Hits & Takes
John Lothian & JLN Staff
One of my former Eagle Scouts, who attended the World Scout Jamboree in Japan in 2015 with help from readers of this newsletter, was laid off from his consulting firm job on the West Coast at the end of 2022 and is looking for a new opportunity. In his previous role he was a full stack developer, project manager, consultant, and business analyst.
He is a University of Illinois graduate with a bachelor’s degree in computer science and economics who is looking for opportunities in the climate tech and sustainability space. He is a bright young man and solid citizen. If you have an interest in him or have suggestions for firms he should talk to, please contact me.
In our recent interview at FIA Expo 2022 with former CME executive William Knottenbelt, he mentioned something he had said in his earlier interview with us for The History of Financial Futures series: that one of the things that helped liquidity in the Asian market hours grow was the tweeting of then-President Donald Trump. Well, Mr. Trump is not president any more, but Meta has agreed to reinstate his Facebook and Instagram accounts. This comes after the now Elon Musk-owned Twitter reinstated his Twitter account, after all these accounts had been suspended in the wake of the January 6 Capitol riot.
Bloomberg is reporting that “British cybersecurity officials are warning that hacking groups linked to Russia and Iran are duping people into clicking malicious links by impersonating journalists and experts.” I am not part of a hacking group, but there are those that will tell you I have been impersonating a journalist for years. I will say, I do a pretty good Matt Leising impersonation.
There is an interesting story in The New Yorker titled “What’s the Matter with Men?” It mentions a book by the author and scholar Richard V. Reeves titled “Of Boys and Men: Why the Modern Male Is Struggling, Why It Matters, and What to Do About It.”
On Saturday, NASA discovered an asteroid that is going to pass the earth today, but will miss it. It is the size of a delivery truck. It will pass the earth lower than communication satellites, The Guardian reported.
I am not sure what is going on in Finland, but it appears it is not enough hanky panky, as Bloomberg reports “Finland Records Fewest Births in 150 Years, Ending Pandemic Bump.” Besides the slump in births, Bloomberg said, “Finland also recorded the largest number of deaths since World War II.”
ICE is looking for a senior risk analyst in London for a hybrid position. Details are HERE.
The latest edition of the LME Trading Calendar is available now in a printable format and it shows all exchange holidays, non-LME Prompts, 3rd Wednesdays and the dates for LME Week, out to 2033.
Cboe Global Markets is looking for a VP, chief legal officer – Canada. Details are HERE.
Bruce Blythe started a new position as senior writer & editor, Insights & Education, at Charles Schwab.
Peter Clifford is starting a new position as research affiliate at Regulatory Genome Project – Cambridge Judge Business School.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Morgan Housel, in an essay for Collaborative, The Art and Science of Spending Money, discusses 13 principles that motivate the way we spend money. All the principles are insightful, but with special merit for me is “Principle Number 8. An underappreciation of the long-term cost of purchases, with too much emphasis on the initial price.” Citing homeownership as an example, Housel says, “Price is easy to calculate. It’s just whatever you paid initially and sold for eventually. Cost is harder to figure out. They tend to be a slow drip over time, which are easy to ignore but add up quickly.” He adds that in that case, long-term returns are “dim.” The essay is adapted from Housel’s book The Psychology of Money: Timeless lessons on wealth, greed, and happiness. ~SAED
Moody’s Analytics is hosting a virtual event, 2023 ESG and Sustainable Finance Outlook | Amer/EMEA Edition, on January 31 from 10:00 am to 2:00 pm (EST). A live panel will discuss key ESG trends to watch in 2023, their credit implications, and critical factors shaping global sustainable debt markets. You can learn more and register here.~SAED
We Asked ChatGPT to Make a Market-Beating ETF. Here’s What Happened; ‘Unpredictable’ stocks make design of fund impossible, AI says; Machine-powered AIEQ has returned double S&P 500 this year
Sam Potter and Katherine Greifeld – Bloomberg
What happens when you ask the hottest AI tool in the world to design an ETF that can beat the US equity market? It tells you the same thing every frustrated stock manager does. In a bid to see how close technology really is to replacing Wall Street’s army of analysts, experts and money runners, we challenged ChatGPT, the artificial intelligence tool that’s taking the internet by storm, to create us a winning portfolio for the US stock market.
***** What if it asked to take some risk? What then?~JJL
Pritzker says he’s ‘sorry’ Ken Griffin left Chicago
Crain’s Chicago Business
Gov. J.B. Pritzker is currently rubbing elbows with the global elite at this year’s World Economic Forum in Davos, Switzerland, but took time out to chat with CNBC’s “Squawk Box” about his presence at the conference and about-what else? -the departure of Ken Griffin and Citadel. As flagged by Rich Miller at Capitol Fax, the conversation also touched on crime and its impact on business, including that call-out by McDonald’s CEO Chris Kempczinski.
****** “Ken, I didn’t mean it. Please come back. We need you here in Illinois and Chicago.” I am not sure that is going to work, JB.~JJL
A Catastrophic Mutating Event Will Strike the World in 2 Years, Report Says
Tim Newcomb – Popular Mechanics
The 2023 World Economic Forum (WEF) in Davos, Switzerland, has filled us with lots of uplifting predictions, like how companies will soon decode our brain waves. The latest warns of a global catastrophic cyber event in the very near future. The 2023 World Economic Forum (WEF) in Davos, Switzerland, has filled us with lots of uplifting predictions, like how companies will soon decode our brain waves. The latest warns of a global catastrophic cyber event in the very near future.
****** “93 percent of cyber leaders, and 86 percent of cyber business leaders, believe that the geopolitical instability makes a catastrophic cyber event likely in the next two years.” ~JJL
What the poet, playboy and prophet of bubbles can still teach us; Charles Mackay was wrong about a lot, but his wild life and times hold many lessons
Tim Harford – Financial Times
One winter morning in early 1637, a sailor presented himself at the counting-house of a wealthy Dutch merchant and was offered a hearty breakfast of fine red herring. The sailor noticed an onion lying on the counter. “Thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring,” according to a Scottish writer telling the tale two centuries later. “He got clear off with his prize and proceeded to the quay to eat his breakfast.”
****** When I was a cub reporter for Commodity News Services/Knight Ridder Financial News, I asked my sources what books I should read to learn about the markets. The first book that was recommended to me was Charles Mackay’s “Extraordinary Popular Delusions and the Madness of Crowds.”~JJL
Wednesday’s Top Three
Our top story Wednesday was The New York Post’s Sen. Josh Hawley introduces ‘PELOSI Act’ to ban lawmakers from trading stocks. Second was the Exchange Analytics course catalog with its new offerings for 2023. Third was Music financing boom reverberates to markets, the Financial Times’ story about the Chicago-based startup Clouty, which was also our MarketsWiki Page of the Day.
27,158 pages; 242,499 edits
NYSE Mayhem Traced to a Staffer Who Left a Backup System Running; The error led to wild price swings when trading opened Tuesday; Firms are already submitting claims to recoup potential losses
Katherine Doherty – Bloomberg
More than 700 miles from Wall Street, the New York Stock Exchange’s backup data center on Cermak Road in Chicago is supposed to safeguard US markets, standing by at all hours in case disaster ever strikes the world’s largest venue for trading shares. When markets are closed, it participates in a well-worn routine, with NYSE staffers turning on and off systems to ensure everything works. But heading into Tuesday, an NYSE employee failed to properly shut down Cermak’s disaster-recovery system – leading to a disaster.
SEC takes new shot to pass trader conflict rule tabled after 2008 crisis
Reuters via NY Post
Wall Street’s top regulator on Wednesday unanimously voted to propose a rule barring traders in asset-backed securities from betting against the very assets they sell to investors, behavior that became infamous in the wake of the 2008 global financial crisis. The rule is among the last to be adopted under the landmark Dodd Frank Wall Street reform legislation of 2010, according to SEC officials. The 2010 legislation sought to address the root causes of the mortgage crisis. An earlier version of the conflicts rule first proposed in 2011 was never finalized. The sweeping 2010 reforms, named for their sponsors – Senator Chris Dodd of Connecticut and Representative Barney Frank of Massachusetts – aimed to protect investors and taxpayers by preventing the buildup of risk and liability in the financial system.
Morgan Stanley Fines Its Bankers Over Messaging Breaches
Joyce Koh and Tom Metcalf – Bloomberg
Morgan Stanley fined some of its own bankers more than $1 million each for conducting business on WhatsApp and other messaging platforms, the latest fallout from an industrywide probe that saw US regulators impose the record penalties for monitoring lapses.
***** Here is The Wall Street Journal’s version of this story.~JJL
New York Stock Exchange blames manual error for Tuesday trading glitch; Eighty-one stocks ‘erroneously’ had short-selling restrictions applied to them
Nicholas Megaw – Financial Times
The New York Stock Exchange on Wednesday blamed a manual error for causing chaos during the previous day’s market open that led to the cancellation of thousands of trades. Two-thirds of NYSE-listed securities started trading on Tuesday without having held an auction to determine their opening price, leading to sudden swings in many blue-chip stocks and mass confusion among traders.
Genesis Says ‘Bitcoin Jesus’ Owes Millions From Trades; Bankrupt lender is seeking $20.9 million from Roger Ver; Long-time crypto advocate said failed to settle transactions
Emily Nicolle – Bloomberg
A Genesis unit is seeking more than $20 million from Bitcoin Cash backer Roger Ver, alleging that he failed to settle cryptocurrency options transactions that expired in December. Ver, known to some as “Bitcoin Jesus” for his evangelistic role in the early days of crypto, was named in a court summons in New York on Tuesday by GGC International Limited. The filing included a notice seeking no less than $20.9 million in monetary damages, in addition to legal costs and expenses.
EU Sees Legal Grounds to Use Seized Russian Central Bank Assets; Officials explore investing seized assets to rebuild Ukraine; EU plan is in preliminary stages and faces strong skepticism
Jorge Valero, Stephanie Bodoni and Alberto Nardelli – Bloomberg
European Union member states have been told the bloc has the legal authority to temporarily leverage at least EUR33.8 billion ($36.8 billion) of Russian central bank assets to help pay for the reconstruction of Ukraine, according to people familiar with the matter. The bloc’s Council Legal Service told diplomats that such a plan is legally feasible, as long as the assets aren’t expropriated and certain conditions are met, the people said. Those include a termination date, a focus on liquid assets and clarity that the principal and interest would be returned to Russia at some point, the people said.
How the Muni Market Could Help Poor Schools
Heather Gillers – The Wall Street Journal
Whether you’re applying for a credit card or buying a home, borrowing tends to be cheaper the more money you have. But for impoverished school districts financing infrastructure, maybe that shouldn’t be the case. Credit ratings have been shown to lower borrowing costs by 0.4 percentage points or more, but many small school districts issue unrated bonds. Now a study suggests that credit ratings firms could rate struggling districts for free or at a discount.
Introducing Fraught Lots, the Odd Lots Competitive Trivia Night; Test your wits in finance, markets, and economics.
Tracy Alloway and Joe Weisenthal – Bloomberg
You’ve asked for it and we’ve listened. On Thursday, Feb. 9, 2023, Odd Lots will hold its first ever pub quiz at Caveat NYC from 6pm. Hosted by Joe and Tracy, attendees of the ‘Fraught Lots’ trivia night will get to a chance to prove their financial knowledge in a competitive environment. There are prizes for the winners, plus drinks, special events and guest appearances for everyone in attendance.
One of Wall Street’s most feared short-selling research firms just accused Asia’s richest man of a multibillion-dollar fraud
Chloe Taylor – Fortune
Asia’s wealthiest person saw his fortune take a hit on Wednesday, after a famed U.S. short-seller accused him of “pulling the largest con in corporate history.” In a report published on Tuesday, Hindenburg Research said Adani Group and its founder, Gautam Adani-one of the richest people in the world-had engaged in “a brazen stock manipulation and accounting fraud scheme over the course of decades.” Adani serves as the Indian conglomerate’s chairman.
The Dollar Will Vanquish Pretenders to Its Throne; The greenback isn’t in the slightest danger of losing its role as the world’s reserve currency.
Marcus Ashworth – Bloomberg
A couple of recent geopolitical events have prompted the hoary old question of whether the dollar’s hegemony as the world’s reserve currency is at risk. It isn’t. Not in the slightest. If anything, the developments just serve to underline why King Dollar sits atop the throne. The most recent challenger is a putative South American common currency, with the working title of the sur (south). It’s an idea that’s been kicking about since the 1980s, but my colleague Eduardo Porter believes it is either dangerous or irrelevant. If it ever comes to pass, it would be used to facilitate trade between Brazil and Argentina (though they’d retain their respective currencies). Other South American countries could be tempted to join if it succeeded in smoothing the bumps of illiquid, volatile local currencies. But there is something that does that already – it’s called the US dollar.
Franklin Templeton: an old-school stockpicker tries to reinvent itself; The fourth member of the Johnson family to run the group is pushing quickly into new asset classes and technology
Madison Darbyshire – Financial Times
Jenny Johnson was at the movies with her kids when her phone rang. She stepped into a theatre lobby smelling like popcorn to answer the $4.5bn call. “What’s your final number,” said Nelson Peltz. The activist investor had a 10 per cent stake in Legg Mason, the asset manager that Johnson’s family firm Franklin Templeton was trying to acquire, and Peltz was pushing for a higher price.
Morgan Stanley hits bankers with $1mn penalties for messaging breaches; Forfeitures after WhatsApp scandal range from a few thousand dollars to more than $1mn per employee
Arash Massoudi and Stephen Morris Joshua Franklin – Financial Times
Morgan Stanley has hit bankers with financial penalties running up to more than $1mn per employee for conducting official business on WhatsApp and other messaging platforms. The forfeitures come as the bank tries to punish employees for a scandal that tarnished the group’s reputation and resulted in it paying $200mn of regulatory fines last year.
Exodus of Wealthy Chinese Accelerates With End of Covid Zero; China could face at least $150 billion capital flight: Natixis; Resumption of travel opens gates for China’s wealthy to leave
President Xi Jinping’s decision to dismantle Covid travel restrictions is accelerating an exodus by wealthy Chinese, who could fuel billions in capital outflows as they plow cash into property and assets abroad. Since the end of Covid Zero in December, many rich Chinese have begun traveling overseas to check out real estate or firm up plans to emigrate, immigration consultants said in interviews. That’s threatening a brain drain in the world’s second-largest economy as well as outflows that could pressure its financial markets.
Big Tech Binged on Workers During Covid. Now, the Purge; The spate of layoffs is a reaction to a hiring wave during the pandemic that got out of hand. But will it be an overreaction?
Justin Fox – Bloomberg
The layoff announcements coming lately from the chief executive officers of big technology companies all contain variations on the theme of “we hired too many people during the pandemic,” expressed with varying degrees of contrition. At one end of the spectrum are Seattleites Andy Jassy of Amazon.com Inc. and Satya Nadella of Microsoft Corp. Amazon’s layoffs were simply an outgrowth of its annual review, Jassy wrote, although he did allow that “this year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years.” Microsoft’s Nadella opted for bland corporatespeak: “As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.”
Turkey unveils foreign currency scheme to prop up lira; President Recep Tayyip Erdogan under pressure to turn around the economy ahead of a general election set for May
Adam Samson – Financial Times
Turkey has unveiled a new scheme to push exporters to hold less foreign currency as the government of Recep Tayyip Erdogan steps up its battle to defend the lira ahead of this year’s elections. The country said on Thursday it would offer companies new incentives to swap money they earn abroad into lira in return for a vow not to purchase foreign currencies.
IMF warns of market impact of abrupt Bank of Japan policy change; Fund points to ‘significant upside risks’ to inflation and calls for flexible approach to controlling bond yields
Kana Inagaki – Financial Times
The IMF has warned that an abrupt change in Japan’s ultra-loose monetary regime would have “meaningful spillover” effects on global financial markets, underscoring the need for the Bank of Japan to clearly communicate about its future policy. In an interview, Gita Gopinath, the IMF’s first deputy managing director, called on the BoJ to take a flexible approach to controlling yields on government bonds as she warned of “significant upside risks” to inflation in the near term.
Bloomberg settles $5 million SEC penalty for ‘misleading’ fixed income disclosures; SEC’s order finds that from at least 2016 to October 2022, Bloomberg’s paid subscription BVAL service failed to disclose that the valuations for specific fixed-income securities could be based on a single data input.
Wesley Bray – The Trade
The Securities and Exchange Commission (SEC) announced settled charges against Bloomberg for misleading disclosures relating to its paid subscription service BVAL – with the firm agreeing to pay a $5 million penalty. According to the SEC, Bloomberg’s BVAL which provides daily price valuations for fixed-income securities to financial services entities, failed to disclose that the valuations for specific fixed-income securities could be based on a single data input, which did not adhere to methodologies it previously disclosed.
What Tanks Will Ukraine Get, and Why Does It Want Them?
Marc Champion – Bloomberg
Ukraine’s allies have provided thousands of armored vehicles, artillery pieces, aircraft and other weapon systems to help the country fight back against Russia’s invasion. But requests for top-of-the-line, NATO-standard battle tanks – above all the German-made Leopard and US Abrams – long went unfulfilled. The US cited training and logistical hurdles and Germany said it would not make such a move alone. Yet there are reasons why Ukraine’s military wants them.
Ukraine sets sights on fighter jets after securing tank supplies
Tom Balmforth – Reuters
Ukraine will now push for Western fourth generation fighter jets such as the U.S. F-16 after securing supplies of main battle tanks, an adviser to Ukraine’s defence minister said on Wednesday. Ukraine won a huge boost for its troops as Germany announced plans to provide heavy tanks for Kyiv on Wednesday, ending weeks of diplomatic deadlock on the issue. The United States is poised to make a similar announcement.
US Reversal on Abrams Tanks Underscores Focus on NATO’s Unity; Biden decision means Germany’s tanks will get to Ukraine soon; American Abrams won’t likely arrive in Ukraine for months
Courtney McBride and Jenny Leonard – Bloomberg
As recently as last week, US officials insisted the M1 Abrams tank was a bad fit for Ukraine. Yet on Wednesday, President Joe Biden reversed course and offered 31 of them, saying the 70-ton vehicle would “enhance Ukraine’s capacity to defend its territory.” The switch shows how, nearly a year into Russia’s war, keeping NATO unified remains paramount among the alliance’s leaders. Facing pleas from Ukrainian President Volodymyr Zelenskiy, Germany refused to send its battle tank, the Leopard, without other allies doing the same.
Trump Back on Facebook Restores Potent Weapon at Crucial Time; Former president used Facebook effectively to raise money; Trump could also resume posting on Twitter any time he wants
Mark Niquette – Bloomberg
Donald Trump’s reinstated Facebook and Instagram accounts could prove to be the accelerant he needs as he tries to spark Republican enthusiasm around his so-far listless 2024 White House comeback bid. It’s not just that the former president can once again rally the 34 million followers on Facebook and 23 million on Instagram he had before his suspension in 2021. More importantly, his campaign will be able to buy ads again to raise funds with direct appeals or by capturing users’ contact information to solicit them directly.
Ukraine Under New Missile Barrage as Russia Warns West About Tank Pledges; Moscow says the promise of Western-made tanks for Kyiv would escalate the conflict
Matthew Luxmoore and Georgi Kantchev – The Wall Street Journal
Explosions rocked Ukraine’s capital on Thursday after Russia launched a fresh barrage of missiles at targets across the country, as officials in Moscow warned of consequences for Western pledges to send dozens of battle tanks to Ukraine.
Exchanges, OTC and Clearing
Euronext launches the 2023 edition of pre-IPO programmes TechShare and IPOready; 140+ companies from 16 European countries, making this our largest and most diverse edition ever
Euronext, the leading pan-European market infrastructure, announced the launch of the 2023 edition of its successful pre-IPO programmes TechShare and IPOready. These educational programmes support European companies considering a listing on Euronext in the coming years. This year 140+ companies from 16 European countries will take part in TechShare and IPOready, making this the largest and most diverse cohort of companies ever. Countries represented are Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, France, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain and United Kingdom. This confirms Euronext’s position as the listing venue of choice for Tech companies in Europe.
Euronext Dublin launches the 2023 edition of IPOready Ireland; With an unprecedented record number of applications received, Euronext Dublin welcomes 14 companies into its 2023 IPOready programme; Euronext Dublin launches a six-month training programme aiming to equip participating companies with a comprehensive overview of the most appropriate financing tools; 80% of total participants are Tech companies, including cleantech, fintech and life science companies
Euronext Dublin announces the launch of the fifth edition of IPOready, its leadership programme for executives looking to enhance their skillsets for scaling their companies and raising strategic finance. This year, IPOready Ireland received an unprecedented number of applications and welcomed a record 14 companies to the six-month training programme.
NYSE Glitch Was Caused by Manual Error in Disaster Recovery Program; More than 1,300 trades and some 84 stocks were impacted; ‘All exchange systems are operational,’ NYSE says in statement
Katherine Doherty – Bloomberg
The New York Stock Exchange said a manual error caused wild price swings and trading halts for hundreds of company stocks when the market opened Tuesday. The root cause of the issue, which the exchange operator said has been resolved, was tied to the company’s “disaster recovery configuration” at the start of the day. More than 1,300 trades and some 84 stocks were impacted and marked as “aberrant,” NYSE said in an updated statement on its website.
Schwab Criticizes NYSE Over System Failure That Roiled Trading
Katherine Doherty – Bloomberg
Charles Schwab Corp., the brokerage catering to retail investors, said it’s disappointed by the New York Stock Exchange’s handling of a technical mistake that roiled Tuesday’s trading, and that regulators should reconsider the risks of putting retail orders through an auction model. “Unfortunately, the NYSE has not owned up to their full responsibility and retail investors will have to go through a lengthy process to correct orders, with no guarantee of a reasonable outcome,” spokesperson Mayura Hooper said in an emailed statement.
SIX Digital Exchange receives regulatory approval to issue EUR denominated bonds; New service will become available on 1 February, providing issuers with improved trading and settlement possibilities in the digital asset space.
Wesley Bray – The Trade
SIX Digital Exchange (SDX) has received regulatory approval from the Swiss Financial Market Supervisory Authority (FINMA) to support the issuance, trading and settlement of bonds denominated in EUR. All members of SDX will have access to the service from 1 February 2023.
DTCC Highlights Pain Points Related to Data Exchange
Anna Lyudvig – Traders Magazine
To date, the financial services industry has been focused on standardization of data exchange across organizations, but little on standardization of how data is managed within an organization, according to the Depository Trust & Clearing Corporation (DTCC). In its latest whitepaper “Data Strategy & Management in Financial Markets”, DTCC said this has created significant problems. Due to heterogeneous formats and disparate systems, most financial institutions use only a minority of the data they possess on a modern data platform to generate insight.
REGIS-TR adds TradeHeader to its partnership programme
REGIS-TR adds TradeHeader to its partnership programme. Reflecting the existing collaboration, the official partnership will see a continuation of the common work to provide support to our clients in reporting and keep market participants informed of regulatory changes.
Regulatory User Group Members List
The Montreal Exchange
On November 15, 2022 the Regulatory Division of Bourse de Montreal Inc. (the “Division”) published a circular (140-22) calling for applications to become a member of the Regulatory User Group for a twoyear term, 2023 and 2024. The Division is pleased to announce the names of the selected members. The group is composed of representatives from seven Canadian Approved Participants, three foreign Approved Participants, and from the Investment Industry Association of Canada (IIAC). The Regulatory User Group meets a minimum of two times per year.
Nasdaq Announces Mid-Month Open Short Interest Positions in Nasdaq Stocks as of Settlement Date January 13, 2023
At the end of the settlement date of January 13, 2023, short interest in 3,460 Nasdaq Global MarketSM securities totaled 10,244,491,640 shares compared with 10,481,618,341 shares in 3,462 Global Market issues reported for the prior settlement date of December 30, 2022. The mid-January short interest represents 2.92 days compared with 2.82 days for the prior reporting period.
Meta to Reinstate Donald Trump’s Facebook, Instagram Accounts; Move follows Elon Musk’s decision to restore former president’s Twitter account
Meghan Bobrowsky and Jeff Horwitz – The Wall Street Journal
Facebook parent Meta Platforms Inc. said it would reinstate former President Donald Trump’s Facebook and Instagram accounts, more than two years after they were suspended in the wake of the Jan. 6 Capitol riot. Meta said Wednesday that the accounts would be reinstated “in the coming weeks.” It added, “The public should be able to hear what politicians are saying so they can make informed choices.”
Lloyds Invests in App Looking to Help London Bankers Avoid Traffic Fines; Bank backs Caura, an all-in-one driver app, with £4 million; Jaguar Land Rover’s venture arm is among existing investors
Craig Trudell – Bloomberg
One of Britain’s biggest banks is getting behind a startup making car ownership less of a hassle, particularly in city centers, where failing to keep up with all manner of taxes and tolls can lead to big fines. LLoyds Banking Group Plc has put £4 million ($5 million) into Caura, a four-year-old company already backed by Jaguar Land Rover’s venture arm, in its third fintech investment since last year.
Musk explores raising $3 billion to pay off Twitter debt – WSJ
Elon Musk’s team has been exploring using as much as $3 billion in new fundraising to help repay some of the $13 billion in debt tacked onto Twitter Inc for his buyout of the company, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. According to the report, Musk’s representatives discussed selling up to $3 billion in new Twitter shares in December.
ChatGPT’s Need for Computing Power Keeps It Tethered to Microsoft; The enormous processing capacity needed to run modern AI systems is shaping their technical development and business model.
Dina Bass – Bloomberg
To a user firing up OpenAI’s chatbot hoping to generate automated haikus about the American Revolution or recipes for Spam casserole, the product’s basic interface and instantaneous answers can seem simple, even magical.
Russian, Iranian Hackers Pose as Journalists in Emails, UK Says; Academics, NGOs are targeted in apparent espionage campaign; Groups work independently despite common goals, officials say
Ryan Gallagher – Bloomberg
British cybersecurity officials are warning that hacking groups linked to Russia and Iran are duping people into clicking malicious links by impersonating journalists and experts. The hackers, who have similar goals but are said to be working separately, have sought to steal emails from people working in academia, defense, the media and government, as well as from activists and non-governmental organizations, according to an advisory released on Thursday by the UK’s National Cyber Security Centre.
Visium Technologies Secures $1.5 Million Multi-Year License Agreement For TruContext(TM) Cybersecurity Platform
Visium Technologies, Inc, (“Visium” or the “Company”) (OTC PINK:VISM), a global cybersecurity and analytics company, announced today that it has been awarded a contract valued at $1.5 million with the Innovation Science & Security Center. This agreement is a 5-year contract to deliver Visium’s TruContext technology platform for cybersecurity in the country of Burkina Faso. The TruContext platform will be deployed to enhance cybersecurity by providing real-time and understandable situational awareness to facilitate decision making, plans of action, predictions and mitigation of incidents.
Cyber job openings remains steady amid tech industry layoffs
Sam Sabin – Axios
The demand for cyber workers kept steady in recent months as the broader tech industry suffered from a wave of cost-cutting layoffs, according to data published today. Why it matters: Cybersecurity job openings present a bright spot in an otherwise grim hiring outlook for the tech sector.
How a Crypto Quant Firm Shook Off the Bear Market – and FTX Exposure
Brandy Betz – CoinDesk
Crypto quantitative trading firm Pythagoras Investment Management LLC made it through the turmoil of 2022 in a rare position. The firm’s funds were up 8% for the year even with exposure to the implosion of crypto exchange FTX. However, the market turbulence halved the company’s assets under management to less than $40 million as wary investors stepped to the sidelines.
Binance USD Stablecoin Sees $2B Reduction in a Month Amid Token Mismanagement
Krisztian Sandor – CoinDesk
Crypto exchange giant Binance’s BUSD stablecoin has extended its recent declines, amid mismanagement issues involving the exchange’s pegged tokens that surfaced earlier this month, and other debacles.
CBDCs are set to transform how payments are made; Development of the digital currencies is gathering pace around the world
Ousmène Jacques Mandeng – Financial Times
In the late 19th century, there was controversy in England over what some saw as a usurper to the established monetary order – paper banknotes. At the time, the use of paper currency to complement gold and silver coins was seen by opponents as unduly disruptive and prone to causing instability.
Ex-UK chancellor Hammond to chair crypto firm Copper; Warning that Britain is falling behind EU rivals as financial centre for digital assets
Daniel Thomas – Financial Times
Philip Hammond has warned that the UK is falling behind EU rivals as a financial centre for digital assets as the former chancellor takes on a new role as chair of crypto firm Copper. Hammond said the Mayfair-based fintech group had almost closed a new funding round despite turmoil in the cryptocurrency market. The fundraising is expected to value the company at about $2bn.
Hopes stir for FTX creditors – but recovery could take 2 years, sources say
Charles Gasparino – NY Post
Wall Street executives representing creditors in the Sam Bankman-Fried-FTX scandal are growing increasingly optimistic they will be able to recover a sizable amount of money that went missing during the chaotic implosion of the crypto exchange, The Post has learned. However, the process could take as long as two years, leaving nearly a million FTX customers in limbo and without their money for the foreseeable future, according to people with direct knowledge of the matter.
‘Bitcoin Jesus’ Roger Ver Says He Doesn’t Have to Pay the $21M He Owes Genesis
Stacy Elliott – Decrypt
Bitcoin evangelist Roger Ver said in a Reddit post yesterday that he has “sufficient funds” to pay now-bankrupt crypto broker Genesis the $21 million he owes, but argued that he doesn’t have to. “I have sufficient funds on hand to pay Genesis the sums allegedly owed, and I’m happy to pay what I actually owe. However, Genesis was required by our agreement to remain solvent-as Genesis can’t ask its clients to play a “heads clients lose, tails Genesis wins” game,” he wrote in response to a post in the Bitcoin subreddit asking, “Did Roger Ver get rekt?”
Digital Currency Group’s crypto exchange axes 35% of its staff in the latest round of industry layoffs
Morgan Chittum – Business Insider
Luno, the crypto exchange owned by Digital Currency Group (DCG), laid off 35% of its workforce on Wednesday, citing harsh market conditions that impacted growth and revenue. “2022 has been an incredibly tough year for the broader tech industry and in particular the crypto market,” the company said in a statement shared with Insider. “Luno unfortunately hasn’t been immune to this turbulence.”
Founders of Gemini-Owned NFT Marketplace Nifty Exchange Are Leaving the Company
Cam Thompson – CoinDesk
The co-founders of Gemini-owned non-fungible token (NFT) marketplace Nifty Gateway are stepping down and leaving the crypto exchange to eventually start another company. Duncan Cock Foster, who founded Nifty Gateway with his twin brother Griffin Cock Foster in 2019, tweeted Wednesday about the departure. “Some news – after almost 4 years, @gcockfoster and I are departing @gemini and are passing the baton at @niftygateway,” he wrote. “This journey has been an incredible ride, but Griffin and I are founders at heart and we want to start another company.”
An open letter to Sen. Elizabeth Warren: Your shotgun approach to crypto is dangerous for America
Kadan Stadelmann – Forkast
Dear Senator Warren,
The FTX melee has infused crypto regulation efforts with new life. Politicians pounced at the opportunity, including you. The bill you’ve recently introduced requires the U.S. Treasury Secretary to create a rule disallowing financial institutions from transacting with self-custody wallets, citing the FTX debacle. It was a wholly inappropriate response to the failure of a centralized entity already regulated by a government. Your shotgun approach to regulation is dangerous to innovation in the United States, and particularly Main Street.
Elizabeth Warren calls on SEC to use ‘full force of its regulatory powers’ in crypto crackdown
Jennifer Schonberger – Yahoo Finance
Sen. Elizabeth Warren (D-MA) said Wednesday the Securities & Exchange Commission is off to a good start when it comes to regulating crypto, but said the agency still has more work to do in overseeing the industry. “The commission has been loud and clear that crypto doesn’t get a pass from longstanding security laws that protect investors,” Warren said in a speech before a virtual forum for the American Economic Liberties Project on Wednesday.
U.S. Rep. Jesús ‘Chuy’ García steps down from congressional committee that oversaw cryptocurrency industry
Tessa Weinberg – WBEZ 91.5 NPR
U.S. Rep. Jesús “Chuy” García will no longer serve on the influential House Financial Services Committee, his congressional office confirmed Wednesday. Republicans won majority control of the House in last year’s election, and as a result the limited seats for Democratic members to serve on the committee were prioritized by seniority, said Fabiola Rodriguez-Ciampoli, a spokeswoman for García.
The Ninth Circuit Upholds a Wealth Tax; The Supreme Court should review the ruling, which ignores constitutional limits on the taxing power.
Christopher Cox and Hank Adler – The Wall Street Journal Opinion
The 16th Amendment authorizes the federal government only to tax income, but some members of Congress would love to tax wealth as well. That is widely understood to be unconstitutional, but a recent ruling from the Ninth U.S. Circuit Court of Appeals upholding a form of wealth tax could upend that conventional wisdom if it is allowed to stand.
National Sales-Tax Plan Gains Attention in House GOP; Speaker Kevin McCarthy says he doesn’t support plan to replace income taxes and abolish the IRS
Richard Rubin – The Wall Street Journal
A decades-old proposal to replace federal income, estate and payroll taxes with a national sales tax has gained support and attention in the new House GOP majority, but House Speaker Kevin McCarthy said he doesn’t favor the policy. The so-called FairTax, if enacted, would be the largest structural change in U.S. taxation in 110 years. Wages, capital gains and corporate profits would become tax-free. The new levy would hit consumption instead. The national sales tax would apply to a broad base including food, medical care and new homes.
IRS harshly punishes taxpayers who accidentally break the rules
Jacob Sullum – Chicago Sun Times
As tax season begins, the IRS is making a show of using its newly expanded budget to improve the agency’s “customer service,” mainly by trying to answer the questions of perplexed taxpayers more than 13% of the time. Its biggest challenge will be persuading Americans that they qualify as customers of the IRS in any meaningful sense. The IRS, after all, does not provide goods or services that anyone would voluntarily choose to buy. Its main function is separating people from their money, and its chief tool is fear, as illustrated by the $2.1 million penalty it imposed on an 82-year-old grandmother for failing to file a form on time.
US Treasury Denies Republicans’ Request for Hunter Biden Records; Department asks for more details on why they want the reports; President’s troubled son has been a target for Republicans
Billy House – Bloomberg
The US Treasury Department refused Wednesday to provide House Republicans any suspicious activity reports it may have on foreign banking and other business transactions by Hunter Biden and other members of President Joe Biden’s family. Jonathan Davidson, Treasury’s legislative affairs chief, told House Oversight and Accountability Chairman James Comer in a letter that he needs more details about why the panel is seeking such “highly sensitive” information.
DoubleClick Deal Started ‘Google’s March to Monopoly,’ US Says; A new lawsuit aims to force the internet giant to break off parts of its ad-tech business.
Julia Love and Davey Alba – Bloomberg
Legal pressure has been mounting on Alphabet Inc.’s Google for years, making a large showdown over the company’s market power seem increasingly unavoidable. A new lawsuit in which the government claims that company is illegally monopolizing the advertising-technology business and needs to be broken up has the potential to be the main event.
US Natural Gas Falls Below $3 for First Time Since May 2021; Mild weather and surging production weigh on gas prices; Extended outage at LNG export plant boosted domestic supply
Gerson Freitas Jr – Bloomberg
US natural gas futures extended declines below $3 amid mild winter weather that’s helped spark the worst selloff among the country’s commodities. Gas for February delivery traded as low as $2.919 per million British thermal units early on Thursday on the New York Mercantile Exchange. Prices are at the lowest levels since May 2021 after dipping below $3 on Wednesday.
Russian Oil Switching at Sea Gathers Pace in Wake of European Sanctions; Urals transfers could reach 14 million barrels in this month; G-7 price cap, shortage of ice-class tankers boost transfers
Sherry Su – Bloomberg
Russia is transferring record amounts of its flagship Urals crude at sea as Moscow tries to overcome freight costs that soared following European sanctions. A total of 19 million barrels of the crude will likely get transfered at sea this month and last, according to tanker tracking data compiled by Bloomberg. The January tally alone is likely to set a record at 14 million barrels.
Wall Street Trades in Asset-Backed Securities Face SEC Scrutiny for Conflicts; Regulator proposes plan to reduce conflicts of interest; Banks issuing ABS couldn’t bet opposite investors for one year
Lydia Beyoud and Dan Wilchins – Bloomberg
Wall Street firms that help issue asset-backed securities wouldn’t be able to bet against those products under a plan from the US Securities and Exchange Commission. The SEC’s five commissioners on Wednesday voted unanimously to propose new conflicts-of-interest regulations for investment banks and others involved in securitizations. The new restrictions wouldn’t cover market making or trades to hedge against risk, according to the commission.
Commissioner Goldsmith Romero to Participate in the American Bar Association Derivatives and Futures Law Committee Winter Meeting
Commissioner Goldsmith Romero will participate on a panel entitled, Looking Forward, at the American Bar Association Derivatives and Futures Law Committee Winter Meeting.
CFTC Approves Technical Corrections to Swap Dealer Regulations
The Commodity Futures Trading Commission unanimously approved a final rule to make non-substantive technical corrections to the CFTC’s regulations for swap dealers and major swap participants in Part 23.
SEC mulls Wall Street ‘conflicts’ rule, a decade after 1st try
Wall Street’s top regulator on Wednesday was set to unveil a rule barring traders in asset-backed securities from betting against the very assets they sold to investors, behavior that became infamous in the wake of the 2008 global financial crisis. In Washington, the U.S. Securities and Exchange Commission’s five members were due to vote on whether to propose the rule formally at a meeting set to begin at 10 a.m. EST. The rule is among the last yet to be adopted under the landmark Dodd Frank Wall Street reform legislation of 2010 that sought to address the root causes of the mortgage crisis, SEC officials said.
The Office of the Advocate for Small Business Capital Formation hosts an annual Capital Call styled after public companies’ earnings release calls, where we talk about what’s happening with capital raising from startup to small cap. The public has an opportunity to ask live questions about our annual report to Congress and the Commission and share perspectives on capital raising. Video recordings from prior Capital Calls are located below, alongside links to the relevant annual reports.
Silvestre Fontes Named Director of Boston Regional Office
The Securities and Exchange Commission today announced that Silvestre A. Fontes has been named Regional Director of the Boston office, starting next week.
John Dugan and Kevin Kelcourse, who have served as Acting Co-Regional Directors, will remain as Associate Regional Directors of the office’s Enforcement and Examinations programs, respectively.
SEC Proposes Rule to Prohibit Conflicts of Interest in Certain Securitizations
The Securities and Exchange Commission today proposed a rule to implement Section 27B of the Securities Act of 1933, a provision added by Section 621 of the Dodd-Frank Act. The rule is intended to prevent the sale of asset-backed securities (ABS) that are tainted by material conflicts of interest. Specifically, the rule would prohibit securitization participants from engaging in certain transactions that could incentivize a securitization participant to structure an ABS in a way that would put the securitization participant’s interests ahead of those of ABS investors. The Commission originally proposed a rule to implement Section 27B in September 2011.
Statement on Prohibiting Conflicts of Interest in Securitizations
Chair Gary Gensler – SEC
Today, the Commission is considering whether to re-propose rules to prohibit a range of market participants that sell or sponsor asset-backed securities (ABS) from taking positions against those very products. I am pleased to support this re-proposed rule as it fulfills Congress’s mandate to address conflicts of interests in the securitization market, which contributed to the 2008 financial crisis.
Statement on Prohibiting Conflicts of Interest in Certain Securitizations
Commissioner Jaime Lizarraga – SEC
While “asset-backed securities” may not be a household term, it has direct implications for millions of working households. So much so that in both 2008 and during the Covid-19 pandemic, the Federal Reserve set up emergency loan facilities to prevent interruptions in this market.
Today, the Commission re-proposes a Dodd-Frank Act rule, originally proposed in 2011, that is designed to address the harmful conflicts of interest in the asset-backed securities market that played a significant role in the 2008 financial crisis.
Statement on the Proposed Rule: Prohibition against Conflicts of Interest in Certain Securitizations
Commissioner Mark T. Uyeda – SEC
Thank you, Chair Gensler. Before I discuss today’s proposal, I want to recognize Renee Jones for her leadership of the Division of Corporation Finance since June 2021 and wish her the best in her return to academia. Congratulations to Erik Gerding as he prepares to step into his new role as Renee’s successor. I also want to recognize Dan Berkovitz for serving as general counsel to the Commission, as well as a lifetime of public service, including as a Congressional staffer and at the Commodity Futures Trading Commission, both as general counsel and a commissioner.
Statement on the Prohibition against Conflicts of Interest in Certain Securitizations Re-proposal
Commissioner Caroline A. Crenshaw – SEC
The Commission is proposing to implement Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Even though it has been said frequently, I’d like to commend the work of so many tireless advocates, public servants, and elected officials in shepherding through a statute to protect American investors and their families, and to reduce the likelihood of a recurrence of the events that led up to the Global Financial Crisis of 2007-2008. And I also want to applaud the Commission staff for ensuring that Dodd-Frank, and all of our relevant statutes, are faithfully and meaningfully implemented.
Statement on Proposed Rule: “Prohibition Against Conflicts of Interest in Certain Securitizations”
Commissioner Hester M. Peirce – SEC
Thank you, Chair Gensler. I support putting out a new proposal as a step toward compliance with a more-than-decade-old mandate from Congress, but I have numerous questions about its content. The proposal should narrowly implement this mandate given the admitted lack of problems in the market. The release acknowledges that “[c]urrent market practices may be generally consistent with the re-proposed rule requirements as a result of market participants’ current compliance with the existing rules and reputational incentives.”
UK Treasury Taskforce gears up for accelerated settlement exploration with new appointment; The taskforce will examine the case for quicker settlement times, with initial findings due to be published by December.
Wesley Bray – The Trade
Tony Freeman, director of policy at non-profit industry body and catalyst for collaborative innovation within the capital markets, ISITC Europe CIC, has joined the recently launched UK Treasury Taskforce for accelerated settlements. Launched on 9 December 2022, the Accelerated Settlement Taskforce looks to explore the potential for faster settlement of financial trades in the UK.
Investing and Trading
The US Hasn’t Noticed That China-Made Cars Are Taking Over the World; The country is poised to become the No. 2 exporter of passenger vehicles, surpassing the US and South Korea and risking new tensions with trading partners and rivals.
Tom Hancock – Bloomberg
When Andreas Tatt, a manager at a greeting card company in Canterbury, UK, was interested in buying a new car, he knew he’d go electric. But after considering a Tesla Model 3 and the Porsche Taycan, he settled on a less familiar choice: a yellow-gold, battery-powered Polestar 2 manufactured by Volvo and its Chinese parent Zhejiang Geely Holding Group Co.
Argentina’s Bond Buyback Plan Sets Off Moody’s Default Alarm; Moody’s says buyback is tantamount to a ‘distressed exchange’; Some investors dubious buyback warrants default classification
Scott Squires – Bloomberg
Argentina’s plan to repurchase $1 billion of overseas bonds meets the definition for a default, according to Moody’s Investors Service. The credit assessor sees that the nation’s strategy of buying back short-dated dollar bonds – primarily those due in 2029 and 2030 – through direct market purchases as tantamount to a “distressed exchange and hence a default under our definition,” Moody’s analysts including Jaime Reusche wrote in a note.
Blackstone Gets Extra $500 Million From University of California
John Gittelsohn – Bloomberg
The University of California is investing $500 million more into Blackstone Inc.’s massive real estate fund for wealthy investors, adding to a $4 billion commitment earlier this month. The new investment, which is expected to close March 1, will have the same structure, terms and fees as the university’s initial stake in Blackstone Real Estate Income Trust, according to a statement Wednesday.
Tesla Keeps Losing Money on Bitcoin. But Elon Musk Is Still Holding.
Jack Denton – Barron’s
Tesla continued to hold onto its digital assets through the depths of a brutal bear market, with the electric-vehicle maker recording a write-down on its Bitcoin holdings after a turbulent fourth quarter. Elon Musk’s company shows no signs of selling.
‘Peak Passive’ Seems Closer, But Just How Much? Actively managed funds await their day to shine again, but they may find less of a turn down from indexing than a plateau. Plus: Tesla’s Elon moment.
John Authers – Bloomberg
Peak Passive, Here We Come?
If there’s been one thing to rely on over the last decade, it’s been the flow from active to passive funds, particularly exchange-traded funds and particularly in the US. Indexed investing grew steadily throughout the 1980s and 1990s, and ate into the share of traditional active managers – but the growth and popularization of ETFs has sparked an outright exodus of money from active funds:
Environmental, Social and Corporate Governance
It’s not easy being green: why the FX market is lagging on ESG And what’s being done to fix it
Natasha Rega-Jones – Risk.net
Imagine a meeting of desk heads at a bank, to discuss progress on ESG transactions. The rates head describes an interest rate swap linked to climate metrics. The equity head talks about an index futures trade that tracks environmental benchmarks. Then it’s the turn of the foreign exchange head – and an awkward silence. The FX market has slipped behind other asset classes in developing trades linked to environmental, social and governance factors. But banks are working to reverse this trend.
What is ‘greenhushing’ and why is it a risk for sustainability professionals?; Sustainability professionals are well-versed in the risks of greenwashing, but now some corporates are being accused of “greenhushing”. So, what is greenhushing and why is it important that we get to grips with this growing trend and the risks that it brings?
Matt Mace – edie
Data from RepRisk shows that one in every five cases of corporate risk incidents linked to environmental, social and governance (ESG) issues stems from greenwashing. It is an issue that every sustainability practitioner has had to grapple with and, as frameworks like the Competition and Markets Authority’s (CMA) Green Claims Code emerge, the number of corporates called out for false green claims may well grow. To avoid greenwashing accusations, some brands and businesses may feel compelled not to communicate as much about their environmental plans, instead sitting quietly on the information they have – or don’t have – and going about progressing towards targets in silence. This practice is known as ‘greenhushing’. Greenhushing gained traction when it was first covered consultancy Treehugger back in 2020, which at the time claimed that greenhushing would happen because businesses were hesitant to share progress on sustainability initiatives.
Corporate Sustainability Due Diligence; An effective approach for financial institutions
AFME, ISDA, FIA and EPIF (the “Associations”) highlight the importance of ensuring that the proposed EU Corporate Sustainability Due Diligence Directive (“CSDDD” or the “Directive”) takes a proportionate, riskbased and workable approach and provides a clear, practical and legally certain framework. As has been highlighted by associations representing businesses and in the discussions in the Council and the European Parliament, all companies (including financial institutions) will face significant challenges with applying the proposed due diligence obligations to their downstream value chains. This paper highlights the serious challenges faced by financial institutions if the obligations are applied beyond their upstream supply chain to their relationships with corporate clients or trading counterparties in their downstream value chain. We have significant concerns with proposals to extend the scope of downstream financial services that would be included in the scope of the Directive.
Biden’s Push to Slash Truck Pollution Has a Hidden Loophole; An exemption backed by engine manufacturers weakens the rule’s emissions-cutting potential.
Jennifer A Dlouhy – Bloomberg
When Biden administration officials unveiled a first-in-decades crackdown on pollution from heavy-duty trucks last month, they touted the requirements as a major step toward cleaner air and environmental justice. The measure compels engine makers to adopt technology designed to curb tailpipe emissions. Tucked inside the 1,200-page rule, though, is an exemption – pushed by manufacturers including Daimler Truck North America and Navistar International Corp. – that threatens to obliterate the regulation’s smog-cutting potential.
DWS unveils ETFs targeting UN sustainable development goals; Range includes individual SDG ETFs on themes such as good health, sustainable cities and clean water
Sandra Heistruvers – Financial Times
DWS is launching a seven-strong range of thematic exchange traded funds that specifically target United Nations’ Sustainable Development Goals. The listed Euro 833bn asset manager has started trading the first three ETFs of the new Dublin-domiciled Xtrackers product suite in London, Frankfurt and Zurich, while the remaining four products will be listed in the next few weeks.
BOJ Record Suggests High Hopes for Expanded Fund Operations
Toru Fujioka – Bloomberg
The Bank of Japan indicated it had high hopes its enhanced fund supplying operations will help its yield curve control program, after the latter came under the most intensive market attack under Haruhiko Kuroda’s decade-long governorship earlier this month. “It is expected that continuing with nimble conduct of market operations while making use of the Funds-Supplying Operations against Pooled Collateral will improve market functioning,” one member said at the January 17-18 policy meeting according to the summary of opinions released Thursday.
Fear of BOJ Turning Hawkish Spurs 94% Jump in Shorter Bond Sales; Sales of bonds maturing in over five years plunged this month; Short-dated credit is less vulnerable to interest-rate action
Ayai Tomisawa – Bloomberg
Growing expectations that the Bank of Japan will drop its yield-curve control policy sooner rather than later are triggering a 94% surge in sales of yen bonds with shorter maturities that are less vulnerable to future interest-rate action. A possible future BOJ policy change would lead to bigger losses for debt with longer maturities. Sales of Japanese corporate bonds maturing in more than five years have plunged by more than half so far this month.
Popular 401(k) Funds Rebound After Tanking in 2022; Some of the biggest actively managed funds in 401(k)s are outperforming thanks to a comeback in tech stocks.
Suzanne Woolley – Bloomberg
Checking your 401(k) account balance is a little less painful these days. Popular active equity funds in 401(k)s tanked last year because of their heavy focus on the big technology companies that got battered by surging inflation and steep interest rate hikes. Those same stocks have given them a boost so far in 2023. Fidelity Contrafund (FCNTX), Growth Fund of America (AGTHX), T. Rowe Price Blue Chip Growth (TRBCX), Harbor Capital Appreciation (HNACX) and Fidelity Growth Company (FDGRX) are up anywhere from 5.4% to 8.8% through Tuesday’s close. By comparison, the S&P 500 is up 4.6%.
Light Street Fell 54% Last Year, Rivaling Tiger Global’s Plunge
Nishant Kumar and Hema Parmar – Bloomberg
Light Street Capital Management’s hedge fund tumbled 54% in 2022, according to a person familiar with the matter, one of the industry’s worst performances last year. That drop rivals the 56% decline for Tiger Global Management, and is steeper than Lone Pine Capital’s 36% loss and Whale Rock Capital Management’s 45% slide.
Credit Suisse Dismisses Bankers in Mexico as Part of Global Job Cuts
Michael O’Boyle – Bloomberg
Credit Suisse Group AG dismissed most of its team of Mexico-based bankers as part of its global drive to shrink its investment bank, according to people with knowledge of the matter. The cuts were focused on structured-finance investment bankers, leaving the brokerage unit standing, one of the people said, asking not to be identified discussing information that isn’t public.
Vidrio Financial and Qontigo announce expanded partnership to accelerate risk management solutions for public and private market allocators
Vidrio Financial (‘Vidrio”), a provider of managed data services and software for global institutional allocators, today announced the expansion of their existing partnership with the leading global provider of risk solutions, Qontigo, to work more closely together and provide enhanced risk solutions to the multi-asset class institutional allocator market.
Vidrio Financial and Qontigo Announce Expanded Partnership to Accelerate Risk Management Solutions for Public and Private Market Allocators
Vidrio Financial (‘Vidrio”), a provider of managed data services and software for global institutional allocators, today announced the expansion of their existing partnership with the leading global provider of risk solutions, Qontigo, to work more closely together and provide enhanced risk solutions to the multi-asset class institutional allocator market.
Credit Suisse Asset Management hires ex-HSBC stewardship head to lead active ownership; Christine Chow will report to Credit Suisse’s global head of sustainable investing Jeroen Bos
Penny Sukhraj – Financial News
Credit Suisse Asset Management has hired Christine Chow as a managing director and head of the firm’s active ownership unit. Chow, HSBC’s former head of stewardship, will be based in London when she steps into the role on 1 April, and will report to Credit Suisse’s global head of sustainable investing Jeroen Bos. Credit Suisse said she will work alongside Dominik Scheck, its head of ESG integration. She will also work closely with the head of sustainability research, Nisha Long, who joined the firm this month along with other hires Credit Suisse made to build out its sustainability team.
Work & Management
Remote Work Saves Global Commuters 72 Minutes a Day, Study Finds
Michael Sasso – Bloomberg
Working from home is saving commuters around the world 72 minutes a day, time they’re splitting between their jobs, leisure and caregiving, a new study shows. Remote staff are saving the most time in China, where forgoing the trek to and from one’s workplace is freeing up 102 minutes a day, according to the study published this month by the National Bureau of Economic Research. Serbian workers saw the smallest savings of 51 minutes, while those in the US also saw a comparatively low 55 minutes spared.
Credit Suisse’s laid-off bankers will not face bonus clawbacks; Complexity continues as Swiss bank looks to tweak its bonus arrangements again
Paul Clarke – Financial News
A Credit Suisse bonus scheme that gives more upfront cash to senior bankers in a bid to retain talent comes with a sting in the tail – anyone who quits within three years has to pay back the full amount. But as the Swiss bank embarks on a cost-cutting programme that will see 9,000 jobs stripped out by 2025, there is some reassurance for dealmakers – laid-off bankers will not have to return their bonuses.
Laid-Off Foreign Tech Workers Are Set to Find New Jobs in Chicago; More than 35 firms in the region are hiring H-1B visa holders; City says being open to immigrants is a competitive advantage
Isis Almeida – Bloomberg
Chicago is looking to attract a myriad of foreign workers laid off by technology giants as companies in the city and its suburbs seek to lure top talent and fill thousands of open positions. More than 35 firms in the Chicago region are willing to hire workers on H-1B visas, given to foreign employees in specialty occupations such as software engineering. The companies have teamed up with the city and P33, a nonprofit organization founded by former Secretary of Commerce Penny Pritzker, to build a job-listing website that debuts on Wednesday.
The inside story of ChatGPT: How OpenAI founder Sam Altman built the world’s hottest technology with billions from Microsoft
Jeremy Kahn – Fortune
A few times in a generation, a product comes along that catapults a technology from the fluorescent gloom of engineering department basements, the fetid teenage bedrooms of nerds, and the lonely man caves of hobbyists-into something that your great-aunt Edna knows how to use. There were web browsers as early as 1990. But it wasn’t until Netscape Navigator came along in 1994 that most people discovered the internet.
IBM to Cut About 3,900 Workers, Still Hiring in ‘Higher Growth’ Areas; Company will cut about 1.5% of workforce, CFO Kavanaugh says; Free cash flow in 2023 projected to be $10.5 billion
Brody Ford – Bloomberg
International Business Machines Corp. delivered an upbeat annual sales forecast while announcing it would eliminate about 1.5% of its global workforce, following similar job cuts the past few months by many of its technology peers. The reductions will amount to a “ballpark” figure of 3,900, Chief Financial Officer James Kavanaugh said Wednesday in an interview.
As Tech Layoffs Mount, Employer-Employee Relations Grow Toxic; Companies have made some bad choices, and workers are bearing the brunt.
Jessica Karl – Bloombierg
Imagine it’s your first day on the job. You eat the free donuts. Learn where the bathrooms are. Create 87 different passwords. Divulge two truths and a lie to a circle of strangers. Interact with a chipper HR employee. And THEN you watch that person – the one onboarding you! – get fired midway through their introductory speech. Moments ago, they were praising the company’s pillars of honesty, respect and trust. Now, they’re locked out of their email. What a hospitable welcome.
Reinventing Wall Street’s apex predator
Alice Fulwood – The Economist
It has been a rough few weeks for Goldman Sachs. On January 11th the firm laid off roughly 6% of its workforce. A week later it posted dismal fourth-quarter and full-year earnings, including a quarterly return on tangible equity-a measure of profitability-of just 4.8%, its worst in a decade. Employees in the firm typically get told their bonuses the day after full-year results are announced. The bonus pool is reported to be down 40-50% on last year. This is familiar to me. I joined a trading desk at a European bank in 2012, after a year in which the euro-zone debt crisis had killed profits. The firm was in the middle of a huge post-crisis reshuffle. A month or so after I joined, it laid off thousands of workers, most of whom only found out when their access cards no longer worked. When I walked into the lobby at 6.30am there were bouncers manning the turnstiles.
Giving Four Months’ Notice or Paying to Quit Has These Workers Feeling Trapped; At Concentra, financial penalties built into contract clauses discourage unhappy employees from taking other jobs.
Josh Eidelson and Zachary Mider – Bloomberg
Last spring, a doctor for Concentra Inc., the leading US occupational health-care company, told his boss he wanted to quit. The workload of as many as 40 patients a day was too great, and the breaks were too short, he says. He’d gotten so used to inhaling his lunches in a couple minutes that he’d started racing through meals with his family, too. But Concentra wasn’t ready to let him go.
When bringing your ‘whole self’ to work could be a bad idea; It’s a popular HR talking point. But deciding how much of your true self to share is more complicated.
Stephanie Vozza – FastCompany
You should never change who you are to fit into a job or company culture. According to an article in Psychology Today, authenticity is linked to self-esteem and can protect against mental illness. But should you reveal all of yourself at the office? While “bring your whole self to work” is a popular HR talking point, in some cases it could do more harm than good, says Erin Thomas, head of diversity, inclusion, and belonging for the talent marketplace Upwork.
America’s Coming Demographic Crisis Is Bad News for Employers; A tight labor market that’s getting tighter and falling birth rates spell trouble for the world’s largest economy.
Stephanie Flanders and Michael Sasso – Bloomberg
We all might one day be replaced by robots or ChatGPT. But for now, businesses still need humans to make computer chips or staff daycare centers. Problem is, too few workers in the US are actually working and too few people are having babies. That’s a major concern for American industry, policymakers, and most immediately, tech giant Intel Corp. The company is trying to find 7,000 people in central Ohio to build its new semiconductor facilities and 3,000 more to staff them.
Ranks of Quiet Quitters Climb as Layoffs Mount; Surveys from Gallup and a human-resources association capture a hybrid workplace with growing confusion and distrust.
Matthew Boyle and Jeff Green – Bloomberg
Close to one in five workers has fully checked out on the job, and employees’ sense that they’re being treated fairly has plummeted, according to two new surveys that paint a dismal picture of the American workplace.
Covid Boosters Protect Against Latest Omicron Strains in Study; Study relieves some concern about immune-evasive mutants; FDA advisers to discuss vaccine schedule, composition Thursday
Tanaz Meghjani and Madison Muller – Bloomberg
Updated Covid-19 boosters originally designed to protect against early omicron strains continued to reduce rates of illness from new mutants that have since spread rapidly throughout the US. The shots’ effectiveness against symptomatic infection ranged from 38% to 50% in recent months as the XBB and XBB.1.5 strains became dominant, Centers for Disease Control and Prevention scientists said Wednesday. The boosters helped most in adults from the ages of 18 to 49, according to a study in CDC’s Morbidity and Mortality Weekly Report.
China says COVID deaths, severe cases have fallen over 70% since peak
Critically ill COVID-19 cases in China are down 72% from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped 79% from their peak, the Center for Disease Control and Prevention said on Wednesday. The figures, published on the centre’s website, come after a prominent government scientist said over the weekend that 80% of China’s 1.4 billion population had already been infected, making the possibility of a big COVID-19 rebound over the next two or three months remote.
FDA’s One-Size-Fits-All Covid Booster Plan Needs to Go; Public health officials should recognize that additional shots are now a more nuanced decision.
Faye Flam – Bloomberg
The Food and Drug Administration needs a new Covid vaccine policy that follows the latest immunology and vaccine efficacy data. At a meeting scheduled for Thursday, the agency should acknowledge booster shots aren’t having much effect on the spread of Covid. Pushing them on young, healthy people is a waste of resources and a drain on public trust.
Taiwan’s President Says War With China Is ‘Not an Option’
Betty Hou – Bloomberg
Taiwanese President Tsai Ing-wen told Pope Francis that war with China was “not a option,” reaffirming her desire to avoid a conflict that could drag in the US. Tsai used a letter to the pontiff marking World Peace Day to press her case for a peaceful resolution of Taipei’s dispute with Beijing. In the letter, which was released Monday, Tsai expressed her support for the Vatican’s positions on Russia’s war against Ukraine and restated her stance on maintaining stability across the Taiwan Strait.
Hindenburg vs Adani: The Short Seller Taking on Asia’s Richest Person; A short seller with a nose for fraud is taking aim at Gautam Adani, one of the world’s richest people. Cue the fireworks.
Edward Ludlow and Katherine Burton – Bloomberg
Over the past few years, Nathan Anderson has made a name with analysis that sends stocks sinking. Now the activist short seller behind Hindenburg Research is going after his biggest game yet – what Hindenburg is calling, with characteristic chutzpah, “The Largest Con in Corporate History.” His target: Indian industrialist Gautam Adani, a figure even richer than Bill Gates or Warren Buffett, with a net worth of $113.4 billion, according to the Bloomberg Billionaires Index.
The Adani Short Sale Puts Investor Trust in India in Doubt; A rise in jingoistic nationalism has added a new element of impunity to the behavior of some corporate chiefs.
Andy Mukherjee – Bloomberg
The big stock-market scams in India over the past 30 years exploited vulnerabilities in the local banking system. However, the country’s growing integration with the global economy and international capital means that preparations for the next big scandal may well be under way in an overseas financial center like London or Singapore, rather than in Mumbai.
Why Bulgaria Will Struggle to Adopt the Euro by 2024
Slav Okov and Alexander Weber – Bloomberg
Bulgaria is planning to adopt the euro in 2024, further integrating into the European Union’s financial system in a bid to boost living standards in the bloc’s poorest member state. Along with Croatia, Bulgaria joined an exchange rate mechanism in preparation in 2020. But it fell behind Croatia, which became the euro area’s 20th member this year. And even Bulgaria’s less-ambitious timetable is in peril as political instability complicates progress toward clearing the remaining hurdles.
Turkey Offers Favorable Lira Rate for Converting Exporter Income
Beril Akman – Bloomberg
Turkey will provide a more favorable exchange rate to exporters that convert their foreign income into lira and don’t use the proceeds to buy hard currency for some time. The central bank will offer a 2% premium on the current exchange rate for companies repatriating their earnings, according to an announcement published in the Official Gazette. The mechanism will apply to exporters who “make a commitment” not to buy foreign currency for a period that will be disclosed by the monetary authority.
Canadian Oil Flows to Asia Surge After US Refinery Disruptions; Asia buyers to take at least 7 million barrels of Canada crude; Shipments set to reach over one-year high as US demand dips
Canadian crude shipments to Asia are set to surge to the highest in more than a year as US refinery outages force producers to find new outlets for their oil. At least 7 million barrels of heavy-sour crude produced in Canada’s oil sands have been sold to Asian buyers for February loading, according to people familiar with the matter. That’s the most since January 2022, Vortexa data shows.
Bill Gates Asked Why He’s Buying So Much US Farmland: Here’s His Answer In Free-For-All AMA
AJ Fabino – Benzinga
Microsoft founder and billionaire turned philanthropist Bill Gates recently laid to rest the long-time conspiracy theory that he owns some 80% of all U.S. farmland in his 11th appearance in an “Ask Me Anything” (AMA) session on Reddit.