joe Biden on Thursday suggested that Israel’s military response in Gaza has been “over the top” and said he is seeking a “sustained pause in the fighting” to help ailing Palestinian civilians. “I’m of the view, as you know, that the conduct of the response in the Gaza Strip has been over the top,” Biden told reporters at the White House. He added that he has been pushing for a deal to normalize Saudi Arabia-Israel relations, increased humanitarian aid for Palestinian civilians and a temporary pause in fighting to allow the release of hostages taken by Hamas.

Exchanges, OTC and Clearing

Cboe Global Markets Announces Election of Erin Mansfield and Cecilia Mao to Board of Directors; Declares First-Quarter 2024 Dividend
Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced its Board of Directors elected Erin Mansfield, former Managing Director, Global Head of Regulatory Relations and Policy at Barclays, and Cecilia Mao, Global Chief Product Officer at Equifax Inc., as new members to its Board of Directors. Additionally, its Board of Directors has declared a quarterly cash dividend of $0.55 per share of common stock for the first quarter of 2024. The first-quarter 2024 dividend is payable on March 15, 2024, to stockholders of record as of February 29, 2024.

Change in Chief Executive And Change in the Holding of Executive Office
Retirement of Mr Alejandro Nicolas AGUZIN. Reference is made to the announcement of Hong Kong Exchanges and Clearing Limited (“HKEX”) dated 15 December 2023 in relation to Mr Aguzin not seeking reappointment as HKEX Chief Executive at the end of his current contract in May 2024. Mr Aguzin has subsequently informed the Board of Directors of HKEX (the “Board”) that, as the transition has been proceeding smoothly and effectively, he believes it would be in the interest of HKEX to accelerate the change in leadership; and has accordingly agreed with the Board to remain as the Chief Executive of HKEX and an ex-officio member of the Board until 29 February 2024.

LME faces lawsuit over ‘dirty metals’ trading; Metals traded on the exchange are the product of ‘environmental crimes’, NGOs say
Jeremy Chan – Financial News
The London Metal Exchange is facing a High Court claim that it allows “dirty metals” to be traded on its bourse in violation of environmental law. The case, which is being brought by human rights groups, the Global Legal Action Network and the London Mining Group, says the LME’s policies do nothing to bar these metals from being traded on the exchange.

Miami International Holdings Reports Trading Results for January 2024; MIAX Pearl Equities Volume Increases 105.3% with Market Share Reaching 1.9%
Miami International Holdings, Inc.
Miami International Holdings, Inc. (MIH) today reported January 2024 trading results for its U.S. exchange subsidiaries – MIAX, MIAX Pearl and MIAX Emerald (together, the MIAX Exchange Group), and Minneapolis Grain Exchange (MGEX).

TMX Group CEO John McKenzie to present at the Bank of America 2024 Financial Services Conference
February 8, 2024 (TORONTO) – TMX Group Chief Executive Officer John McKenzie will present at the Bank of America 2024 Financial Services Conference on Tuesday, February 20, 2024, at 11:40 a.m. – 12:20 p.m. ET.

Performance Bond Requirements: Energy, FX, and Interest Rate Margins – Effective February 09, 2024
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Performance Bond Requirements: Agriculture Margins – Effective February 09, 2024
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Derivatives Holiday Trading (February 12, 2024)
The derivatives market will be open for holiday trading on Monday, February 12, 2024 (Substitute Holiday of National Foundation Day).

The details of Electricity futures contracts starting in FY2023 and FY2024 (Including Weekly contracts)
Along with the addition of Electricity futures (Weekly) that will become effective on March 18, 2024, The details of Electricity futures contracts starting in FY2023 and FY2024 shall be as below.

Moscow Exchange trading schedule in February 2024
Moscow Exchange announces the trading schedule for its markets over the February 2024 public holiday period. Friday, 23 February 2024 is a non-trading day on all MOEX markets due to a public holiday in Russia. On 22 February 2024, all markets will operate as usual.


Social Media Platforms Are Done With News, But Gen Z Still Treats Them as a Go-To Source; Data analysis reveals growing trust in information found on social media among young people, even as tech companies roll back moderation.
Laura Bliss and Minh-Anh Nguyen – Bloomberg
In democracies, big election years such as this provide ­convenient moments to assess the health of the Fourth Estate. News flash: Much of the industry is in upheaval. As public trust and consumption of mainstream outlets decline, Instagram, TikTok and YouTube have become the new juggernauts.

FIX Trading Community set to establish digital assets-focused standards; The objectives for 2024 are three-fold and include: interoperability, regulation and distributed ledger technology application.
Claudia Preece – The Trade
As the evolution of digital assets as a distinct class continues to accelerate, the FIX Trading Community is set to establish specific standards for the area, focusing on three core pillars: interoperability, regulation and distributed ledger technology (DLT) application. “We are entering a new era, marked by the emergence of new asset classes enriching traditional ones. We see a bright future ahead of us, with new and improved efficiencies and greater transparency across the financial services sector, benefiting all participants,” said Vince Turcotte, co-chair of FIX’s digital assets and technology committee.

BMLL Wins ‘Data Science Solution Provider’ at the Hedgeweek European Awards 2024
We are delighted to announce that BMLL has won “Best Data Science Solution” at the annual HedgeWeek European Awards 2024. These awards recognise excellence among fund managers and service providers in Europe across a wide range of categories. BMLL was awarded “Best Data Science Solution” for providing Level 3 data and analytics to hedge funds, helping them improve predictability, quality and speed of alpha through a scalable, managed data and analytics service.

S&P completes ‘operational integration’ of IHS Markit, ups focus on genAI, new regtech tool; With the IHS Markit merger now behind it, S&P Global is set to release RegGPT and other AI-enabled products.
Rebecca Natale – Risk.net
After piloting a new generative AI-powered search interface, ChatIQ, in December to a handful of customers, S&P Global is planning a large swath of similarly AI-led new products and enhancements to existing products, president and CEO Doug Peterson told investors during the company’s quarterly earnings call on Thursday. Later this year, S&P expects to launch RegGPT, for which the company last year registered a trademark, which is still pending. The product includes downloadable computer software

Nvidia Nears Amazon’s Market Value as Blazing Rally Drives Ahead; Stock’s valuation has risen this year amid stalling estimates; Next catalyst will come when it reports later this month
Ryan Vlastelica – Bloomberg
Nvidia Corp.’s stock has rallied so much this year that it’s now threatening to overtake Amazon.com Inc. to become the fourth most valuable US company. Having added nearly Tesla Inc.’s entire market capitalization in the past two months alone, Nvidia is worth $1.72 trillion, just shy of Amazon at $1.76 trillion, as of Thursday’s close. Google-owner Alphabet, the third most valuable US company after Microsoft Corp. and Apple Inc., isn’t too far away at $1.82 trillion.

Japan Earmarks $300 Million to Fire Up Chip Research at Home; Economy ministry adds to spending on chip competitiveness; LSTC set up to act as a hub to accumulate chip research
Takashi Mochizuki, Yoshiaki Nohara, and Yuki Furukawa – Bloomberg

US to Launch $5 Billion Research Hub to Stay Ahead in Chip Race; Officials seek to prevent China from benefiting from funding; R&D effort seeks to fill hardware, packaging innovation gaps
Mackenzie Hawkins – Bloomberg

OpenAI on track to hit $2bn revenue milestone as growth rockets; San Francisco-based start-up joins Google and Meta as one of the fastest-growing tech companies ever
Madhumita Murgia and George Hammond – Financial Times

Nvidia share price juggernaut will not be stopped easily; After rising five-fold in little more than a year, the stock continues to be propelled by the AI boom
Richard Waters – Financial Times


Revolut says Mark Zuckerberg’s Meta platforms are ‘hotbed’ for scams; The fintech said that over 60% of scams reported by its UK customers originated from Facebook, Instagram and WhatsApp
Bilal Jafar – Financial Times
Revolut said that Mark Zuckerberg’s multi-billion dollar social media platforms are a “hotbed” for scams in the UK. Revolut, which has more than eight million customers in the UK, said that 60% of all scams reported by its customers in 2023 originated from Meta platforms Facebook, Instagram and WhatsApp.

Lessons from finance in the battle against deepfakes; Policymakers should look at the long history of the fight against counterfeit money
Gillian Tett – Financial Times
This week, a grim new record was set in the business world: fraudsters used a deepfake bot to trick an employee of a Hong Kong company into transferring $25mn. This is not the first time such a fraud has occurred. But what makes this case chilling is its unprecedented scale – and the fact that artificial intelligence was used to create a fake of the company’s chief financial officer. Yes, really. And this is not the only current bot scare. Last autumn, Michal Å imečka, a Slovakian politician, lost an election after a fake recording of him went viral. That is ominous ahead of the 2024 US election.


BlackRock, Fidelity Bitcoin ETFs Have a Liquidity Edge Over Grayscale: JPMorgan
Will Canny – CoinDesk
There is evidence the BlackRock (BLK) and Fidelity spot bitcoin {{BTC}} exchange-traded funds (ETFs) already have an advantage over Grayscale when it comes to certain liquidity metrics linked to market breadth, JPMorgan (JPM) said in a research report Wednesday.
Even though outflows from Grayscale’s GBTC slowed in the fourth week following approval by the U.S. Securities and Exchange Commission, the fund is expected to lose out to the newly created ETFs, and in particular to the BlackRock and Fidelity products, if it doesn’t make a meaningful cut to its fees, the report said.

Loyalty Points Are Crypto’s New Bait; Blast has lured $1.3 billion worth of crypto since November; Most programs haven’t said what their points can be used for
Muyao Shen and Elijah Nicholson-Messmer – Bloomberg
An increasing number of digital-asset startups are offering airline-like loyalty points as they seek to attract more devoted users, even though most have yet to define what the rewards actually entail. Loyalty programs have sprung up in response to a once-favorite marketing ploy – the token airdrop – in which projects give away crypto tokens to users. But the industry is rethinking this tack because many airdrops have done little to retain users while regulatory scrutiny has swelled over tokens themselves.


Republican senators tell Gensler they’re troubled over SEC inaccuracies in DEBT Box case
Sarah Wynn – The Block
Republican senators have a bone to pick with Securities and Exchange Commission Chair Gary Gensler over inaccurate statements the agency made in its lawsuit against crypto startup DEBT Box. Sens. Cynthia Lummis of Wyoming, Bill Hagerty of Tennessee, Katie Boyd Britt of Alabama, Thom Tillis of North Carolina and JD Vance of Ohio said the SEC’s mission of protecting investors and maintaining fair markets was “compromised” by its handling of the case in a letter penned to Gensler on Wednesday.

US House panel accuses VC firms of aiding Chinese military and genocide; Sequoia, Qualcomm and GGV among investment groups cited in congressional China committee report
Demetri Sevastopulo and George Hammond – Financial Times
A US congressional panel has accused five venture capital firms, including Sequoia Capital China and Qualcomm Ventures, of investing more than $3bn in Chinese groups that support China’s military and of facilitating genocide and other human rights abuses. The House of Representatives China committee on Thursday released the results of an investigation which found that the firms, which include Walden International, GGV Capital and GSR Ventures, invested more than $1.9bn in groups involved in artificial intelligence and at least $1.2bn in entities that help China develop its chip industry to further its “military, genocidal, and techno-totalitarian ambitions”.

How Donald Trump risks triggering a new bond crisis
Szu Ping Chan – The Telegraph
Donald Trump is scaring the moneymen. The former US president’s attempt to return to the White House is raising eyebrows on Wall Street, including among the so-called bond vigilantes. Coined by veteran investment strategist Ed Yardeni in the 1980s, the term describes debt traders who punish profligate politicians by selling bonds. This pushes their value down, lifting borrowing costs and making it more costly for governments to issue new bonds.

Britain’s Hunt wants London Stock Exchange to become Europe’s Nasdaq
British finance minister Jeremy Hunt said on Thursday he wants the London Stock Exchange to become the Nasdaq of Europe, attracting tech companies to help create “the next Silicon Valley”. Britain is reforming its financial sector in a bid to remain globally competitive as UK tech companies like chip designer Arm Holdings choose to list in New York. London’s financial sector has also been largely cut off from the European Union due to Brexit.

EU Parliament threatens to shut down debates if MEPs don’t show; A suggested rule change aims to banish images of dreary deliberations in a empty chamber.
Eddy Wax – Politico
Attendance rates at the European Parliament are so low that top MEPs are considering rule changes to strong-arm politicians into showing up. According to an internal catalog of suggested rule changes seen by POLITICO, the legislature’s president could pull the plug on a debate if there aren’t enough lawmakers present. The magic number would be one-third of all MEPs, a total that will grow to 720 after June’s EU election. That would mean no debate if fewer than 240 MEPs are present in the chamber.

Russia could attack a Nato country within 3 to 5 years, Denmark warns; Danish defence minister is latest western official to sound the alarm about Moscow’s continued appetite for war
Richard Milne and Marton Dunai – Financial Times


HKMA head rejects calls to prop up sinking Hong Kong stock market; Hong Kong Monetary Authority chief’s statement comes as China increases domestic ETF purchases
Sinyi Au – Financial Times
The chief executive of the Hong Kong Monetary Authority has dismissed calls from lawmakers for Hong Kong’s de facto sovereign wealth fund to boost investment in the tumbling domestic stock market. Eddie Yue, head of Hong Kong’s de facto central bank, said on Monday that the move would be counterproductive, adding there was “almost no place in the global market” where foreign exchange reserves were used to invest in the domestic market.

CFTC to Hold a Commission Open Meeting on February 15
Commodity Futures Trading Commission Chairman Rostin Behnam today announced the Commission will hold an open meeting on Thursday, February 15 at 12:30 p.m. (EST) at the CFTC’s Washington, D.C. headquarters. Members of the public can attend the meeting in person, listen by phone, or view a live stream at CFTC.gov.

Statement of Commissioner Kristin N. Johnson: The Importance of Financial Market Transparency for Systemic Risk Management
Transparency is an integral component of the regulatory framework that ensures the safety and soundness and enduring preeminence of our financial markets. Our statutory mandate expressly directs the Commodity Futures Trading Commission’s (Commission or CFTC) mission to “ensure the financial integrity of all transactions subject to [the Commodity Exchange Act] and the avoidance of systemic risk” and today, consistent with this mandate, the Commission seeks to enhance oversight and improve visibility through well-calibrated data collection approaches.[1]

Dissenting Statement of Commissioner Caroline D. Pham on SEC-CFTC Joint Final Rule on Form PF
I respectfully dissent from the Joint Final Rule on Form PF and Reporting Requirements for All Filers and Large Hedge Fund Advisers that is being issued together with the U.S. Securities and Exchange Commission (SEC) (SEC-CFTC Joint Final Rule on Form PF or Joint Final Rule) because, overall, the rule does not achieve its stated purpose to improve systemic risk monitoring because it will obscure hidden risks and unacceptably increase costs for American savers.

Joint Statement of CFTC Commissioner Caroline D. Pham and SEC Commissioner Mark T. Uyeda: Memorandum of Understanding Between the SEC and the CFTC Regarding the Use of Form PF Data
The U.S. Securities and Exchange Commission (“SEC”) and the U.S. Commodity Futures Trading Commission (“CFTC”) have entered into a memorandum of understanding (“MOU”), under which the SEC will grant the CFTC unrestricted access to all data submitted by all Form PF filers.[1] Because the MOU contains a number of deficiencies, we dissent.

Commissioner Pham to Speak at EUROFI Ghent 2024
Commissioner Caroline D. Pham will participate on a panel titled “AI and Data Frameworks: Main Priorities Ahead in the Financial Sector” at The EUROFI High Level Seminar 2024.

SEC Adopts Amendments to Enhance Private Fund Reporting
The Securities and Exchange Commission today adopted amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds, including those that also are registered with the Commodity Futures Trading Commission (CFTC) as commodity pool operators or commodity trading advisers. The amendments, which the CFTC concurrently adopted, are designed to enhance the ability of the Financial Stability Oversight Council (FSOC) to monitor and assess systemic risk and to bolster the SEC’s oversight of private fund advisers and the agency’s investor protection efforts. The SEC and CFTC also agreed to a memorandum of understanding related to the sharing of Form PF data.

Statement on Final Joint Amendments to Form PF
Chair Gary Gensler – SEC
Today, the Commission voted to adopt amendments to Form PF, an important reporting tool whereby the Commission and the Financial Stability Oversight Council (FSOC) receive reporting from private fund advisers. I am pleased to support the adoption because it will improve the quality of the information we receive, particularly from large hedge fund advisers. This will help the SEC and FSOC to better assess systemic risk and protect investors.

Joint Statement of SEC Commissioner Mark T. Uyeda and CFTC Commissioner Caroline D. Pham: Memorandum of Understanding Between the SEC and the CFTC Regarding the Use of Form PF Data
Commissioner Mark T. Uyeda and Commissioner Caroline D. Pham – SEC
The U.S. Securities and Exchange Commission (“SEC”) and the U.S. Commodity Futures Trading Commission (“CFTC”) have entered into a memorandum of understanding (“MOU”), under which the SEC will grant the CFTC unrestricted access to all data submitted by all Form PF filers.[1] Because the MOU contains a number of deficiencies, we dissent.
Form PF was adopted jointly by the SEC and the CFTC in 2011[2] pursuant to the Dodd-Frank Act.[3] The joint adoption is reflective of the fact that some SEC-registered investment advisers also are required to register with the CFTC as commodity pool operators (“CPOs”) or commodity trading advisors (“CTAs”).[4]

Statement on Form PF; Reporting Requirements for All Filers and Large Hedge Fund Advisers
Commissioner Mark T. Uyeda – SEC
The latest Form PF amendments – the second set of substantive additions within a year – further expand the scope and granularity of information that private funds must report. The comment file is replete with substantive criticism of the expanded reporting requirements. Administrative agencies like the Commission have an obligation to consider and respond to significant comments received during the period for public comment.[1] Regrettably, the Commission dismisses those concerns with assumptions and unsupported conclusory statements.

Sixteen Firms to Pay More Than $81 Million Combined to Settle Charges for Widespread Recordkeeping Failures; The Huntington Investment Company self-reported and was ordered to pay lower civil penalty than other firms
The Securities and Exchange Commission today announced charges against five broker-dealers, seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.

Curiouser and Curiouser: Statement on Amendments to Form PF to Amend Reporting Requirements for All Filers and Large Hedge Fund Advisers
Commissioner Hester M. Peirce – SEC
I write to dissent from the latest unwarranted expansion of Form PF. These revisions stem from the Commission’s unbridled curiosity rather than from a legitimate regulatory objective. In 2010, Congress established the Financial Stability Oversight Council (“FSOC”) and charged it with, among other things, “identify[ing] risks to the financial stability of the United States.”[2] Congress directed the Securities and Exchange Commission (“SEC” or “Commission”) and the Commodity Futures Trading Commission (“CFTC”) (collectively, “Commissions”) to provide some of the information FSOC would need to fulfill its duties, and so in 2011 Form PF was born.[3]

NFA permanently bars Florida-based commodity pool operator Bit5ive Mining Fund Advisor, LLC from membership
NFA has permanently barred Bit5ive Mining Fund Advisor, LLC (Bit5ive Advisor), an NFA Member commodity pool operator (CPO) located in Doral, Florida, from NFA membership and from acting or being listed as a principal of an NFA Member.

Shifting the dial on financial crime requires a collective push
Mark Francis – FCA
This week we’ve published Reducing and preventing financial crime an update on the progress we’ve made over the past 18 months, and a look at the challenge ahead, focusing on 4 areas in greater depth. I’d urge firms – as well as trade bodies, big tech companies, social media platforms, regulatory and enforcement partners – to read it, and think about the actions we can all take to help tackle financial crime. Financial crime is never victimless. It costs firms and consumers, damages the integrity of our markets and undermines our international competitiveness. That’s why fighting financial crime is a key focus of our strategy. The subsequent national Economic Crime Plan 2 and Fraud Strategy establish actions for both public and private sector parties, with an ambition to reduce financial crime, and we have a key role to play in achieving that goal.

Court finds Block Earner crypto product needs financial services licence
The Federal Court has found fintech company Block Earner engaged in unlicensed financial services conduct when offering its crypto-backed Earner product. From March 2022 to November 2022, Block Earner offered consumers the Earner product which allowed them to earn fixed yield returns from different crypto-assets.

Investing and Trading

Meme Traders Fuel 2,650% Spike in Battered Holographic-Tech Company
Bailey Lipschultz – Bloomberg
A battered Chinese company that’s developing holographic technology captured the attention of the meme stock crowd. The prize: a 2,650% jump. MicroCloud Hologram Inc. soared as high as $41.53 Thursday from a $1.50 record low earlier this week, with more than $1.7 billion in shares traded as posts about the stock pop up across platforms like Reddit’s WallStreetBets and StockTwits. Even with the eye-popping move, shares remained 67% lower than a January 2023 high with a trading history that resembles the odds at a horse-track.

BofA Says State Funds Drive Biggest-Ever China Stock Inflows; Nearly $20 billion rushed into China shares during last week; Officials ramp up market intervention to stem stock rout
Henry Ren – Bloomberg
Funds tracking the topsy-turvy Chinese stock market just recorded their biggest-ever weekly inflows, according to Bank of America Corp. strategists. A record $19.8 billion poured into funds focused on Chinese stocks in the week through Feb. 7, a splurge likely driven by state-backed investors, a BofA team led by Michael Hartnett wrote in a note Friday. That accounted for almost all of the $20.8 billion – an all-time-high – that flooded into emerging-market equities, the strategists said, citing EPFR Global data.

Can Dividend Investing Rise From the Dead? The once-blockbuster strategy of picking big payers has been battered by growth-focused tech titans
Jon Sindreu – The Wall Street Journal
Amid a confusion of artificial-intelligence narratives, “quant” analyses, and sustainable funds, the oldest and simplest stock-picking strategy-dividend investing-lies almost forgotten. There might be ways to dust it off. Ever since the 2008-09 financial crisis, investors have sneered at getting cash back. U.S. equities with dividend yields above 5% have returned roughly 450% since the end of 2008, below the 640% gain of the wider S&P Composite 1500. Companies that don’t pay dividends have returned nearly 1,200%.

ECB Warns Banks to Grasp Real Estate Risks or Face Capital Hits; Commercial real estate is a key focus for ECB supervisors; Contagion spreading to European banks as values plunge
Nicholas Comfort – Bloomberg
The European Central Bank is signaling to lenders that they may face higher capital requirements if they have an insufficient handle on risks they face from commercial real estate, according to people familiar with the matter. The watchdog is placing greater emphasis on the management of commercial property risks, in a dialog with banks that comes before the annual bar for their financial strength is set, said the people, who asked to remain anonymous as the discussions are private.

Magnificent or Marxist? Passive Investing Is Back on Trial; Index funds keep blowing what looks like a bigger bubble in the giant tech stocks. Buying at any price simply isn’t good capitalism.
John Authers – Bloomberg
Marxism and Passive Investing: A Jaded View
Passive investing is back in the crosshairs. “I view the markets as fundamentally broken,” David Einhorn, the master value investor who runs Greenlight Capital, said on Barry Ritholtz’s Masters in Business podcast. “Passive investors have no opinion about value. They’re going to assume everybody else has done the work.” Meanwhile, Charles Gave of Gavekal Research avers in as many words that “indexation will destroy capitalism.”

How not to pick stocks; Our columnists enter the FT’s stockpicking contest, and are embarrassed. But they’ve got more ideas!
Financial Times Podcast

UK pension funds lost £425bn in year of bond market crisis; Schemes registered a new quarter drop in asset value in 2022 driven by mini-Budget turmoil, finds Pensions Regulator
Josephine Cumbo – Financial Times

Environmental, Social and Corporate Governance

New York City Is Considering a Laundry Pods Crackdown; Laundry and dishwasher detergent pods made with polyvinyl alcohol, or PVA, contribute to plastics pollution in US waterways.
Kendra Pierre-Louis – Bloomberg
New York City is considering limiting the types of laundry and dishwashing detergents available in the five boroughs. City Council Member James Gennaro, a Democrat, introduced a bill on Thursday that would make it illegal to sell or distribute detergent pods or laundry sheets that contain polyvinyl alcohol, also known as PVA or PVOH. If approved, the bill would take effect on Jan. 1, 2026. While detergent pods and sheets “dissolve” in the wash, PVA is ultimately a type of plastic.

British firm tries and fails to get EU to undo oxo-degradable plastics ban; A London-based material innovation company’s legal challenge to the EU’s ban on oxo-degradable plastics, which was implemented in 2019 due to pollution concerns, has failed.
Sarah George – edie
Symphony Environmental filed a lawsuit at the Court of Justice of the European Union (CURIA), alleging that the ban is not compatible with existing business competition law and that, in designing the ban, legislators were misled over the lifecycle impacts of oxo-degradable plastics. Oxo-degradable plastics are plastics designed to break down in open environments, landfills, industrial composting facilities, and water. Proponents claim that they do not result in microplastic pollution or toxicity, whereas the EU’s lawmakers heard prior to the ban that they only break down to a certain extent, leeching plastics into the environment.

Microsoft-Backed Clean Jet Fuel Startup Fires Up New CO2 Converter; Twelve took a major step toward creating aviation fuel from captured CO2 and water, which it plans to sell to airlines in the coming years.
Michelle Ma – Bloomberg
Climate technology startup Twelve took a major step towards producing sustainable aviation fuel (SAF) on Thursday by launching its commercial-scale carbon transformation unit. The company will generate carbon credits for customers including Microsoft Corp. and Shopify Inc., in addition to producing clean jet fuel for Alaska Air Group Inc. Twelve is one of a number of emerging companies working on ways to transform captured CO2 into useful products. In the case of the Berkeley, California-based startup, its nascent technology will be critical to cleaning up one of the hardest-to-decarbonize sectors: aviation.

California’s Biggest Ports Are Deploying Air Pollution Capture for Ships; Startup STAX is using what’s essentially a range hood for ships that can help carriers meet the state’s strict pollution standards.
Michelle Ma – Bloomberg
At first glance, the Ports of Los Angeles and Long Beach look like any others in the world. Among the world’s busiest, the neighboring facilities hum with massive container ships, tankers and auto carriers making their way in and out and cranes swinging containers onto waiting trucks. But at the Port of LA, a curious companion is making itself at home next to docked boats: a bright green barge with a massive 270-foot bendable arm hovering over a container vessel’s smokestack holding a system of hoses, filters and pumps collecting exhaust like a giant range hood.

US Plan to Refill Oil Reserve Hits Snag as It Shuns Some Light Crudes
Lucia Kassai – Bloomberg
The formidable task of refilling the world’s largest government oil stockpile is like mixing oil and vinegar. Only in this case, the vinegar is actually just more oil – a super-thin crude from South Texas. While the US is under pressure to quickly inject American oil back into its depleted emergency reserves, the Energy Department is shunning some of the so-called light crude for which the nation is known. That’s because very thin oil, such as that produced in Texas’s Eagle Ford basin, doesn’t blend well with the denser, mostly imported varieties currently sitting in the stockpile.

Barclays to adopt fresh curbs on oil and gas financing
Simon Jessop and Sinead Cruise – Reuters

In other news: Wyoming’s struggle to embrace federal clean energy funding contrasts with its investments in carbon sequestration and hydrogen schemes, despite limited clean-energy options, according to Inside Climate News. California’s offshore wind ambitions face opposition from marine sanctuaries, highlighting challenges in balancing clean energy development, conservation, and tribal interests, Bloomberg reports. Inside Climate news reports on the Tijuana River crisis and how it underscores cross-border sewage threats to San Diego’s public health. Reuters had a story on environmental concerns raised by Pemex’s methane leaks in Mexico’s Gulf of Mexico operations. In news overseas, the Financial Times detailed Labour leader Keir Starmer’s significant reduction in green spending and how it reflects fiscal constraints. Bloomberg reported on Germany’s delay in implementing stringent ESG laws. The Financial Times discusses how Oersted’s retreat from offshore wind markets signals challenges in renewable energy sectors. Japex eyes the US for energy exploration, Reuters reports. And finally, edie reported that record participation in Veganuary underscores growing interest in veganism.


Goldman Sachs faces probe over fees charged for futures trading- Bloomberg News
Wall Street investment bank Goldman Sachs (GS.N) is facing an investigation over fees it charges for futures trading, Bloomberg News reported on Thursday, citing people familiar with the matter. Top US financial regulator Commodity Futures Trading Commission (CFTC) has privately authorized sending subpoenas to Goldman for information about fees charged for some futures block trades, the report said, adding the probe stems from a whistle-blower tip.

Barclays Gives Dozens of Bankers Nothing in Grim Bonus Round
Jan-Henrik Forster and Dinesh Nair – Bloomberg
Barclays Plc is planning to hand dozens of investment bankers no bonus as the slowdown in dealmaking forces it to cut payouts for a larger-than-usual group of its lowest performers. Executives are also planning to shrink the firmwide bonus pool amid a persistent slump in dealmaking and capital markets activity, according to people familiar with the matter. Junior bankers largely won’t be impacted by the moves and top dealmakers might still see an increase of as much as 10%, the people said, asking not to be identified discussing personnel information.

Lex Populi – NatWest’s quest to shake off state ownership; Bank lacks a permanent boss and its shares are down nearly 30 per cent in the past 12 months
Financial Times
Don’t tell Sid. The UK government’s bid to broaden the share-buying populace, through the proposed partial sale of its 36 per cent holding in NatWest, is a far cry from the glory days of the 1980s and 1990s. In that era, under then-prime minister Margaret Thatcher, a host of utilities and other one-time monopolies passed from public to private hands. TV viewers were carpet-bombed by ads – most famously featuring Sid, whom a cast of Brit stereotypes were urged to tell about the offer of shares in British Gas.

Barclays to buy most of Tesco’s banking business for £600mn; Disposal is latest sign that UK supermarkets are unwinding a previous push into financial services
Oliver Ralph and Akila Quinio – Financial Times
Barclays has agreed to buy the bulk of Tesco’s banking business in a £600mn deal, as UK supermarket chains accelerate their retreat from an ill-fated expansion into financial services. Barclays said on Friday that it would take on Tesco Bank’s credit cards and unsecured personal loans, totalling about £8.3bn of lending balances.

Hedge-Fund Short Sellers Revel in Hidden Cash Perk Like 2007
Justina Lee and Lu Wang – Bloomberg
Hedge funds are paid big bucks for making smart market bets. Yet these days, a simple feature of the financial plumbing – largely overlooked on Wall Street during the low interest-rate era – is helping juice industry returns. It’s the tidy income the masters of the universe are enjoying just on their cash proceeds after shorting stocks, all thanks to the highest federal funds rate since 2007. When the fast-money set bets against a company, it sells borrowed shares, resulting in a pile of cash that is held as collateral with their prime broker. That cash earns interest, known as a short rebate.

Bill Ackman defends online activism as he plans fund launches; Hedge fund investor says he is not distracted while looking to raise tens of billions of dollars
Stephen Gandel and Ortenca Aliaj – Financial Times

Work & Management

AI Is Driving More Layoffs Than Companies Want to Admit; By one tracker, US firms have announced 4,600 job cuts since May related to artificial intelligence.
Jo Constantz – Bloomberg
United Parcel Service Inc.’s largest layoffs in its 116-year history were made possible, in part, by new technologies including artificial intelligence, CEO Carol Tomé said last week. Citing one example, she said that machine learning allows salespeople to put together proposals without having to ask pricing experts for guidance. UPS is among a growing number of companies facing an AI two-step of sorts: Showing investors how AI helps do more with less while simultaneously avoiding the fear-mongering that comes with directly linking technology with job cuts. A UPS spokesperson later said AI is not replacing workers, and that executives did not make an explicit connection between AI and the permanent layoffs on the company’s earnings call.

Remote work jobs are disappearing before our eyes
Jane Thier – Fortune (subscription required)
Forget the fact that nearly every expert insists that flexible work arrangements-guided principally by employee desires-are the way of the future. Disregard, too, the fact that many workers insist they’re more productive working from home-and more likely to feel empowered to do their best work under a boss who allows them to work where they want. And pretend you don’t know that return-to-office mandates are near-universally reviled and lead to rapid retention issues, bitter company culture, and swelling resentment-with worsened productivity to boot.

Wellness Exchange

Thousands of England doctors to strike again as health likely a key UK election issue
Pan Pylas – Associated Press
Thousands of doctors in the early years of their careers in England are to go on strike later this month for another five-day stretch as their long-standing pay dispute with the British government remains in stasis. The British Medical Association, the union that represents the so-called junior doctors, said on Friday that the government had “failed to meet the deadline to put an improved pay offer on the table” and that they would go on strike from Feb. 24 to Feb. 28. The junior doctors, who form the backbone of hospital and clinical care as they train up to be specialists in a particular field, have walked off the job on nine occasions over the past year and last month they went on strike for six days, the longest in the history of the state-funded National Health Service.


China Stock Rebound Shows Cracks, Spoiling Traders’ Holiday Mood
Ishika Mookerjee – Bloomberg
A small-caps crash. Dizzying rebounds. And cooling gains. Yet another wild week for Chinese stocks has left investors yearning for more policy support as they remain unconvinced the market has reached a bottom. Beijing’s intensified efforts to halt the equity rout helped the benchmark CSI 300 Index stage a sharp rebound but its gains slowed before the market shut for the Lunar New Year break. A slide in Hong Kong-listed Chinese shares on Friday further signaled that skepticism is still running high, dampening the holiday spirit.

BofA Says State Funds Drive Biggest-Ever China Stock Inflows
Henry Ren – Bloomberg
Funds tracking the topsy-turvy Chinese stock market just recorded their biggest-ever weekly inflows, according to Bank of America Corp. strategists. A record $19.8 billion poured into funds focused on Chinese stocks in the week through Feb. 7, a splurge likely driven by state-backed investors, a BofA team led by Michael Hartnett wrote in a note Friday. That accounted for almost all of the $20.8 billion – an all-time-high – that flooded into emerging-market equities, the strategists said, citing EPFR Global data.

China’s property crisis is starting to ripple across the world
Neil Callanan and Ainslie Chandler – Bloomberg
Chinese investors and their creditors are putting up “For Sale” signs on real estate holdings across the globe as the need to raise cash amid a deepening property crisis at home trumps the risks of offloading into a falling market. The prices they get will help finally put hard numbers on just how much trouble the wider industry is in. The worldwide slump triggered by borrowing-cost hikes has already wiped more than $1 trillion off office property values alone, Starwood Capital Group Chairman Barry Sternlicht said last week. But the total damage is still unknown because so few assets have been sold, leaving appraisers with little recent data to go on. Completed commercial property deals globally sank to the lowest level in a decade last year, with owners unwilling to sell buildings at steep discounts.

Revamp of Tax-Free Investments in Japan Spurs Jump in Accounts
Nao Sano – Bloomberg
The number of accounts opened at five major Japanese securities firms in January increased by more than 900,000 from the previous month as the nation’s new tax-exempt retirement savings system bolstered demand. SBI Securities Co., the largest online brokerage, saw the biggest number of account openings on record. They rose 274,000 on a net basis, while Rakuten Securities Inc. added approximately 280,000. Monex, Inc. saw a significant increase of about 320,000, due in part to transfers from its partner AEON Bank. Other securities companies also saw thousands of accounts opened.

As China woes mount, investment banks brace for more Asia job cuts
Kane Wu and Selena Li – Reuters
Job cuts at western investment banks in Asia are expected to increase this year as revenue pressures rise due to deepening economic and market turmoil in China, even as deal prospects brighten in Japan and India, headhunters and bankers said. A new round of staff cuts that began in late 2023 on the Chinese mainland and Hong Kong, key regional investment banking hubs, will gather pace in the coming months, they added.

Billionaire Adani Secures Ore for $1.2 Billion Copper Smelter
P R Sanjai and Swansy Afonso – Bloomberg

Oil prices would double if India didn’t trade with Russia, energy minister says
Filip De Mott – Business Insider

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The unsustainable hype around ESG

The unsustainable hype around ESG

First Read Hits & Takes John Lothian & JLN Staff Fifty years ago today, SEC Commissioner A.A. Sommer, Jr. issued a paper titled "The SEC in the Midst of Revolution." Here is a summary of his speech: The securities industry is undergoing a significant...