Hits & Takes
By John Lothian & JLN Staff
On Friday, John Lothian News published a video about a new book from a first time author and longtime industry executive, Margaret Wiermanski. She has penned a murder mystery and financial crime thriller set in Chicago’s derivatives markets. It is fiction, but some of the characters will seem very familiar. I could not put the book down and finished it several weeks ago at 11 PM. I really enjoyed the way Wiermanski went into detail about each of the characters.
The book, “Silent Partners” is self published on Amazon and available for download for your Kindle or Kindle app. The proceeds from the book go to the Greenwood Project, a not-for-profit that helps inner city youths find jobs in Chicago’s financial markets. I heartily recommend the book and can’t wait for the next two books Wiermanski has planned as part of a trilogy with this first strong effort.
According to a couple of professors, when the NYSE floor opens again on Tuesday, the return to floor trading may be accompanied by a deterioration in the quality of the daily end of day auctions for NYSE-listed stocks. Edwin Hu (NYU) and Dermot Murphy (U of I – Chicago) found that, once the floor traders’ information privileges were eliminated in the all-electronic trading environment that has existed since mid March, price and volume indications about the closing auction improved. According to the Wall Street Journal, the NYSE disputes the findings. ~Thom Thompson
Nasdaq Chief Economist Phil Mackintosh’s latest blog post is entitled “NMS II: Shifting Stocks Toward a Dealer Model” and is about the SEC’s new NMS II proposals. The deadline for filing comments on these proposals is today.~SR
NYSE’s floor opens again today, but with only a quarter of the usual population of traders, who must wear masks, avoid taking public transportation and follow social-distancing rules, Seeking Alpha reports. The exchange has also put up Plexiglas barriers, and traders must sign liability waivers. More about this and other reopenings in our Lead story below.~SR
Chicago Derivatives Executive Pens Murder Mystery Thriller Set in Chicago’s Markets
Margaret Wiermanski is a longtime derivatives industry back office executive turned author. Silent Partners is a murder and financial crime mystery, and the first of three books she intends to write. The book is set in Chicago’s derivatives markets and involves former floor traders and brokers and their lives after trading floors closed. While this is fiction, some of the characters will seem real to those who work in the Chicago markets. It is a fun thriller and its sales support the Greenwood Project, a Chicago-based charity to introduce minority students to the financial industry.
The Spread: Married to The Job
This week on The Spread – Ed Tilly gives a take on the state of the markets, an industry veteran joins the MIAX Exchange Group, open interest grows for bitcoin options at the CME, and more.
Why failing to reopen Purdue University this fall would be an unacceptable breach of duty
Mitch Daniels – President of Purdue University and a former governor of Indiana
On Feb. 1, watching the outbreak of a new virus in China, our university suspended travel to that country. On Feb. 26, we extended that ban to visiting other countries reporting the infection. On March 10, we decided to close the Purdue University campus for the spring semester and move to remote instruction. On March 17, we canceled our traditional commencement.
*****I am not worried too much about the college students getting and surviving the virus, but I am concerned about the older faculty members.~JJL
Scared Americans Desperate to Travel Are Buying Up ‘Covid Campers’; Recreational vehicle dealers report a tide of customers desperate to get away, but wary of cities, crowds and the coronavirus.
Jeff Green – Bloomberg
Floor traffic at Mike Regan’s two RV dealerships outside Austin, Texas, is up 30% compared with last May. And the reason is fear. Cooped-up Americans desperate to get out after months of lockdowns are dreaming of doing something—anything—that resembles a vacation. But a majority of them worry a second wave of the coronavirus is coming, and think politicians have pushed too fast to reopen. Unsurprisingly, when it comes to getting out of Dodge, the close-quarters of an airline cabin are a no-go.
*****My wife and I were looking at campers before this all happened. In fact, the last large event we went to was a show in February before all the virus news became a thing.~JJL
Friday’s Top Three
Our top story Friday was Ronin expanded rapidly before flaming out, accounts show, from Risk.net. Second was It Plays Better with Reverb: Thoughts on a New Model of Data Sharing, Trading Technologies’ blog post about its new Echo Chamber alternate data feed. Third was Politico’s Plagued by stock trades, Loeffler vows she won’t drop out about Senator Kelly Loeffler’s battle to keep her seat amid questions about her stock portfolio.
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NYSE Trading Floor Reopens as Lockdowns Loosen Further; Floor trading set to resume Tuesday; crowds hit beaches in Florida and Italy; and the NBA looks to a July restart in Florida
John Lyons and Sune Rasmussen – WSJ
The New York Stock Exchange is set to resume floor trading Tuesday as reopenings accelerate in the U.S. and around the world. Declining coronavirus cases and slowing death rates are fueling hopes that the worst of the pandemic is over—despite concerns about possible new waves of infection.
Market ‘distress’ over virus sparked emergency Wall St measures; Banks needed two weekend meetings to clear backlogs of failed trades
Laura Noonan in New York and Philip Stafford – FT
More than 270 of Wall Street’s key trading staff were summoned for emergency weekend duty to clear a massive backlog of failed trades in March and April, highlighting the stress that built up in the financial system when the coronavirus crisis tore into markets.
The Fed’s Rescue of Risk-Takers Creates Dangers for the Future; What can the central bank do to stop executives from loading up their balance sheets with debt again?
Brian Chappatta – Bloomberg
When the coronavirus pandemic reached America’s shores, bond traders knew exactly what to sell first.mIn the span of four and a half weeks, from Feb. 19 to March 23, the gap between rates on U.S. Treasuries and corporate bonds rated double-B, or just below investment-grade, spiked to 8.65 percentage points from 1.9 percentage points—a sign investors were demanding higher premiums to take the extra risk. That kind of punitive interest rate, unseen in more than a decade, froze the market for new debt for all but the bravest borrowers at a critical time.
Europe Is Opening for Business But Isn’t on Sale; The region’s companies are becoming more attractive takeover targets, but sealing the deal is getting more difficult
Rochelle Toplensky – WSJ
Don’t be fooled by the knockdown prices; corporate Europe isn’t on sale. European companies are cheap relative to U.S. rivals, which have strong dollars and higher-valued shares to spend. But new hurdles are also forming that will make it harder for outsiders to pursue acquisitions in the region.
Big Short in U.S. Stocks Needs Watching, Says One Market Veteran
Adam Haigh – Bloomberg
A large bearish position in U.S. equities that’s been amassed by trend-following funds may prove vital to the next move for stocks, according to a strategist who’s been analyzing markets since the early 1990s. The S&P 500 Index is now trading within 50 points of its 200-day moving average, a metric that’s proved important when breached in the past for changes in positioning by commodity-trading advisers, known as CTAs, according to an analysis from James McCormick at NatWest Markets Plc.
CFTC Issues COVID-19 Customer Advisory on Commodity ETPs and Funds
The Commodity Futures Trading Commission today issued a Customer Advisory informing the public about the unique risks associated with certain trading vehicles that use futures contracts or other commodity interests as they make investment decisions during the COVID-19 (coronavirus) pandemic. This is the third Customer Advisory the CFTC has issued in response to the pandemic and is a joint product of the Office of Customer Education and Outreach (OCEO) and the Division of Swap Dealer and Intermediary Oversight (DSIO).
U.S. Moves to Audit Chinese Firms. Market Frets Over What Comes Next; Investors worry proposed legislation will further inflame tensions between Beijing and Washington
Dave Michaels and Akane Otani – WSJ
For more than a decade, Chinese companies raised billions by listing their shares on American stock exchanges while avoiding the accounting-quality checks that other public firms endure.
Market ‘distress’ over virus sparked emergency Wall St measures; Banks needed two weekend meetings to clear backlogs of failed trades
Laura Noonan in New York and Philip Stafford – Ft
More than 270 of Wall Street’s key trading staff were summoned for emergency weekend duty to clear a massive backlog of failed trades in March and April, highlighting the stress that built up in the financial system when the coronavirus crisis tore into markets.
US shale industry braces for wave of bankruptcies; Seventeen producers have filed for Chapter 11 so far this year but many more are close
Myles McCormick – FT
The biggest independent shale oil groups in the US reported a record combined loss of $26bn in the first quarter as the sector braces itself for a wave of bankruptcies over the next two years.
The Bond Market Thinks It Knows What’s Coming Next From the Fed
Liz McCormick and Craig Torres – Bloomberg
Yield-curve control seen as tool to adopt in next crisis phase; Fed would peg Treasury rates, likely on maturity of 2-3 years
The Federal Reserve has already unleashed a barrage of new policies to keep the economy out of depression. Investors reckon it’s lining up another one. The Fed’s version of the strategy known as yield-curve control is expected to involve capping yields on government bonds of a chosen maturity – – by buying however much it takes. For central banks that already cut short-term interest rates to zero, it’s a way to signal that they’ll stay low for an extended period, while helping pin down longer-term borrowing costs too.
Only a Few Hedge Funds Made Money in March and April. Here’s How
David Ramli, Bei Hu and Nishant Kumar – Bloomberg
Vigilance, diversity helped in two wildly different months; Focus on industry leaders in China also paid dividends
Father-of-six Nicolas Bryon didn’t get much sleep in March but it wasn’t family duties keeping him up. As global markets crashed, the Sydney-based hedge-fund manager rose every hour to check on his positions and execute trades.
When the C.E.O., Already Facing a Crisis, Gets the Coronavirus; Business cratered at Booking Holdings, the online travel giant. Then its chief executive found out he was sick, too.
Erin Griffith – NY Times
Glenn Fogel was in crisis mode. It was late February, and the coronavirus was spreading. Mr. Fogel, the chief executive of Booking Holdings, the online travel giant that owns brands like Priceline.com, OpenTable and Kayak, was spending nearly every waking moment at his computer as a tsunami of travel cancellations poured in. He quickly paused marketing, halted stock buybacks, froze hiring and raised $4 billion in debt.
BlackRock Is About to Find Skeletons in $45 Billion Bond Market
Love Liman, Anton Wilen, and Leo Laikola – Bloomberg
As BlackRock starts to kick the tires of Sweden’s credit market at the behest of the Riksbank, a world of trouble is about to reveal itself. “This market seems completely dead,” said Hakan Karlsson, chief executive of MaxFastigheter i Sverige AB, a property firm with an unrated bond maturing in September. “If we want to retain the possibility of raising money through bonds, some kind of support is needed for it to function.”
U.S. Labor Department to End Economic-Data Lockups Permanently
Scott Lanman – Bloomberg
Government had suspended briefings because of virus pandemic; Releases without lockups have gone smoothly, department says
The U.S. Labor Department said Tuesday it will permanently end the practice of giving news media early looks at market-moving economic data, after suspending the pre-briefings during the coronavirus pandemic.
The Dow Is Getting Crushed in the Recovery Trade
Sarah Ponczek – Bloomberg
Gap between the Dow and Nasdaq is over 20 percentage points; Famous index excludes stay-at-home winners, elevates losers
This week marks a milestone for the Dow Jones Industrial Average: its 124th birthday. Not that anyone watching markets needs a reminder it’s getting old. Wrinkles show in the gaping divide between the venerable gauge and its younger brethren. Like many grandparents, it’s struggling to keep up with tech. Plunges in Boeing Co. — its biggest member at the start of February — were very costly, and some wonder if the benchmark represents the 21st century economy at all, especially in the coronavirus age.
California Will Get So Hot That Mountain Streams Could Kill
Brian K Sullivan – Bloomberg
Year’s first heat wave will sear much of California by Tuesday; Temperatures will push to 100 degrees or higher in region
It’s going to get so hot in California that people swimming in mountain streams could freeze to death. Much of California, parts of Nevada and Arizona, will be getting their first extreme heat of the year and by Tuesday temperatures will reach 100 degrees Fahrenheit (38 Celsius) in many places and stay there through Thursday. Car interiors will become death traps for children and pets left alone, outside work will be difficult, and the elderly will be at risk, the National Weather Service said.
Banks, Defense Firms Rush to Nab Newly Unemployed Workers; Some employers are hiring people laid off elsewhere or taking advantage of the stability of being an essential industry
Doug Cameron – WSJ
Pockets of hiring have emerged beyond online retailing and grocery delivery, even amid the coronavirus-induced surge in job cuts, as employers adapt to new working practices and changing consumer behavior.
China’s ‘Bat Woman’ Warns Coronavirus Is Just Tip of the Iceberg
Shi Zhengli, a virologist renowned for her work on coronavirus in bats, said in an interview on Chinese state television that viruses being discovered now are “just the tip of the iceberg” and called for international cooperation in the fight against epidemics. Known as China’s “bat woman,” the deputy director of the Wuhan Institute of Virology said research into viruses needs scientists and governments to be transparent and cooperative, and that it is “very regrettable” when science is politicized.
As Covid-19 Cases Wane, A New York Hospital Prepares For A Second Wave; ‘To some extent, we’ve accepted that there will always be Covid patients,’ Lenox Hill Hospital doctor says
Melanie Grayce West | Photographs by Sarah Blesener – The Wall Street Journal
Nazish Ilyas is just now starting to process the last two months of the new coronavirus pandemic. The 35-year-old doctor staffed the hospital’s first unit of Covid-19 patients and oversaw the care of hundreds of other patients with the illness at Lenox Hill, on the Upper East Side of Manhattan. She held the hands of dying patients, carrying out prayers for family members. She treated older married couples and people her age who required ventilators. She got sick with the virus, too.
Lumber Prices Rebound From Coronavirus Decline; Futures are soaring on signs that the home-building season might be salvaged
Will Horner and Ryan Dezember – WSJ
Lumber futures have soared since the start of April, driven by cutbacks at mills, signs that the home-building season might be salvaged and brisk business at home-improvement stores.
Will lockdown permanently change the way we shop? Clicking a few buttons and seeing items appear on your doorstep quickly becomes a hard habit to break
Elaine Moore – FT
The pandemic-driven rise in online shopping feels like the sort of trend that is going to outlast this crisis. It is not a coincidence that Facebook, Shopify and the founder of Stitch Fix have all launched new shopping platforms over the past few weeks.
Some Americans fear their jobs will be lost forever; Concerns grow that labour market recovery will mean fewer positions with lower wages
James Politi and Demetri Sevastopulo Joe Rennison and Patti Waldmeir – FT
When the pandemic hit San Francisco in March, Berta Lopez, 47, was earning $1,000 a week doing a mix of cleaning and child care from 8am to 6pm for a couple employed in the tech sector.
Corporate events get creative to beat lockdown doldrums; Planners move beyond video conferences to entertain clients without meeting in person
Kiran Stacey and Siobhan Riding – FT
Every week, the investment manager Neuberger Berman hosts a networking event where more than 100 people climb on to their bicycles and race each other through a range of picturesque locations.
Can New York avoid a coronavirus exodus? As it prepares to reopen, the city will have to reinvent itself to keep talented people
Joshua Chaffin – FT
Just over a year ago, before the modern plague descended, Manhattan’s Hudson Yards threw a launch party that was Versailles-like in its overabundance of champagne, oysters, top chefs, beautiful people and other trappings of a great city.
Global Leaders Call on UN, Governments to Thwart Health-Care Hackers
Alyza Sebenius – Bloomberg
Diplomats, tech leaders cite peril of attacks during Covid-19; Cyberattacks have been aimed at hospitals, medical researchers
Dozens of global leaders — ranging from former heads of state to private sector executives and Nobel laureates — signed onto a a letter calling on international governments and the United Nations to help prevent the cyberattacks that have plagued health care and research facilities during the coronavirus crisis.
German New Coronavirus Cases Decline as Infection Rate Drops
Andrew Blackman – Bloomberg
Germany recorded a decline in the number of new coronavirus cases and the infection rate dropped further below the key threshold of 1.0.
Project leader: Oxford’s COVID-19 vaccine trial has 50% chance of success – Telegraph
The University of Oxford’s COVID-19 vaccine trial has only a 50% chance of success as the coronavirus seems to be fading rapidly in Britain, the professor co-leading the development of the vaccine told the Telegraph newspaper
Covid-19 Patients Not Infectious After 11 Days: Singapore Study
Yoolim Lee – Bloomberg
Latest findings may have implications on discharge policy; Pre-school staff are among the city-state’s new virus cases
Covid-19 patients are no longer infectious after 11 days of getting sick even though some may still test positive, according to a new study by infectious disease experts in Singapore.
Virus Vaccine Maker’s Bubble Bursts After Stock Crashes
CanSino falls as much as 28% despite upbeat report on product; Market value has fallen $1.9 billion in days after huge gain
No amount of good news could stop CanSino Biologics Inc. shares from falling on Monday. The Chinese vaccine maker tumbled as much as 28% to HK$160 in Hong Kong as a vertiginous rally gave way. The stock had rallied more than 300% this year until Thursday, when cracks first appeared as CanSino slumped 13%. Analysts cited profit-taking as the most likely cause for the drop.
The Pandemic Is Exposing the Limits of Science; The financial crisis tarnished the field of economics. Will the coronavirus do the same for medicine?
Ferdinando Giugliano – Bloomberg
The 2008 financial crisis led the public to discover the limits of economics. The Covid-19 pandemic risks having the same effect on scientists and medical doctors.
Coronavirus Seen Doubling Need for Food Aid in East Africa
Eric Ombok – Bloomberg
Up to 43 million people face acute shortages, according to WFP; Massive locust plague, extensive flooding compound situation
The number of acutely food insecure people in East Africa and the Horn of Africa is likely to increase to between 34 million and 43 million from May through July due to the socio-economic impact of the coronavirus pandemic, according to the World Food Programme.
Exchanges, OTC and Clearing
NYSE to reopen trading floor closed by coronavirus
John McCrank – Reuters
The New York Stock Exchange will partially reopen the trading floors at its iconic 11 Wall Street building on Tuesday for the first time since March 20 when the bourse was forced to go all-electronic due to the coronavirus pandemic.
JPX response to spread of novel coronavirus
In regard to the spread of the novel coronavirus, Japan Exchange Group (JPX) understands the need to fulfil its duty as public infrastructure by ensuring continued smooth operation of the market. For this reason, JPX has responded by establishing a BCP (Business Continuity Plan) Emergency Headquarters headed by Group CEO Kiyota Akira and implementing the following measures.
English translation of Practical Handbook for ESG Disclosure
On March 31, 2020, JPX and TSE released the Practical Handbook for ESG Disclosure, a reference guide for listed companies who are choosing to begin or improve their ESG-related information disclosure. This Handbook has now been translated into English for the benefit of overseas investors and other interested parties. The full Handbook and a summary are available to download from the link below.
SGX and ESS launch essay competition on capital markets of the future
Singapore Exchange (SGX) and the Economic Society of Singapore (ESS) have partnered to launch the SGX-ESS Essay Competition that encourages participants to analyse and debate on how the networks and mechanisms of price formation are likely to evolve in the future. Markets are collections of individual sellers and buyers determining the prices of goods and services to enable transactions. This price formation and discovery is a key function of any benchmark market and has typically been centralised for millennia.
EXASOL AG new in the Scale segment of the Frankfurt Stock Exchange; First IPO of the year / First price: 14.00 euros
Deutsche Börse Group
EXASOL AG (ISIN: DE000A0LR9G9) is listed in the Scale segment of the Frankfurt Stock Exchange today . At the start of trading, the shares of the technology company from Nuremberg were listed at EUR 14.00, the issue price was EUR 9.50.
Webinar: Risk Management in times of COVID-19; Start:27 May 2020 04:00 PM
Margins, collateral, liquidity – It’s anything but marginal
Market turmoil reminds everyone that margin optimization, margin methodologies, counterparty risk, and funding are essential elements in the total risk/reward profile of a portfolio.
Withdrawal of admission of Single Stock Futures and Single Stock Dividend Futures due to corporate actions
Due to corporate actions, the Management Board of Eurex Deutschland took the following decisions with effect from 1 June 2020:
BME: The Medcap Forum To Gather Over 200 Investors For Its 16th. Edition, Starting Tomorrow
To be held virtually due to the Covid-19 crisis; Javier Hernani, CEO of BME, Fernando Ruiz, Chairman of Deloitte, and Antonio Garamendi, Chairman of CEOE, will open the event; José Carlos García de Quevedo, Chairman of ICO, and Juan Carlos Ureta, Chairman of Renta 4, to participate in Wednesday’s session; 52% of the investors that will be attending the conference come from outside Spain; Over the three-day event more than 1,200 one-on-one meetings will be held
Tomorrow marks the start of the 16th edition of the Medcap Forum, which will be held from 26th to 28th May, this year in virtual format due to the Covid-19 crisis. This event has consolidated itself as the must-attend event for small and medium-sized companies, since it will become a meeting point for over 100 companies and 200 investors through more than 1,200 one-one-one meetings over three days.
Transition to EURSTR Price Alignment and Discounting for Euro OTC IRS – Effective July 24, 2020
From CME Clearing
In order to support the market transition from EONIA to EURSTR, and consistent with the wider industry initiative to switch to EURSTR discounting in line with the recommendations of the ECB Working Group, Chicago Mercantile Exchange Inc. (“CME” or “CME Clearing”), pending CFTC approval, proposes to update the PA/discounting protocol for CME cleared EUR interest rate swap products from EONIA to EURSTR (the “Transition”). In accordance with the recommendation of the ECB Working Group and with broader industry initiatives, the Transition will follow a “single day” approach and will take effect on July 24, 2020 (the “Transition Date”), from which date all existing and new positions in such products will be subject to EURSTR PA/discounting.
Performance Bond Requirements: Agriculture, Energy, Equity, Metals & Interest Rates Margins – Effective May 26, 2020
From CME Clearing
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.
Gross Customer Net Option Value Aggregation Implementation – Effective June 01, 202
From CME Clearing
Starting on Monday, June 01, 2020, CME Clearing will begin phasing out of Net Option Value (NOV) net end customer aggregation and move to gross aggregation at the end client level for all clearing members with client accounts.
Valuation Model Change for Four Natural Gas Option Products – Effective May 26, 2020
From CME Clearing
CME Clearing is switching the pricing model used for valuation of four options products on NYMEX European Natural Gas Futures to the Bachelier model, effective with trade date Tuesday, May 26, 2020. (Note that Monday, May 25, is Memorial Day, an exchange holiday, and hence trades executed on CME Globex beginning on the evening of Sunday May 24 will be for trade date Tuesday May 26.)
Nasdaq CSD Iceland Merges With Nasdaq CSD SE – Nasdaq Consolidates Its Central Securities Depository Business In Europe
Nasdaq (Nasdaq: NDAQ) today announced the merger of Nasdaq CSD Iceland with Nasdaq CSD SE (Nasdaq CSD). The combined company, Nasdaq CSD SE, will operate in Latvia, Estonia, Lithuania and Iceland. Subsequently to the merger, the Icelandic branch will be positioned to leverage the full potential of Nasdaq CSD’s securities settlement platform and links to create new opportunities for domestic and international clients. Migration of the securities settlement platform in Icelandic markets is scheduled to be fully implemented on 15 June.
DTCC: Future of Settlement Revamp Depends on Industry Appetite; Client feedback and priorities will drive the next phase of the market structure firm’s project to modernize settlement.
Josephine Gallagher – Waters Technology
Despite the disruption caused by the coronavirus, the Depository Trust and Clearing Corporation (DTCC) hopes to engage with some of clients, market participants, and regulators to determine whether a new settlement service would be valuable to the financial industry, and whether to move forward with developing it.
The Future Of Fintech: The New Normal After The Covid-19 Crisis
Ron Shevlin – Forbes
The “new normal” in banking and fintech is best understood by starting with a look back at what the “old normal” was. The Old Normal: Fintech Fetishism. The Oxford dictionary defines fetishism as “worship of an inanimate object for its supposed magical powers.” That’s a good term for how many people have thought—and still think—of fintech.
UBS to launch fintech venture fund
UBS is building a fintech venture fund to invest hundreds of million of dollars in startups and later-stage firms capable of deepening client engagement, providing alternative financing platforms and improving the underlying operations of the bank.
India tops China in fintech funding in first quarter as pandemic, US trade war prolong ‘capital winter’
Yujie Xue – South China Morning Post
India has overtaken China as Asia’s top destination for venture capital investment in fintech although the lead may not last, according to analysts.
The change at the top comes amid a diminished investment appetite in fintech start-ups due to the economic crisis brought about by Covid-19, with China being particularly hard hit as it was the first market to be affected by the pandemic.
Fintech Companies: How Financial Advisors Can Win The Data Race
Morey Stettner – Investor’s Business Daily
Since 2016, new fintech companies that support financial advisors have vied for recognition in an annual contest. Each year, fledgling software companies showcase their technology and how it helps advisors succeed.The XY Planning Network, a national membership association that provides resources for fee-only advisors, organizes the competition. In 2019, nearly 30 companies too part. Their products ranged from a client survey tool to a digital custodial service.
JPMorgan Says Central Bank Digital FX a Danger to U.S. Power
Joanna Ossinger – Bloomberg
The primary issue is U.S. dollar hegemony, report says; m Firm sees trade settlement, SWIFT messaging system as key
As the idea of central bank digital currencies starts to gain traction, the U.S. in particular needs to pay attention or risk losing a major aspect of its geopolitical power, according to JPMorgan Chase & Co.
“There is no country with more to lose from the disruptive potential of digital currency than the United States,” analysts including Josh Younger, head of U.S. interest-rate derivatives strategy and Michael Feroli, chief U.S. economist, wrote in a report. “This revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services conveys immense advantages.”
Tether stablecoin settled $212 billion worth of value in 2019
Yogita Khatri – The Block
Around $212 billion worth of money was transferred or settled via Tether (USDT) stablecoin in 2019, according to research conducted by The Block’s John Dantoni. Dantoni examined the aggregate value of transactions conducted in Tether in the last year and found that the most substantial quarterly increase was from Q1 2019 to Q2 2019, when Tether’s settlement value increased 220%, from $17.4 billion to $55.7 billion.
Thailand Turns to Blockchain to Boost Renewable Energy Push
Sebastian Sinclair – Coindesk
Thailand is teaming up with a blockchain firm to encourage peer-to-peer trading of renewable energy. Announced on Monday, Thai Digital Energy Development (TDED) – a public-private joint venture – has inked a deal with blockchain energy startup Power Ledger to develop a blockchain-based digital energy business. The deal, also in collaboration with energy suppliers in Thailand, seeks to develop solutions for peer-to-peer energy trading and environmental commodity trading, Australia-based Power Ledger said in a press release.
Binance CEO Says Steem Too Centralized but Exchange Must Support Controversial Hard Fork
Daniel Palmer – Coindesk
Binance is forced to “technically” support last week’s hard fork of the Steem blockchain, according to the crypto exchange’s CEO, Changpeng “CZ” Zhao. In a statement on the company’s official blog Sunday, CZ said that, while the exchange is “very much against zeroing other people’s assets on the blockchain,” to not support it would mean that Binance users would not be able to withdraw their steem tokens.
Lies, damn lies and perjury: new motion against Craig Wright asks for case-terminating sanctions
Stephen Palley – The Block
It’s hard to keep up with all of the ins and outs of the Kleiman v. Wright lawsuit in Florida, a good deal of which has revolved around whether or not Craig Wright is a liar instead of the substantive merits of the case. There’s also a strong likelihood that the case will end up resolving based on the Court’s assessment of Wright’s conduct, as opposed to who is right or wrong.
China’s Crypto Is All About Tracing — and Power; Beijing will come out of the coronavirus crisis with a big first-mover advantage in official digital currency.
Andy Mukherjee – Bloomberg
The coronavirus has disrupted the world in very large ways. While that battle has been waged, however, another event has almost been missed: the birth of a new kind of fiat currency, which could forever reshape the relationship between money, economic power and geopolitical clout.
China’s central bank governor says there is no timetable for digital currency launch
Yogita Khatri – The Block
People’s Bank of China (PBOC) governor Yi Gang has said that the central bank doesn’t yet have a timetable for the official launch of digital yuan.
BitMEX may be faulty, but traders still prefer it
Aakash Athawasya – AMB Crypto
BitMEX is the kid in high school who keeps mucking about and bunking classes, but still ends up with good grades. The Seychelles-based cryptocurrency exchange, known for its highly leveraged Bitcoin derivatives platform, in the past two months has had a number of trading halts, yet by the looks of things, it still is the most liquid exchange in the market.
Coinbase Ventures, Polychain Capital invest $2.5 million in Indian crypto exchange CoinDCX
Yogita Khatri – The Block
Indian cryptocurrency exchange CoinDCX has raised more funds, just two months after its Series A round. The new $2.5 million investment is led by Polychain Capital, with participation from Coinbase Ventures. CoinDCX said this is Coinbase Ventures’ “first investment in an Indian blockchain company,” but the venture firm is already an investor in Mumbai-based Matic Network.
Zcash’s First Halving May Solve Its Inflation Problem
Omkar Godbole – Coindesk
Mining reward halvings are a hot topic in the crypto markets, as they alter a cryptocurrency’s supply and often have a significant impact on prices. Bitcoin, the biggest cryptocurrency by market value, underwent its third halving on May 11, which reduced the reward per block mined to 6.25 bitcoin from 12.5. Bitcoin offshoots bitcoin cash and bitcoin SV also witnessed halvings in April.
Telegram Quits Court Fight With SEC Over TON Blockchain Project
Anna Baydakova – Coindesk
Telegram has thrown in the towel in its court battle against the U.S. Securities and Exchange Commission (SEC) and will no longer be fighting the ban on its blockchain token project. In a filing on Friday (see bottom), the messaging app provider said it was withdrawing its appeal over a previous court decision that backed the SEC in prohibiting the issuance of “gram” tokens to investors both in and out of the U.S.
A member of China’s parliament suggests setting up national blockchain development fund
Yogita Khatri – The Block
Tan Jieqing, a member of China’s parliament, or National People’s Congress, has recommended setting up a national, government-backed blockchain development fund. Jieqing believes that blockchain technology has huge economic potential and can generate employment opportunities, Beijing News reported on Saturday. The current number and scale of blockchain firms in China are small and that needs to be strengthened, according to Jieqing.
Binance Adds ETH and XRP Options Contracts
Arnab Shome – Finance Magnates
Crypto exchange giant Binance announced on Monday the addition of Ethereum and XRP options trading facility. This addition came only a month after the exchange jumped into options trading with Bitcoin contracts. The platform now supports options trading with three digital currencies.
Trump Threatens to Pull Republican Convention From North Carolina; President calls on governor to guarantee event can be held at full capacity, without coronavirus-related restrictions
Andrew Restuccia – WSJ
President Trump threatened to move the Republican National Convention out of North Carolina if the state’s governor can’t guarantee that the event will take place at full capacity. In a series of Monday tweets, Mr. Trump called on North Carolina Gov. Roy Cooper, a Democrat, to reassure Republican officials that the event can continue without coronavirus-related restrictions on the number of attendees.
Beijing seeks to reassure business over Hong Kong security law; But investors fret about threat to city’s autonomy from law that has sparked new pro-democracy protests
Hudson Lockett, Daniel Shane and Sue-Lin Wong – FT
China has sought to reassure international investors that a proposed national security law that critics say gravely threatens Hong Kong’s autonomy would instead improve the business environment in the Asian financial hub.
The G7 must stand up for Hong Kong’s freedom; Britain should lead the way as the territory protests over the national security law
Chris Patten – FT
China’s assault on Hong Kong’s freedom and its outrageous breach of its treaty obligations to this great city are matters of global concern. More than 200 politicians and senior policymakers from 23 countries from every side of politics have already signed a statement denouncing Beijing’s action. The UK must ensure that China’s efforts to impose a new national security law on the territory are on the agenda for the G7 meeting next month.
Li Ka-Shing’s Son Hopes Security Law Will Help Revive Hong Kong
Shirley Zhao – Bloomberg
City clouded by political turmoil, uncertainties: Victor Li; China has proposed a sweeping security law to crush protests
Victor Li, the elder son of legendary Hong Kong tycoon Li Ka-shing, is hoping that a security law proposed by Beijing would help the semi-autonomous Chinese city bounce back from months of social unrest. “Hong Kong is now in an atmosphere of political turmoil and business uncertainties,” the 55-year-old, who seldom comments on politics, said in an email sent Tuesday through representatives of his property flagship CK Asset Holdings Ltd. “I hope the related draft can stabilize Hong Kong and help its society and economy return to normal.”
Trump’s Firing of Watchdogs Must Be Checked; Congress should investigate the removal of inspectors general, and that means Republicans as well as Democrats.
Michael R. Bloomberg – Bloomberg
When Donald Trump’s supporters in 2016 imagined him bringing his television catchphrase — “You’re fired!” — to Washington, they probably didn’t think he meant ethics officers and government watchdogs charged with rooting out illegal activity. The president’s removal of such officials has become so brazen that even a few of his allies in Congress are expressing concern.
How Democrats Became the Party of the Upper Middle Class; Democrats may find it impossible to reclaim their historical identity.
Ramesh Ponnuru – Bloomberg
When House Democrats introduced what they call the Heroes Act this month, they described it as “a bold and comprehensive coronavirus response bill that will meet the challenge this pandemic poses to our nation.” Among its provisions: restoring the full deductibility of state and local taxes, which the Republican tax legislation of 2017 had limited.
Why Delisting Chinese Firms Has Gained Traction in Washington
Naoreen Chowdhury, Sarah Babbage, Benjamin Bain, and Michael Smallberg – Bloomberg
The widening economic tussle between the U.S. and China now involves audits of public companies. A bill that easily passed in the U.S. Senate, and is now under consideration in the House, could force major Chinese companies to stop trading their shares on the New York Stock Exchange and Nasdaq. The bill advanced with speed and unanimity not normally seen in Washington, underscoring the depth of conviction in both parties about confronting China.
China Strongly Condemns U.S. Blacklisting Dozens of Its Firms
China condemned the U.S. adding 33 Chinese entities to a trade blacklist, a move that risks potential retaliation from Beijing as tensions between the world’s two-biggest economies deteriorate further.
Feeding America Should Become a Federal Priority; The Sept. 11 attacks inspired a department of homeland security. Should Covid-19 do the same for food security?
Amanda Little – Bloomberg
It was mid-April when Rosa DeLauro, a Democratic Representative from Connecticut, realized that the U.S. had entered the early stages of a food crisis. Thousands of minimum-wage food workers were contracting Covid-19. Major meat-processing plants were shutting down. Livestock producers were euthanizing their animals by the tens of thousands. Vegetable growers were plowing unsold produce back into the soil. Millions of jobless, hungry Americans were signing up for food relief.
SEC Shuts Down Fraudulent Investment Adviser Targeting Senior Citizens
The Securities and Exchange Commission today announced that it has filed an emergency action and obtained a temporary restraining order and asset freeze against a California-registered investment adviser and his entities to halt an ongoing Ponzi scheme targeting senior citizens in Southern California.
SEC Announces Virtual Conference on Municipal Securities Disclosure; Event Will Be Held Virtually on June 16
The Securities and Exchange Commission today announced that it has rescheduled its conference entitled “Spotlight on Transparency: A Discussion of Secondary Market Municipal Securities Disclosure Practices” for June 16, 2020. The conference is open to the public via live webcast from 1 p.m. to 4 p.m. ET at www.sec.gov, and will be archived on the Office of Municipal Securities (OMS) webpage for later viewing.
SEC Charges Owner of Film Distribution Company with Defrauding Publicly Traded Fund
The Securities and Exchange Commission today announced charges against William Sadleir, the owner of a film distribution company, for defrauding a publicly traded fund of at least $13.8 million.
ASIC bans former Spectrum Wealth adviser for five years
ASIC has banned Hunter Valley-based financial adviser Sean Philip Lewis from providing financial services for five years. This follows an ASIC surveillance of Mr Lewis’ advice while he was an authorised representative of Spectrum Wealth Advisers.
Ex-Citi Banker’s Alleged Ties at Issue in Insider-Trading Appeal
Jonathan Browning, Bloomberg News
When prosecutors knew about possible links between a former Citigroup Inc. banker and a wealthy businessman will be one of the issues reviewed during an appeal in the U.K.’s highest-profile insider-trading case.
Europe’s Banks Are Stronger, but Some May Not Weather Crisis, Regulator Says; European Banking Authority says lenders are more exposed to smaller companies and consumer credit—areas hit hard by coronavirus pandemic
Patricia Kowsmann – WSJ
Europe’s banks have built enough buffers to face the effects of the coronavirus pandemic, but not all will be able to weather a sharp fall in profitability as loans turn sour and the cost of raising funds rises, a banking regulator said Monday.
Investing and Trading
IPO ‘roadshows’ from home cause bankers to question the old ways; Advisers and executives say they do not miss the traditional tours of financial centres
Anna Gross – FT
Anthony Sun carried out the preparation for his stock market listing last month from his children’s bedroom, sleeping in their bunk bed and emerging only to use the bathroom and collect the food his wife left outside the door.
Companies ditch commercial paper to lock in longer-term debt; Coca-Cola, PepsiCo and Pfizer among groups reducing reliance on short-term funding
Eric Platt and Colby Smith – FT
Commercial paper has lost its fizz. Dozens of blue-chip companies including Coca-Cola and PepsiCo, which have long relied on the market to raise cash, are paying off tens of billions of dollars of borrowing in favour of new longer-term facilities.
Just one in 10 fund managers expect V-shaped recovery for US economy; Most investors dismiss optimistic forecast and share the cautious approach of Fed chair
Colby Smith – FT
V, U, W, L — just a handful of the letter-shaped recoveries that investors have put forward as possible paths for the US economy, once the worst of the coronavirus crisis is over. More recently, the idea of a “Nike swoosh” recovery has taken hold, implying a rebound in economic activity that is flatter and slower than the drop.
BOE Isn’t Close to Implementing Negative Rates, Haldane Says
Lucy Meakin and Jill Ward – Bloomberg
‘Reviewing and doing are different things,’ he says on webinar; Says U.K. recovery won’t be sharp after lockdown lifts
One of the Bank of England’s key policy makers played down the possibility of an imminent cut in interest rates below zero, saying that “reviewing and doing are different things.”
JPMorgan Quants Show Where Flows Data Give an Edge or Not
Gregor Stuart Hunter – Bloomberg
Information on investment flows in and out of stocks can prove helpful for certain types of equity strategies, according to the quantitative team at JPMorgan Chase & Co. The most effective approach is to combine short-term momentum and positioning data to create a “flow factor” which can be used to aid portfolio selection and generate higher returns, strategists including Khuram Chaudhry and Marko Kolanovic said in a note dated May 26.
Don’t Expect Mortgage Rates to Drop Much Further; Home loans won’t be able to continue to follow Treasury yields lower given the economic outlook.
Brian Chappatta – Bloomberg erg
On March 17, bond markets were freaking out. The benchmark 10-year Treasury yield had soared 38 basis points, entirely reversing the stunning 34-basis-point drop from the previous day. High-yield credit spreads had just surpassed their early 2016 peak to reach the widest in nearly a decade. Fixed-income exchange-traded funds were in an “illiquidity doom loop.”
Coronavirus Threatens to Hobble the U.S. Shale-Oil Boom for Years; Drillers that survive pandemic are likely to be leaner and less inclined to invest freely in growth
Collin Eaton and Rebecca Elliott – WSJ
American shale drillers helped turn the U.S. into the world’s top oil producer, topping 13 million barrels a day earlier this year. It likely will be years—if ever—before they reach such heights again.
The World’s Smartest Oil Traders Have Taken to the Seas; Amid the oil glut, tankers everywhere are acting as temporary storage capacity. Where this crude ends up will have a big impact on the oil price.
Julian Lee – Bloomberg
The waters off the South African oil storage terminal at Saldanha Bay are getting busy. A small flotilla of tankers full of crude is idling near the busy shipping lanes that link the Atlantic and Pacific Oceans. Their presence, along with similar gatherings of ships all around the world, will be a potential source of oil price volatility for months to come, as global demand begins to recover amid the biggest production shutdown in the oil industry’s 160-year history.
Global Trade Volumes Fall the Most in More Than a Decade
Fergal O’Brien – Bloomberg
Global trade took its biggest hit in more than a decade in March, when the spread of the coronavirus began to take an increasingly heavy toll on businesses. World trade volumes fell 4.3% from a year earlier, the most since 2009, according to the World Trade Monitor. On the month, they fell 1.4% for a third straight decline. The slump is only an initial sign of the damage from the lockdowns to contain the disease, and surveys have since shown a deep recession is underway.
Hedge funds target France as short-selling bans lifted
Maiya Keidan – Reuters
A cluster of big name hedge funds have started betting against French companies, moving in after the lifting of a short-selling ban imposed earlier this year to calm financial markets, an analysis of regulatory filings showed.
JP Morgan DCM syndicate head departs for Citi; Nick Darrant will co-head the DCM syndicate business in EMEA at Citi after five years in a similar role at JP Morgan.
Hayley McDowell – The Trade
Citi has hired the head of debt capital markets (DCM) syndicate for central and eastern Europe at JP Morgan in a leadership shake-up, according to an internal memo seen by The TRADE.
Goldman Sachs ramps up cash management plans despite coronavirus; US bank expected to pay up to 200 basis points more than rivals on some deposits
Laura Noonan – FT
Goldman Sachs is planning to launch its fledgling cash management operations in the UK by September and across Europe by the end of the year, as the bank presses ahead with investment in the division in spite of the coronavirus crisis.
HSBC board rethinks overhaul and seeks even sharper cuts; More drastic action sought three months after unveiling plan to slash 35,000 jobs and $4.5bn of costs
Stephen Morris and Laura Noonan – FT
HSBC’s board is set to deepen the biggest restructuring in the bank’s 155-year history after deciding that the coronavirus crisis requires more drastic measures.
HSBC Takes Full Control of German Unit With Landesbank Deal
Stephan Kahl and Harry Wilson -Bloomberg
Lender to acquire 18.66% stake in HSBC Trinkaus subsidiary; Purchase comes as bank plans 35,000 job cuts globally
HSBC Holdings Plc is taking full control of its German business as Europe’s largest lender restructures its global operations in smaller markets, and targets Asia for growth.
Scotiabank profit drops 41.5% on higher loan losses
Bank of Nova Scotia said on Tuesday second-quarter profit fell 41.5%, hit by a jump in loan-loss provisions due to the COVID-19 outbreak.
Qatar pushing ahead with LNG expansion despite slumping demand; State-owned Qatar Petroleum also eyeing investment opportunities overseas
Andrew England and David Sheppard- FT
Qatar is forging ahead with the expansion of the world’s largest liquefied natural gas project and eyeing investment opportunities overseas despite a slump in global energy demand and the collapse of oil prices.
Why China Uses ‘Special Debt’ to Help Economy Recover
With the virus pandemic pummeling China’s economy, the government plans to sell 1 trillion yuan ($140 billion) of special government bonds to help fund public health and Covid-19 recovery efforts — without inflating the budget deficit. The rarely used financing tool was previously employed during the Asian financial crisis in the 1990s and to help seed the sovereign wealth fund in 2007.
Kenya’s Biggest Source of Foreign Currency Hit by Coronavirus
Eric Ombok – Bloomberg
Remittances payments from Europe and the Middle East plunged; World Bank sees big global drop of remittances due to pandemic
Kenya’s biggest source of foreign currency slumped last month, with the central bank indicating that shocks caused by the coronavirus will have a greater impact on the economy for the rest of this year.
Ambani Ordered to Pay $700 Million in Dispute With Chinese Banks
Jonathan Browning – Bloomberg
Judge rules Anil Ambani provided personal guarantee on loans; Ambani had said in lawsuit that his net worth was ‘zero’
Former billionaire Anil Ambani was ordered by a London judge to pay more than $700 million to a trio of Chinese banks following a dispute over defaulted loans.
Chinese Developers Drag Asia’s Junk-Bond Market Out of the Doldrums; Investors are buying new bonds from riskier companies again as China’s property sector gains momentum
Frances Yoon – WSJ
Asia’s junk-bond market is slowly coming back to life, with Chinese property developers at the forefront of the recovery. The region’s market was hit hard in March’s global selloff, and has been slower to recover than international counterparts—particularly U.S. high-yield, which for the first time ever is enjoying limited support from the Federal Reserve.
UK and EU fund managers at odds over Mifid II revamp; French and German groups lobby Brussels for a change to research unbundling
Siobhan Riding – FT
Asset managers in France and Germany are pushing for a change to European rules on investment research payments, setting the stage for an early post-Brexit clash between UK and EU financial regulations.
Brexit talks ‘risk stalemate’ if no progress on key issues
Jennifer Rankin – The Guardian
Brexit talks risk reaching a stalemate if there is no progress in the next round of negotiations between the European Union and the British government, EU sources have said. The two sides are due to resume talks next week, the final round scheduled before a “high-level conference” in June to assess progress before the end-of-year deadline.
Brexit: Irish Sea border ‘unlikely’ to be ready by January
John Campbell – BBC News
The new ‘Irish Sea border’ is unlikely to be operational by 1 January, a think tank has concluded. The Institute for Government (IfG) also said that the government should extend the Brexit transition period. Under the Brexit deal, new checks and processes on goods being shipped from GB-NI should be in place by the end of the year.
The new immigration rules are not really about Brexit. They’re about ripping off workers
Daniel Trilling – The Guardian
If you want to see how little the government would prefer things to change once the coronavirus pandemic has subsided, look at its immigration policy. Over the past few months the Home Office has fought hard to maintain the labyrinthine bureaucracy, exorbitant fees and harsh punishments that govern the lives of migrants from outside the European Union.
(Video) The U.K.’s Post-Brexit Trading Relationship With the EU
Cathy Gibson, head of dealing at Royal London Asset Management, discusses Brexit and the U.K.’s trading relationship with the EU. She spoke March 26, 2019 on “Bloomberg Daybreak: Europe.”
Summer Camp Might Not Survive Covid-19; Sleepaway camps across the U.S. are making the expensive decision to stay closed. Some may not be around come 2021.
Arianne Cohen – Bloomberg
For eight glorious weeks each summer, lucky American children get to enjoy activities such as canoeing, swimming and lanyard-making, making new friends by day while retiring each night to cramped cabins in the woods. Parents, meanwhile, get to enjoy a couple months of alone time. Surely, you see the problem: Summer camp and the coronavirus don’t go well together.
Summer Jobs Dry Up and Teens Face Highest Unemployment in Decades; Younger workers’ go-to positions at pools, restaurants, golf courses are hit by the coronavirus
Patrick Thomas – WSJ
Young Americans are having little luck finding summer jobs. Coronavirus outbreaks throughout the country have dried up many of the traditional opportunities that high school and college-age students rely on each summer. Junior workers seeking seasonal employment are striking out so much that the April unemployment rate for teens aged 16 to 19 hit 32%, marking a high not seen since at least 1948, according to the Bureau of Labor Statistics. As more teens hit the job market in June and July, when school is generally out, that rate typically climbs higher.
In Harvard’s Backyard, Graduations Vanish as Does Business
Michael McDonald – Bloomberg
College towns across the U.S. are facing hard economic times; Commencements and reunions usually pack hotels and restaurants
The end of May — when the air is sweet and graduation ceremonies lure alumni back to reminisce about the springtime of their lives — is typically a bonanza for the shops and restaurants of university towns from Berkeley, California to Charlottesville, Virginia.