Minor system issue hits DTCC’s night cycle processing on first day of T+1; Can Billions in New Subsidies Keep Family Farms in Business?

May 30, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

Today we have part one of a three part video interview with former CQG President Josef Schroeter. I am a longtime CQG user and it was interesting to hear first hand the history of the company from the change agent who was hired in 2000 to help it transition to the era of electronic trading. You can see part one of the Schroeter interview from the JLN video series The Path to Electronic Trading HERE.

We also have an interview from the Options Conference and one from FIA Boca today. From the Options Conference in Asheville, NC we have an interview with IG North America’s JJ Kinahan. From FIA’s International Futures Industry Conference in Boca Raton, FL we have an interview with Katten attorneys Lance Zinman and Dan Davis.

The FIA Forum: Commodities 2024 will take place in Houston, Texas from September 16-18, focusing on market trends and issues in energy and commodities derivatives markets. The event offers a multi-track program for traders, risk managers, compliance, and legal personnel, covering topics such as oil, gas, power market drivers, hedging strategies, carbon and renewables opportunities, and battery metals. Legal and compliance sessions will address CFTC and FERC enforcement trends, trade surveillance, sanctions compliance, and commodity financing issues. The forum begins with an opening reception sponsored by Nodal Exchange. Attendees are encouraged to explore sponsorship and exhibit opportunities by contacting Toni Vitale Chan, vice president of business development, at +1 312.636.2919. Register early to secure your spot at this rapidly growing event.

The European Securities and Markets Authority (ESMA) today issued guidance for firms using Artificial Intelligence (AI) in providing investment services to retail clients, emphasizing compliance with MiFID II requirements regarding organizational aspects, conduct of business, and acting in clients’ best interests. While AI offers potential benefits, it also presents risks such as algorithmic biases, data quality issues, opaque decision-making, overreliance on AI, and privacy and security concerns. AI applications in investment firms include customer support, fraud detection, risk management, compliance, and investment advice. ESMA and National Competent Authorities will continue monitoring AI use in investment services and the EU legal framework to determine if further action is necessary.

CFTC Chairman Rostin Behnam will deliver a keynote address at the Piper Sandler Global Exchange & Trading Conference 2024. The event is scheduled for Wednesday, June 5, 2024, at 12:30 p.m. (ET), taking place at the Lotto New York Palace Hotel, Holmes Ballroom, 4th floor, located at 455 Madison Avenue, New York, NY 10022.

Today’s Financial Times Special Report explores the growing field of impact investing, exploring how it differs from traditional ESG (Environmental, Social, and Governance) funds. The report includes a comparative analysis of the effectiveness of direct enterprise investments versus risk-focused ESG funds. It highlights a U.S. platform aiding former prison inmates through impact investing, providing crucial support for their reintegration. The report also examines the efforts of India’s venture capitalists to demonstrate the tangible impacts of their investments in climate tech, microfinance, and agrifood sectors. Additionally, it addresses the decline in sustainability-linked bonds due to credibility issues, contrasting it with the robust green bond market. Another focus is the burgeoning interest in blue bonds, aimed at marine and water-related projects, which are gaining momentum. Finally, the report advocates for foundations to utilize their entire financial resources, not just grants, to maximize charitable impact.

JLN is looking for subject matter experts on two subjects to be guests on our Futures Discovery video series, hosted by Corties Draper. The subjects are “Reading Your Statement” and “Block Trading in Futures.” Corties will be wrapping up shooting his 26 episodes by the end of June, so we hope to get these done soon. Corties has given us a recommendation for a new host to follow in his footsteps, but we welcome other recommendations too.

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

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Our most read stories from our previous edition of JLN Options were:
Lightning strikes: Options boom threatens data overload, from Waters Technology.
NYSE Plans Bitcoin Options, Bringing Another TradFi Giant Into Crypto, from CoinDesk.
After 24 S&P 500 Records, Options Traders Running Low on FOMO, from Bloomberg.~JB

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

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JJ Kinahan of IG North America Discusses Options Trading and Regulatory Changes
JohnLothianNews.com

ASHEVILLE, N.C. (JLN) – JJ Kinahan, CEO at IG North America, shared his insights on the current state of options trading and regulatory changes in the industry during an interview at the Options Industry Conference with John Lothian News. The interview is part of the JLN Industry Leader video series sponsored by the OCC.

Watch the video »

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Cryptocurrency and Regulatory Landscape: Insights from Katten Attorneys
JohnLothianNews.com

BOCA RATON, Fla. (JLN) – In a recent interview at the FIA’s International Futures Industry Conference, Katten attorneys Lance Zinman and Dan Davis shared their perspectives on the evolving landscape of cryptocurrency and regulatory changes in the financial industry. The future of trading firms may involve more consolidation and a greater number registering as broker-dealers, the two Katten attorneys said.

Watch the video »

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Joe Schroeter on Transforming CQG for the Digital Age: From Humble Beginnings to Market Leader
JohnLothianNews.com

Elmhurst, IL (JLN) – Joe Schroeter is a change agent and that is exactly why CQG owner Tim Mather hired him in 2000 as the markets were turning electronic and CQG needed to reinvent itself.

Watch the video »

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The People in Finance to Watch in 2024; Get to know the investors, money managers, executives and strategists who are shaping the future of finance.
Bloomberg Businessweek
We looked across the industry to find both established players and yet-to-be household names in banking, private equity and asset management. Among those making an impact are a CEO (Tim Spence at Fifth Third Bancorp), a CFO (Amrita Ahuja at Block) and hedge fund founders (Mala Gaonkar at SurgoCap and Nick Laster at Lykos). Whichever turn markets take in the second half, these leaders will be ones to watch.
/jlne.ws/4bAvVQ8

***** The person I am watching in finance in 2024 is named Hal.~JJL

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Gold bars and $5 chickens make Costco an inflation wave winner; Shares of the discount club soar as price-weary shoppers peruse towers of chlorine and macaroons for bargains
Gregory Meyer – Financial Times
The no-frills retailer Costco Wholesale has emerged as one of the big winners of the US inflation wave, drawing in millions of consumers willing to pay at least $60 a year to gain access to member-only warehouses stocked with bargain-priced produce, paper towels, appliances and $5 rotisserie chickens. The US-based company’s shares have more than trebled in the past five years, rising at a pace that rivals some tech giants to give it a market capitalisation of $358bn.
/jlne.ws/3R7GIsP

***** There is no inflation in the Costco hot dogs. However, the gold-embossed wrapped ones are a different story.~JJL

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Wednesday’s Top Three
Our top story Wednesday was Chicago to Offer Most Generous Subsidies in U.S. to Save Its Downtown, from The Wall Street Journal. Second was the Women In Listed Derivatives (WILD) page for the Take WILD to Work Tour – CME group, an event taking place June 13. Third was the video interview from 2020 of Jeff Carter for JLN’s Open Outcry Traders History Project.

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Lead Stories

Minor system issue hits DTCC’s night cycle processing on first day of T+1; affirmation rates top 90%;’Teething issues’ as anticipated on first day of T+1 implementation in the US while affirmation rates top the DTCC’s target on day one.
Jonathan Watkins – The Trade
DTCC experienced system issues within its DTC and NSCC night cycle processing on the first day of T+1, Global Custodian has learnt. The issue was described by sources as having minor impact, and is in line with’expected teething issues’ anticipated by the US market infrastructure. DTCC has issued a notice to market participants that a system issue had occurred, but according to sources at a number of custodians, transactions were still processed in accordance with the DTCC deadlines for settlement.
/jlne.ws/3yGueSO

Can Billions in New Subsidies Keep Family Farms in Business? The Biden administration aims to better support small farmers while still aiding big operations and rewarding climate-friendly practices. It’s a tall order.
Lydia DePillis – The New York Times
Agriculture Secretary Tom Vilsack has a line about the state of small-scale agriculture in America these days. It’s drawn from the National Agricultural Statistics Service, which shows that as the average size of farms has risen, the nation had lost 544,000 of them since 1981. “That’s every farm today that exists in North Dakota and South Dakota, added to those in Wisconsin and Minnesota, added to those in Nebraska and Colorado, added to those in Oklahoma and Missouri,” Mr. Vilsack told a conference in Washington this spring. “Are we as a country OK with it?”
/jlne.ws/4ecGk6u

Buried Fortune of Old Copper Wire Is Worth Billions to Telcos; Companies are working to recover at least $7 billion of copper;’It’s an enormous commercial opportunity,’ TXO’s Evans says
Sheryl Tian Tong Lee and Todd Shields – Bloomberg
AT&T Inc., BT Group Plc, Orange SA and their global peers are preparing to tap a rich new source of revenue: their old copper wiring. In the migration to fiber-optic cable, telecommunications companies could recover as much as 800,000 metric tons of copper over the next decade, worth more than $7 billion at today’s prices, according to estimates from TXO, a UK-based firm that provides engineering services to the industry. “We’ve got all of this material, sitting redundant,” said David Evans, who runs asset recovery at TXO. The firm is working with BT, and Evans says discussions are under way with more than a dozen telcos worldwide about copper recovery. “It’s an enormous commercial opportunity.”
/jlne.ws/4dZKoa2

PBOC Explains Xi’s’Powerful Currency’ Idea, Vows Tech Support; Yuan should be stable and easy to use, deputy governor says; China also seeks greater use of yuan in international markets
Bloomberg News
China’s central bank said President Xi Jinping’s idea of a “powerful currency” is one that is stable and easy to use, as it pledged to play a key role in developing a competitive financial system and supporting the top leader’s strategy. A strong currency should have a stable value domestically, and maintain an exchange rate that’s “basically stable” and at a “reasonable, equilibrium level” externally, Tao Ling, Deputy Governor of the People’s Bank of China, said in an interview published by the central bank Thursday.
/jlne.ws/3KneeI0

ECB to Impose First-Ever Fines on Banks for Climate Failures; Several lenders didn’t progress enough on risk assessment; Fines per day can technically be up to 5% of daily revenue
Nicholas Comfort and Jorge Zuloaga – Bloomberg
The European Central Bank is set to take the unprecedented step of imposing fines on several lenders for their protracted failure to address the impact of climate change. As many as four lenders face penalties after not meeting deadlines set by the ECB for assessing their exposure to climate risks, according to people familiar with the matter. The amounts aren’t final yet and may be largely symbolic, the people said, who asked not to be named as the move isn’t public.
/jlne.ws/4e4myK7

Big Oil Companies Will Just Keep Getting Bigger; ConocoPhillips is the latest to bulk up as investors pay up for size
Jinjoo Lee – The Wall Street Journal
Oil-patch consolidation has been a big game of musical chairs: No one wants to be left standing. Exxon Mobil and Chevron, the largest U.S. hydrocarbon producers, picked their targets last year. On Wednesday, the third-largest producer by market value-ConocoPhillips had its latest turn, agreeing to buy Marathon Oil in a deal that values its stock and debt at $22.5 billion. Once the deal closes, Conoco’s market value will edge closer to that of the French oil major, TotalEnergies.
/jlne.ws/4553pE3

UBS shakes up executive board with eye on CEO succession; Swiss lender divides responsibility for wealth management between Iqbal Khan and Rob Karofsky
Owen Walker – Financial Times
UBS has shaken up its executive board and split responsibility for its all-important wealth management business between two of the managers most likely to succeed chief executive Sergio Ermotti. Under the changes announced on Thursday, wealth management head Iqbal Khan will move to Asia and become head of Asia-Pacific, while investment bank head Rob Karofsky will become head of the Americas.
/jlne.ws/3Vmqw9R

UBS Makes Karofsky and Khan Wealth Co-Heads in Management Shakeup; CEO Ermotti shaking up executive team as CS merger completes; Khan to relocate to Asia, loses sole control of wealth unit
Myriam Balezou and Laura Noonan – Bloomberg
UBS Group AG appointed investment bank head Rob Karofsky to run its US business and jointly oversee wealth with Iqbal Khan, in a management shakeup that paves the way for a race to succeed Chief Executive Officer Sergio Ermotti. Khan, who previously had sole charge of the key wealth unit, will now also become president of the Asia Pacific region, the Zurich based bank said in a statement Thursday. Khan will relocate to Asia later this summer, the bank said.
/jlne.ws/4e51Iun

UBS’s Ermotti Starts the Race. His Job Is the Prize; Karofsky and Khan start as frontrunners to be the Swiss bank’s next boss.
Paul J. Davies – Bloomberg
Sergio Ermotti has made it clear he would only lead UBS Group AG in his second stint as chief executive officer for the time it took to absorb Credit Suisse and set the enlarged Swiss bank on a steady course. On Thursday, he reshuffled his top lieutenants to broaden the experience and exposure of his main succession candidates. The race is on. Ermotti isn’t going anywhere until at least the end of 2026 or early 2027, by which time the bank should have finished the integration of its erstwhile rival, bought for a tiny $3 billion in a rescue deal last spring. UBS should also be handing out more than $7 billion in dividends and buybacks by then too – Ermotti’s golden goodbye to shareholders.
/jlne.ws/3R778Lz

Internal divisions linger at OpenAI after November’s attempted coup; Arguments over safety and Sam Altman’s leadership spill back into public domain as artificial intelligence start-up hit by resignations
Madhumita Murgia and Cristina Criddle – Financial Times
OpenAI is struggling to contain internal rows about its leadership and safety as the divisions that led to last year’s attempted coup against chief executive Sam Altman spill back into the public domain. Six months after the aborted removal of Altman, a series of high-profile resignations point to continuing rifts inside OpenAI between those who want to develop AI rapidly and those who would prefer a more cautious approach, according to current and former employees. Helen Toner, one of the former OpenAI board members who tried to remove Altman in November, spoke out publicly for the first time this week, saying he had misled the board “on multiple occasions” about its safety processes.
/jlne.ws/3R6cpTE

JPMorgan’s Jamie Dimon says he could step down as CEO in as little as 2.5 years
Reuters via NY Post
JPMorgan Chase Chief Executive Jamie Dimon said Wednesday he and the bank’s board will “do the right thing” on succession, and warned of the dangers, particularly to small businesses, of non-bank lenders. Dimon told investors that his timeline for stepping down was less than five years, and could be between two and a half to four and a half years, depending on the board’s decision. He also praised the company’s management team.
/jlne.ws/4chwr5N

OpenAI Strikes Licensing Deals With The Atlantic and Vox Media; OpenAI can feature content from the publishers in its products
Jackie Davalos – Bloomberg
OpenAI said it has inked licensing agreements with The Atlantic and Vox Media, the latest in a flurry of deals the startup has made with publishers to support the development of its artificial intelligence products. As part of the deals, OpenAI will be able to display news from The Atlantic and Vox Media – which owns The Verge and New York Magazine, among other news outlets – in products like ChatGPT. The startup can also use the publishers’ content to train its AI models. Financial terms of the deals weren’t disclosed.
/jlne.ws/3WZ7hnN

Will the European equities tape tender process end up as a one-horse race? Annabel Smith explores the potential contenders to provide the European equities consolidated tape following the opening of ESMA’s consultation, unpacking the watchdog’s rules around consortiums, the future role of data providers, and assessing if anyone will step up to the plate to contend with EuroCTP, the only current bidder and exchange-backed initiative.
Annabel Smith – The Trade
The European Securities Markets Authority (ESMA) opened up its industry consultation on 23 May inviting participants to comment on how they expect the equities consolidated tape to be delivered. The watchdog is expected to publish its results in the fourth quarter of this year and the findings will heavily impact who will go on to bid as part of the tender process, which is expected in the second half of 2025. As anyone reading the consultation can see, there is still a plethora of creases that need to be ironed out across latency, the commercial model, and many of the technical standards.
/jlne.ws/4bZMuoE

âEUR˜Time is money and time is risk’ proclaimed Gensler ahead of T+1 implementation, but how is the market feeling as reality hits; While the industry recognises the importance of T+1 in safeguarding against avoidable risks, in particular given events like meme-stock, for now the long shadow cast by implementation challenges appears to be hampering market sentiment.
Claudia Preece – The Trade
Gary Gensler’s foreboding message for the market ahead of the US shift to T+1 on Tuesday indicated a philosophical perspective on the massive structural change for the industry, however this is a perhaps overly simplistic message, lacking some sympathy for the pragmatic side of the process.
/jlne.ws/4e3kjGS

Sustainability-linked bonds falter amid credibility concerns; Issuance of debt linked to companies’ climate promises has fallen but green bond market proves robust
Patrick Temple-West – Financial Times
In an era of higher scrutiny for sustainable investing products, green bonds are proving to be the tried-and-tested sustainability choice for fixed income investors as more esoteric offerings falter. Global green bond issuance has remained steady – the total in the first four months of this year was $232bn, equal to the issuance in the same period in 2023, according to a report from Morgan Stanley.
/jlne.ws/3V0bpBv

Ukraine Invasion

Ukraine and Its Allies Need a New Strategy. Here’s a Start; Stop talking about’liberal’ democracy and the’rules-based international order.’
Marc Champion – Bloomberg
Ukraine’s allies need to radically rethink their approach to this devastated nation’s defense.That means delivering more weapons and ammunition, of course, but it’s also about changing the way the war is explained, because getting the “why” right is essential to achieving the “how.” Back in February 2022, this wasn’t so important. The shock and outrage caused by President Vladimir Putin’s invasion was more than enough to persuade populations to lay down tax money for Ukraine. Countries had redundant weapons stocks; allies committed to help for “as long as it takes,” in the name of protecting both liberal democracy and the rules-based international order.
/jlne.ws/4c0jbSC

Russia sources ammunition faster than west, says Prague; Czech government warns that payment delays to international arms makers could deprive Kyiv of millions of shells
Raphael Minder and Henry Foy – Financial Times
Russia is beating western capitals in securing artillery supplies on international markets, the Czech government has said, warning that delayed payments to arms companies could lead to millions of ammunition rounds being sent to Moscow instead of Kyiv. Prague is coordinating purchases of ammunition from arms companies in non-Nato countries on behalf of many western allies, but is struggling to compete with Moscow, which has proved it can get financing to manufacturers faster.
/jlne.ws/3yCCXFn

France leads initiative on sending military trainers to Ukraine; Paris and Kyiv in talks ahead of D-Day anniversary when Volodymyr Zelenskyy will visit France
Leila Abboud, Henry Foy and Christopher Miller – Financial Times
France is seeking to assemble a coalition of European countries willing to send military trainers to Ukraine as western allies look for ways to speed up Kyiv’s recruitment efforts in the face of Russia’s renewed offensive. More than 100,000 Ukrainian servicemen have completed training abroad – mostly in Poland, Germany and the UK – since the start of Russia’s full-scale invasion in 2022, according to Ukraine’s General Staff.
/jlne.ws/452FKnu

US seeks to choke off supplies via China for Russia’s war machine; Ukraine’s allies and western businesses will be told to stop flow of critical components
Max Seddon and Christopher Miller – Financial Times
The US will urge Ukraine’s allies and western businesses to choke off supplies for Russia’s defence industry through China, a vital route to sustain President Vladimir Putin’s war machine. In a speech to German business leaders in Berlin on Friday, US deputy Treasury secretary Wally Adeyemo will urge western companies to stop Russia importing critical components from or via China.
/jlne.ws/3Km1Zv5

Israel/Palestine Conflict

Israel’s Claim of Control Over Border Zone Risks Raising Tensions With Egypt
The New York Times
Gaza and Egypt share a sensitive border that the Israeli military has moved to control.
The Israeli military’s announcement that it had seized “tactical control” of a sensitive border strip between Gaza and Egypt comes after weeks of rising tensions between Egypt and Israel over Israel’s advance into Rafah. Israeli forces advanced into the roughly nine-mile-long area – known as the Philadelphi Corridor – in an attempt to crack down on Hamas’s ability to rearm itself by smuggling munitions into Gaza through tunnels from Egypt, according to the Israeli military. The move was part of the Israeli offensive in the southern Gaza city of Rafah, which has prompted more than one million Palestinians to flee, according to the United Nations.
/jlne.ws/44ZtLqZ

Exchanges, OTC and Clearing

CME Group U.S. Treasury Complex Surpasses Record 34 Million Contracts
CME Group
CME Group, the world’s leading derivatives marketplace, today announced that volume in its deeply liquid U.S. Treasury complex set a new record of 34,350,339 contracts traded on May 28, surpassing the previous record of 33,322,608 contracts on November 27, 2023. “Investors seeking to navigate historic levels of debt issuance and persistent uncertainty are turning to our U.S. Treasury complex in record numbers to access the world’s most liquid, flexible and efficient risk management offerings,” said Agha Mirza, CME Group Global Head of Rates and OTC Products. “In advance of the Treasury market move toward central clearing, we are also seeing new open interest records as our leading network of buyside participants continues to grow and we explore more opportunities to extend cost savings across portfolios.”
/jlne.ws/44ZzAVj

Nasdaq Collaborates with Microsoft to Reimagine the Boardroom Experience using Artificial Intelligence
Nasdaq via Yahoo!Finance
New artificial intelligence powered capabilities help governance teams and corporate secretaries realize time and cost savings. Nasdaq (Nasdaq: NDAQ) today announced its Capital Access Platforms division has introduced new artificial intelligence (“AI”) powered capabilities for the Nasdaq Boardvantage® Board Portal on Microsoft Azure. These capabilities, powered by Microsoft Azure OpenAI Service, are designed to help governance teams quickly summarize board materials, which can help to highlight crucial information and provide strategic insights and actionable recommendations. This may not only equip board members with essential information for informed decision-making, but also help governance teams with time and cost savings, so they can focus on vital board initiatives.
/jlne.ws/3KlOMm4

EEX and ECC to move headquarters into NEO Leipzig building
European Energy Exchange
The European Energy Exchange (EEX) and European Commodity Clearing (ECC) are to move their headquarters to the NEO Leipzig building, located in the city center of Leipzig. Following the necessary construction works, the companies are planning to move into the new premises in the second half of 2026.
/jlne.ws/3V1ACvo

EEX establishes subsidiary in Japan
European Energy Exchange
Marking the fourth anniversary of the launch of its fast growing Japan Power offering, the European Energy Exchange (EEX) announces the establishment of a subsidiary in Japan, in order to reinforce presence and strengthen ties with local stakeholders, including the trading community and authorities. Over the past four years, trading volumes in EEX Japan Power Futures have shown remarkable growth, with a total volume of 54 TWh traded up to date. In February 2024, a monthly record of 6.6 TWh was achieved, contrasting the total annual traded volume of 18.3 TWh in 2023, and the 2022 annual volume of 6.7 TWh. In addition, EEX’s market share on the Japanese power futures market has increased significantly, with a steady 96%-plus since July 2023.
/jlne.ws/4c0k6CA

Medcap Forum exceeds 15,000 meetings between companies and investors in its 20 years of existence
BME
More than 800 people attended the XX Medcap Forum organized by BME in person
The importance of going public to grow, the valuations of small and mid-caps and the key role of these companies in the economy were the focus of the event’s panels. BME today concluded the twentieth edition of the Medcap Forum after having held nearly 1,200 meetings (an all-time record) between 106 companies and 188 investors registered in Discovery meetings and one-on-one meetings. Of the investors attending, 26.5% were international, coming from Germany, France, Finland, England, Switzerland, Italy, the United States, Andorra, India and Portugal. In addition to the meetings, the Forum also hosted eight panels to encourage exchange and debate on the situation of small and medium-sized companies and the main sectors of the economy. The event was attended by more than 800 participants.
/jlne.ws/4bBwSb6

Using Sectors to Identify Opportunities Beneath the Benchmark Index Level
CME Group
2023 was a strong year for equity investors in the S&P 500, with the index gaining over 25%. The first quarter of 2024 continued this upward trend, with the S&P 500 gaining nearly 7%. However, April saw a market correction, with the index giving back about half of its Q1 gains. While the overall market rallied in 2023, sector performance diverged as investors saw relative value in different industries. Technology was the standout winner, rising by 55%.
/jlne.ws/3wZxmZt

Investments in money market exchange-traded funds grew 12-fold over the year
MOEX
The net asset value of money market exchange-traded mutual investment funds (MUIFs) traded on the Moscow Exchange stock market increased over the year by more than 12 times and reached 300 billion rubles (23.8 billion rubles as of June 1, 2023). The average daily trading volume of money market funds in the first five months of 2024 increased 15 times compared to the same period in 2023 and amounted to 7.7 billion rubles. The total volume of transactions with money market funds this year exceeded 812 billion rubles.The number of individuals who invest in money market mutual funds on the Moscow Exchange has exceeded half a million people.
/jlne.ws/3V5KmVk

Fintech

A coordinated integration of chatbots across trade lifecycle on the cards, says whitepaper; There is scope for chat strategies to be employed from pre- to post-trade through the use of on-demand bots, capture bots, and LLM chatbots, says ipushpull.
Claudia Preece – The Trade
Looking ahead to the future of automation, chat strategies present a tangible way to automate across the trading lifecycle, claims recent whitepaper from live data sharing and workflow automation services provider, ipushpull. The whitepaper includes insights from senior individuals at firms including Kepler Cheuvreux, Microsoft, and SIX around how their own chat strategies are evolving.
/jlne.ws/3KjH7EZ

We Can’t Opt Out of AI (But We Can Try) Recent developments at OpenAI and Alphabet have exposed a new reality: AI is coming for us. On today’s Big Take podcast, we look at who is pushing back.
David Gura, Kimberly Gittleson, and Thomas Lu – Bloomberg
Generative AI is back in the news – and not for a good reason. First, OpenAI made headlines after the voice it introduced as part of its latest GPT update sounded eerily like Scarlett Johansson. Then, Google’s newly-introduced “AI Overview” feature started returning some questionable results – like that eating rocks might be good for you, or that cheese can help prevent cavities. On today’s Big Take, host David Gura speaks to Bloomberg AI reporter Rachel Metz and Bloomberg Opinion columnist Dave Lee to get to the bottom of just what’s been happening in the world of generative AI – and what these latest headlines mean for the way we’re all getting our information now and in the future.
/jlne.ws/3yPXyGj

Tech giants form an industry group to help develop next-gen AI chip components
Kyle Wiggers – TechCrunch
Intel, Google, Microsoft, Meta and other tech heavyweights are establishing a new industry group, the Ultra Accelerator Link (UALink) Promoter Group, to guide the development of the components that link together AI accelerator chips in data centers. Announced Thursday, the UALink Promoter Group – which also counts AMD (but not Arm), Hewlett Packard Enterprise, Broadcom and Cisco among its members – is proposing a new industry standard to connect the AI accelerator chips found within a growing number of servers. Broadly defined, AI accelerators are chips ranging from GPUs to custom-designed solutions to speed up the training, fine-tuning and running of AI models.
/jlne.ws/4bDYSLc

Palantir Wins $480 Million AI Computer Vision Deal With US Army
Lizette Chapman – Bloomberg
The US Army awarded a $480 million contract to Palantir Technologies Inc. for work on a project called the Maven Smart System through 2029. The Maven deal was disclosed Wednesday as part of the Defense Department’s daily contract announcements. Palantir declined to comment on the contract.
/jlne.ws/3WZ7uHB

A Flirty Chatbot Is What You Get With So Few Women in Tech; The company building AI for humanity has a problem when less than a fifth of its researchers are women.
Parmy Olson – Bloomberg
It was hard not to cringe at the demo of ChatGPT’s latest upgrade. Instead of showcasing a chatbot that sounded more reliable, OpenAI gave the world one that hit all the notes of an obsequious female, giggling at the antics of its male researchers and praising their outfits. The resulting outrage over the voice’s similarity to Scarlett Johansson missed a deeper point. The world’s leading AI builders are creating software that reinforces stereotypes about women. And there’s a big reason why: There are simply too few of them involved.
/jlne.ws/4bKd31q

The Problem With Asking Google and AI for All the Answers; Memorizing facts remains important, even if ChatGPT can spit them out faster.
Chris Bryant – Bloomberg
Artificial intelligence has persuaded a lot of folks that we need to radically overhaul education. Now that chatbots can speedily retrieve information and answer complex questions, why bother memorizing historical facts or quotations? Shouldn’t we instead teach kids to think critically and solve problems, and leave the grunt work to computers?
/jlne.ws/4bC6spH

AI replicating human thinking is more Big Tech’fake-it-till-you-make-it’ hype; ChatGPT and its peers do not understand what words mean
Jeffrey Funk and Gary Smith – MarketWatch
The fundamental problem with ChatGPT and other large language models (LLMs) is that they do not understand what words mean. They are very much like a young savant who can recite every word in all six volumes of the History of the Decline and Fall of the Roman Empire without comprehending any of the content. Without such comprehension, LLMs are not going to morph into artificial general intelligence (AGI) – the ability to perform any intellectual task that human beings can do.
/jlne.ws/4dZO5wq

AWS, Orange to offer cloud computing in Morocco, Senegal
Nqobile Dludla and Supantha Mukherjee – Reuters
Amazon Web Services (AWS) plans to offer cloud computing in Morocco and Senegal using its AWS Wavelength platform in partnership with Orange, the firms said on Wednesday. This will be the first time the services will be available in any country without physical AWS infrastructure such as data centres, with Orange set to house the services in its data centres.
/jlne.ws/4bxqsto

Cybersecurity

The SEC’s New Take on Cybersecurity Risk Management; Insights from three companies that recently reported breaches under the new disclosure regulations.
Dr. Sean Costigan, Managing Director, Resilience Strategy, Red Sift – Dark Reading
The advent of generative AI is surfacing new risks, significantly raising the stakes for businesses around the globe and for marketplace stability. In reaction to the logarithmic growth of cybercrime, the guidance and regulatory landscape is changing rapidly. While historically, the United States preferred frameworks over regulation, in 2023 there was a significant regulatory development: the introduction of new cybersecurity rules by the Securities and Exchange Commission (SEC). These rules for publicly traded companies focus on cybersecurity risk management, governance, and incident disclosure. Designed to enhance investor protection and market transparency, the SEC seeks to ensure timely and effective communication of events that affect the financial health or stability of publicly traded companies.
/jlne.ws/4dYYxnP

Understanding The Importance Of The DoD’s SPRS Cybersecurity Requirements
Chris Petersen – Forbes
Are you compliant with the cybersecurity requirements of your government contracts? If not, or if you don’t know, it’s time to commit to increasing your cybersecurity efforts to keep your company and the nation safe. The Importance Of Security And Compliance For The DIB. The Defense Industrial Base (DIB) and U.S. Critical Infrastructure (CI) don’t just rely on large enterprises for manufacturing and technology. They’re increasingly relying upon small and medium-sized businesses (SMBs) for inventions, ideas and technologies to support advancing defense systems that keep our nation safe, both domestically and abroad.
/jlne.ws/4dZl5ou

AI, cybersecurity investments and identity take center stage at RSA 2024
Rick Grinnell – CIO (opinion)
It was truly a good use of time attending the 33rd RSA Conference in San Francisco, along with over 40,000 attendees, networking with the leading minds in the cybersecurity industry. For many, this spring’s RSA show was an energized, optimistic experience, similar to the pre-pandemic years of 2017-2019. There was a definite buzz about cybersecurity investments and M&A picking up steam, AI-based defense and AI-delivered industry models, and overall product innovation. Above all, there was a palpable focus on what it will take to make organizations combat-ready for the next waves of cybercrime and how best to manage it all.
/jlne.ws/3V5aYpq

Cryptocurrencies

European bitcoin ETPs suffer mounting outflows; Rising client interest has not yet converted to industry-wide product sales
Dom Lawson – Financial Times
European bitcoin exchange traded products have suffered outflows every month this year, despite providers’ hopes being raised following the approval of spot bitcoin ETFs in the US. Bitcoin ETPs domiciled in Europe have bled $506mn since the start of this year, while other crypto ETPs attracted small net inflows of $42mn, Morningstar data shows. The price of bitcoin rose by approximately 40 per cent over this period.
/jlne.ws/3Kpzs7S

Risky New Experiments Attract Billions of Dollars in Bitcoin; Bitcoin holders seek to earn rewards for their tokens; Projects like Merlin Chain send Bitcoin to other blockchains
Muyao Shen – Bloomberg
Billions of dollars worth of Bitcoin are pouring into the type of blockchain projects that historically have been vulnerable to hackers and other security risks. The allure of the new projects is simple: They allow owners of the original cryptocurrency to earn a passive yield on their holdings, a common attraction for more elaborately designed tokens that came after Bitcoin. Yet the excitement for these projects, many of which promote themselves as safe, has obfuscated risks associated with them. That’s because the Bitcoin blockchain was not set up as a “proof of stake” network, which allows crypto owners to earn rewards by locking up their tokens as part of the system that validates transactions. Instead, these projects rely on what are known as side chains and bridges, or pieces of software that allow tokens to be transferred between blockchains.
/jlne.ws/4bFLDtg

Politics

Prominent billionaires from Wall Street to Silicon Valley are warming up to Donald Trump
Ben Werschkul – Yahoo Finance
Billionaires from coast to coast are putting their influence and money behind Donald Trump, a wave of support that is helping the former President narrow his fundraising gap with President Joe Biden and seize new momentum in his race for the White House. Some have already donated millions to his campaign, some have announced plans to do so, and some are only saying for now that they will vote for him.
/jlne.ws/4c11cf8

Markets cannot keep ignoring Trump’s bid for re-election; The stakes of US fiscal policy are too high
Katie Martin – Financial Times
Investors are generally able to ignore the noise of national politics and focus on drier matters such as corporate earnings or the minutiae of monetary policy, enabling them to keep their cool around the tawdry drama and bright lights of elections. The upcoming UK general election campaign, for example, is unlikely to leave a serious or lasting mark on the country’s stocks and bonds. It is tough to find an investor with a strong view on the EU parliament vote coming up in early June, either. The latter’s “diminished significance” for investors stems from the “toothless” nature of the EU parliament, says German asset manager DWS. Harsh but fair.
/jlne.ws/3KlItio

Regulation

Turkey Close to Exiting Global Watchdog’s Illicit Finance List; FATF visit notes significant progress to exit “gray list”; Final decision to be made at plenary meeting on June 28
Ben Bartenstein, Patrick Sykes, and Beril Akman – Bloomberg
Turkey is poised to be removed from a financial watchdog’s “gray list” as early as next month, a potential boost to one of the Middle East’s biggest economies following its efforts to curb illicit money flows. An on-site visit by the Paris-based Financial Action Task Force earlier this month noted significant progress, according to people familiar with the matter, who requested anonymity as the deliberations are private. That means Turkey could come off the list of jurisdictions under increased monitoring on the final day of the FATF plenary in Singapore on June 28, the people said. No final decisions have been made.
/jlne.ws/3yFEJFX

Remarks of Chairman Rostin Behnam at the Hellenic Republic Capital Market Commission Conference “Climate in the Center of Economy,” Athens, Greece
CFTC
Thank you, Vasiliki, for the invitation to join you today, and to the Hellenic Capital Market Commission for hosting this year’s IOSCO Annual Meeting. As an independent agency of the U.S. federal government, the Commodity Futures Trading Commission (“CFTC” or “Commission”) is the primary regulator of the U.S. derivatives markets, including futures, options on futures, and swaps. The CFTC’s mission is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation.[1] The CFTC exercises its oversight and civil enforcement authorities granted to it under the Commodity Exchange Act to promote market integrity, prevent price manipulation and other market disruptions, protect customer funds, and avoid systemic risk, while fostering responsible innovation and fair competition in the derivatives markets.[2]
/jlne.ws/455IDnz

SEC Charges Advisory Firm Mass Ave Global and Co-Founder and CEO Winston Feng with False Statements and Undisclosed Conflicts
SEC
The Securities and Exchange Commission today instituted settled proceedings against formerly registered investment adviser Mass Ave Global Inc. (MassAve) and its co-founder and CEO Winston M. Feng for making false and misleading statements to investors in MassAve’s flagship opportunity fund. To settle the SEC’s charges, MassAve agreed to pay a civil penalty of $350,000, and Feng agreed to pay a civil penalty of $250,000. In addition, Feng, who is also the chief investment officer and portfolio manager at MassAve, is suspended for 12 months from industry-related work.
/jlne.ws/3wVR34g

Three principles for better compliance; Speech by ASIC Commissioner Simone Constant at the Australasian Investor Relations Association (AIRA) Annual Conference, 30 May 2024
ASIC
Good morning. I would like to begin by acknowledging the Traditional Owners of the land on which we are meeting, being the Gadigal people of the Eora nation, and pay my respects to their Elders, past, present, and emerging. I would also like to thank the Investor Relations Association for hosting me here today. In the last six years, I’ve been a risk executive at two of Australia’s largest listed companies and it taught me many things, including the value of a professional investor relations team. If you really want to know what’s going on in the company and in the outside world, your investor relations colleagues are the ones to help you with it. Indeed, I found as a CRO [Chief Risk Officer], if you really wanted to step back and think about what matters in terms of transparency to your stakeholders, and in terms of your reputation, it’s your investor relations colleagues who can really help you with that.
/jlne.ws/3V5FcsA

ASIC permanently bans Melbourne director from financial services and credit activities
ASIC
ASIC has made two orders permanently banning Melbourne-based former director Christopher David Nairn from the financial services and credit industries. Mr Nairn falsified numerous documents by forging his clients’ signatures which enabled him to misappropriate more than $650,000 in client funds.
/jlne.ws/3wY1dBC

ESMA provides guidance to firms using artificial intelligence in investment services
ESMA
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, today issued a Statement providing initial guidance to firms using Artificial Intelligence technologies (AI) when they provide investment services to retail clients. When using AI, ESMA expects firms to comply with relevant MiFID II requirements, particularly when it comes to organisational aspects, conduct of business, and their regulatory obligation to act in the best interest of the client.
/jlne.ws/4aBAkBa

Financial Advice Provider Monitoring Insights; Findings from the FMA’s supervision activities and monitoring of Class 1 and 2 licensed financial advice providers
FMA – New Zealand
Foreword from Michael Hewes, FMA Director Deposit Taking, Insurance and Advice
The financial advice sector has the most diverse range of businesses among the sectors licensed and monitored by the Financial Markets Authority – Te Mana Tātai Hokohoko (FMA). Advisers are spread throughout the country, operating from home offices through to large corporates. Financial advice plays a critical role in helping New Zealanders get ahead by building and protecting their retirement savings, investments, homes, families, and overall financial wellbeing.
/jlne.ws/3V5Wl5c

FMA publishes first monitoring insights report into Financial Advice Providers
FMA – New Zealand
The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko – today published its first monitoring report of the new financial advice regime. The report shows how a range of Financial Advice Providers [1] (FAPs) responded to the obligations and licensing requirements under the new regime introduced during the transitional period in 2021, and fully effective from March 2023.
/jlne.ws/4bz1ycS

MAS Expands Application of Fair Dealing Guidelines to All Financial Institutions and All Products and Services
Monetary Authority of Singapore
The Monetary Authority of Singapore (MAS) today issued an updated set of Guidelines on Fair Dealing. A key change is that the scope of the Guidelines has been expanded to apply to all financial institutions (FIs), and all products and services they offer to their customers.
/jlne.ws/4520SdI

Settlement Calculator BETA – SEBI (Settlement Proceedings) Regulations, 2018
SEBI
In order to simplify and provide more transparency in the process of arriving at the indicative settlement amount in terms of the parameters laid down in the SEBI (Settlement Proceedings) Regulations, 2018, SEBI has launched the Settlement Calculator (BETA version). This Settlement Calculator contains fields that the applicant may identify in terms of the violations and also enables the applicant to select the appropriate options with respect to their past regulatory track record on the basis of actions of SEBI as well as the details of other ongoing proceedings, if any, as on date of filing the settlement application.
/jlne.ws/3wY27y0

Investing and Trading

Dimon Says’Could Be Hell to Pay’ If Private Credit Sours
Hannah Levitt – Bloomberg
Jamie Dimon said he expects problems to emerge in private credit and warned that “there could be hell to pay,” particularly as retail clients gain access to the booming asset class. “Do you want to give access to retail clients on some of these less liquid products? Well the answer is – probably, but don’t act like there’s no risk with that,” the JPMorgan Chase & Co. chief executive officer said at an industry conference Wednesday. “Retail clients tend to circle the block and call their senators and congressmen.”
/jlne.ws/4bBrCUF

Traders Are Bracing for a Record-Smashing Summer That Will Shake Up Commodities; High prices for food and energy frustrate the Federal Reserve’s inflation fight.
Bloomberg News
Around the world, people are already living through the havoc brought on by global temperatures that are breaking records. It’s about to get a lot worse. Odds are growing that 2024 will become the hottest year in history as the Northern Hemisphere barrels into summer. Prices for some of the world’s most vital commodities – natural gas, power and staple crops like wheat and soy – are climbing. The world of shipping, already thrown into chaos from the Red Sea to the Panama Canal, is likely to be rocked again by parched waterways. And the potential for destructive wildfires is increasing.
/jlne.ws/3KoEJwu

What Are Block Trades? Why Are They in the Spotlight?
Bei Hu and Filipe Pacheco – Bloomberg
Selling small amounts of publicly listed shares is easy: They generally sell for the prevailing market price. Big share sales are more complicated, since the very act of selling can drive the price down. To avoid that scenario, banks and brokerages often work with sellers to arrange private “block trades.” A string of recent scandals has underscored the murkier aspects of block trading, and put pressure on regulators to crack down on the misuse of private information ahead of deals.
/jlne.ws/3X2ld0p

Japan’s 30-Year Bond-Swap Rate Gap Widens to Most Since 2012
Hidenori Yamanaka – Bloomberg
In another sign of rising interest rates in Japan, the gap between 30-year government bond yields and swaps contracts has widened to the most in a more than a decade. Yields on the super-long notes – which are typically favored by Japanese life insurers – have outstripped the gains in the swaps rate as buyers of government debt hold back on expectations of further increases. Investors often hedge their bond holdings by exchanging fixed-rate swap contracts for floating-rate ones. That means that even if they lose money on bonds when yields rise, they will receive interest from their floating contracts that at least partly make up for the losses.
/jlne.ws/3yChb4S

Private equity now says sharing is caring
FT Podcast
Europe has only a fraction of the air defence capabilities needed to protect its eastern flank, BHP’s £39bn takeover bid for Anglo American has collapsed, and Israel bonds are a hot commodity in US municipalities. Plus, the FT’s Brooke Masters explains why private equity firms are pivoting towards profit sharing.
/jlne.ws/3V1rQh0

BHP investors support decision to walk away from Anglo American deal; Australian mining group has to wait six months before any further approach for UK-listed rival
Nic Fildes – Financial Times
BHP’s decision to walk away from a £39bn bid for rival Anglo American has been welcomed by some of its investors in Australia as the spotlight shifts to whether its UK-listed target can deliver on its restructuring plan. Anglo American refused to give BHP more time on Wednesday to make a formal offer, resulting in the collapse of the miner’s six-week takeover attempt.
/jlne.ws/454UN03

This Record Stock Market Is Riding on Questionable AI Assumptions; Just four giant technology stocks added more market value than the rest of the S&P 500 put together this month. More than half of the gain came from Nvidia.
James Mackintosh – The Wall Street Journal
Remember all the bulls earlier this year getting excited that the rally was broadening out beyond the “Magnificent Seven” stocks, and how wider gains were a sign that the market’s rise was sustainable? Not so much. This month, as indexes hit fresh records, just four giant technology stocks added more market value than the rest of the S&P 500 put together. A brief burst of outperformance by smaller stocks seems to have petered out again.
/jlne.ws/3wZyUmf

Environmental, Social and Corporate Governance

The Solar Breakthrough That Could Help the U.S. Compete With China; Biggest investor in U.S. solar manufacturing will use new technology to cut costs
Amrith Ramkumar – The Wall Street Journal
The biggest investor in U.S. solar manufacturing is embracing a new technology that reduces the cost of producing the panels, potentially bolstering efforts to build a supply chain outside of China for an industry crucial to the energy transition. The new technology comes from an Israeli startup that promises to simplify one of the most cumbersome steps in solar manufacturing and cut costs by reducing the amount of silver needed to capture sunlight on the panels.
/jlne.ws/3VlAyrE

The Big Problem With the Modern Electricity Grid And how we got here.
Joe Weisenthal and Tracy Alloway – Bloomberg (Odd Lots Podcast)
The modern electricity grid is a weird thing. The delivery of electricity is a natural monopoly, for kind of obvious reasons. Despite that, we still attempt to shoehorn market-based mechanisms into the system. Many utilities are shareholder-owned, yet heavily regulated. In many markets around the country, producers of natural gas, wind, coal, nuclear, solar and so on, compete to sell their electricity into the grid. Now that we’re looking for ways to decarbonize the grid, we’re running headlong into complications and perverse outcomes of what we’ve built. On this episode of the podcast, we speak with Matt Huber, a professor at Syracuse University, and Fred Stafford, a pseudonymous writer who talks about energy markets, grid history, and nuclear power. We talk to them about how we got the current grid, and why nuclear energy in particular is squeezed out of existing markets.
/jlne.ws/3yydWLx

Corporations invested in carbon offsets that were’likely junk’, analysis says; Analysis of the carbon offset projects used by top corporations including Delta, Gucci and ExxonMobil raises concerns around their emission cuts claims
Nina Lakhani – The Guardian
Some of the world’s most profitable – and most polluting corporations – have invested in carbon offset projects that have fundamental failings and are “probably junk”, suggesting industry claims about greenhouse gas reductions were likely overblown, according to new analysis. Delta, Gucci, Volkswagen, ExxonMobil, Disney, easyJet, and Nestle are among the major corporations to have purchased millions of carbon credits from climate friendly projects that are “likely junk” or worthless when it comes to offsetting their greenhouse gas emissions, according to a classification system developed by Corporate Accountability, a non-profit, transnational corporate watchdog.
/jlne.ws/3R51Rnw

Little to no ethanol will qualify for US aviation fuel credit
Leah Douglas and Jarrett Renshaw – Reuters
Little to no ethanol will qualify for U.S. sustainable aviation fuel (SAF) subsidies under a new pilot program by President Joe Biden’s administration, which toughened climate requirements at the last minute, according to a Reuters review of government data and people familiar with the matter. The issue could hurt the biofuel industry, which sees SAF as ethanol’s best chance at growth since electric cars have cut into its market as a gasoline additive. It could also hinder Biden’s goal of producing 30 billion gallons of SAF by 2030. He once promised 95% of SAF – a biofuel that can be made from oils, waste, or grains – would come from farmers.
/jlne.ws/4bGUJWW

EU agrees to quit energy investment treaty over climate concerns
Kate Abnett and Diana Mandia – Reuters
European Union countries unanimously agreed on Thursday to quit an international energy treaty over concerns that it protects fossil fuel investments and undermines efforts to fight climate change, the Belgian EU presidency said. The 1998 Energy Charter Treaty (ECT) allows energy companies to sue governments over policies that damage their investments. In recent years, some companies have used it to launch billion-dollar lawsuits against measures to shut or restrict fossil fuel projects.
/jlne.ws/4e3dIw6

New bill could bail out US farmers ruined by’forever chemical’ pollution; The bipartisan proposal that would remediate farms affected by toxic PFAS contamination is gaining speed in Congress
Tom Perkins – The Guardian
The US may soon bail out farmers whose livelihoods were destroyed by toxic PFAS “forever chemical” contamination. The proposal for a $500m fund aims to head off a crisis for the nation’s growers and is moving through Congress amid increasing evidence that PFAS-contaminated sewage sludge used as a cheap fertilizer alternative poisoned crops and livestock. Separately, around 4,000 farms nationwide have been contaminated by PFAS from neighboring military bases.
/jlne.ws/3yCB1wB

The Solar Breakthrough That Could Help the U.S. Compete With China; Biggest investor in U.S. solar manufacturing will use new technology to cut costs
Amrith Ramkumar – The Wall Street Journal
The biggest investor in U.S. solar manufacturing is embracing a new technology that reduces the cost of producing the panels, potentially bolstering efforts to build a supply chain outside of China for an industry crucial to the energy transition. The new technology comes from an Israeli startup that promises to simplify one of the most cumbersome steps in solar manufacturing and cut costs by reducing the amount of silver needed to capture sunlight on the panels.
/jlne.ws/3VaH0Rc

Exxon prevails over dissident shareholders in board battle; Oil major’s slate of directors gains wide approval despite activist-led revolt over greenhouse gas emissions
Amanda Chu and Myles McCormick – Financial Times
/jlne.ws/4aFUnOS

Delhi suffers record heatwave as temperatures soar near 50C; Scientists warn climate change is increasingly becoming a public health hazard in India
Benjamin Parkin – Financial Times
/jlne.ws/3X1yvtW

Designer of World’s Tallest Building Wants to Turn Skyscrapers Into Batteries; The company behind Dubai’s 828-meter-high tower plans to harness gravity to offset construction emissions.
Will Wade – Bloomberg
/jlne.ws/3WXwdfy

Israel aims to boost Red Sea oil deliveries despite environmental risks
Ari Rabinovitch – Reuters
/jlne.ws/3R52kWO

US slows plans to retire coal-fired plants as power demand from AI surges; New technologies are straining power supplies and forcing a shift in plans to reduce use of the fuel source
Amanda Chu – Financial Times
/jlne.ws/4aJIBTs

Another Big Oil Deal Despite Regulatory Pushback and Market Volatility; ConocoPhillips has agreed to buy Marathon Oil for $22.5 billion, as consolidation in the U.S. energy sector shows little sign of slowing down.
Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch, Ephrat Livni and Edmund Lee – Dealbook
/jlne.ws/4c104Iq

Chevron’s $53 Billion Oil Deal Is Backed by Hess Shareholders; Hurdles remain as Chevron and Exxon Mobil wage a legal battle over Hess’s stake in a lucrative oil project in Guyana.
Rebecca F. Elliott – The New York Times
/jlne.ws/4bUjuOY

How to ship sunlight; Repurposing railways for solar energy transportation is one way to address the energy challenge
John Thornhill – Financial Times
/jlne.ws/4e4cbGc

Institutions

U.S. bank profits jump 79.5% as large firms shake off failed bank costs
Pete Schroeder – Reuters
Profits for the U.S. banking sector surged 79.5% to $64.2 billion in the first quarter of 2024, boosted primarily by large banks not shouldering billions in special fees they were directed to pay to recover costs incurred by bank failures last spring.
/jlne.ws/3yCcLuG

UK Banks’ Record Repo Uptake Puts QT Tipping Point in Focus
James Hirai – Bloomberg
UK banks extended their record bid for cash from the Bank of England, replacing liquidity which is being drained as policymakers continue to sell bonds acquired through years of quantitative easing. Banks took up £17.2 billion ($21.9 billion) in funding through one-week repurchase agreements, or repos. That’s up from £16.2 billion, and a sixth straight week of record demand.
/jlne.ws/3yGvrJO

UBS reshuffles group executive board
Anika Sidhika – Private Banker International
UBS has transformed its Group Executive Board (GEB) changes to carry out short- and long-term initiatives; all changes are subject to final regulatory approval and take effect on 1 July 2024, unless otherwise specified. Moreover, UBS intends to merge with Credit Suisse AG on 31 May 2024, and form a single Intermediate Holding Company in the US in June, with an emphasis on sustainable growth, notably in the Americas and Asia-Pacific.
/jlne.ws/3wWvv7A

Barclays Sees Signs That the IPO Dry Spell Is Coming to an End; Executive says rate path clarity should help boost IPO levels; Analysts expect Barclays stock underwriting revenue to soar
Jan-Henrik Foerster – Bloomberg
Barclays Plc is seeing signs that the yearslong drought in IPOs is slowly coming to an end as corporate chiefs and investors alike have gotten more clarity on central banks’ plans to lower interest rates. The British bank – which recently helped CVC Capital Partners Plc raise EUR2.3 billion in Europe’s third-biggest initial public offering this year – sees “more to come” from clients looking to do such deals, said Tom Swerling, who leads the stock underwriting business globally at Barclays.
/jlne.ws/451CJnk

US Banks Have a Commercial Property Blind Spot, Study Warns; Term loans and credit lines for REITs add to systemic risk; Fed stress tests should consider such lending, authors say
Todd Gillespie – Bloomberg
Large US banks may be more exposed to commercial property than regulators appreciate because of credit lines and term loans they provide to real estate investment trusts, according to a new study. Big banks’ exposure to CRE lending grows by about 40% when that indirect lending to REITs is added, wrote researchers including Viral Acharya, a professor of economics at New York University. That’s largely been missed in the debate about the risks the troubled industry poses to lenders, they argue.
/jlne.ws/3UUUoZe

CIBC Tops Estimates as Provisions Come in Lower Than Expected
Christine Dobby – Bloomberg
Canadian Imperial Bank of Commerce beat analysts’ estimates as it set aside less money than expected for possible loan losses. The Toronto-based lender earned C$1.75 per share on an adjusted basis in the fiscal second quarter, it said in a statement Thursday, topping the C$1.65 average estimate of analysts in a Bloomberg survey. CIBC’s provisions for credit losses totaled C$514 million ($375 million) for the three months through April, less than the C$567 million analysts had forecast.
/jlne.ws/3R7RjUO

America’s Tiniest National Park-With the Hugely Unpronounceable Name; Let the crowds have Yellowstone. Real adventurers will be exploring this brick edifice.’Who the hell is Thaddeus Kosciuszko?’
Scott Calvert – The Wall Street Journal
He is the Revolutionary War hero you’ve quite possibly never heard of, the trans-Atlantic freedom fighter whose name you probably can’t pronounce. We’re talking about Thaddeus Kosciuszko. Thanks to a fish-stick magnate (more about that later), this Polish-born military engineer is heralded at a national memorial here-a onetime boardinghouse that at .02 acres is the tiniest of more than 400 units in the National Park Service empire, including parks, monuments and battlefields. As travelers swarm rock-star parks such as Yellowstone this summer, a relative few will venture inside the brick edifice that served as an extended-stay hotel for a man endorsed by Benjamin Franklin, backed by George Washington, extolled by Thomas Jefferson and jailed by Catherine the Great.
/jlne.ws/4bZXVN2

PIF and BlackRock crowned world’s most valuable sovereign wealth fund and asset management brands
Brand Finance
Brand Finance launches world’s first global ranking of brand strength and brand value of asset managers and sovereign wealth funds. American asset managers dominate, with BlackRock, JP Morgan Asset Management, and Vanguard among top five strongest and most valuable asset management brands. PIF ranked most valuable sovereign wealth fund brand, with trust and stability highlighted. Abu Dhabi Investment Authority and PIF emerge as strongest sovereign wealth fund brands. BlackRock is crowned the world’s most valuable asset management (AM) brand, with a brand value of just over $7 billion, and PIF is the most valuable sovereign wealth fund (SWF), according to new data from Brand Finance. Robust revenue growth and innovation have fuelled BlackRock’s brand value, while PIF leads among SWFs driven by its investment strategy, trust in its name, brand awareness, and for being a catalyst for advancement.
/jlne.ws/451Vwz8

Work & Management

Landing a Job Is All About Who You Know (Again); Networking is making a comeback as employers drown in computer-generated job applications
Callum Borchers and Lindsay Ellis – The Wall Street Journal
Nine-hundred eighty-three people applied online for a job posted recently by tech recruiter Rob Tansey. The candidate who got the offer wasn’t one of them. Tansey, who scouts potential hires for aviation-software maker Veryon, received a half dozen referrals from a woman he knew from past job searches. One of those six quickly became the front-runner. That’s often how Tansey operates: He estimates that just 40% of successful applicants come in cold through his company’s job portal.
/jlne.ws/4aG0cfk

3 Challenges to Hybrid Work – and How to Overcome Them
Mark C. Bolino and Corey Phelps – Harvard Business Review
Managers struggling to implement hybrid work policies confront three key challenges: scheduling, culture, and productivity. Research into companies allowing employees to be both remote and in-person suggest these obstacles can be overcome. More than four years after the Covid-19 pandemic accelerated an immediate shift to remote knowledge work, it’s clear that, despite some organizations’ attempts to lure employees back to the office full-time, hybrid work arrangements are here to stay. And yet employers are still struggling with implementation. In particular, the managers we have talked to point to three key issues: scheduling, culture, and productivity.
/jlne.ws/4bZrzBT

Wellness Exchange

US close to deal to bankroll Moderna bird flu vaccine trial; Funding worth tens of millions of dollars would help to bolster stockpile as H5N1 cases spread
Oliver Barnes – Financial Times
The US government is nearing an agreement to bankroll a late-stage trial of Moderna’s mRNA pandemic bird flu vaccine, hoping to bolster its pandemic jab stockpile as an H5N1 outbreak spreads through egg farms and among cattle herds. The federal funding from the government’s Biomedical Advanced Research and Development Authority, known as Barda, could come as early as next month, according to people close to the discussions.
/jlne.ws/3X3P9tc

You Can Thank Private Equity for That Enormous Doctor’s Bill; Private-equity investors have poured billions into healthcare but often game the system, hurting both doctors and patients
David Wainer – The Wall Street Journal
Consolidation is as American as apple pie. When a business gets bigger, it forces mom-and-pop players out of the market, but it can boost profits and bring down costs, too. Think about the pros and cons of Walmart and “Every Day Low Prices.” In a complex, multitrillion-dollar system like America’s healthcare market, though, that principle has turned into a harmful arms race that has helped drive prices increasingly higher without improving care.
/jlne.ws/3V5SOns

Regions

Chinese Regions Urge Companies to Curb Foreign-Currency Buying; Steps said to be taken to slow purchase of foreign currencies; China’s capital exodus reached the worst since 2016 last month
Bloomberg News
Some of China’s regional authorities are guiding firms to slow purchases of foreign currencies in a sign the nation is taking further measures to discourage capital outflows amid yuan weakness. Regional regulators have been verbally guiding a number of companies in coastal provinces to delay or cut bulk buying of foreign exchange, especially the US dollar, people familiar with the matter said, asking not to be identified discussing private matters.
/jlne.ws/4chq5mX

AI Buzz Drives Biggest Flows Into Malaysian Stocks in Two Years; Foreigners bought $502.9 million of local shares in May; Microsoft, Nvidia among tech giants investing in the country
Abhishek Vishnoi – Bloomberg
A confluence of tailwinds is helping Malaysian equities outperform the region and the return of foreign funds points to further gains. Overseas investors have bought $502.9 million of local shares on a net basis in May, putting the market on track for its biggest monthly inflow since March 2022, according to Bloomberg-compiled data. Malaysia is the only country in Southeast Asia to see inflows this month as a budding artificial intelligence sector and political stability lure global money.
/jlne.ws/4554yeP

Google to Invest $2 Billion in Malaysia, Build Data Center
Ram Anand – Bloomberg
Google committed to making $2 billion in investments in Malaysia, including developing its first data center and a cloud facility. The pledge marks Google’s largest planned investment in the Southeast Asian nation, according to Alphabet Inc. Chief Financial Officer Ruth Porat in a statement Thursday. The data center and Google Cloud region facility will support 26,500 jobs across various sectors in the country, with the total economic impact valued at $3.2 billion, according to Malaysia’s trade ministry. The site of the investments will be in Sime Darby Property’s Elmina Business Park in Selangor state, it added.
/jlne.ws/4e0IkhQ

Pressure mounts on Beijing to allow renminbi to weaken; Markets push central bank for a weaker currency to reflect the gap in bond yields with the US
Cheng Leng – Financial Times
Market pressure is growing on the People’s Bank of China to allow the renminbi to weaken, as traders bet that the yawning gap with US borrowing costs will lead more investors to sell out of the Chinese currency. China’s central bank has maintained a strong yuan policy so far this year, keeping its daily fixing – or reference rate around which the currency is allowed to trade – within an unusually narrow range of 7.09 to 7.11 against the US dollar.
/jlne.ws/45k1VpD

Searing Temperatures Boost India Gas Use as Idle Plants Restart; Peak electricity demand in the country surges to record high; Indraprastha witnessing jump in fuel’s demand in the nation
Rakesh Sharma and Rajesh Kumar Singh – Bloomberg
Sweltering heat has raised gas demand in India by as much as 12% from a year ago as some idle power plants have restarted to cater to growing electricity needs, according to a major supplier of the fuel in India’s capital. “More and more gas-based generation capacities are coming on stream,” Kamal Kishore Chatiwal, managing director of Indraprastha Gas Ltd., told Bloomberg Television in an interview on Thursday. Some plants, which were not competitive earlier, have become active again, said the official, whose company is the sole distributor of gas for homes, industries and automobiles in the city.
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Germany Will Scrap Its Controversial Gas Storage Levy in 2025; Ending levy in January will need change in law, Giegold says; A planned hike in the levy in July will still take place
John Ainger – Bloomberg
Germany will scrap a gas storage levy at its border from January 2025 after central European states like the Czech Republic said it harmed their efforts to ditch Russian gas by making the fuel pricier. The end of the levy will need a change to the law, according to Sven Giegold, Germany’s state secretary for economic affairs and climate action. The country introduced the charge at the peak of Europe’s energy crisis in 2022 after Moscow curbed its pipeline gas flows and Berlin had to spend billions of euros to fill its storage facilities.
/jlne.ws/3V57BPi

FESE Manifesto:’C.H.E.C.K-List – Getting European Capital Markets In Motion’
Federation of European Securities Exchanges (FESE)
Today, FESE launched its FESE Manifesto:’C.H.E.C.K-list – Getting European Capital Markets in motion’ a C.H.E.C.K.-list from the exchange industry to get European capital markets in motion for the next political mandate. The decline in competitiveness of our financial markets poses a significant threat to Europe’s economic growth and ability to support the green and digital transformations. While significant progress has been made since the onset of the CMU, the EU needs to expand its capital markets to perform in line with its economic potential.
/jlne.ws/450kcrL

The UAE’s rising influence in Africa; As China steps back, the oil-rich Gulf state has become an important source of foreign investment – but with fresh layers of complexity
David Pilling, Chloe Cornish and Andres Schipani – Financial Times
When Sheikh Mohammed bin Zayed al-Nahyan, president of the United Arab Emirates, jetted several hundred friends into a private airport in the Eastern Cape province to celebrate Eid last year, it showed both the promise and pitfalls in dealing with a new cash-rich player in Africa. Ahead of a stay at his private resort in one of South Africa’s poorest regions, the UAE ruler was reported to have donated R20mn ($1mn) to upgrade the runway at the backwater airport, which the authorities made an international port of entry for the occasion.
/jlne.ws/3KmD8r3

Bulk of gold smuggled from Africa exported to UAE, says report; Illicit trade now accounts for about 40% of continent’s production, according to Swissaid
Harry Dempsey, Chloe Cornish and Andres Schipani – Financial Times
The UAE has been accused of being a leading recipient of tens of billions of dollars worth of gold smuggled out of Africa every year, reflecting growing concern over the illicit trade in the region’s precious metals. In a comprehensive study, Swissaid estimated that about 435 tonnes of gold worth about $31bn were exported undeclared out of Africa in 2022 – a doubling of illicit volumes in a decade to about 40 per cent of the continent’s production, or 12 per cent of global mined supply.
/jlne.ws/3R66H44

Miscellaneous

The Boy Scouts Can Still Be Saved; The organization doesn’t need to change its name or court girls to attract new members.
John Carlson – The Wall Street Journal
The Boy Scouts of America will soon be no longer. After years of declining membership, controversies over admitting gay members, and billions of dollars in sex-abuse lawsuits, the organization has decided it’s time for a reset. As of February 2025, it will exist under a new name, Scouting America. “There’s nothing about scouting that’s inherently masculine or inherently feminine,” Bob Brady, a New Jersey scout leader, recently told NPR. The organization evidently agrees. Girls have been able to join Cub Scouts since 2018. They’re also allowed to participate in the traditional Boy Scouts program, for 11- to 17-year-olds, within all-girl or in some cases “linked” troops. That alone may be unobjectionable, but the changes don’t end there. The national scouting office is now telling local councils it is considering a pilot program to merge both sexes into single units.
/jlne.ws/3yGmDDF

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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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