Inside Wall Street’s Playbook to Prevent Debt-Ceiling Chaos

May 25, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

Florida Governor Ron DeSantis chose a bad day to announce he was running for U.S. president. Not only was Twitter not up to the job, as the site had multiple technological failures during his announcement, but his joining the race was overwhelmed by news of the death of the Queen of rock and roll, Tina Turner.

Shaquille O’Neill has made a great effort to avoid being served with papers for lawsuits tied to the FTX collapse. So what does he do? He makes an appearance at the former FTX Arena, home of the Miami Heat, a team he once played for, during a playoff game. And what happens? He gets served with the papers from a FTX-related lawsuit in the former FTX Arena. Too funny!

Much has been made about people fleeing Illinois because of taxes or Chicago because of crime, but according to a Crain’s Chicago Business story one bank is increasing the number of advisors in its Chicago private bank catering to wealthy families and individuals. JP Morgan is planning on tripling the number of advisors over the next five years, and that is after a 25% jump in the last two years. As they say in accounting, follow the money.

The Financial Times has a Special Report titled “Africa’s Fastest Growing Companies.” The description of the special report is: “FT-Statista’s top 100, plus: global shocks test continent’s resilience; Nigeria leads; DRC solar offers hope; Egypt must reform to build on success stories; healthcare rises to dialysis challenge; the drive to digital; investors who do their research.”

The pandemic FINRA exam rules are changing for futures market participants. For those people taking the Series 3, Series 30, Series 31, Series 32 and Series 34 exams, beginning on Friday, June 9, FINRA is ending its interim accommodation process. Now, only certain individuals will be able to request online administration of the above-mentioned exams, including those “experiencing underlying health conditions or are immunocompromised and at an increased risk for severe illness; or those who live more than 150 miles from a test center.”

Family members of Ray Dalio, the billionaire founder of Bridgewater Associates, are in a battle against a neighbor in New York over the Dalios building a new 7th floor deck on top of their 6th floor unit in an 1880s former factory building converted to residential use in the 1970s. The construction has caused damage to the unit of a wealthy financier named Federico Pignatelli della Leonessa, who is none too pleased with the ongoing disruption to his life and damage to his apartment. The New York Times has the story.

Do you want to climb Mount Everest? Well, this year might not be the year to do so as the number of deaths on the mountain has soared after a record number of climbers have attempted to summit the world’s highest peak, Bloomberg reported. Eleven mountaineers have died over the past weeks after the Nepali government issued a record 478 permits. The worst year for death was 2014, when 17 people died, mostly from an avalanche. One factor in the rising deaths may be the rising age of climbers, who must pay $11,000 for a permit from Nepal. In 1960, the average age of a climber was 26.5; in 1980 it was 33 and in 2022 it was 42 years old. I am happy just climbing out of bed every day.

The Wall Street Journal has a story titled “Check Fraud Is Increasing. Here’s How to Protect Your Money.” The subheadline is “As swindlers target paper checks, take steps to secure your payments.” To which I reply, what is a check?

The fundraising campaign of Robbert Booij, CEO of ABN AMRO Clearing Bank NV, is off to a good start. He leaves on June 4th, joined by some ABN AMRO clients and colleagues, to cycle from Amsterdam to London for the Kilt Challenge as part of the IDA Gala Dinner. He has already raised £10,303, which is 82% of his £12,500 target. You can help him meet his target by donating HERE.

The first hydrogen index, the HYDRIX, has been published by EEX. It is the first market-based assessment for green hydrogen, according to EEX.

Today we have the last of the videos from FIA Boca 2023. We had a couple of videos that did not turn out because of audio problems caused by a faulty SD card. We apologize to those interview subjects and will find a way to make it up to you. We should start our OIC video coverage next week, if not tomorrow.

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


The top three stories in JLN Options yesterday were: Cboe prepares for European stock market listings grab and Shanghai International Energy Exchange has released its Announcement of Market Makers for Futures and Options and Volatility Rising on Debt Ceiling Debate. Unfortunately, the actual #1 story in JLN Options yesterday, “What Form of Magic Will Keep Citadel Happily Ensconced in Chicago,” was removed for some unknown reason by the site it was published on. ~JB


SMALL CAPS TELL US MORE. The Russell 2000 Index provides live index tracking data, with historical performance dating back to January 1984. Academic and practitioner research confirms that large-cap stocks behave differently to small-cap stocks and performance is variable. There are sub-periods during which the Russell 1000 outperforms the Russell 2000 and vice versa. Quarterly performance assessments provide valuable datapoints for understanding market sentiment and US economic activity. Read now: Russell 2000 Index Quarterly Chartbook Q1 April 2023 (


Cboe Global’s Howson on the exchange’s expansion in the Asia-Pacific and how it’s celebrating 50 years

JLN spoke at FIA Boca 2023 with David Howson, president of Cboe Global Markets, about the company’s most recent activities and how it would be celebrating 50 years in business.

Watch the video »


We should all be worried about the ‘financialisation’ of our world; When debt and asset prices have surged before, it has typically produced political implosions
Gillian Tett – Financial Times
Shut your eyes and try to visualise $160tn. It might seem impossible. Those zeroes in $160,000,000,000,000 – which almost take up a line by themselves – are enough to make anyone dizzy. But right now we should try anyway because a new report about the state of the world’s balance sheet (that is, its assets and debts relative to growth) contains a startling finding. Number crunchers at the consultancy McKinsey believe that, since 2000, the world’s stock of paper wealth (the speculative, unrealised price of all its financial assets) has jumped by some $160tn. Yes, really.

****** And this is why I am a student of history.~JJL


Wednesday’s Top Three
Our most clicked item Wednesday was the video on YouTube for “Dear Marjorie,” written and performed by John’s nephew Andrew Lothian in honor of the passing of John’s mother, Marjorie Lothian. Second was a tie between Cboe prepares for European stock market listings grab, from the Financial Times, and Around 50% of prop trading firms are considering moving operations out of European markets due to Mifid complexity, Acuiti report finds, from The Trade News. Third was Chicago’s new Mayor Brandon Johnson is already bad for business from the New York Post, which was our top story Tuesday.


MarketsWiki Stats
27,328 pages; 244,900 edits
MarketsWiki Statistics


Lead Stories

Inside Wall Street’s Playbook to Prevent Debt-Ceiling Chaos; Default on U.S. Treasurys might not stop the bonds from trading as industry looks to limit damage
Sam Goldfarb – The Wall Street Journal
Wall Street is breaking out its doomsday playbook for how to survive a U.S. default. The industry’s primary goal: keep the financial markets functioning. Many fear everything from computer glitches to cascading panic if the U.S. misses payments on Treasurys, which are a bedrock of trading and usually considered almost as safe as cash. Under Wall Street’s plan, though, investors would be able to keep trading all U.S. Treasurys, even those with past-due interest or principal payments. Chaos and confusion would be kept at bay through a series of conference calls, each with an agenda already organized by the Securities Industry and Financial Markets Association trade group.

Regulating artificial intelligence is a 4D challenge; Experts warn of existential threats that require a global competition for good ideas
John Thornhill – Financial Times
The leaders of the G7 nations addressed plenty of global concerns over sake-steamed Nomi oysters in Hiroshima last weekend: war in Ukraine, economic resilience, clean energy and food security among others. But they also threw one extra item into their parting swag bag of good intentions: the promotion of inclusive and trustworthy artificial intelligence.

Investors are so horny for AI that they’ve invested $175mn in OpenAI’s VC fund; Summer of Sam Altman
Robin Wigglesworth – Financial Times
Ground zero for the current AI mania – ChatGPT parent OpenAI – might be owned by a non-profit, but it’s shown some serious human intelligence in finding ways to squeeze money out of the hype it has helped stir. The main way was obviously a complicated $10bn investment from Microsoft, but that was over multiple years and mostly paid for with computing power to fuel its chatty bots, rather than cold hard cash.

Hong Kong throws open the doors to cryptocurrency even as debate rages on whether it’s a security or commodity
South China Morning Post
The debate over whether cryptocurrencies are securities or commodities has continued among regulators in the US as it would determine which agency assumes primary oversight of digital assets.And the confusion persists, with chairman of the Commodity Futures Trading Commission (CFTC) Rostin Behnam in March calling the ether token a commodity during a congressional hearing, while the US Securities and Exchange Commission (SEC) Chairman Gary Gensler argued that every cryptocurrency other than bitcoin falls under securities laws.

Switzerland speeds up work on liquidity backstop after Credit Suisse crash
The Swiss government on Thursday moved to speed up work on extending a public liquidity backstop Credit Suisse received access to in March under emergency rules to other systemically important banks and make it a permanent part of regulatory framework.

UK crypto fraud losses jump 40%; Data from national reporting agency for cyber crime shows £300mn in losses over past year
Siddharth Venkataramakrishnan – Financial Times
UK losses to crypto fraud increased more than 40 per cent over the past year, surpassing £300mn for the first time, according to Britain’s fraud reporting agency. Law firms said the data, provided by Action Fraud, reflected the scale of cyber crime and the high-profile collapse of crypto exchange FTX last year that triggered a wave of losses among retail investors.

Tradeweb set to acquire Australian electronic trading platform Yieldbroker; The move will help bring increased liquidity, transparency and efficiency to Australian and New Zealand fixed income markets.
Wesley Bray – The Trade
Tradeweb Markets has entered into a definitive agreement to acquire Australia-based Yieldbroker, a government bond and interest rate derivatives trading platform covering the institutional, wholesale and primary markets. The transaction will leverage both firms’ trading solutions and industry experience to create more liquid, transparent and efficient fixed income markets.

FX Market Approaching Last UMR Test: Is Change Upon Us?
Colin Lambert – The FullFX
When phase 6 of the uncleared margin rules (UMR) came into force at the start of September 2022, there was no ‘big bang’, in spite of some warnings to the contrary – now however, the first real test of firms now in scope of the regulation is fast approaching, with the end of the AANA (aggregate average notional amount) measurement window on May 31.

High-Tech Farm Startups Are Laid Low by Financing Drought, Pests; Ventures represent latest attempts by tech to transform established industries
Amrith Ramkumar and Patrick Thomas – The Wall Street Journal
Startups that promised to make farming a high-tech business are withering, suffering from rising costs, tight financing, pests and other problems that have troubled traditional agriculture for centuries.

Can Morgan Stanley pull off a bloodless succession? Longtime chief executive seeks to buck ‘horrific’ Wall Street record for handing over top jobs
Joshua Franklin and Laura Noonan and Arash Massoudi – Financial Times
Over an Italian dinner at Elio’s on New York’s Upper East Side two years ago, Ted Pick and Andy Saperstein promised each other that a brewing succession battle at Morgan Stanley would not devolve into the kind of back-stabbing common at other banks. Colleagues for 15 years, they had just been promoted to co-presidents, marking them out as leading contenders to eventually take over one of Wall Street’s biggest jobs from long-serving chief executive James Gorman.

Europe’s Banks Say They’re Back. So Why Doesn’t Anyone Buy Their Shares?
Steven Arons – Bloomberg
PacWest Bancorp lost $1 billion in one quarter, saw its stock drop 89% in two months, and has been selling assets to shore up confidence. Deutsche Bank AG just had its most profitable 12 months since 2007.

Solar power investment to exceed oil for first time, says IEA chief; Fatih Birol hopeful about 1.5C goal as clean energy spending forecast to hit $1.7tn this year
Tom Wilson – Financial Times
Solar power investment is set to outstrip spending on oil production this year for the first time, the head of the International Energy Agency has said, highlighting a surge in clean energy development that will help curb global emissions if the trend persists.

Celsius Names Fahrenheit as Winning Chapter 11 Bidder; Crypto lender has reached a deal to be managed by a group of investors led by TechCrunch founder Michael Arrington
Alexander Gladstone – The Wall Street Journal
Celsius Network, the bankrupt cryptocurrency lender, has reached an agreement to be managed by Fahrenheit LLC, a group of investors led by TechCrunch founder Michael Arrington.

Shaq appeared to make a joke about FTX on national TV, right before he was served – again
Will Gendron and Sindhu Sundar – Business Insider
During TNT’s broadcast of the NBA Eastern Conference Finals on Tuesday, Shaquille O’Neal hinted at his involvement in an FTX lawsuit while speaking to Stephen Curry – just hours before getting served. “Thanks for getting me in trouble,” O’Neal said to Curry, likely in reference to their joint involvement in the FTX case. “Don’t say nothing,” he continued, as both NBA legends fell into laughter.

The World’s Oil Map Is Being Redrawn by Rising Russian Flows to Asia
The global oil map is being redrawn as the long-run impact of western sanctions channels more barrels from Russia to Asia’s largest economies, with China also taking crude from Iran and Venezuela. China and India took more than 30% of their combined imports from the three states in April, according to data tracked by intelligence firm Kpler. That’s up from just 12% in February 2022, the month Russia invaded Ukraine.

People Living in US Cities Are More Financially Strained Than Suburbanites; Urban areas have bigger share living paycheck to paycheck; For six in 10 Americans, paycheck only covers monthly bills
Alexandre Tanzi – Bloomberg
Americans living in big cities are more likely to be financially strained than their suburban counterparts, according to a survey. Nearly 70% of urban dwellers were living paycheck to paycheck last month, compared with 55% of suburbanites, a survey by LendingClub Corp. found. At the same time, more wealthy people – who tend to live in large cities – are living paycheck to paycheck, and the cohort is growing especially in the West.

Canada Wildfires Raise Threat of Another Oil-Sands Shutdown; Energy analyst counsels clients to “pray for rain,” while Fort McMurray residents rehearse lessons learned from the 2016 blaze.
Kevin Orland – Bloomberg
Abetted by an unseasonably hot spring, hundreds of wildfires have ignited across the Canadian province of Alberta, choking the skies with smoke and forcing the evacuation of about 40,000 people. The blazes in Canada’s top energy-producing province have knocked out a fifth of the nation’s natural gas output at times and are expected to put a dent in economic growth numbers for the month of May.

Ukraine Invasion

Russia claims it ‘fully liquidated’ pro-Kyiv militias who crossed border; Kremlin embarrassed by two-day incursion on Russian territory
Max Seddon – Financial Times
Russia has claimed that its army “fully liquidated” pro-Ukraine militias who made a two-day incursion on its territory, an embarrassing episode that points to broader failures more than a year into President Vladimir Putin’s invasion. The apparent ease with which two Ukraine-based groups of far-right Russian nationals penetrated Russia’s border and temporarily “liberated” a village raised rare public criticism from local authorities, prompting the Kremlin to play down concerns.

Putin’s Central Bank Is Also on the Battlefield in Ukraine; Decorated military officer is Bank of Russia deputy governor; Belov runs field institutions providing funds to troops at war
President Vladimir Putin has increasingly put Russia’s economy on a war footing since his invasion of Ukraine. The central bank is also being enlisted for the fight under a decorated military officer installed as a deputy governor. Sergey Belov’s role in charge of what are known as “field institutions” that effectively channel funding from the state budget to combat troops draws little attention.

Swiss Back Sale of 25 Tanks to Germany to Support Ukraine Effort
Bastian Benrath – Bloomberg
Germany’s request to buy 25 mothballed Swiss Leopard 2 tanks, intended to make up for stocks it’s sending to Ukraine, won the support of Switzerland’s government. It voted in favor of decommissioning the tanks and selling them back to their maker Rheinmetall AG, as requested by Germany, the government said in a statement on Wednesday.

EU discusses plan to send profits from EUR196.6bn of frozen Russian assets to Ukraine; Officials explore legal route of using proceeds from funds stuck at settlement house Euroclear
Laura Dubois – Financial Times
The EU has discussed sending Ukraine the profits generated by billions of euros of Russian assets that are stuck inside the plumbing of global financial markets. Officials from member states and the European Commission met on Wednesday to explore options for siphoning off the interest generated by Russian assets held at Euroclear, the world’s biggest settlement house, according to people familiar with the matter.

Exchanges, OTC and Clearing

Court system in Cook County is so bad: Terry Duffy
FOX Business
CME Group Chairman and CEO Terry Duffy discusses Chicago’s potential transaction tax on businesses based in the city, the surging crime crisis and the banking sector.

Short Term Rate Benchmarks – Post LIBOR Regime by Bruce Tuckman 2023
LIBOR, the predominant family of global short-term rate benchmarks
for the past 40 years, ceased to exist in June 2023. Given the low
volumes of interbank loans on which LIBOR had been based, the revelations
that LIBOR had been manipulated, and the risks that countless
LIBOR-dependent financial instruments without fallback rates would
be cast into limbo, regulators over the last decade pushed to replace
LIBOR with risk-free overnight rate benchmarks.

ASX Enters Into Agreement To Sell Entire Investment In Yieldbroker
ASX is pleased to announce that it has entered into a binding agreement to sell 100% of its interest in Yieldbroker Pty Limited (Yieldbroker) to a wholly owned subsidiary of Tradeweb Markets LLC (Tradeweb) (Proposed Transaction).

Directorate Change
London Stock Exchange Group
LSEG announces that Anna Manz, Group Chief Financial Officer (CFO), has informed the Board that she has decided to step down from her role as CFO and Executive Director of LSEG in order to assume a CFO role outside the financial services industry. Anna will remain as CFO of LSEG for the duration of her 12-month notice period until May 2024. The process to identify her successor is underway and further updates will be made in due course.

The Kaliningrad region placed the third issue of national bonds ahead of schedule on Finuslugakh
Placement of the third issue of bonds of the Kaliningrad region for the population on the Finuslugi platform was completed in full ahead of schedule. The placement of the bonds was supposed to last until December 25, 2023.
million rubles.

Nasdaq Announces Mid-Month Open Short Interest Positions in Nasdaq Stocks as of Settlement Date May 15, 2023
At the end of the settlement date of May 15, 2023, short interest in 3,359 Nasdaq Global MarketSM securities totaled 10,456,611,754 shares compared with 10,469,054,205 shares in 3,390 Global Market issues reported for the prior settlement date of April 28, 2023. The mid-May short interest represents 2.97 days compared with 3.07 days for the prior reporting period.

TMX Group CEO John McKenzie to present at the Piper Sandler Global Exchange and FinTech Conference
TMX Group CEO John McKenzie will present at the Piper Sandler Global Exchange and FinTech Conference taking place at the Lotte New York Palace in New York on Thursday, June 8, 2023 at 8:00 a.m. – 8:30 a.m. ET. A link to the webcast will be available and archived in TMX’s shareholder events section.


FIA Tech Expands Reference Data-Sharing With LSEG
FIA Tech
FIA Tech, the futures industry’s leading technology provider, today announced that it has expanded its cooperation with LSEG’s data and analytics business, one of the world’s largest providers of financial market data, enabling reference data-sharing for joint customers.

big xyt launches new trade verification tool to improve ETF execution; The move has come in response to the pre-hedging debate, according to the business.
Claudia Preece – The Trade
big xyt has announced the launch of a new trade verification tool – an extension of its Open TCA solution – focused on execution analytics at both the pre- and post-trade stage. It allows users to rapidly verify “suspicious” trades, providing transparency and returns verification of price reversion and execution performance instantly on any trade or order.

OpenAI warns over split with Europe as regulation advances; ChatGPT maker’s chief Sam Altman voices ‘many concerns’ over bloc’s planned legislation
Richard Waters, Madhumita Murgia and Javier Espinoza – Financial Times
OpenAI chief Sam Altman has warned that Brussels’ efforts to regulate artificial intelligence could lead the maker of ChatGPT to pull its services from the EU, in the starkest sign yet of a growing transatlantic rift over how to control the technology.

Africa’s IT and fintech sectors sustain drive to digitalisation; Stimulus effect of the pandemic continues to be felt and much opportunity for growth remains
Ima Jackson-Obot and Golden Matonga – Financial Times
Africa’s push to digitalisation was already in motion before the emergence of coronavirus in late 2019 – and the latest FT-Statista ranking of the continent’s fastest-growing companies shows the continued advance of those in digital and related sectors.

Bloomberg upgrades its multi-asset automated trading offering to bolster client execution; The new enhancements follow a significant increase in the use of the company’s automated trading service, more than double what it was in 2021.
Claudia Preece – The Trade
Bloomberg has introduced a range of new developments – which include new tools and functionalities – to its Rule Builder (RBLD) solution, aiming to strengthen client execution by improving the efficiency of rules-based trading.

Dispersion Capital Opens $40M Fund for Web3 Infrastructure
Brandy Betz – CoinDesk
New crypto-focused venture capital firm Dispersion Capital has launched a $40 million fund focused on pre-seed and seed investments in Web3 infrastructure projects. Limited partners backing the fund included the venture capital arm of USDC issuer Circle, enterprise-focused crypto firm Ripple and Web3 infrastructure giant Alchemy’s investment arm.

A Chicago-centric angel investor’s message to the new mayor
Christopher Deutsch – Crain’s Chicago Business

Does anyone want a digital euro?
Michela Tindera and Martin Arnold – Financial Times


Chinese Hackers Targeting US, Guam Aim to Disrupt Communications, Microsoft Says; Group’s aim is to disrupt communications, researchers believe; Guam has become increasingly important strategic hub for US
Jamie Tarabay and William Turton – Bloomberg
A Chinese state-sponsored hacking group has stealthily gained access to infrastructure organizations in Guam and elsewhere in the US, with the likely aim of disrupting critical communications in the event of a crisis, according to Microsoft Corp. In a report published Wednesday, Microsoft said the group known as Volt Typhoon had been active since mid-2021, targeting organizations that span manufacturing, construction, maritime, government, information technology and education.

Chinese group has hacked critical US infrastructure, Microsoft warns; State-sponsored ‘Volt Typhoon’ campaign is alleged to seek disruption of communications links
Tabby Kinder – Financial Times
Microsoft has warned that a state-sponsored Chinese hacking group has compromised “critical” infrastructure in the US in order to disrupt communications between the country and Asia in the event of a crisis. In a rare announcement about a systems breach, the US technology group said the hackers, codenamed “Volt Typhoon”, have operated since mid-2021.


Hong Kong is world’s most crypto-ready jurisdiction, new study claims
Pradipta Mukherjee – Forkast
Hong Kong is the most crypto-ready jurisdiction in the world, based on the number of blockchain startups per 100,000 people and the number of crypto ATMs proportional to the population, according to a new study by foreign exchange education platform Forex Suggest.

Crypto Conglomerates, DeFi Targets of EU Financial Stability Watchdog Concerns
Jack Schickler – CoinDesk
The European Union’s financial stability watchdog has said that new regulations may be needed to cover large crypto conglomerates and smart contracts, as it warns that a growing digital asset and decentralized finance (DeFi) sector may come to pose a systemic risk to the economy.
/ CEO says US default would hit crypto initially
Andrew Mills – Reuters
A U.S. government default would trigger an initial pull-back from crypto currencies followed by a “push upward” the CEO of London-based crypto firm said on Thursday.

Stablecoin Market Shrinks for 14th Straight Month, Posing Potential Headwinds for Crypto Prices
Krisztian Sandor – CoinDesk
The stablecoin market is on track to shrink for the 14th consecutive month, a sign of capital draining from the digital asset space, and a troubling trend for the recovery of cryptocurrency prices. The total market capitalization of stablecoins dropped to $130 billion in May, falling to the lowest level since September 2021, digital asset data firm CCData noted Tuesday in a market report. The stablecoin market has been in a continuous decline since March 2022, per CCData.

Crypto Trading Platform Bitget to Offer Off-Exchange Settlement With Copper’s ClearLoop
Will Canny – CoinDesk
Crypto exchange Bitget will be partnering with custody firm Copper and joining the ClearLoop network, the company said in a statement Thursday. Bitget’s integration with ClearLoop will allow institutional clients of both companies to hold digital assets within Copper’s infrastructure while at the same time delegating those assets to trade on the exchange. Client assets are deposited on Copper’s platform and then linked to a Bitget account.

Fahrenheit Wins Bid to Acquire Assets of Insolvent Crypto Lender Celsius
Jack Schickler, Elizabeth Napolitano – CoinDesk

What is looping, the high-risk strategy producing 60% yields for crypto traders?
Ben Weiss – Fortune

The disgraced cofounder of failed crypto company Terraform Labs will remain in jail after his bail was reportedly revoked in Montenegro
Morgan Chittum – Business Insider

Why Gary Gensler can find a sympathetic crowd among Bitcoiners
Leo Schwartz – Fortune

Cathie Wood Thinks the U.S. Crypto Exodus Is Here. Is It?
David Z. Morris – CoinDesk

Japan to implement anti-money laundering rules for crypto: report
Pradipta Mukherjee – Forkast

Shaq Served Again in FTX Lawsuit … at Former FTX Arena
Joseph De Avila – The Wall Street Journal

Shaq Hit With Lawsuits Over Solana NFT Project, FTX During NBA Game
Andre Beganski – Decrypt


Crypto Insider Vows a $100 Million Lobbying Push
Joe Light – Barron’s
The push to create a pro-crypto public relations and lobbying campaign is ramping up, with the chief executive of a crypto research firm pledging to raise tens of millions of dollars and pleading with other industry officials for tens of millions more to promote crypto and attack its enemies.

Beware Elon Musk’s warped libertarianism; The billionaire entrepreneur’s AI initiative is disturbing in light of his selective approach to political and civic freedoms
Edward Luce – Financial Times
Future generations might say that the big event of 2023 was when Elon Musk thought of TruthGPT – the “maximum truth-seeking AI” he plans to launch. Musk is many things – brilliant engineer, massive risk-taker, overgrown adolescent. One thing he is not is someone who can be trusted with a technology that could assume God-like influence over our lives. Nor is anyone for that matter.

DeSantis Twitter Campaign Debut Shows Musk’s Embrace of Politics; Florida’s governor to use Spaces to announce presidential bid; Any political bias may spook advertisers – Disney among them
Alex Barinka and Aisha Counts – Bloomberg
Elon Musk’s plan to host Ron DeSantis’s 2024 presidential campaign announcement on Twitter will mean promotion of the live audio event to the billionaire’s more than 140 million followers on the platform he owns, underscoring the social network’s shift toward a more partisan approach to political discourse.

DeSantis: ‘Bitcoin Represents a Threat to the Current Regime’
Sam Reynolds – CoinDesk
The latest contender for the leadership of the Republican Party said he is an advocate for crypto. “The current regime, clearly, has it out for Bitcoin,” Ron DeSantis said during a Twitter space with Elon Musk and venture capitalist David Sacks in which he officially announced his bid for U.S. president. “And if it continues for another four years, they’ll probably end up killing it.”

Crypto Execs Give Washington Influence Another Go With FTX Anchor Around Necks
Jesse Hamilton – CoinDesk
When Washington, D.C., lawmakers tune into their favorite Sunday morning political shows this week, they’ll also get a dose of crypto messaging, thanks to a Coinbase (COIN) campaign that’s part of the next stage in the industry’s attempt to influence U.S. policy. But the efforts from Coinbase CEO Brian Armstrong and a push from Messari CEO Ryan Selkis to build a well-funded movement to steer future crypto rules will land in a U.S. capital still trying to swallow the disasters the fledgling industry provided in the last couple of years.

How much debt is too much? The US could quickly find out
Jeremy Warner – The Telegraph

Could $25 Billion in Social Security Payments Force a Debt-Limit Deal?; Millions of Americans are due a benefit payment next Friday; Yellen says ‘difficult choices’ loom if Treasury cash runs out
Laura Litvan – Bloomberg

Move Over, Murdoch. Musk’s Huge Fortune Makes Him Political Kingmaker; DeSantis set to announce campaign on Twitter Spaces with Musk; Musk hasn’t traditionally been a big political donor
Laura Davison and Amanda Albright – Bloomberg

Canada Wildfires Raise Threat of Another Oil-Sands Shutdown; Energy analyst counsels clients to “pray for rain,” while Fort McMurray residents rehearse lessons learned from the 2016 blaze.
Kevin Orland – Bloomberg

Democrats unanimously back debt ceiling discharge petition
Mike Lillis – The Hill

Russia Is a Bigger Problem for Saudis Than Oil Short-Sellers, Veteran Oil Analyst Says
Gerson Freitas Jr – Bloomberg


ESMA publishes recommendations for trading venues in the event of a market outage; As part of the opinion, venues should consider offering members an “order book purge” in the case where orders are compromised, ESMA has concluded.
Annabel Smith – The Trade
ESMA has today published its opinion on how trading venues should manage their operations and communication in the event of a market outage. The opinion follows a consultation which the regulator launched in September last year, following its commitment to providing more robust guidance around how venues should handle outage events.

CFTC Charges Five Defendants with Fraudulent Digital Assets Trading Scheme
Commodity Futures Trading Commission
The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Central District of California against David Carmona formerly of Elmhurst, New York, Juan Arellano Parra formerly of Chino, California, Moses Valdez of Hesperia, California, David Brend of Tampa, Florida and Marco A. Ruiz Ochoa of Nashua, New Hampshire, all jointly doing business as Icomtech.

Statement of Commissioner Kristin N. Johnson: Enforcement Action To Stop Bitcoin Fraud Targeting the Spanish-Speaking Community
Commodity Futures Trading Commission
Today, the Commodity Futures Trading Commission (CFTC or Commission) filed a Complaint in the U.S. District Court for the Central District of California against David Carmona (a/k/a/ David Segundo Carmona a/k/a Wuilver Segundo) (Carmona), Juan Arellano Parra (Arellano), Moses Valdez (Valdez), David Brend (Brend), and Marco A. Ruiz Ochoa (Ruiz) (together, Defendants), charging the Defendants with defrauding more than 170 individuals-a group of predominantly Spanish-speaking investors-out of hundreds of thousands of dollars.

Sustainable? Ethical? The substance must back up the claims
Paul Gregory – Financial Markets Authority
Regulators don’t decide ethics. From a regulatory perspective – and pending mandatory climate reporting requirements aside – it is acceptable for managed funds to do very little on environmental, social and governance (ESG) and sustainability provided they don’t pretend (or advertise) otherwise. But investors are different. Increasingly, they are looking for investments aligning with their values, or which at least don’t deliver an ethical shock. So, managed funds marketed as ethical or responsible are more attractive.

“Bear in the Woods” Remarks before the Investment Company Institute
Chair Gary Gensler – SEC
There is a saying when you’re in the woods. “You don’t have to outrun the bear; you just have to outrun one of your fellow campers.” A bit gruesome, yet this helps explain why investors might try to cash out of investments before the proverbial bear-of dilution and illiquidity-catches them. It also helps explain why savers might try to cash out of deposits before that proverbial bear catches them at the bank.

SEC Obtains Final Judgments Against Stock Promoter and Microcap Issuer in Penny Stock Fraud Scheme
The Securities and Exchange Commission obtained final judgments against a stock promoter and a microcap issuer for their roles in an $11 million penny stock fraud scheme first charged in August 2021.

Investing and Trading

Traders accused of ripping off taxpayers by colluding on UK bonds
Simon Foy – The Telegraph
Five of the world’s biggest banks have been accused of ripping off UK taxpayers after sharing sensitive information when trading government bonds. The Competition and Markets Authority (CMA) said it provisionally found that traders at Citigroup, Deutsche Bank, HSBC, Morgan Stanley and RBC colluded in chatrooms to swap sensitive information about UK bonds in the wake of the financial crisis.

Philippine Stock Exchange pushes short selling to lure hedge funds
Cliff Venzon – Financial Times
When an army of online traders decided in 2021 to take on Wall Street hedge funds that had shorted US video game retailer GameStop, a man in Manila was monitoring the mayhem that followed: Philippine Stock Exchange chief executive Ramon Monzon. Monzon is pushing to launch short selling in the Philippine stock market to attract foreign money, but local regulators have raised several concerns, including fears of the wild price swings that were seen during the GameStop frenzy.

Pray for gilt traders; Nightmare on Threadneedle Street
Robin Wigglesworth – Financial Times
Back in the financial crisis, Morgan Stanley’s analyst Andrew Sheets drew the above cartoon to show how tough things were for bond traders at the time. It came to mind looking at the market reaction to a third consecutive upside surprise in UK inflation, which has probably caused some gilt traders to evacuate their breakfasts this morning.

Debt-Ceiling Drama Has Some T-Bills Trading Like Junk Bonds; “The least-loved T-bills have discount yields that resemble the effective yields of several short-dated high-yield bonds.”
Tracy Alloway – Bloomberg
As the US inches closer and closer to a debt ceiling debacle, some short-term government bonds are trading like junk. T-bills maturing on June 1 – the so-called “X” or “drop dead” date at which the Treasury is expected to exhaust its borrowing capacity without an increase in the debt limit – are currently yielding more than 6%. That’s more than some corporate bonds sold by junk-rated companies.

Billionaire Reuben Brothers Win Battle Over Russian Fraud; Court ruled Elliot Daniloff must repay $25 million investment; David Reuben saw Daniloff as ‘younger version of himself’
Jack Farchy – Bloomberg
A New York court has found that the billionaire Reuben brothers were defrauded by a family friend of an old business contact who took $25 million of their money to invest in a Russian poultry business. The judgment is the culmination of eight years of legal action by the Reubens over the investment into a fund run by Elliot Daniloff – who, according to testimony heard in court, was viewed by David Reuben as “a younger version of himself.”

AI Intrigues ETF Managers as Both Investment and Tool; Artificial intelligence replaces crypto as next big thing; Inside ETFs conference also discusses diversifying client base
Isabelle Lee and Peyton Forte – Bloomberg

Metals Markets Face Grueling Summer as Chinese Demand Falters; Weakening in construction activity to hit copper and iron ore; Greener production to raise requirement for higher grade ore

Environmental, Social and Corporate Governance

Anti-ESG Campaign Triggers More Defections From Insurer Group; SCOR is fifth major insurer to quit NZIA after GOP attacks; Alliance is holding emergency talks to address the exodus
Alastair Marsh – Bloomberg
The French reinsurer SCOR SE is quitting the world’s main climate alliance for insurers, the latest in a string of defections as the industry reacts to a campaign by the Republican Party to put an end to coordinated ESG strategies. Chief Executive Office Thierry Leger announced the decision to exit during SCOR’s annual general meeting, a spokesperson said by email on Thursday.

*****Related news from Reuters, Insurance Journal and UNEP FI

UK fund giant L&G bets on Ecuador’s Galapagos debt experiment; Britain’s biggest asset manager buys $250mn of bonds in a sign of growing investor interest in debt-for-nature swaps
Kenza Bryan and Joe Daniels – Financial Times
The UK’s largest asset manager Legal & General has thrown its weight behind a landmark debt deal by Ecuador, in a sign of growing investor interest in swaps that shrink countries’ interest payments while raising money for environmental conservation. A unit of Legal & General Investment Management snapped up $250mn of the record-setting Galápagos deal in May – the largest ever so-called debt-for-nature swap – making it the largest cornerstone investor in the deal, it told the Financial Times.

Cities Must Be Redesigned for a Future of Extreme Heat; On this week’s Zero, Akshat Rathi talks to Eleni Myrivili, global chief heat officer for UN Habitat, about how cities can better cope with heat waves.
Akshat Rathi and Oscar Boyd – Bloomberg Zero (podcast)
By 2050, almost 70% of the world’s population will live in cities – and nearly 1,000 cities will see their average high temperatures reach or surpass 35C during summer months. That’s triple the number of cities experiencing those kinds of temperatures today, and alarming evidence of extreme heat’s growing impact on the viability of urban areas.

China Eyes Transition and Nature Taxonomies
Vibeka Mair – ESG Investor
The People’s Bank of China (PBOC) is working on a transition taxonomy and looking to create a nature-based taxonomy, according to Dr Ma Jun, Co-Chair of the UK-China Green Finance Centre. Speaking yesterday at the Net Zero Delivery Summit in London, Jun said the PBOC was drafting a transition taxonomy, covering four sectors: coal fired power generation, steel, cement and agriculture. At a local level in China, he said the municipality of Chongqing had just launched a transition taxonomy which had been so far used to finance 90 transition projects with subsidies. Jun also said that the PBOC would be looking to produce a nature-based taxonomy. In related news, Jun said a “common ground taxonomy” used by China and Europe could be expanded to Singapore, UK and maybe the ASEAN region.

Zimbabwe Bids to Be Africa’s Carbon Credit Trading Center; Pan-African carbon registry planned for Victoria Falls; Conference to be held in July to get African pact on registry
Godfrey Marawanyika, Ray Ndlovu and Antony Sguazzin – Bloomberg

Humanity Is Addicted to Plastic, but We Can Still Keep It Out of Our Oceans
Boyan Slat – New York Times (opinion)

Biden Pressed to Limit Hydrogen Credits Key to New Industry; Activists want tax incentive reserved for new, clean power; Advocates say restrictions could suppress industry’s promise
Jennifer A Dlouhy – Bloomberg


Credit Suisse withdraws attempt to protect staff bonuses; More than $400mn in deferred pay was wiped out after a state-orchestrated rescue by UBS
Owen Walker and Robert Smith – Financial Times
Credit Suisse has given up trying to save its staff bonuses that were wiped out following the bank’s rescue by its rival UBS. Just over $400mn of deferred pay for Credit Suisse middle managers was reduced to zero as a result of the state-orchestrated takeover and several bankers are preparing lawsuits against Finma, the Swiss regulator, over their losses, the Financial Times reported this week.

JPMorgan can sue former executive Staley over Epstein ties -US judge
Jonathan Stempel – Reuters
JPMorgan Chase & Co may move forward with its lawsuit seeking to hold former executive Jes Staley liable for concealing what he knew about the disgraced financier Jeffrey Epstein, a U.S. judge ruled on Wednesday. The ruling by U.S. District Judge Jed Rakoff in Manhattan means Staley, who is also a former Barclays Plc chief executive, could be on the hook for millions of dollars over his ties to Epstein, a JPMorgan client from 1998 to 2013.

Jes Staley must face JPMorgan’s Jeffrey Epstein claim, judge rules; Wall Street bank had accused its former executive of misleading it about his relationship with sex offender
Joe Miller – Financial Times
Jes Staley will have to face claims that he misled JPMorgan Chase about his relationship with Jeffrey Epstein after a New York judge denied the banker’s attempt to dismiss a lawsuit brought by his former employer. The 66-year-old, who spent more than 30 years at JPMorgan before being fired in 2013, was sued by the bank in March, seeking to make Staley liable for any damages awarded in two separate claims over JPMorgan’s decision to retain Epstein as a client for 15 years.

Mexico president says does not rule out buying part of Citi unit Banamex
Mexican President Andres Manuel Lopez Obrador said on Wednesday he does not rule out the possibility of the government stepping in to buy a part of U.S. bank Citigroup’s local retail unit, adding the government would have up to $3 million at its disposal. Citigroup announced earlier on Wednesday it will pursue an initial public offering of its Banamex unit instead of a sale, arguing it is the optimal path to maximizing value for shareholders.

Chicago wealth flight? One banking giant that ought to know says no.
Steve Daniels – Crain’s Chicago Business
If the wealthy are leaving Chicago, or even contemplating it, it’s news to the country’s largest bank. Over the next five years, JPMorgan Chase is planning to triple the number of advisers in its Chicago private bank catering to wealthy families and individuals. And that’s after a 25% increase in private bankers over the past two years. The JPMorgan private bank now has 100 advisers serving the market.

Former First Republic Employees Face DOJ Probe Over Stock Trades
Tom Schoenberg and Lydia Beyoud – Bloomberg

Citi’s $7 Billion Banamex Sale Scuttled After AMLO Intervenes
Jenny Surane and Michael O’Boyle – Bloomberg

Deutsche Bank and Citigroup Admit to Anticompetitive Practices
Mack Wilowski – Investopedia

Meet the pizza-loving diplomat behind Antigua News’s big Credit Suisse scoop; Flamboyant owner of obscure website claims files were “absolutely not secret”
Louis Ashworth, Robert Smith, Cynthia O’Murchu and Owen Walker – Financial Times

Work & Management

Fraud-Laden Pandemic Credit Causes Headaches for Buyers in Deals
Lauren Vella – Bloomberg Tax
Diligence is often one of the longest-and most expensive-parts of merger and acquisitions work. On the buyer’s side, a team dives deep into their target’s financial past to unearth any risky activity. These days, lawyers and accountants are discovering a new skeleton in targets’ closets: the employee retention credit.

Don’t Believe Your Lying Eyes in the AI Era; Technology will only get us so far in dealing with AI-generated photos, of which there will be many. We’ll all need to become more dubious.
Parmy Olson – Bloomberg
A fake photo of an explosion near the Pentagon went viral across Twitter on Monday, and stocks dipped. The incident confirmed what many have said for months: Misinformation is on course to be supercharged as new AI tools for concocting photos get easier to use. Fixing this problem with technology will be an endless game of whack-a-mole.

BofA to Ask About 40 Bankers in Asia to Find Jobs in Other Units
Cathy Chan and Pei Li – Bloomberg
Bank of America Corp. plans to ask about 40 bankers in Asia to look for jobs in other divisions as it looks to manage the industry-wide decline in dealmaking while trying to avoid headcount reduction, a person familiar with the matter said. About half of these client-facing roles are based out of Hong Kong with a focus on China, and the majority of the affected employees are in junior positions, the person said, asking not to be identified because the matter is confidential. A few positions in global markets may also be affected, the person said.

Wellness Exchange

Another Blow to the Return to Offices: Everyone’s Got Allergies; A rough season has people sneezing through meetings and apologizing to co-workers
Alyssa Lukpat – The Wall Street Journal
The most miserable allergy season in recent memory is filling offices with a symphony of coughs, sniffles and sneezes. The pollen has tormented employees-and any co-workers within earshot-as they constantly sniffle and interrupt presentations and meetings with coughing and sneezing fits.

Health care: Americans are increasingly delaying medical care due to cost
Adriana Belmonte – Yahoo Finance
The U.S. health care system is once again falling short for Americans. A new Federal Reserve survey found that 28% of respondents went “without some form of medical care” due to cost in 2022, which represented a 4 percentage-point year-over-year increase. The survey found that dental care was the most frequently skipped medical service, followed by a doctor’s visit, prescription medication, a follow-up visit, and mental health care or counseling.


China Buys More Australian Coal as Appetite for Quality Builds
Australian coal continues to make inroads among Chinese buyers, adding to pressure on domestic prices, with new shipments climbing to their highest level since Beijing halted imports in the fall of 2020. That ban ended at the start of this year and China’s appetite for the high-quality coal supplied by Australia is gaining momentum amid concerns that rising domestic production includes too much lower-grade fuel. Australian cargoes in April of mostly thermal coal for power plants surged 75% from the prior month to 3.89 million tons, according to Chinese customs data.

Heatwave Spells Trouble for Ringgit Bonds as Food Prices to Soar; A reduction in subsidies will add to inflationary pressures; Central bank delivered five rate increases in the past year
Matthew Burgess – Bloomberg
A stuttering rally in Malaysian government bonds may run into another roadblock as a heatwave sweeping across Southeast Asia threatens to drive up inflation. Benchmark yields are likely to face further upward pressure if faster price gains prompt Bank Negara Malaysia to tighten policy again. Turbulence in Treasuries fueled by the prospect of a US default may also stoke volatility in the near term.

Don’t Believe Your Lying Eyes in the AI Era; Technology will only get us so far in dealing with AI-generated photos, of which there will be many. We’ll all need to become more dubious.
Parmy Olson – Bloomberg
A fake photo of an explosion near the Pentagon went viral across Twitter on Monday, and stocks dipped. The incident confirmed what many have said for months: Misinformation is on course to be supercharged as new AI tools for concocting photos get easier to use. Fixing this problem with technology will be an endless game of whack-a-mole.

Zimbabwe Rules Out Free-Floating Currency After 26% Slump; Zimbabwe dollar has weakened 65% against US dollar this year; May need depreciation to get equilibrium with unofficial rate
Ray Ndlovu – Bloomberg
Zimbabwe has ruled out free-floating its local currency, a day after its dollar slumped 26% on the official market and a report urged looser foreign-exchange controls. Authorities in the country instead still support a “managed float” that countries around the world use for their currencies, said Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe’s Monetary Policy Committee.

Argentina to Restrict FX Access for Oil Companies’ Imports
Ignacio Olivera Doll and Jonathan Gilbert – Bloomberg
Argentina’s government will tighten access to the foreign exchange market for oil companies that need to import amid a severe shortage of dollars, according to people with direct knowledge. Central Bank President Miguel Pesce, Energy Secretary Flavia Royon and other officials informed oil company executives Wednesday morning that they will be required to finance import payments for 90 days, one person said.

US crude stockpiles post massive surprise drawdown -EIA

Downtown LA’s Office Distress Shows the Pain Coming for Cities; Brookfield has defaulted on three towers, while other landlords have sold for a loss or face foreclosure.
John Gittelsohn – Bloomberg


Journalists Increasingly Face Legal Threats, Say Press-Freedom Advocates
Joanna Sugden – The Wall Street Journal
Laws designed to prevent the spread of misinformation and disinformation are having an opposite and chilling effect, the president of the Committee to Protect Journalists said Wednesday, warning that some countries are using the rules to silence independent reporting.

Leon Black Wins Multi-Year Fight Over Ex-Model’s Allegations; Manhattan Judge ruled that an NDA covered their relationship; Black said that the case has been “exceptionally painful”
Heather Perlberg and Bob Van Voris – Bloomberg
Leon Black won a legal fight with a former model from Russia who claimed he sexually assaulted her, a case that riveted Wall Street and revealed intimate aspects of the billionaire’s life. The private equity titan for two years engaged in an escalating series of claims with Guzel Ganieva, who accused him of taking her to Florida to meet with Jeffrey Epstein and engage in sex acts.

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The Stock Market Has Rarely Been This Sleepy

Lead Stories The Stock Market Has Rarely Been This Sleepy Gunjan Banerji - The Wall Street Journal It's eerily calm out there in the stock market. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices...

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