Hits & Takes
By JLN Staff
JP Morgan has decided to extend banking services to cryptocurrency exchanges, including Gemini and Coinbase. The crypto crowd is sure to crow about the 180 turn from JP Morgan CEO Jamie Dimon’s comments about the legitimacy of bitcoin. What is shown is a maturation of the sector, which now features two different futures contracts, bitcoin and ether.
The next sector that needs banking services is the cannabis community. That will help both the banks and the companies in the cannabis industry.
Matt Scharpf‘s charity happy hour show on Thursday this week is a fundraiser for Misericordia. Tune in at 7 PM Chicago time on Facebook Live at @matthewscharpfmusic. Matt has raised more than $24,000 for charity since late March. His charitable efforts have not gone unnoticed throughout the industry and have generated widespread support. Join the fun!
I am surprised that, as much of a markets history buff as I am, I had never heard of Louis Bachelier before the CME Group adopted the Bachelier Options Model for certain energy contracts in April that preceded the move of WTI futures to negative prices. His PhD thesis, “The Theory of Speculation,” just yells for some higher level of notice.
This is another case of an unknown unknown.~JJL
The FIA is offering a webinar on May 15 on CME Group block trades during the COVID-19 pandemic. It is a rule and guidance refresher covering: CME, CBOT, NYMEX and COMEX Rule 526 and associated guidance; how the Market Regulation Block Team reviews block trades during the COVID-19 pandemic; and best practices for interaction with Market Regulation and the Block Trade Team. For further details and to register, go here. ~SR
The halving, a major event in the cryptocurrency markets, took place for the third time in bitcoin’s history yesterday. While this event is usually associated with major market shifts, including dramatic increases in volatility, this blog post from last week points out how the effects of this year’s halving might differ substantially due to the nascent bitcoin derivatives markets.~MR
ErisX Launches Ether Futures
ErisX Launches Ether Futures
John Lothian News
The cryptocurrency marketplace ErisX announced today that they are the first U.S. based exchange to introduce physically settled Ether futures contracts.
John Lothian News interviewed ErisX CEO Tom Chippas and ErisX Investor Joe Lubin of ConsenSys about the news and what this means for ErisX and the cryptocurrency trading world.
Reopening Won’t Work Until People Feel Safe; And that starts with their jobs.
Mark Gongloff – Bloomberg
Back in early March, when Taft was still president and “Peg o’ My Heart” topped the charts, Clara Ferreira Marques wrote a smart column comparing the economic hit of Covid-19 to a credit crisis, but with people: Stop the flow of people, and you stop the economy. Boy, was she ever right, we’ve learned in the eternal weeks since, with economic activity collapsing and U.S. unemployment spiking to Great Depression levels. Understandably, everybody wishes this had never happened and that we could just get the people flowing again. But most people will not willingly resume their normal flow until they feel safe.
*****Everything you do needs to be thoughtful. It needs to examine the risk versus the reward. The risks are too great to ignore. The reward is everything.~JJL
Bill Gates Has Regrets; Years before the Covid-19 pandemic, the billionaire tried to warn global leaders of the threat from new infectious diseases. Few listened. ‘I feel terrible.’
Betsy McKay – WSJ
Five years ago, Bill Gates warned that the biggest potential killer the world faced wasn’t war, but a pandemic. The billionaire spent hundreds of millions of dollars to find faster ways to develop vaccines and create disease-tracking systems. He urged world leaders to build national defenses against new infectious diseases.
*****Don’t beat yourself up, Bill. Just keep fighting the good fight!~JJL
How to Create a Pandemic Depression; Opening the economy too soon can backfire, badly.
Paul Krugman – NY Times
Last week the Bureau of Labor Statistics officially validated what we already knew: Just a few months into the Covid-19 crisis, America already has a Great Depression level of unemployment. But that’s not the same thing as saying that we’re in a depression. We won’t know whether that’s true until we see whether extremely high unemployment lasts for a long time, say a year or more.
*****Stay safe, stay the course.~JJL
Tudor Jones says this will be the ‘Second Depression’ if we remain in lockdown in a year
Yun Li – CNBC
Billionaire hedge fund investor Paul Tudor Jones said Monday the economy would be in a “Second Depression” if the coronavirus pandemic doesn’t get contained in a year.
*****Timing is everything. We have had more than one “depression.” But we have only had one “Great Depression.” ~JJL
Monday’s Top Three
Our most read story Monday was MarketWatch’s He started the day with $77,000 — by midnight, he owed $9 million, about Syed Shah, a 30-year-old day trader whose oil trading went spectacularly wrong. A close second was the Syed Shah story from Bloomberg, which actually had it first, Oil Crash Busted Broker’s Computers and Inflicted Big Losses. Third was Traders Are Baffled Why the Futures Market Is Pricing in Negative Rates, also from Bloomberg.
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|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.
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JPMorgan Extends Banking Services to Bitcoin Exchanges; Gemini, Coinbase are the bank’s first clients from the cryptocurrency industry
Paul Vigna – WSJ
JPMorgan Chase & Co. has taken on two well-known bitcoin exchanges, Coinbase Inc. and Gemini Trust Co., as banking customers, according to people familiar with the matter, the first time the bank has accepted clients from the cryptocurrency industry. The move is the latest in a string of positive developments for bitcoin and another sign that Wall Street is becoming more comfortable with the business of cryptocurrencies.
What the history of market crashes teaches us about the coronavirus crisis; Previous sell-offs offer a guide but nothing compares with scale of economic damage
Peter Oppenheimer – FT
The longest equity bull market in US history came to a dramatic end as a result of the coronavirus crisis, just a few weeks short of its 11th birthday. The sell-offs in equity indices that started in mid-February were swift, delivering the speediest fall by the benchmark S&P 500 index into a bear market — defined as a 20 per cent drop from a recent high — on record.
Investors struggle to hear signals from bond markets; Huge scale of Fed buying obscures once-reliable signs on the path of inflation
Colby Smith and Tommy Stubbington – FT
When the Federal Reserve stepped in to support the world’s largest debt market in March, fixed income investors were relieved. But in successfully staving off a more pronounced financial crisis, the Fed has further distorted markets, they say, overwhelming the once-reliable signals that bonds used to give about the path of the economy and inflation.
Never Say Never on Negative Rates; The Fed is showing reluctance to go negative, but such a move can’t be ruled out
Justin Lahart – WSJ
Futures markets imply the Federal Reserve will end up taking interest rates negative. Investors should be careful not to view that as an inevitability. But neither should they think it impossible. Last week, futures markets began pricing in the Fed taking overnight rates into negative territory by the end of this year. With Fed officials pushing back against the idea, those bets have moderated but haven’t gone away, with futures now pointing to rates going negative by June of next year.
World’s Biggest Wealth Fund Faces Record $37 Billion Withdrawal
Mikael Holter – Bloomberg
Development could trigger at least $12 billion in asset sales; Fund will need to dump bonds to meet rebalancing requirements
Norway plans to draw a record 382 billion kroner ($37 billion) from its wealth fund, forcing the world’s biggest sovereign investor to embark on an historic asset sale to generate cash.
Euronext extends consultation on shorter market hours; Market participants now have until 30 June to respond to Euronext’s market hours consultation due to the coronavirus pandemic disruption.
Hayley McDowell – The Trade
A consultation from pan-European exchange group Euronext on whether markets hours should be reduced has been extended by six weeks in light of the disruptions caused by the coronavirus pandemic, The TRADE understands.
NY Fed Says It Will Start Buying ETFs; Fed’s purchases are part of the central bank’s efforts to restore functioning to the financial markets during the coronavirus pandemic
Michael S. Derby – WSJ
The Federal Reserve Bank of New York said Monday that starting Tuesday one of its emergency market support facilities will begin buying corporate-bond exchange-traded funds, in a notable expansion of the central bank’s efforts to support the economy and financial system in the coronavirus crisis.
PNC Financial to Exit Full Investment in BlackRock
Regional bank owns about 20% of money manager BlackRock, will sell stake in secondary stock offering
Dawn Lim – The Wall Street Journal
BlackRock Inc.’s largest shareholder, PNC Financial Services Group Inc., said it is exiting its stake in the firm, ending a lucrative yearslong wager on the world’s largest money manager.
PNC Financial Services Group Inc. currently owns a roughly 22% stake in BlackRock.
PNC Financial first invested $240 million in BlackRock in 1995. PNC, which held on to a piece of the firm, got a steady stream of fees and profits from the asset manager’s meteoric growth in the last decade as BlackRock sucked up a growing share of money flowing into index and exchange-traded funds.
Boeing CEO Says a U.S. Airline Will ‘Most Likely’ Fold This Year
Julie Johnsson – Bloomberg
Boeing Co.’s top executive sees a rocky road ahead for U.S. airlines, saying it’s probable that a major carrier will go out of business as the Covid-19 pandemic keeps passengers off planes.
Burger King Owner Says Coronavirus May Change Restaurants Forever
Jonathan Roeder and Leslie Patton – Bloomberg
Restaurant Brands International Inc., the owner of Burger King and Tim Hortons, says the food-service industry needs to change “for the foreseeable future and possibly forever” after Covid-19.
FCA considers 12-month mortgage payment holiday – reports
Shekina Tuahene – MortgageSolutions.co.uk
The Financial Conduct Authority (FCA) is considering giving homeowners a 12-month break from mortgage payments by extending the payment holiday period, according to reports.
CEO Pay Up 940% Faces Its Coronavirus Reckoning; Corporate leaders are responding better than during the 2008 crisis, by moving to share their employees’ pain.
Clara Ferreira Marques – Bloomberg
Large institutions resist change, and nowhere more so than in the way they pay their bosses. Despite scandals and crises, executive compensation has remained too generous, too opaque and too loosely linked to long-term goals. The upheaval wrought by the Covid-19 pandemic provides the opportunity for a remake: Simpler, smaller packages with a more significant non-financial component would mark a welcome shift.
Norway’s central bank risks undermining trust in $1tn oil fund; Supervisory council of Norwegian politicians criticises the recruitment process for a new chief
Richard Milne – FT
Norway’s central bank risks undermining confidence in the country’s $1tn sovereign wealth fund through its mishandling of the recruitment of a new chief executive, its supervisory council has warned.
NYC Virus Lockdown Likely to Continue Into June, Mayor Says
Henry Goldman – Bloomberg
Regions less hit will be able to start reopening on May 15; Data show the city is ‘clearly not ready yet,’ de Blasio says
New York City’s lockdown is likely to continue into June, Mayor Bill de Blasio said Monday at a press briefing. The state has been under lockdown since March in an attempt to stop the spread of the novel coronavirus. New York Governor Andrew Cuomo has said that some regions of the state will be able to reopen beginning May 15, but that likely wouldn’t include hard-hit New York City.
The Miracle On Wall Street Is Doomed
Clem Chambers – Forbes
The market crashed and then it rallied. For those who hoped for a V-shaped recovery, here it is. Sadly it’s a fake. It’s not a recovery, it’s a rally. These are not the same. The world economy has not recovered nor is the market looking out to the future for a recovery. The market has bounced because the Federal Reserve has cornered the market with an impulse of money never seen outside of scenarios of hyperinflation such as the German, Hungarian and untold South American inflations of the past.
Fauci to Warn Senate of Needless Death If U.S. Reopens Too Fast
Laura Litvan – Bloomberg
Three witnesses, chairman in quarantine after virus exposure; Fauci plans to warn of ‘danger of trying to open’ prematurely
Top U.S. health officials will discuss how to safely restart the economy before a Senate committee Tuesday, with three of the four witnesses — including Anthony Fauci — and the panel’s chairman all appearing remotely because of potential exposure to coronavirus.
Singapore Rejects Herd Immunity as Strategy to Tackle Virus
Philip Heijmans – Bloomberg
Allowing widespread infection has ‘too big a price’: official; Total cases in the city-state rose past 24,000 on Tuesday
Singapore rejected “herd immunity” as a strategy in the fight against the coronavirus pandemic and signaled it instead will continue to contain transmission until a vaccine is ready.
The Virus Sent Millions of European Workers Home. Some Forever
Andra Timu – Bloomberg
Years of labor flowing into EU’s rich west being reversed; Officials in Bucharest, Kyiv, Belgrade want returnees to stay
After Covid-19 killed the elderly woman Mihaela Danaila had been taking care of for nine years in northern Italy, she joined a rush of about 1.3 million Romanians working abroad and headed home.
Sweden Revises Covid Strategy After Deaths of Elderly Spiral
Charles Daly and Christian Wienberg – Bloomberg
Sweden will adjust a key corner of its strategy for dealing with Covid-19, after the death rate at care homes spiraled out of control. The government of Prime Minister Stefan Lofven plans to spend about 2.2 billion kronor ($220 million) on ratcheting up staff levels to help protect the country’s oldest citizens. Another 2 billion kronor will go toward compensating local authorities for the extra costs they’ve incurred in dealing with the pandemic, the government said on Tuesday.
Bitcoin ‘halving’: What does the much-hyped event mean?
Bitcoin has just gone through a much-hyped adjustment that reduced the rate at which new coins are created. The world’s biggest cryptocurrency’s so-called “halving” happens roughly every four years. The digital currency relies on what are known as “miners”, who run software that races to solve complex maths puzzles in return for Bitcoins.
Majority Black Counties See Triple the Covid Death Rate
Jeff Green and Jackie Gu – Bloomberg
It has become increasingly clear that black Americans are dying at alarmingly high rates of Covid-19. But absent national statistics, the picture remains incomplete. Piecemeal data trickling out of cities and states have shown disproportionate death rates among African Americans, with an analysis of available state-provided figures by APM Research Lab putting the black death rate at 2.6 times higher than that of whites.
Coronavirus Doesn’t Care About Your Data Points; Bringing Covid-19’s effective reproduction number down is a worthwhile goal. That won’t stop bad things from happening anyway.
Mark Buchanan – Bloomberg
In nations around the world, the epidemiological number now getting all the attention is R, the effective reproduction number, which reflects the average number of new coronavirus cases resulting from a single infection. Germany estimates its R is now around 0.9, meaning the epidemic is waning there, if slowly. Estimates from two weeks ago in the U.S. put R in most states just above 1, which explains why the U.S. infection rate is still rising.
Shut casinos hit Caesars as COVID-19 puts gambling industry in survival mode
Sanjana Shivdas – Reuters
Caesars Entertainment Corp (CZR.O) missed quarterly revenue estimates on Monday as it shuttered its casinos amid nationwide lockdowns to contain the spread of the COVID-19 pandemic.
Exchanges, OTC and Clearing
Expansion of the Listing Schedule of Three (3) LNG Freight Futures Contracts
Value date for settlement variation to be added to IRSXV report – Effective June 01, 2020
To Clearing Member Firms
The IRSXV report is a CSV-formatted datafile (comma-separated values) which provides settlement variation amounts by position account and currency, for positions in interest-rate swaps and interest-rate futures being portfolio margined together with those swaps.
Warehousing 20 124 Delisting of Warehouse (11.82 KB)
TMX Group Limited Reports Results for First Quarter 2020
TMX Group Limited [TSX:X] (“TMX Group”) today announced results for the first quarter ended March 31, 2020.
TMX Group Limited Declares Dividend of $0.66 per Common Share
The Board of Directors of TMX Group Limited today declared a dividend of $0.66 on each common share outstanding, payable on June 12, 2020 to shareholders of record at the close of business on May 29, 2020.
SET Market Report For April 2020
The Stock Exchange of Thailand (SET) Index ended April at 1,301.66 points, gaining 15.6 percent from the preceding month, while the average daily trading value of SET and Market for Alternative Investment (mai) surged 28 percent to THB 68.09 billion (approx. USD 2.10 billion) from the 2019 average. Foreign investors sold a net THB 46.78 billion worth of Thai shares, moving in tandem with other Asian markets.
NYSE Options: Permanent Penny Interval Program for Options
On July 1, 2020, NYSE American Options and NYSE Arca Options will be adopting the Penny Interval Program for Options (the “Program”) on a permanent basis, following the expiration of the Penny Pilot (the “Pilot”). The Program will initially apply only to the 363 most actively traded multiply listed options classes as determined by the OCC during the six month period ending on April 30, 2020 (the “Top 363”). To be eligible for the Top 363, an issue must either be in the Pilot or trading under $200 at the close of June expiration.
Greenstone Systems and R.J. O’Brien’s Hrvyst Partner to Digitally Connect Origination, Merchandising, Hedging for U.S. Grain Industry
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, and Greenstone Systems, the leading market provider of integrated agricultural accounting and management software, today announced that RJO’s Hrvyst initiative has partnered with Greenstone to digitally connect and automate origination, merchandising and hedging for U.S. grain companies. The integration will be piloted at several locations throughout the country with broad commercial availability expected this summer.
FinTech Innovation and Policy: Congressional CRS Report
Stephen A. Rutenberg – National Law Review
On April 28, 2020, the Congressional Research Service (CRS) published an in depth report related to Fintech, titled Fintech: Overview of Innovative Financial Technology and Selected Policy Issues. This report focuses on providing an overview of all types of FinTech, including blockchain and initial coin offerings (ICOs) and provides some discussions of potential legal and policy ramifications.
Fintech offers lifeline for crisis-hit Mexican businesses; Upstart lenders plug gaps as SMEs struggle to access government support and bank finance
Jude Webber – FT
Gabriel Méndez is resigned to having to close his language school as coronavirus slashes demand for English lessons. The Mexican entrepreneur also runs a small pizza business, which he is struggling to keep afloat, but he says he cannot access government help because he is not on an official social programmes registry.
Fintech startups amass war chests for the economic downturn
Dougal Waters – TechCrunch
Consumer fintech startups were massively successful in 2019, attracting millions of new users and disrupting traditional retail banks and financial services with mobile-first, consumer-oriented products. Despite the economic downturn in public markets and the massive wave of cuts at public and private companies in recent weeks, fintech startups have been raising a ton of money.
Ideal Prediction Names Walter Bell as New CTO;He has 20 years of past working experience in the capital markets.
Arnab Shome – Finance Magnates
Ideal Prediction, a trade analysis and data science platform of capital markets, has announced on Monday the appointment of Walter Bell as its new chief technology officer (CTO).
Bitcoin Halving Arrives: Mining Rewards Drop for Third Time in History
Wolfie Zhao – Coindesk
Bitcoin’s third halving, the network’s quadrennial landmark and the most anticipated event this year in the cryptocurrency industry, has finally happened. Miners racing on the network to compete for freshly minted bitcoin produced the 630,000th block at 19:23 UTC on May 11, which triggered the programmed halving event, marking another milestone in the currency’s 11-year history.
Bitcoin’s “halvening” is upon us
Jemima Kelly – FT
Today’s the day that bitcoiners the world over have been waiting for. It’s the day – which only comes around every four years – that the supply of new bitcoins is cut in half. It’s the halvening! (OK yes, some bitcoiners just call it “the halving”, but we prefer the former because we feel it’s a nice illustration of the way much of Cryptoland doesn’t make a lot of sense.)
Vitalik Buterin says ETH 2.0 is still on track, touting crucial multi-client testnet
Yilun Cheng – The Block
With a newly launched multi-client testnet, Ethereum 2.0 is on track to meet its “Phase 0” pre-launch requirements, Ethereum co-founder Vitalik Buterin said Monday. Kicking off Coindesk’s Consensus: Distributed conference, Buterin discussed the latest progress. In particular, he highlighted the recent release of the first ETH 2.0 multi-client testnet.
Binance CEO Sees Virus-Era Growth, Boost to Bitcoin From Halving
Vildana Hajric – Bloomberg
A lot of ink has been spilled over Bitcoin’s halving, with crypto luminaries the world over taking sides on how much it will affect the token’s price. Will it push Bitcoin higher or does its anticipatory nature necessitate much has been priced in? To Zhao “CZ” Changpeng, chief executive officer of Binance Holdings Ltd., the world’s largest spot crypto exchange by volume, it’s a no-brainer. “The halving should be very positive for the crypto industry,” said Zhao in an interview from Singapore, citing historical precedent.
Unprofitable Miners Already Leaving Bitcoin Network Ahead of BTC Halving
Stephen O’Neal – Cointelegraph
The halving is just a few hours away — and many miners are already shutting their soon-to-be unprofitable rigs, says Poolin vice president Alejandro De La Torre. With the halving scheduled to happen in just under four hours, unprofitable miners have already begun shutting down their equipment, Alejandro De La Torre — the vice president of major mining pool Poolin — said in a Monday interview with Cointelegraph. Per his estimations, these miners account for “15 – 30%” of the entire Bitcoin (BTC) hash rate.
Crypto Under Corona: From Venezuela to Liberland
Jeff Wilser – Coindesk
For nearly two years I traveled around the world and wrote about the subcultures of blockchain – from Bali to Budapest, from Serbia to Switzerland. I planned to continue the journey. I imagined I’d be traveling to far-flung places this summer, reporting on global blockchain projects for CoinDesk.
Former CFTC chair says a tokenized dollar could be a better way to hand out relief money
Mike Orcutt – The Block
A tokenized U.S. dollar would make it easier for the government to put money into the hands of people who need it during crises like the COVID-19 pandemic, according to a high-profile lobbying group that’s trying to make a digitized USD a reality.
CME Says Volume Surge Shows Strong Institutional Interest Before Bitcoin Halving
Paddy Baker – Coindesk
Chicago Mercantile Exchange (CME) says record trading activity for its bitcoin derivatives reflects a strong institutional interest in the imminent halving event. In a note sent out late on Sunday, the derivatives exchange said a strong “ramp up” in volumes over the past week showed institutional investors were getting exposure to bitcoin, most likely in preparation ahead of the supply-cutting event.
Bitcoin Crashes as Halving Hype Loses Impetus Over the Weekend
Joanna Ossinger and Vildana Hajric – Bloomberg
Bitcoin appears to be running out of steam just before one of the most anticipated milestones among cryptocurrency enthusiasts. The largest digital token tumbled over the weekend, declining about 13% to around $8,675. It rebounded to about $8,840 as of 10 a.m. in New York trading on Monday. The decline took place ahead of a closely watched technical event known as its halving, when the rewards miners receive for processing transactions will be cut in half as soon as later today.
Tether USDT Surpasses XRP as the 3rd-Largest Cryptocurrency
António Madeira – Cointelegraph
Stablecoin Tether has just surpassed XRP as the third-largest cryptocurrency and is now the second-largest altcoin behind Ethereum’s Ether (ETH). Tether’s USDT has just surpassed XRP in market capitalization, becoming the third-biggest cryptocurrency in the moments leading into the Bitcoin halving. Sitting with a market cap of $8.79 Billion, it is now bigger than XRP, whose market cap is roughly $8.6 billion. USDT is currently second only to Ether (ETH) as the largest altcoin in the cryptocurrency market.
Trust No Dapp: Chainlink Launches Oracle for Provable Randomness
William Foxley – Coindesk
Chainlink may be solving part of the problem that first drove Ethereum co-founder Vitalik Buterin’s interest in decentralized applications. “One day [‘World of Warcraft’ game maker] Blizzard removed the damage component from my beloved warlock’s Siphon Life spell. I cried myself to sleep, and on that day I realized what horrors centralized services can bring. I soon decided to quit,” Buterin wrote.
Crypto.com Lands Record $360M Insurance Cover for Offline Bitcoin Vaults
Ian Allison – Coindesk
Crypto.com has gathered a record-breaking $360 million worth of insurance to cover the potential loss of coins stored in special offline vaults. Announced Monday, the crypto finance platform accessed the cover through institutional custody provider Ledger Vault, which offers $150 million of pooled insurance cover to clients via insurance broker Marsh, and Lloyd’s of London underwriter Arch Insurance.
Can Central Bank Digital Currencies Protect Individual Privacy?
Samuel Haig – Cointelegraph
Crypto industry leaders and law experts debated the privacy implications of central bank digital currencies, known as CBDCs, during the “Money Re-Imagined” panel as part of Consensus:Distributed on Monday.
White House Cuts Off Savings Fund’s Investment in China Stocks
Justin Sink and Jenny Leonard – Bloomberg
Kudlow and OBrien write letter to Labor Secretary Scalia; Move comes as tensions with China rise over coronavirus, trade
The Trump administration moved on Monday night to block investments in Chinese stocks by a government retirement savings fund. National Economic Council Director Larry Kudlow and National Security Adviser Robert O’Brien made the administration’s wishes known in a letter to Labor Secretary Eugene Scalia, according to a person familiar with the matter.
Election Risk Swells as Wall Street Warns on Tax Cut Reversal
Luke Kawa – Bloomberg
Six-month S&P 500 volatility, VIX kink show election in focus; Goldman: 2021 EPS $19 lower if 2018 corporate tax cut reversed
As equity investors struggle to divine how long the coronavirus will weigh on U.S. activity, there’s another risk arriving right on schedule: The 2020 presidential election. Investors are pricing volatility on the S&P 500 Index at the six-month point higher than at the one-year mark. Typically, the curve is upward-sloping, but that’s been upended as traders buy protection that kicks in around election time.
Trump’s Attack Ads Won’t Amount to Much; The president plans to activate a `Death Star’ of negative advertising. He should consult some political science first.
Jonathan Bernstein – Bloomberg
Last week, President Donald Trump’s campaign signaled that an aggressive attack against former Vice President Joe Biden is coming soon. As Politico reported: “Trump campaign manager Brad Parscale hinted at the forthcoming offensive in a Thursday morning tweet calling the reelection effort a `death star’ and declaring, `In a few days we start pressing FIRE for the first time.’ ”
The stakes of Trump’s tax return case couldn’t be higher
Elie Honig – CNN
After years of political wrangling and multi-front litigation, the Supreme Court will hear oral arguments Tuesday on the battle over President Donald Trump’s tax returns. The stakes are enormous. The court will decide by the end of its current term not only whether Trump’s tax returns ever see light of day, but also whether the President stands so far above the law that he cannot meaningfully be held accountable to other branches of government and the American public.
Fraud and Your Investment Accounts During COVID-19 Pandemic
The COVID-19 pandemic is affecting most aspects of our society and daily lives, as well as the U.S. economy and markets. Events with such profound impact routinely create opportunities for financial fraud. FINRA has released a new Notice to broker-dealers advising firms and their associated persons to be aware of and take appropriate measures to address the increased risks and challenges presented during the COVID-19 pandemic. In addition to new scams focusing on COVID-19, previous scams may also find new life as fraudsters adapt to and exploit recent events and related vulnerabilities, especially those related to the remote working environment.
European Commission endorses CSDR push-back; The endorsement comes two months after the ESMA stated it would postpone enforcing the CSDR settlement discipline regime following an industry-wide lobby.
Joe Parsons – The Trade
The European Commission has endorsed the recommendation to delay the implementation the settlement discipline regime (SDR) set out under the Central Securities Depository Regulation (CSDR) to February 2021.
Chairman Jay Clayton Announces Additions to Executive Staff
The Securities and Exchange Commission today released an updated roster of the executive staff of Chairman Jay Clayton, including several individuals who have recently joined the office.
Peter Uhlmann, Managing Executive in the Office of the Chairman, to Assume New Role at the Agency
The Securities and Exchange Commission today announced that Peter Uhlmann, Managing Executive in the Office of Chairman Jay Clayton, will assume a new role in the agency’s Office of Compliance Inspections and Examinations (OCIE).
Autorité Des Marchés Financiers Increases Support To Organizations Providing Assistance To Consumers
With COVID-19 causing financial hardship for many Québec households, the Autorité des marchés financiers (AMF) is substantially increasing the support it provides to various front-line organizations that are dedicated to helping consumers, including seniors.
Investing and Trading
Wall Street Bets Virus Meltdown Gives Landlords a Chance to Grow; Largest home-leasing companies have strong occupancy, rent collection and expect demand for suburban houses to rise
Ryan Dezember – WSJ
Wall Street’s wager on high-earning suburban renters is paying off, and it is raising its stakes. Investors are flocking to America’s mega landlords, drawn by signs the companies that emerged from last decade’s foreclosure crisis owning huge pools of rental houses are weathering the economic shutdown far better than feared. Many also expect that the coronavirus pandemic will make suburban single-family homes both more desirable and more difficult to buy for even the relatively well-heeled.
BP chief sees risk of oil demand passing peak as pandemic hits; Sustained consumption crunch beyond coronavirus crisis cannot be ruled out, says Bernard Looney
Anjli Raval and Billy Nauman and Gillian Tett – FT
BP’s new chief executive said the coronavirus hit to crude consumption was likely to endure beyond the pandemic — and may even have ushered in “peak oil” demand.
Buzzwords for Markets Driven by Fear
Love has its own language and, in the markets, so does fear. As the global spread of the novel coronavirus triggered lockdowns and massive economic disruption, the terminology of bad news came back in vogue. Here are some useful phrases for parsing a catastrophe.
If Landlords Get Wiped Out, Wall Street Wins, Not Renters; Bans on evictions and rent strikes could push out small investors.
Prashant Gopal, Oshrat Carmiel – Bloomberg
Nobody’s bailing out Connecticut landlord Maribeth Shields. More than half of the tenants in the 27 low-income apartments she owns in the city of West Haven and its vicinity aren’t paying and there’s nothing she can do about it. The state banned evictions until July and allowed tenants hurt by the pandemic to defer with no penalty.
Big Oil Has Big Plans for Net Zero. Are They Credible?
Akshat Rathi – Bloomberg
Sign up to receive the Green Daily newsletter in your inbox every weekday. There are now four major oil companies pledging to cut emissions to “net zero,” after Total followed Repsol, BP, and Shell in laying out its plans. And, yet, each one of them defines that vital goal in a different way.
Hot U.S. Solar Market Fizzles, an Unlikely Oil-Bust Casualty; Developers have canceled at least 13 solar projects since crude crisis began
Chris Martin – Bloomberg
The oil crash is yanking the rug out from under the hottest U.S. solar market. Developers including 8minute Solar Energy have scrapped plans to build at least 13 solar farms in Texas since crude prices began plummeting in March. Analysts warn more may follow.
Future Warming Arriving Earlier Than Expected, Study Finds
Eric Roston – Bloomberg
Climate scientists have previously warned that a lethal combination of heat and humidity will make currently inhabited parts of the planet uninhabitable for months at a time in the decades to come. New research finds that future is now.
Shale Drillers Are Already Reopening Wells, Pipe Giant Says
Rachel Adams-Heard – Bloomberg
Some Permian wells idled amid low prices are resuming output; ‘Things have bottomed out’: Energy Transfer executive McCrea
Some drillers in the biggest North American oil field are reopening wells shut in response to the pandemic-driven price collapse, according to pipeline giant Energy Transfer LP. In the Permian Basin’s Midland region, about 8% of oil volumes that feed Energy Transfer’s pipe network had been shut at the start of the month, Mackie McCrea, the company’s chief commercial officer, said during a conference call on Monday.
Deutsche grabs capital from rekindled bank bond market; German lender’s existing similar bond was hit hard in coronavirus sell-off
Nikou Asgari and Olaf Storbeck – FT
Deutsche Bank successfully sold EUR1.25bn of new bonds that count towards its capital buffers on Monday, taking advantage of renewed investor demand for financial institutions’ higher-risk debt following the coronavirus sell-off.
BlackRock’s largest shareholder sells 22% stake; US bank PNC intends to offload $17bn holding in asset manager to raise cash for potential deals
Richard Henderson and Laura Noonan and James Fontanella-Khan – FT
BlackRock’s top shareholder, PNC Financial, will sell its $17bn stake in the asset manager, freeing up the bank to pursue potential acquisitions.
George Soros Wagers on Sports Betting With DraftKings Stake
Miles Weiss – Bloomberg
Family office’s Quantum Partners holds $66 million of shares; Company has surged since going public through reverse merger
George Soros has a $66 million stake in DraftKings Inc., one of several big-name investors to receive shares in the sports-betting company through a deal that took it public last month.
Goldman Sachs tells interns their summer program will be fully online; The US bank followed Wall Street rivals in telling interns they won’t get to see the office at all amid the pandemic
Paul Clarke and Emily Horton – Financial News
Goldman Sachs bit the bullet and moved its summer internship entirely online, following Wall Street rivals in overhauling its programme in the wake of the coronavirus pandemic.
Macau Gaming Regulator Head Resigns as Casinos Face Crisis
Jinshan Hong and Daniela Wei – Bloomberg
Paulo Chan stepping down months before tenure was to end; Macau government has cited no reason for the sudden departure
The head of Macau’s gaming regulator is stepping down from his position at a time when the world’s biggest gambling hub is facing its worst crisis in the wake of the coronavirus pandemic. Paulo Chan, director of Macau’s Gaming Inspection and Coordination Bureau (DICJ), will relinquish his position, according to a spokeswoman from the Office of the Secretary for Economy and Finance. His successor will be announced in due course, the spokeswoman said, declining to give further details.
Paul Krugman Says the Liquidity Trap Has Spread to Emerging Markets
Matthew Bristow -Bloomberg
Peru and Chile have slashed interest rates almost to zero; ‘First-world credibility’ brings with it a new set of problems
Two months into the deepest slump in decades, some of Latin America’s major economies are close to losing their main recession-fighting tool — interest rate cuts.
Turkey to Add $3 Billion to Capital at Three State Banks
Ercan Ersoy and Firat Kozok – Bloomberg
Injection will give banks extra room to accelerate lending; Credit Suisse analyst says relief may only give temporary lift
Turkey’s sovereign wealth fund will inject 21 billion liras ($3 billion) into three state lenders to strengthen their capital positions and minimize the impact of the coronavirus pandemic that may provide a $24 billion boost to the market.
Brazil’s Top Chicken Producer Gears Up for Supply Disruptions From Pandemic
Tatiana Freitas – Bloomberg
BRF adjusts production, expects lower slaughtering capacity; Demand seen steady as retail offsets lower food-service demand
Top Brazilian chicken producer BRF SA is preparing for possible processing bottlenecks as the coronavirus spreads in the South American meat-producing giant.
Saudis Cut Oil Output Again as Kingdom’s Budget Reels From Crash
Javier Blas – Bloomberg
‘We have to be ahead of the curve,’ says Saudi oil minister; Riyadh sees signs of demand recovery as drivers go out
Saudi Arabia announced a surprise move to slash oil output to the lowest in 18 years as it tries to spur the recovery from an energy crisis that has devastated the kingdom’s finances. Just hours after unveiling a slew of dramatic austerity measures, Saudi Arabia said it would cut oil output by another 1 million barrels a day on top of what it already agreed with OPEC allies. Oil futures rose, and Kuwait and the United Arab Emirates followed up with extra cuts of their own.
The Chinese IPO That Led the Way in Wall Street’s Virtual Shift; As the pandemic began rattling markets, there was no such thing as business as usual. That didn’t stop Ma Cunjun and his bankers.
Lulu Yilun Chen, Cathy Chan, and Julia Fioretti – Bloomberg
When Ma Cunjun strapped on his face mask and boarded a nearly empty flight to New York from Hong Kong, the most important deal of his life was at risk of unraveling.
China Steps Up U.S. Soybean Buying With Million-Ton Purchase
Nation bought more than 20 U.S. cargoes in the past two weeks; Purchases were made with tariff waivers previously issued
China is stepping up purchases of soybeans from the U.S. as Brazilian sales start to wane and the Asian nation seeks to meet its pledges under the trade deal with Washington, according to people familiar with the matter.
Brexit: UK-EU trade talks resume ahead of June summit
Talks between the UK and EU over a post-Brexit trade deal will enter their third round later, ahead of a decisive summit next month. Both sides are due to decide by the end of June whether the current deadline for negotiating an agreement should be extended beyond the end of December. The UK has said it will not agree to an extension, even if the EU requests one. The latest round of talks, to be held via video link, will end on Friday.
U.K. Risks Causing ‘Catastrophe’ Over Brexit, German Lobby Warns
Iain Rogers – Bloomberg
British government negotiators are not taking talks on the U.K.’s future relationship with the European Union seriously enough and failure to seal an agreement by the end of this year could provoke an “economic catastrophe,” according to Germany’s main business lobby.
Northwestern University to Furlough 250, Tap Endowment for More
Janet Lorin – Bloomberg
School to furlough some staff, halt retirement contributions; Will also increase the rate of payout taken from endowment
Northwestern University forecast a $90 million budget shortfall due to the coronavirus pandemic and said it will tap more money from its endowment and furlough about 250 staff members. The school forecast the deficit for the current fiscal year and said the endowment move is aimed at avoiding further budget pressures, according to a letter from university President Morton Schapiro on Monday. The endowment was valued at $10.8 billion as of August.
To Avoid Burnout, Work Less and Ignore ‘Productivity Propaganda’; Recovery time is key to innovation and output, says digital anthropologist Rahaf Harfoush.
Lindsey Tramuta – Bloomberg
There’s burnout, and then there’s pandemic-induced burnout. For many workers, the professional environment has changed radically since Covid-19 disrupted life—but the intensity of their jobs hasn’t. Juggling full-time responsibilities, family life, and the stress of confinement makes the risk of burnout greater than ever.
How generous are America’s rich? The wealthier people are the more they tend to give to charity—both in absolute and relative terms
WHEN THE super-rich make charitable donations, their philanthropy is often met with scepticism, or even hostility. In April Jeff Bezos, the boss of Amazon, an e-commerce giant, donated $100m to American food banks. Rather than commend Mr Bezos, many criticised him for giving too little, or for trying to divert attention from his company’s treatment of workers. The covid-19 pandemic, which has already attracted more than $1bn-worth of charitable giving by individual Americans, will offer other opportunities for billionaire-bashing. But new research suggests that one strand of the criticism—the claim that the rich give proportionately less of their incomes—is misplaced.