Oil Crash Busted Broker’s Computers and Inflicted Big Losses; He started the day with $77,000 — by midnight, he owed $9 million

May 11, 2020

First Read

Hits & Takes
By JLN Staff

JLN’s Bachelier Options Model virtual panel on Thursday still has some spots left. Register by sending me an email at johnlothian@johnlothian.com

You can dig into the problems experienced by Interactive Brokers on April 20 when WTI oil prices went negative with the first two stories in leads. In the first one, Matt Leising digs into the experience of a trader who saw his account go from positive $77K to a negative $9 million as a result of the trading on that day. Oil prices would move $55 in the May contract and go nearly $40 negative.

I expect to hear more about this coming from the CFTC and maybe even Congress.

Thom Thompson will be writing a monthly report about the hemp market as part of a deal with PanXchange to have access to their price report. The first report ran last week.

We are pleased to announce that Revolution Global has agreed to sponsor a regular podcast titled “Hemp and Cannabis Market Insights.” We are pleased to have them as a sponsor for coverage of this developing market sector.~JJL

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Joseph Molluso, Virtu Financial’s former CFO, will return to Virtu Financial as co-president and co-COO, after leaving in October last year. He will take on the two roles alongside Brett Fairclough. ~SR

Consensus 2020, one of the biggest industry events of the year for the cryptocurrency and blockchain industries, is happening now. Among the usual speakers – Changpeng Zhao, Vitalik Buterin, Tyler Winklevoss – this year they booked Akon, who is apparently still serious about building his own crypto-powered city. The event is free and entirely televised over the Internet this year, so you can check it out from home. You can find more information here.~MR

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The Spread: Re-Opened For Business
JohnLothianNews.com

This week on The Spread, several exchanges cautiously open their trading floors, the OCC’s volumes are up yet again, Cboe posts its earnings report, and more.

Watch the video »

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Traders Are Baffled Why the Futures Market Is Pricing in Negative Rates
Vivien Lou Chen – Bloomberg
Big drops in Libor rates, need to hedge may be factors: FHN; Gundlach tweet may have brought topic to fore: RW Pressprich
The futures market is again pricing in the possibility of the U.S. joining Europe and Japan with negative rates, catching money managers, traders and analysts off guard. Expectations for the timing of below-zero rates — as shown by contracts on the Fed funds rate — shifted to the middle of 2021 after earlier indicating this scenario as soon as December amid dour jobs data that showed the worst employment downturn in U.S. history. But investors are still trying to figure out why markets have so rapidly embraced a theme that’s an anathema to many.
/bloom.bg/2WPgLkO

*****If you pay negative interest rates on your loan to buy oil at negative rates, is that a positive?~JJL

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A Lesson from the Spanish Flu: Don’t End Restrictions Too Soon; New research says shutdowns need to last about 12 weeks to save lives.
Peter Coy
Social distancing didn’t meaningfully reduce the number of deaths from the Spanish flu a century ago because it didn’t last long enough, says a new research paper that has implications for the response to Covid-19. Harvard University economist Robert Barro writes that “the likely reason” school closings, prohibitions on public gatherings, and quarantines and isolation in various U.S. cities didn’t save many lives is that they “had an average duration of only one month.”
/bloom.bg/2WGK6ho

*****There are lessons to be learned from history. Patience is one of them.~JJL

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To Restart Business, Protect Workers; Companies that make a good-faith effort to keep employees safe during the pandemic shouldn’t have to worry about getting sued.
Michael R. Bloomberg – Bloomberg
States that are reopening their economies even as cases of Covid-19 are still rising are threatening their own residents and the whole country. But they are also running into two challenges that all states will face: Employees don’t want to return to work if they fear exposure to coronavirus on the job, and employers don’t want to get sued if their workers or customers end up sick. Both concerns are reasonable, and both could further cripple the economy unless Congress steps in.
/bloom.bg/2AjpXqb

******Mike Bloomberg has it right.~JJL

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Microsoft now blocks reply-all email storms to end our inbox nightmares
Tom Warren – The Verge
Microsoft is rolling out a new reply-all protection feature for Office 365 and Exchange Online. It’s designed to prevent email storms (reply allpocalypse), when hundreds or thousands of people start replying to an email thread after someone forgot to BCC everyone or a distribution list was misconfigured.
/bit.ly/2zqP8GP

****I recall working at a global company where someone did this and it literally took days for the email storm to end.~JB

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Friday’s Top Three
Our most-read story Friday was the Financial Times’ Flash Crash — the trading savant who crashed the US stock market, a review of a new book by Liam Vaughan. Second was The True Cost Of Commodity ETFs, from Seeking Alpha. Third was CME trading floor coronavirus reopen is ‘complicated’, from Fox Business.

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Lead Stories

Oil Crash Busted Broker’s Computers and Inflicted Big Losses
Matthew Leising – Bloomberg
Syed Shah usually buys and sells stocks and currencies through his Interactive Brokers account, but he couldn’t resist trying his hand at some oil trading on April 20, the day prices plunged below zero for the first time ever. The day trader, working from his house in a Toronto suburb, figured he couldn’t lose as he spent $2,400 snapping up crude at $3.30 a barrel, and then 50 cents. Then came what looked like the deal of a lifetime: buying 212 futures contracts on West Texas Intermediate for an astonishing penny each.
/bit.ly/2YRSZYb

He started the day with $77,000 — by midnight, he owed $9 million
Shawn Langlois – MarketWatch
‘I was in shock. I felt like everything was going to be taken from me, all my assets.’
That’s Syed Shah (not pictured), a 30-year-old daytrader in Toronto whose ill-fated attempt to dip his toe into the oil pits CL00, 1.01% was covered in a recent story by Bloomberg News. On April 20, Shah started with about $77,000 in his account. He put $2,400 toward buying crude, first at $3.30 a barrel, and then more at 50 cents. From there it got interesting. Ultimately, as the historic plunge in oil prices took hold, he was able to load up on futures at a penny each.
/on.mktw.net/2WMjmMl

*****The MarketWatch version of this story.~JJL

Wall St banks’ trading risk surges to highest since 2011; Coronavirus sell-off drives up key measure of potential losses
Laura Noonan – FT
Daily trading risks at top Wall Street banks hit their highest level since 2011 during the first-quarter turmoil, prompting speculation that their capital-intensive markets businesses would be further scaled back.
/on.ft.com/2yL5Gt9

Carta plans private share trading platform to rival Nasdaq; Silicon Valley start-up poised to launch exchange as tech companies delay IPOs
Miles Kruppa – FT
The Silicon Valley start-up Carta is planning to launch a private share trading platform that it hopes will be a credible alternative to leading stock exchanges as fast-growing tech companies increasingly decide against initial public offerings. Henry Ward, Carta’s chief executive, said he aimed to debut the CartaX exchange in the summer with an offering of his own company’s shares before expanding to other customers.
/on.ft.com/2Aiy2eM

‘Survival Mode’: How Billionaire Bosses Tackle the Pandemic
Tom Metcalf and Devon Pendleton – Bloomberg
‘Nobody is going to come back at 100%,’ developer Caruso says; Convincing staff to return may be tough, says SAS’s Goodnight
Empty shopping malls in California, idled oil fields in Texas and the highest unemployment rate since the Great Depression paint a dire picture for the American economy. The reality is more complex, as evidenced by the closely held firms that will play a decisive role in dictating the size and timing of any recovery.
/bloom.bg/3fDOczz

Big Money Managers Take Lead Role in Managing Coronavirus Stimulus; BlackRock is about to start buying billions of dollars in corporate bonds for the Fed, reflecting the firm’s rise to financial might but also opening it to scrutiny
Dawn Lim and Gregory Zuckerman – WSJ
The Federal Reserve’s giant program of corporate bond buying is about to kick in. It will hand a critical new role in propping the struggling economy to a business with increasing clout in the financial world: money management. The central bank has tapped BlackRock Inc. to help it direct money into both new and already-issued corporate bonds, assisting the Fed in its recently adopted role as lender of last resort for businesses. The Fed is expected to launch the program in coming days.
/on.wsj.com/2WNhnr4

Gambling on US equities is becoming more difficult; Deglobalisation should make investors think twice about betting on index tracker funds
Rana Foroohar – FT
At the recent Berkshire Hathaway annual meeting it sometimes felt like Warren Buffett was trying to square words with actions. The Oracle of Omaha insisted, as he always has, that the best place for retail investors to be is in an S&P500 index fund. But he also told shareholders that his company had sold 16 times as much stock as it had purchased in the last month, including dumping the entire airline asset class. And he admitted that while you could still “bet on America, you are going to have to be careful how you bet”.
/on.ft.com/2AfYKVf

‘Hidden’ Defaults Set to Soar as Recession Squeezes Firms
Denise Wee – Bloomberg
Distressed exchanges often just a ‘bandage’: Edward Altman; Indonesia’s Geo Energy and China’s Yida conducted exchanges
The worst recession since the Great Depression is prompting indebted companies to default, and increasingly more will do so in a way that’s harder for investors to detect.
/bloom.bg/2WJkosF

A Philosopher-Banker Who’s Shaking Up a Nation; Steven Coutinho had long wanted to help Suriname, his homeland, overcome its colonial past. A huge financial scandal gave him his chance.
Anatoly Kurmanaev – WSJ
Steven Coutinho was sitting in his office in an imposing colonial mansion overlooking a palm-strewn tropical garden one January evening when he received an unexpected text message: Suriname’s enigmatic president wanted to see him in his palace the next day.
/nyti.ms/2WJHmjo

Risk Managers Did Not Ace the Coronavirus Test; The results of a global survey do not inspire confidence in executives charged with seeing existential threats.
Ben Schott – Bloomberg
One in five professional risk managers who had previously considered the risk of a global pandemic, or similar crisis, admit to doing nothing whatsoever to prepare for it, according to a survey by the Institute of Risk Management.
/bloom.bg/2SS6ZNC

Niall Ferguson: We’re Still Early Into This Crisis; The economic historian offers a playbook for investors to navigate the pandemic.
Eric Uhlfelder – RIA Intel
“The pandemic has morphed into an economic crisis far greater than the Great Recession of 2008,” says economic historian Niall Ferguson, “because major Western governments’ response to the coronavirus was late, especially in the U.S. where cases have now topped one million and deaths have now well exceeded those of the Vietnam War.”
/bit.ly/3dxy7tl

A Nation of Zombie Borrowers Isn’t Inevitable—Even With More Debt; Governments and central banks are correct in trying to extend credit to companies that were already loaded up
James Mackintosh – WSJ
Can you cure a debt problem with more debt? Governments and central banks everywhere are in the process of trying to do exactly that: extend more credit to companies that were already loaded up with plenty of it. With some caveats, they are right to do so—and truly radical action being tested in Europe could overcome even these drawbacks.
/on.wsj.com/2yLA72o

The Airline Business Is Terrible. It Will Probably Get Even Worse; An industry that is intimately familiar with failure confronts a crisis unlike any other. Executives say they have no idea when passengers will return.
Niraj Chokshi – NY Times
Delta Air Lines started 2020 celebrating what it said was the most successful year in company history. Not long after, it shared a record $1.6 billion in profits with its 90,000 employees. But with air travel nearly shut down by the coronavirus, the airline is now bleeding money and will drop 10 more airports from its already skeletal network on Wednesday.
/nyti.ms/2YRUw0l

Negative Oil Is Positive for Clean Power; Electricity markets were built for this sort of thing.
Liam Denning and Nathaniel Bullard – Bloomberg
One word explains oil’s recent crash to negative prices: inertia. Those barrels in the pipeline, and the forces that put them there, don’t respond quickly to sudden change. Supertanker symbolism aside, that matters in a real way for a defining competition of the energy transition: oil versus electricity.
/bloom.bg/2WNc4rM

Long-suffering Canadian oilpatch faces ‘biggest existential crisis’ yet
Jeff Lewis, Rod Nickel – Reuters
Canada’s oil patch has endured five years of existential threats that have pruned weaker companies, but now its strongest firms are trying to navigate the coronavirus pandemic, which has set off the worst crisis in the oil industry in 40 years.
/reut.rs/2SUrJVj

Repeat After Me: The Markets Are Not the Economy; The two have been intertwined in the American psyche since the 1929 stock crash and the onset of the Great Depression. But stocks are not a reliable gauge of overall economic health.
Matt Phillips – NY Times
The stock market looks increasingly divorced from economic reality. The United States is on the brink of the worst economic collapse since the Hoover administration. Corporate profits have crumpled. More than a million Americans have contracted the coronavirus, and hundreds are dying each day. There is no turnaround in sight.
/nyti.ms/3fFMwFx

Coronavirus

What We Don’t Know About Coronavirus Origins Might Kill Us; The WHO is seeking a new mission to China to hunt for the pathogen’s source.
Jason Gale, Robert Langreth, and John Lauerman – Bloomberg
The best minds in virology are trying to unravel a mystery: How did a lethal coronavirus jump from the wilds of rural China to major human population centers? And what chain of genetic mutations produced a pathogen so perfectly adapted for stealth and mass transmission?
/bloom.bg/2WOSprq

The Fate of Business Travel Could Hang on Covid-19 Tracing Apps
Natalia Drozdiak, Richard Weiss, and Helene Fouquet – Bloomberg
France, U.K. contact-tracing apps incompatible with Germany’s; EU officials say interoperability needed for travel to restart
Mobile phone applications that trace the new coronavirus could help decide whether business travelers and vacation-goers get to meet clients or visit their favorite beaches this summer. But politics and disagreement over what system to use threatens to thwart that solution.
/bloom.bg/3dAZEtM

Virus Pushes America’s Hospitals to the Brink of Financial Ruin
Lauren Coleman-Lochner, John Tozzi, and Jeremy Hill – Bloomberg
U.S. hospitals say they face more than $200 billion of losses; Consultants predict a coming wave of bankruptcy filings
The century-old Henry County Health Center in southeast Iowa was already losing money before the pandemic hit. With a shrinking number of births and trouble recruiting staff, it had planned to close its obstetrics department.
/bloom.bg/2WKI3sz

Britain to quarantine travellers for 14 days, UK airlines body says
James Davey – Reuters
The British government has told airlines it will introduce a 14-day quarantine period for most people arriving from abroad to try to avoid a second peak of the coronavirus outbreak, an association representing the airlines said on Saturday.
/reut.rs/2SVpO2G

Why Chicken Is Plentiful During the Pandemic and Beef Is Not; Poultry production has long been the most industrialized of U.S. agricultural operations.
Justin Fox
Beef and pork have been pricey and, at times, scarce in the U.S. this spring amid outbreaks of the corona­virus at slaughterhouses around the country. Chicken has remained widely available and cheap. Why the difference?
/bloom.bg/2yC5b4L

Pork Chops vs. People: Battling Coronavirus in an Iowa Meat Plant; After President Trump’s executive order, meat plants are reopening. Can they do so without endangering their low-wage workers and their communities?
Ana Swanson, David Yaffe-Bellany and Michael Corkery – NY Times
On April 10, Tony Thompson, the sheriff for Black Hawk County in Iowa, visited the giant Tyson Foods pork plant in Waterloo. What he saw, he said, “shook me to the core.”
/nyti.ms/2yCYrDL

Why the Path to Reopening New York City Will Be So Difficult; The factors that made the city one of the hardest hit on the planet — its density, mass transit and tourism — complicate a return to normalcy.
J. David Goodman and Michael Rothfeld – NY Times
Nearly 190,000 people were tested for the coronavirus in New York City over the past two weeks, a record number. The increase in testing, crucial for curbing the outbreak, came as Mayor Bill de Blasio announced plans to hire a small army of 1,000 disease detectives to track down the contacts of every infected New Yorker.
/nyti.ms/2YUTwZk

Coronavirus crisis: does value investing still make sense? The strategy that once worked for Keynes and Buffett has performed badly. The pandemic has compounded the pain
Robin Wigglesworth -FT
When Joel Greenblatt went to Wharton Business School in the late 1970s, the theory of “efficient markets” was in full bloom, approaching the point of becoming dogma among the financial cognoscenti. To the young student, it all felt bogus.
/on.ft.com/2YOzK1L

South Korea’s Early Coronavirus Wins Dim After Rash of New Cases; More than 50 cases have been linked to Seoul’s nightclubs and bars, which have now been ordered closed
Timothy W. Martin and Dasl Yoon – WSJ
South Korea, which largely succeeded in quelling the initial spread of the coronavirus, is back on the defensive, with Seoul’s bars and clubs ordered closed, as the country reported its biggest one-day increase in new infections in a month.
/on.wsj.com/2SVrmK2

Cargill to shut Quebec beef plant temporarily, cites coronavirus outbreak
Reuters
The Canadian arm of U.S. agribusiness Cargill [CARG.UL] said on Sunday it would soon temporarily shut a meat-processing plant in the province of Quebec after 64 workers tested positive for the coronavirus.
/reut.rs/2YRU9CZ

Nearly a Third of Kentucky Workers Seek Jobless Aid; With the governor’s encouragement, the Bluegrass State has the highest rate of unemployment filing in the nation
Kim Mackrael – WSJ
Nearly a third of Kentucky’s labor force has filed for unemployment insurance, the largest share of any U.S. state, partly reflecting officials’ encouragement to do so and an early move to expand workers’ eligibility.
/on.wsj.com/3fDdyh0

Factories Close for Good as Coronavirus Cuts Demand; Some manufacturers that furloughed employees during lockdowns say plants won’t reopen
Austen Hufford and Bob Tita – WSJ
Factory furloughs across the U.S. are becoming permanent closings, a sign of the heavy damage the coronavirus pandemic and shutdowns are exerting on the industrial economy.
/on.wsj.com/3fB2e4R

Exchanges, OTC and Clearing

SGX RegCo removes minimum trading price rule while enhancing other anti-manipulation tools
SGX
Singapore Exchange Regulation (SGX RegCo) is removing the minimum trading price (MTP) rule for Mainboard issuers with effect from 1 June 2020. Since the implementation of a series of anti-manipulation tools, the number of manipulation alerts triggered on our market has declined. These tools include the enhanced Trade with Caution alerts and Member Surveillance Dashboard. In contrast, the MTP framework has turned out to be a blunt tool in addressing risk of manipulation.
/bit.ly/3dySSor

SGX reports market statistics for April 2020
SGX
Early signs of market optimism drive partial recovery in global equities; Demand for FX risk management grows, while disruptions in global supply chains drive commodity trading
Singapore Exchange (SGX) today released its market statistics for April 2020. Global equities stabilised on early signs of market optimism, following the intense volatility in the first quarter. Demand to risk-manage Emerging Asia currencies sustained growth, while disruptions in global supply chains continued to drive trading in commodity derivatives.
/bit.ly/2YWkZd9

The Egyptian Exchange Launches A New Index “EGX 100 EWI” To Diversify The Market Performance Measurement Tools
Mondovisione
The Egyptian Exchange has launched the EGX100 Equal Weight Index (EWI) replacing EGX100. The EGX 100 EWI measures the performance of the best 100 companies on the EGX in terms of liquidity and activity including EGX30 and EGX70 EWI constituents.
/bit.ly/3dzCALZ

Nasdaq Helsinki Launches Premier Segment Within Nasdaq First North Growth Market – New Segment Designed To Raise Investor Visibility And Prepare Companies For A Main Market Listing
Mondovisone
Nasdaq (Nasdaq: NDAQ) announces that Nasdaq Helsinki launches a new Premier segment on the Nasdaq First North Growth Market Finland today. The new segment was first introduced in Sweden in 2009 and supports companies who seek to enhance investor visibility by complying with higher standards than imposed under the regular Nasdaq First North Growth Market rules.
/bit.ly/2YNEnZU

CLS appoints Thomas Barkhuff as Chief Information Officer
CLS
CLS, a market infrastructure group delivering settlement, processing and data solutions, today announces the appointment of Thomas Barkhuff as Chief Information Officer. He will report to Chief Executive Officer Marc Bayle de Jessé and serve as a member of the Executive Management Committee.
/bit.ly/3dGitfr

Fintech

Lockdown Disrupts the Part of Finance That Hasn’t Gone Digital
Jennifer Surane – Bloomberg
Social media flooded with images of lines for money transfers; Western Union, MoneyGram struggle to keep many locations open
It had been over three hours, and Raynique Cartwright still hadn’t received her money. Cartwright, 21, had arrived at the Western Union location in the Bahamas a little before 10 a.m. to pick up funds, but the branch was only allowing two or three people inside per hour, leaving a large crowd outside clamoring to get in.
/bloom.bg/2YRPTTT

The online challengers threatening to disrupt the disrupters
Goutam Challagalla – FT
Sir Tim Berners-Lee, creator of the worldwide web, hit out at Big Tech recently, complaining that personal data is controlled and owned by a small number of companies. The internet, he said, “has been compressed under the powerful weight of a few dominant platforms”.
/on.ft.com/2LkxXJS

Google: The Next Big Fintech Vendor
Ron Shevlin – Forbes
In an article titled Amazon’s Impending Invasion Of Banking, I wrote:
“Amazon has no incentive to cut banks out of the lending or deposit business. Amazon can make more money by providing technology services to help financial institutions underwrite, process, and service loans. Banks will gladly pay for this, because Amazon will do it for a lower cost that what banks incur to do it today.”
My argument then, as it is now, is that Amazon is poised to be a vendor—not a competitor—to financial institutions.
/bit.ly/3bod4bh

Fintechs For Sale: Post-Covid, It’s Partner Or Perish For Many Startups. Here’s A Buy List.
Jeff Kauflin – Forbes
The coronavirus pandemic couldn’t have come at a worse time for New York City’s On Deck Capital. The once-promising fintech unicorn, known for massaging big data with algorithms to make loans for small businesses, started life with such promise. It had blue chip backers like Peter Thiel, Khosla Ventures and Tiger Global. It went public in December 2014, and almost immediately its stock soared 40% to a peak market value of $1.9 billion. But long before COVID began making headlines, On Deck hit a rough patch. As competitors flooded its small business niche, customer acquisition expenses ballooned, and margins plummeted. By the end of 2019, more than $1.6 billion of its market value was gone, and On Deck was attempting a turnaround strategy.
/bit.ly/35QkZwX

KRM22 Receives GBP1 Mln Commitment for Equity Fundraise
Anthony O. Goriainoff – WSJ
KRM22 PLC said Monday that it has received a firm commitment for an equity investment of approximately 1.0 million pounds ($1.2 million) at 30 pence a share in a fundraise, and that this exceeds its original target.
/on.wsj.com/2YOPcuN

Cryptocurrencies

First Mover: As Bitcoin’s Halving Finally Arrives, a Price Retreat Deflates the Hype
Bradley Keoun – Coindesk
A pullback in the bitcoin market over the past few days has rattled traders on the eve of the blockchain network’s third halving, which had been tabbed by some bullish investors as a catalyst for higher prices. The cryptocurrency fell for a third straight day to about $8,500 as of late Sunday, off 15% from the May 7 price of $10,000. The cryptocurrency exchange Coinbase suffered a temporary outage on Saturday, too, as prices tumbled 10% in a span of just 30 minutes.
/bit.ly/2SVs0qW

Cryptocurrency Hedge-Fund Survey Hints at Big Quant Disparities
Joanna Ossinger – Bloomberg
Family offices, wealthy people comprised most of investors; Gains in 2019 came when Bitcoin’s price increased 95%
Cryptocurrency-focused hedge funds’ assets under management jumped in 2019, according to a new survey, but there were some big differences in performance during the year. Total AUM of crypto funds rose to more than $2 billion at the end of last year from $1 billion at the end of 2018, and the average per fund jumped to $44 million from $21.9 million, according to a survey from PwC and Elwood Asset Management Services Ltd., an investment firm specializing in digital assets. Of course, that was in a year where the price of Bitcoin soared 95%.
/bloom.bg/2SQs5fq

Ashton Kutcher and Michelle Phan Invest in Lolli’s $3M Seed Round
Leigh Cuen – Coindesk
E-commerce startup Lolli, which gives shoppers bitcoin rewards for online purchases at retailers like Sephora, just attracted investment from the YouTube beauty queen herself, Michelle Phan. The $3 million seed round with Phan and Ashton Kutcher’s VC firm, Sound Ventures, marks roughly $5.4 million in total capital raised by Lolli so far. Pathfinder, the early-stage investment arm of Peter Thiel’s Founders Fund, led this recent round with participation from Bain Capital Ventures, Craft Ventures and Digital Currency Group, CoinDesk’s parent company.
/bit.ly/2SVw7TL

Crypto bank SEBA teams up with Tokensoft to offer asset tokenization solutions
Yogita Khatri – The Block
Crypto bank SEBA is set to offer asset tokenization solutions later this year. The bank has partnered with Tokensoft International AG, a distributor of U.S.-based Tokensoft Inc., for the initiative. “Our core solutions are ready and in the final testing phase. We plan to be fully live from the second half of this year,” Matthew Alexander, head of asset tokenization at SEBA, told The Block.
/bit.ly/3dCOjJE

Bitcoin price tanks by 15% in 10 minutes causing $226M of liquidations on BitMEX
Celia Wan – The Block
Bitcoin fell from $9,500 to $8,100 on Saturday, posting a 14.6% loss in just 10 short minutes. The price has since recovered covered slightly to nearly $8,800. Following the sudden drop, liquidations of BTC perpetual swap reached $226 million on BitMEX.
/bit.ly/2xVxxqc

Coronavirus sows doubt over bitcoin’s rally after third ‘halving’
Gertrude Chavez-Dreyfuss – Reuters
As bitcoin investors brace for a long-awaited technical adjustment that will halve new supply of the cryptocurrency, the coronavirus pandemic has cast uncertainty over the expected rally that has historically accompanied such events. This “halving,” the third in bitcoin’s 11-year history, has been widely flagged. The previous events fueled huge surges in bitcoin’s market value, but there is a wildcard this time in the form of the coronavirus pandemic, some analysts said.
/reut.rs/3dv02Kg

3 Straight Record Days Drive CME Bitcoin Futures Open Interest to All-Time High
Zack Voell – Coindesk
Open interest for CME bitcoin futures made a new all-time high of just under $500 million on Friday, the third consecutive day of open interest records this week. Significant growth in CME futures demonstrates the intensifying contest between the stalwart institutional trading platform and crypto-native derivatives exchanges like BitMEX.
/yhoo.it/3fNxjCG

A key metric for CME’s bitcoin futures market hit an all-time high this week
Ryan Todd and Frank Chaparro – The Block
If Paul Tudor Jones ultimately dives into the bitcoin futures market, he won’t be the only large investor trading there. The famed macro investor made headlines last week after an investor letter he penned, supporting bitcoin as an inflationary hedge, made the rounds. The note also said Jones’ fund could allocate to bitcoin futures.
/bit.ly/2Wngmam

Web traffic to crypto exchanges fell in April compared to March, data indicates
Michael McSweeney – The Block
Data from traffic tracking platform SimilarWeb indicates that the number of visits to crypto exchanges fell in April compared to March. As noted by The Block’s Larry Cermak in an April by-the-numbers report on the crypto ecosystem, the number of visits fell from 111.2 million in March to 99.9 million in April. This represents a month-over-month decrease of 10.2%.
/bit.ly/2SVnUin

North Korean Hackers Ramp Up Efforts to Steal Crypto Amid Coronavirus Pandemic
Sebastian Sinclair – Coindesk
Notorious hacking group Lazarus is said to be increasing its efforts to steal cryptocurrency from traders and industry professionals. Cybersecurity experts, as cited in the Daily NK on Monday, said the group – widely believed to be sponsored by the government of the Democratic People’s Republic of Korea – is making a concerted effort to target South Korean crypto holders amid the coronavirus pandemic. It’s also looking further afield and launching attacks in other nations such as the U.S.
/bit.ly/2yLBKgw

Bitcoin Dominance Is Making Investors Rich, Thanks to Crypto Hedge Funds
Leigh Cuen – Coindesk
National economies are sinking into a recession but the bitcoin economy remains healthy and is still growing throughout the coronavirus crisis, even surging to $10,000 on May 7. Crypto hedge funds, in particular, are reaping the benefits of volatility. For example, Eric Ervin, co-founder of Blockforce Capital in San Diego, said his fund’s returns are up 18% so far in 2020.
/bit.ly/3cpi3tr

Politics

Kamala Harris Can Be Joe Biden’s Biden; The presumptive Democratic nominee needs someone who makes voters comfortable with an old white guy at the top of the ticket.
Francis Wilkinson – Bloomberg
Joe Biden is getting a lot of unsolicited advice about a running mate. Here’s mine: Find yourself another Joe Biden. When Barack Obama was cruising to the Democratic Party’s presidential nomination in 2008, he chose someone who buttressed his political weakness. Obama’s overriding political weakness wasn’t hard to pinpoint: He was a mixed-race intellectual whose father was from Kenya.
/bloom.bg/2YRjQUc

‘Unhinged’ Cattle Ranchers Look for Answers in U.S. Price Probe
Jennifer Jacobs – Bloomberg
Livestock gluts are coinciding with record-high beef prices; Farmers have concerns about ‘potential market manipulation’
U.S. ranchers are looking forward to the results of an investigation into market manipulation as low livestock prices threaten their survival, an industry leader said. Farmers “are becoming unhinged” as livestock gluts — exacerbated by a wave of slaughterhouse disruptions — are coinciding with record-high wholesale beef prices, American Farm Bureau President Zippy Duvall said Friday.
/bloom.bg/3dyl2jj

Wall Street Titans See Tax Hikes Whether They Like Them or Not
Sridhar Natarajan and Max Abelson – Bloomberg
Dalio and Fink predict higher individual, corporate rates; Blankfein says pandemic response means more revenue is needed
It’s a line you don’t hear every day from Wall Street titans: Maybe we really should pay higher taxes. The pandemic has bold-face names like Larry Fink and Lloyd Blankfein thinking out loud that it might be necessary as the coronavirus pandemic derails the economy. A few are even calling for the wealthy to pay up.
/bloom.bg/2YQGpZ5

Soaring joblessness could shake U.S. economy, politics for years; Eye on lessons from the Great Depression and 2008 crisis
David J. Lynch – Washington Post
The United States is facing a political and economic challenge like nothing it has seen in nearly 100 years. Mass unemployment on a scale not seen since the Great Depression has erased the economic gains of the past decade and now threatens to linger for years, fueling social discord and shaking an already polarized political system.
/wapo.st/2WKJAij

U.S. unemployment rate will get worse, Treasury’s Mnuchin says
Reuters
The staggering U.S. unemployment rate reported by the government on Friday amid coronavirus lockdowns may get even worse, Treasury Secretary Steven Mnuchin said on Sunday. “The reported numbers are probably going to get worse before they get better,” Mnuchin told the Fox News Sunday program.
/reut.rs/2YU7sD8

Trump Urges U.S. Back to Work While Combating In-House Outbreak
Jennifer Jacobs – Bloomberg
Vice president’s press aide diagnosed with Covid-19 Friday; Two top military officials have their own brushes with virus
President Donald Trump faces a tricky proposition this week, as he tries to convince Americans it’s safe to return to work and social life while combating a coronavirus scare moving closer than ever to his own office.
/bloom.bg/2SV39Du

Regulation

FCA and HMRC make collaboration agreement
UK FCA
The FCA and Her Majesty’s Revenue & Customs (HMRC) have made a Collaboration Agreement to provide Single Point of Contact (SPoC) services, under Section 79(3) of the Investigatory Powers Act 2016 and Section 8.58 of the Statutory Code of Practice.
/bit.ly/2WKEXor

U.K.’s FCA Considers Head of Hong Kong Watchdog as CEO, Sky Says
Charles Capel – Bloomberg
Want the lowdown on European markets? In your inbox before the open, every day. Sign up here. The U.K.’s Financial Conduct Authority is considering hiring the head of Hong Kong’s Securities and Futures Commission, Ashley Alder, as its next chief executive officer, Sky News reported on Sunday.
/bloom.bg/2yDKa9Q

Investing and Trading

America’s Smallest Stocks Are Staging a Comeback; Rally stands in contrast to economic data showing unprecedented job losses
Recovery
Akane Otani – WSJ
Shares of small U.S. companies are racing higher, stirring a debate among investors about how much longer the stock market can keep rallying despite some of the grimmest economic news since the Great Depression.
/on.wsj.com/3dBmKAI

Wall Street Bets Virus Meltdown Gives Landlords a Chance to Grow; Largest home-leasing companies have strong occupancy, rent collection and expect demand for suburban houses to rise
Ryan Dezember – WSJ
Wall Street’s wager on high-earning suburban renters is paying off, and it is raising its stakes. Investors are flocking to America’s mega landlords, drawn by signs the companies that emerged from last decade’s foreclosure crisis owning huge pools of rental houses are weathering the economic shutdown far better than feared. Many also expect that the coronavirus pandemic will make suburban single-family homes both more desirable and more difficult to buy for even the relatively well-heeled.
/on.wsj.com/3fDhjTK

Johan Andresen, chair of Norway’s Ferd, arbitrates on ethical investments for conglomerate and wealth fund; Decades after family exited tobacco, business owner seeks creative response to pandemic
Richard Milne – FT
When the coronavirus first hit Norway seriously at the end of March, billionaire investor Johan Andresen came up with a remarkable proposal for the 50 workers in his Ferd holding company: to give them NKr100,000-NKr250,000 ($10,000-$24,000) for each of their children or grandchildren to help fund the sports club or out-of-school group they attended.
/on.ft.com/2YSKw6U

Now is the time to emerge as a corporate ‘saint’ not ‘sinner’; Executives will be judged on whether they ‘do the right’ thing during pandemic
Kaye Wiggins – FT
In the pre-coronavirus world, Kimberley Lewis spent much of her working life trying to lift executives’ sights from day-to-day pressures to the ways they could become better, more responsible corporate citizens.
/on.ft.com/3fBIzSp

Barrick Gold on the hunt for copper deals; High bullion prices place Canadian miner in strong position to diversify through acquisitions
Henry Sanderson – FT
Barrick Gold is looking to take advantage of a downturn in copper prices to make an acquisition in the sector, its chief executive Mark Bristow said, as the Canadian miner reaps the benefits of a higher gold price.
/on.ft.com/3fFqCCo

Big Oil Earnings Battered By Virus, But Worst is Yet to Come
Laura Hurst – Bloomberg
Profit plunged in first quarter, seen sinking even further; Potential for more dividend cuts as debt keeps rising
Big Oil emerged from first-quarter earnings battered and bruised, but things are only going to get uglier. Major oil and gas producers from Norway to the U.S. saw profit plunge in the opening three months of the year. Exxon Mobil Corp. reported its first loss in over 30 years, Royal Dutch Shell Plc cut its dividend for the first time since the Second World War.
/bloom.bg/2yCRUZL

Mysterious 2,572% Stock Rally Has Traders Scratching Their Heads
Filipe Pacheco – Bloomberg
IHC has surged 2,574% in past 12 months, up 313% year-to-date; Holding recently acquired several firms in different sectors
An Abu Dhabi-based investment holding is leaving traders and investors scratching their heads after a 2,574% surge in its stock in the past 12 months with very low trading volumes.
/bloom.bg/3fAK5UN

Institutions

Odey defends Brazil firm’s breaches as ‘a parking fine’; Hedge fund boss backs agriculture company penalised for environmental damage
Laurence Fletcher and Anna Gross and Ortenca Aliaj – FT
Hedge fund manager Crispin Odey has come out in defence of a Brazilian agriculture company that has been fined for breaching rules about exploring and damaging tropical savannah, saying the penalties amount to “a parking fine”.
/on.ft.com/2WHVidC

Fund managers struggle to compare ESG apples with oranges; Precise and validated sustainability ratings are essential to avoid ‘greenwash’
Billy Nauman – FT
With sustainable investing growing by leaps and bounds, it is becoming more important than ever for companies to keep a close eye on how they are being rated on environmental, social and governance metrics.
/on.ft.com/2WJOjkp

Regions

The Emerging-Market Debt Trap; It remains cheap for good reasons
Mike Bird – Bloomberg
There is a fundamental unfairness at work. Advanced economies issuing debt in their own currencies are broadly able to play economic policy on easy mode. Increases in state spending don’t trigger concerns about solvency, nor do low interest rates typically trigger steep collapses in currency values.
/on.wsj.com/2YUSFYC

Rout of China’s Bonds Worsens Amid Concerns on Surge in Issuance
Tian Chen – Bloomberg
Ten-year sovereign yield jumps to its highest since March; Reaching 2.8% would be good entry point for investors: analyst
A sell-off in China’s sovereign notes worsened Monday, with the benchmark 10-year yield surging to its highest level since March, amid concerns that investors may switch to local-government bonds for better returns.
/bloom.bg/2SShAZ0

Goldman, HSBC Staff Return to Office as Hong Kong Curbs Ease
Cathy Chan and Alfred Liu – Bloomberg
Barclays enacts first phase with 60% staff back at work; HSBC to allow 30% of workers back to premises starting today
HSBC Holdings Plc, Goldman Sachs Group Inc. and Barclays Bank Plc allowed more employees to resume working from their offices in Hong Kong Monday as the city relaxes social-distancing curbs after largely containing coronavirus infections.
/bloom.bg/2AjizLx

Turkey Lifts Ban on Lira Trading With BNP, Citi, UBS in U-Turn
Asli Kandemir, Constantine Courcoulas, and Cagan Koc – Bloomberg
Turkey lifted a ban on trading liras with BNP Paribas SA, Citigroup Inc. and UBS Group AG, a quick reversal just days after it imposed the restrictions that rippled beyond the currency market. A spokesman for the banking regulator, known as BDDK, confirmed that the trading curbs — which were imposed amid a market rout on Thursday — had been reversed. In instituting the ban, the regulator said the global lenders had failed to meet local-currency obligations to their Turkish counterparts.
/bloom.bg/2YQtHtl

CEO Selection at World’s Biggest Wealth Fund Slammed by Watchdog
Mikael Holter – Bloomberg
The watchdog overseeing Norway’s $1 trillion sovereign wealth fund has delivered a scathing critique of the recruitment process of its next chief executive. Nicolai Tangen, the London-based hedge fund manager picked to start running the world’s biggest wealth fund from September, has become the center of a deep controversy surrounding the investing giant, due to his personal wealth and his firm’s use of tax havens.
/bloom.bg/3dyIP2H

Green Revolution Seen Turning Around Australia’s Steel Industry
James Thornhill – Bloomberg
Australia ideally placed to develop ‘green steel’: report; Revived industry could generate A$65 billion in export revenue
Australia can benefit from its abundance of cheap wind and solar power generation to arrest decades of decline in its steel-making industry.
/bloom.bg/3dAuS4l

Riksbank Says It’s Ready to ‘Scale Up’ Virus Crisis Measures
Niclas Rolander – Bloomberg
Sweden’s central bank says it’s prepared to step up its crisis response if needed, and defended its right to “fully utilize” its balance sheet.
/bloom.bg/2YNnoXE

Brexit

Brussels turns up the heat on Brexit talks; UK warned negotiations could stall unless progress is made in key sectors such as fishing
Jim Brunsden and Sam Fleming – FT
Brussels will push Britain to engage in detailed talks on access to UK fishing waters and other top EU priorities this week, warning that the two sides’ negotiations on a future relationship will stall unless work on all key topics advances in parallel.
/on.ft.com/3dE2Wwj

Saving the planet the Brexit way; EU has reservations about allowing Britain to link to its carbon cap-and-trade system after Brexit
Jim Brunsden and Mehreen Khan – FT
Britain will leave the EU’s single market at the end of its post-Brexit transition period, but will it exit the bloc’s carbon market too? On paper, future co-operation on emissions trading looks like one of the few areas in the EU-UK future-relationship talks where both sides’ starting positions are in relative harmony. Or at least not totally out of tune.
/on.ft.com/2WHdfsI

Miscellaneous

Big Tech Has Crushed the News Business. That’s About to Change; News organizations have long hoped that tech platforms would pay them for news. Now regulators abroad are moving to make that happen.
Ben Smith – NY Times
It reads like a coroner’s report on the news business, 623 pages filled with charts and graphs detailing the devastating decline in local news and public policy reporting of the past decade. It landed on the Australian prime minister’s desk last summer, unnoticed by most news consumers in America and around the world.
/nyti.ms/2YUbGui

The Grapelord of Napa Faces a Threat Worse Than Plague; For 50 years, Andy Beckstoffer drove up the price of wine. Did the strategy work too well?
Ben Ryder Howe – NY Times
One balmy winter afternoon, Andy Beckstoffer, a grape grower who has done more than nearly anyone to shape the premium U.S. wine industry, was sitting in Mustard’s, a restaurant in Napa Valley that is a kind of clubhouse for the vintner class. Although Beckstoffer Vineyards, the largest private grower in California, had recently set a sales record with a blockbuster harvest of $55 million worth of cabernet sauvignon, its founder was not in the mood to celebrate. The wine industry was in trouble, facing its worst outlook in generations — and that was before the coronavirus struck.
/nyti.ms/2YPfbCh

M.B.A. Programs Across the Globe Anticipate Drop in Fall Enrollment; Nearly half of business schools say they expect interest to slide in 2020, new survey shows
Patrick Thomas – WSJ
Business schools in the U.S. and abroad are bracing for a decline in enrollment for the rest of 2020 as the coronavirus pandemic upends higher education and threatens already-fragile graduate programs.
/on.wsj.com/3dzBrEb

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