Hits & Takes
By JLN Staff
The Streetwise Professor’s latest blog post is titled “Whoops! WTI Didn’t Do It Again, or, Lightning Strikes Once” and gives his take on the expiration of the June WTI contract and the current state of the oil market. It is well worth the read
FIS executive John Omahen has weighed in with a post on LinkedIn titled “How COVID-19 Redefined Priorities in the Derivatives Industry.”
Keeping up with the big idea theme, CNBC offered this from Nasdaq, “Nasdaq explains how new SEC proposals could profoundly transform US equity markets.”
John Lothian Productions is now offering a FREE “Everything You Need to Make Your First Video” mini course. The course is designed to give you important lessons, tips and tricks to shoot your own quality videos while away from the office. There are five lessons that walk you from picking your topic to what kind of equipment you need.
The second story in Leads is about casting doubt on the value of trading floors. The paper quoted in the article is titled “Vestigial Tails: Floor Brokers at the Close in Modern Electronic Markets” and is by Edwin Hu of the New York University School of Law and Dermot Murphy of the University of Illinois at Chicago – Department of Finance.
Yesterday the Department of the Treasury accepted bids for $20 billion for U.S. Treasury bonds expiring in May 2040. The bonds bear an annual coupon of 1 ? percent paid semiannually. Bids for $50.6 were placed with the Treasury before the auction. Issuance will occur on June 1. They will be the first 20-year bonds issued since 1986. They are expected to be deliverable on the Chicago Board of Trade classic Treasury bond futures. ~Thom Thompson
For novice constituents who need volatility basics, as well as for the veterans who might want some bedside reading, the CFA Institute Research Foundation recently published “The VIX Index and Volatility-Based Global Indexes and Trading Instruments: A Guide to Investment Trading Features,” co-authored by Matt Moran and Berlinda Liu. The CFA, which claims more than 150,000 charterholders worldwide, issued the study April 30, just under the wire for the VIX’s 27th birthday last month.
During April 2020, the VIX Index ranged between a session high of 60.59 on April 1 and a session low of 30.54 on April 28. That compares with a long-term VIX Index average of 19.1 through 2019.~SC
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Whoops! WTI Didn’t Do It Again, or, Lightning Strikes Once
The June 2020 WTI contract expired with a whimper rather than a bang yesterday, thereby not repeating the cluster of the May contract expiry. In contrast to the back-to-back 40 standard deviation moves in April, June prices exhibited little volatility Monday or Tuesday. Moreover, calendar spreads were in a modest contango – in contrast to the galactangos experienced in April, and prices never got within miles of negative territory. Stronger fundamentals certainly played a role in this uneventful expiry.
*****Excellent analysis from Craig Pirrong.~JJL
How COVID-19 Redefined Priorities in the Derivatives Industry
John Omahen – FIS
It may be an understatement to say that no industry was immune to the effects of COVID-19, least of all the financial industry. The worldwide quarantine and associated business shutdown created market turbulence evidenced by record trading volumes, falling interest rates placing pressure on credit markets and new work-from-home (WFH) mandates that exposed cyber risks while straining workers and systems alike.
***** Always listen to the plumbers and FIS knows where all the monkey wrenches are.~JJL
Deflation Would Be a Crippling Side Effect of the Pandemic; Falling prices could become self-sustaining, prolonging the slump.
Christopher Condon – Bloomberg
If you’re old enough to remember the 1970s in the U.S., or if you’ve ever lived in a country with runaway prices, you know the corrosive impact of high inflation and that awful feeling that your pay will never quite keep pace with the rising cost of everything else. Against that, it sounds odd to say inflation can ever be too low. But many economists had begun to worry about just that in recent years. And that was before the coronavirus pandemic.
*****Think about all the things you do now versus back in January or February. Think of all the things you don’t buy, or won’t need to buy for a long time. And then think about the impact of that diminished demand on prices. Deflation is a risk.~JJL
Inflation Isn’t Gone For Good; The more you hear it’s not a problem, the more worried you should be.
Clive Crook – Bloomberg
After the world has finally worked its way beyond the Covid-19 crisis, it may have to confront a danger that almost everybody has forgotten: higher inflation. At the moment, it’s the last thing investors and governments are worried about, which is exactly what makes the threat so plausible.
*****There is always a risk of inflation and the cure for deflation is inflation, though you want it to be mild. I am worried about deflation first and foremost, but I am just one person and inflation is a mass psychological and monetary phenomena.~JJL
Wednesday’s Top Three
Our most-read story on Wednesday was Cboe to buy Virtu’s MATCHNow dark pool to expand into Canada, from Reuters. Second was John Lothian Productions’ free mini course on Everything You Need To Make Your First Video. Third was For Creators of Giant Oil ETF, Troubles in Market Began a Decade Ago, from Bloomberg, about the United States Oil Fund.
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|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages
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The Day Coronavirus Nearly Broke the Financial Markets; The March 16 stock crash was part of a broader liquidity crisis that threatened the viability of America’s companies and municipalities
Justin Baer – WSJ
An urgent call reached Ronald O’Hanley, State Street Corp.’s chief executive, as he sat in his office in downtown Boston. It was 8 a.m. on Monday, March 16. A senior deputy told him corporate treasurers and pension managers, panicked by the growing economic damage from the Covid-19 pandemic, were pulling billions of dollars from certain money-market funds. This was forcing the funds to try to sell some of the bonds they held.
Coronavirus Shutdown Casts Doubt on Value of Exchange Trading Floors; NYSE’s 4 p.m. auctions run more smoothly, study finds; investors get better prices for S&P 500 options
Alexander Osipovich – WSJ
Investors won’t necessarily benefit when the New York Stock Exchange and other market operators welcome traders back to their closed floors, new research suggests. An academic study released Thursday found that NYSE’s crucial 4 p.m. auctions, which determine end-of-day prices for thousands of stocks, ran more smoothly after the Big Board closed its floor to curtail the spread of the coronavirus. NYSE has questioned the study’s conclusions.
How coronavirus turned the business of trading at banks on its head
As lockdowns begin easing, banks are wrestling with how many traders to send back to the office
Philip Stafford, Stephen Morris and Eva Szalay in London – FT
Traders have long lived by a mantra famed for its masochism: be at your desk at 6:45am, come hell or high water. But the tens of thousands of traders who buy and sell everything from currencies to convertible bonds across the world’s financial hubs did not count on coronavirus. In a few short weeks, the pandemic has ripped up every established convention about the business.
Specter of Negative Rates Is Putting Wall Street Bankers on Edge
Yalman Onaran and Liz McCormick – Bloomberg
Lenders already face lower profit due to surging loan losses; Despite the push-back, negative U.S. rates still a possibility
U.S. banks have long looked with pity at overseas lenders coping with negative interest rates. Now, they’re grappling with the fear they may join the crowd. Negative rates — especially if they persist for many years — reduce the spread banks make between lending and borrowing because they cannot pass the negative rate onto most depositors. Coupled with surging defaults due to an economic downturn, they can sap profits out of the banking system even if they create an initial jump in lending. That toxic combination has crippled Europe’s banks in the last six years, a dreaded position their U.S. peers would like to avoid.
Big Banks Plan Staffing Limits, Shift to Suburbs After Lockdown
Michelle F Davis, Viren Vaghela, and Natalie Wong – Bloomberg
JPMorgan is clearing personal belongings off workers’ desks; Citigroup may move some to offices in New York City suburbs
Wall Street in the post-lockdown era is starting to take shape. Big banks are preparing offices meant for thousands to house a fraction of that number, with some of those displaced employees relocating to suburban outposts and some working from home indefinitely.
Live Q&A: Will the oil industry recover from the Covid-19 crisis? Energy reporters Derek Brower and Anjli Raval have been covering the tumult roiling the sector as lockdowns caused oil demand to collapse
Derek Brower and Anjli Raval – FT
Before coronavirus spread around the globe, there were already looming questions about the future of the energy industry as the world increasingly turned towards renewables. The pandemic has only further shaken the sector.
Venezuela sues Bank of England over refusal to release gold; Lawyer says UK central bank has ‘moral imperative’ to help ease effects of coronavirus
Jane Croft and Gideon Long – FT
Venezuela has filed a $1bn lawsuit against the Bank of England over its refusal to release gold stashed in its vaults, as the government of Nicolás Maduro scrambles for funds to alleviate a deepening economic and health crisis.
Strong demand for newest US 20-year bond to fund record spending; Treasury offloads $20bn at yield of 1.22% after public bids worth $50bn
Colby Smith – FT
The US Treasury drew strong demand for its newest 20-year bond on Wednesday, underscoring its ability to fund the government’s record-setting spending packages at historically low interest rates.
There’s a Long Way to Go Before China Inc. Abandons U.S. Listings
Julia Fioretti and Ishika Mookerjee – Bloomberg
U.S. Senate passed bill that could delist Chinese companies; Hong Kong seen gaining from U.S. move against Chinese IPOs
The U.S. fired its latest shot across the bows in its escalating rivalry with China when the Senate overwhelmingly approved a bill that could lead to Chinese companies being barred from listing on U.S. stock exchanges, although few expect China Inc. to abandon the U.S. as a listing venue entirely.
Singapore Sees Negative Rates Creep In With Flush Liquidity
Masaki Kondo – Bloomberg
Swap-offer rate fell below zero for the first time since 2011; Abundant interbank funds a probable cause for falling rates
Negative interest rates are creeping into Singapore. The nation’s overnight borrowing rate was less than two basis points above zero on Tuesday, down from the year’s high of 1.68% in January. The one-month swap offer rate, the cost to borrow the city’s currency for dollar investors, fell below zero on Wednesday for the first time in almost nine years.
2020 Edelman Trust Barometer Spring Update: Financial Services and the Covid-19 Pandemic
The 2020 Edelman Trust Barometer Spring Update: Special Report on Financial Services and the Covid-19 Pandemic reveals that the public’s trust in financial services has reached an all-time high of 65 percent amid the pandemic. The question is: does this higher level of trust represent a sustainable increase? Or is this a trust bubble, with the gains soon to be followed by a downturn?
Traders Beware: U.S. taps new tools to find fraud in volatile commodities market
Chris Prentice – Reuters
When the U.S. Department of Justice charged a handful of JP Morgan Chase & Co (JPM.N) traders in 2018 and 2019 with alleged commodities futures manipulation, it wasn’t the first time the government had probed the bank’s metals trading activities.
Vanguard’s $50 Billion Woman Found Winners in Bond-Market Chaos
Liz McCormick – Bloomberg
Wright-Casparius has several funds outperforming most peers; Industry veteran is one of 27 women heading bond funds, ETFs
One of the worst-ever bouts of dislocation in the U.S. bond market generated some winning trades for Vanguard Group’s Inc.’s Gemma Wright-Casparius.
Sellers beware: Price collapse triggers bartering over oil and gas deals
Shadia Nasralla – Reuters
The collapse in oil prices to 21-year lows has led potential buyers of oil and gas fields to try and renegotiate deals already agreed at higher prices, with the first examples emerging of sellers having their hand forced.
Coronavirus Case Count Tops Five Million World-Wide; All 50 U.S. states have begun reopening as of Wednesday; Washington, D.C. remains under stay-at-home orders
Chong Koh Ping and Matthew Dalton – WSJ
The global tally of coronavirus infections passed five million on Thursday, according to data compiled by Johns Hopkins University, but more green shoots of normalcy emerged in parts of the world as governments continued lifting pandemic lockdown orders.
Brazil emerges as a top global coronavirus hotspot; Experts predict death toll will top 100,000 in the coming months
Bryan Harris and Andres Schipani – FT
More than 100,000 Brazilians are likely to die from Covid-19, according to public health experts and professionals, who have warned the country’s widespread poverty and social inequality will fuel an explosive rise in cases.
Europe’s Recovery Imperiled by Banks Too Scared to Lend; Bank loans were expected to quickly reach those in need under government-guarantee plans. So far, progress is slow.
Giovanni Legorano and Patricia Kowsmann – WSJ
In late March, Angelica Donati, an Italian infrastructure and real-estate entrepreneur, started calling local banks seeking a loan to shore up her business after it was shut during Rome’s battle to contain the coronavirus.
British finance workers prepare for return to office of the future
Lawrence White, Carolyn Cohn, Pamela Barbaglia – Reuters
Limits on elevators, thermal imaging and temperature checks will greet a first wave of traders and bankers in Britain preparing to return to offices under new norms to tackle the coronavirus.
A Vision of Post-Pandemic Suburbia; The coronavirus is likely to leave places like Northern Virginia more pleasant and more boring.
Tyler Cowen – Bloomberg
If the pandemic will leave New York City poorer, younger and, eventually, more dynamic, what might happen to a typical upper-income American suburb? Like, say, my home venue of Fairfax County, Virginia?
Facebook to Limit Offices to 25% Capacity, Require Masks at Work
Mark Gurman and Kurt Wagner – Bloomberg
Company plans to put employees on shifts to reduce numbers; Grab-and-go meals, temperature checks, updated shuttles coming
Facebook Inc. will limit offices to 25% occupancy, put people on multiple shifts and require temperature checks when it lets employees back into workplaces beginning in July, according to people familiar with the matter.
We need more than Big Data to track the virus; We must take social context into account if we are to stop the spread of the disease
Gillian Tett – FT
Six years ago, Boston-based computer whiz-kids and doctors came up with a seemingly smart pandemic-fighting idea. With Ebola spreading in west Africa, they proposed using digital data to monitor and predict the spread of the disease.
U.S. Meat Squeeze Eases on Slaughterhouse Revival, Slack Demand
Michael Hirtzer and Jen Skerritt – Bloomberg
Plants working at higher than 80% rates compared with 2019; Covid-19 limits may hurt demand during Memorial Day Weekend
The squeeze on U.S. meat is easing. Wholesale prices are falling as slaughterhouses recover from Covid-19 related shutdowns and traders brace for lower demand than usual over the Memorial Day holiday.
US business takes on burden of testing employees for coronavirus; Cost and availability of kits and regulatory confusion present hurdles
Andrew Edgecliffe-Johnson and David Crow – FT
When Major League Baseball told players last week that they would have to undergo regular nasal swabs, temperature checks and blood draws for games to resume, the sport’s authorities were following a playbook that is becoming increasingly familiar across corporate America.
The Robots-Are-Taking-Our-Jobs Threat Gets Real; The coronavirus is hastening the need for a labor force that doesn’t get sick or locked down.
Anjani Trivedi – Bloomberg
If there was ever a good time for the robots-taking-over-jobs argument, this may be it. Not just because factory owners don’t want to pay for rising labor costs, but because workers don’t want to gather every day in petri dishes.
Pandemic-Baking Britain Has an ‘Obscene’ Need for Flour;The Wessex Mill in Oxfordshire, a family business started 125 years ago, is among the British mills striving to meet a surge in demand.
Geneva Abdul – NY Times
A week before Britain came to a standstill in mid-March, the Wessex Mill found itself fielding nearly 600 calls a day requesting one of the country’s hottest commodities: flour.
Exchanges, OTC and Clearing
Nasdaq explains how new SEC proposals could profoundly transform US equity markets
In the first 45 days of 2020,1 the SEC issued two proposals that, together, describe a new frontier of equity market structure that would profoundly change how U.S. equity markets function. The proposals would change nearly every rule of Regulation NMS, touching every quote and trade, every individual and institutional investor, every broker, dealer and market maker, every market data vendor and consumer, and every execution venue.2 The proposals exceed in length, scope, complexity and potential impact any prior proposal from the modern era of equity trading, whether by the SEC itself or by the Equity Market Structure Advisory Committee that the SEC convened, to recommend market structure reforms.
FEAS Chairman Message Dedicated to FEAS 25th Anniversary
The Federation of Euro-Asian Stock Exchanges was established on May 16, 1995. This year we celebrate FEAS 25th Anniversary. Below is the special message from Federation of Euro-Asian Stock Exchanges Chairman Mr. Ahmed Al Marhoon.
The 20-Year Bond in a Brave New World
“Stability was practically assured.” ? Aldous Huxley, Brave New World
The US Government has responded to COVID-19 in unprecedented ways to produce a huge and rapid fiscal policy response. To fund this policy, the Treasury announced that it will issue over $800 billion in Treasury securities over the next three months. Including issuance completed in April, the issuance number rises to over $1 trillion. That is a massive issuance schedule. Here is what is upcoming.
Japan Securities Clearing Corporation Director Candidates
We hereby announce that Japan Securities Clearing Corporation has nominated candidates for
director positions, to be put for votes at the general meeting of shareholders to be held on June 15, 2020.
DriveWealth Brings U.S. Stock Investing Capability to India-Based AI Wealth Management Firm; INDmoney Integrates DriveWealth’s Technology into SuperMoneyApp
DriveWealth, LLC, a U.S. based leader in global digital trading technology, announced today that the firm has partnered with INDmoney, an artificial intelligence (AI) and machine-learning based wealth management platform in India, to bring U.S. stock investing technology and capability to INDmoney clients.
Eventus Systems wins Best Trade Surveillance Solution for Dodd-Frank Act at 2020 RegTech Insight Awards
Second consecutive win in category and second award in past week for Validus platform
AUSTIN, Texas, May 20, 2020 – Eventus Systems, Inc., a leading global trade surveillance and risk management software platform provider, was named Best Trade Surveillance Solution for the Dodd-Frank Act at the unveiling of the 2020 RegTech Insight Awards today. The award is the second regulatory technology honor the firm has received within the past week for its Validus platform and marks the second consecutive year it won the category.
Virtu Financial launches data-as-a-service platform
Open Technology platform from Virtu Financial offers access to APIs for market data covering equity, FX, fixed income and futures.
Hayley McDowell – The Trade
Virtu Financial has unveiled a new data-as-a-service platform via its brokerage and analytics division that provides access to multi-asset market data to subscribers.
Known as Open Technology, that platform hosts various services and market data through an application programming interface (API) architecture, meaning datasets can be accessed for aggregation and analysis, or integration with in-house and third-party applications.
Redburn deploys Glue42 desktop tool to synchronise trading processes; Agency broker Redburn completed a proof of concept with Glue42 to make trading processes more efficient
Hayley McDowell – The Trade
European equity research house and agency broker Redburn has teamed up with financial desktop integration specialist Glue42 in a bid to harmonise its trade execution processes.
Scotland, a thriving fintech sector
Michael Paris – FintechScotland.com
As part of the series on “Innovation in finance” the BBC have produced a video exploring the fintech developments in Scotland. It has been produced in collaboration with Innovate Finance, Scottish Enterprise, DIRECT ID and Fintech Scotland
Machine Learning: A Math Problem or a Workflow Problem? For good reason, machine learning has a highly technical focus. But less talked-about challenges lie in managing the human capital and workflows associated with the tech.
Rebecca Natale – Waters Technology
As machine learning (ML) use-cases expand to include building risk models and trading algorithms, and to finding connections in a fog of data, capital markets firms are also experiencing growing pains when it comes to building some semblance of structure around what can be largely experimental artificial intelligence (AI) projects.
BXS Launches Canadian Best Ex Platform
BXS has launched a Canadian Best Execution Platform that will provide the ability for clients to monitor execution quality, analyze transactional costs, and perform trade surveillance for Canadian-listed securities using BXS’s advanced software and tools. In addition, its comprehensive peer-to-peer comparison dashboard will provide valuable insight of market centers’ performance and trading costs offering clients a competitive edge and opportunities for enhanced profitability.
Crypto hedge funds struggle to recover from ‘bloodbath’; Volatility in cryptocurrency prices causes big losses for highly-leveraged funds
Laurence Fletcher – FT
Vlad Matveev has learnt the hard way how volatile cryptocurrency hedge funds can be. The 50-year-old Muscovite invested $250,000 last year with California-based Cryptolab Capital, which targeted double-digit gains from trading crypto regardless of whether the market rose or fell. But Mr Matveev said his investment fell 98.5 per cent in value when the fund folded in this year’s coronavirus-induced turmoil.
US Lawmaker Proposes Legislative Groundwork for National Blockchain Strategy
Danny Nelson – Coindesk
A U.S. lawmaker wants the federal government to begin considering a national blockchain strategy. On Tuesday, U.S. House Rep. Brett Guthrie (R-Kent.) introduced a bill calling on the Federal Trade Commission (FTC) to survey the prevalence of blockchain technologies across industry, government and the globe. CoinDesk obtained a draft version of the bill, HB6938, which is shared in full below. If passed, the bill, which had no cosponsors when referred to the House Energy And Commerce Committee, would give the FTC two years to conduct the survey and a further six months to advise Congress on what it learned.
Post COVID-19, Coinbase will be a remote-first company
Brian Armstrong – Coinbase blog
I sent the note below to employees earlier today. I’m sharing it publicly here in case others find it helpful. People are trading and using cryptocurrency more and more during this economic crisis we’re in, getting interested in sound money and what the cryptoeconomy can offer. Coinbase is continuing to hire and grow during this time period. If you’re interested in helping create this new culture with us, please check out our open roles (soon to be updated with more remote positions).
Five block trades made up 81% of CME’s recent bitcoin options contract volume
Celia Wan – The Block
Derivatives exchange CME Group has seen a significant pickup of its bitcoin options contract volume over the past week, although five trades accounted for around 81% of these contracts. From May 12 to May 19, a total of 3,059 bitcoin options contracts traded hands, marking May the most active month in CME’s history of bitcoin options trading. Among them, 2,490 contracts can be attributed to five block trades, which are transactions conducted off the public exchange order book due to their large quantities.
The CME is capturing a major share of the crypto market as institutional presence grows
Cole Petersen – Cryptoslate
The introduction of Bitcoin futures to the CME has given professional traders, leveraged funds, and institutional investors a great gateway to gain exposure to the benchmark crypto. Prominent investors like Paul Tudor Jones have already admitted to using futures to gain long-term exposure to the benchmark digital asset, and watching the trends seem surrounding volume and open interest on the platform can offer valuable insights.
Chinese Police Nab 12 for Scamming OTC Crypto Investors
Arnab Shome – Finance Magnates
The Chinese law enforcement has busted a major racket of crypto fraudsters, arresting 12 people impersonating as fake Huobi exchange officials. According to the local media outlet Jinse, all the arrests were made on Wednesday from the Guangdong province.
IBM takes stake in bank-backed blockchain platform we.trade
IBM has taken a seven percent stake in we.trade, a blockchain-based trade finance network owned by 12 banks. Initiated by nine banks in January 2017 under the project name, Digital Trade Chain, the platform was re-badged as we.trade in October 2017. The network went into live production in June 2018.
Crypto Faithful Flip Out on Speculation Satoshi Sold Bitcoin
Vildana Hajric and Olga Kharif – Bloomberg
Crypto Twitter was ablaze Wednesday after the sale of some Bitcoin was reportedly linked to the account of the token’s mystery founder. The price of the largest digital token plummeted on speculation its anonymous creator, who goes by the pseudonym Satoshi Nakamoto, was moving coins mined in early 2009, an act perceived by some as a near-sacrilegious offense.
France’s central bank, Societe Generale ‘successfully’ test blockchain-based digital euro
Yogita Khatri – The Block
The central bank of France has “successfully” completed the first test of its blockchain-based digital currency. Announcing the news on Wednesday, the Banque de France said it ran the experiment with investment banking giant Societe Generale, which issued bonds as security tokens and then settled them in digital euros.
Crypto Currency Exchange Seeks Expansion in Africa
Loni Prinsloo – Bloomberg
Naspers Ltd.-backed cryptocurrency platform Luno is in talks about expanding in Kenya and Ghana to extend its African footprint, as Bitcoin rallies 99% over the past two months amid the coronavirus pandemic. “It’s markets we have a keen interest in, and Ghana and Kenya are high on our list,” Luno General Manager Marius Reitz said by phone. While the outbreak has been beneficial in terms of transactions doubling on the exchange, it’s become harder to travel to talk to key stakeholders, he said.
Staking Will Turn Ethereum Into a Functional Store of Value
Osho Jha – Coindesk
Osho Jha is an investor, data scientist and tech company executive who enjoys finding and analyzing unique data sets for investing in both public and private markets.
U.S. bank regulator chief to depart, with Coinbase’s former top lawyer set to serve in acting capacity
Aislinn Keely – The Block
Joseph Otting is slated to step down from his post as Comptroller of the Currency later this month, according to a new report from the Wall Street Journal. Brian Brooks, first deputy comptroller and COO of the Office of the Comptroller of the Currency (OCC) — a former chief legal officer at Coinbase — will then take up the role as Acting Comptroller until U.S. President Donald Trump nominates a permanent fixture, according to Politico.
Justin Sun calls the cops over ‘stolen’ Steem funds; Justin Sun disclosed that he is working with law enforcement to chase after the people who forked the blockchain that his newly-bought social network site, Steem, ran on.
Robert Stevens – decrypt.co
Justin Sun, the wealthy CEO of the TRON Foundation, has called the cops on those responsible for splitting from his newly-bought blockchain-based social network, Steem.
Negative interest rates are a tool, not a gift; Monetary loosening has a role in crisis-fighting — but fiscal policy needs to do more
The editorial board – FT
The US should “accept the ‘GIFT'” of negative interest rates, US president Donald Trump tweeted last week; the former property mogul has long been an advocate of the benefits of cheap money. Negative rates are an indicator of deep economic troubles, and bring harmful side effects for pension funds and other investors, banks and insurers. Cutting policy rates below zero should remain, in extremis, part of the central bank toolkit. But a move into negative territory should not be cheered.
China Blew a Chance at Global Leadership Responding to Covid-19; Instead of stepping up, it picked fights with other countries.
Rosalind Mathieson – Bloomberg
In mid-April, China engaged in what appeared to be a particularly pointless fight. With France’s death toll spiking from the novel coronavirus and its economy shuttered, China could well have offered commiserations and support. Instead, it lobbed rhetorical grenades at Paris.
Is the Franco-German plan Europe’s ‘Hamiltonian’ moment? EU coronavirus recovery fund proposal puts fiscal union back on the agenda
Ben Hall, Sam Fleming and Guy Chazan – FT
A historic breakthrough. A “Hamiltonian” moment. A very deep transformation. Political leaders and analysts have reached for momentous analogies to describe the EUR500bn European coronavirus recovery fund proposed by France and Germany this week.
When gold and geopolitics clash, it’s rarely pretty
Claire Jones – FT
It might strike many as odd that Venezuela, a country an ocean away from the UK with little in the way of historical ties, has its gold stashed in vaults deep underneath the City of London.
Private Equity, Hedge Funds Get Unlikely Foe in GOP Think Tank
Robert Schmidt and Sabrina Willmer – Bloomberg
New group led by ex-Romney adviser blasts industries in report; American Compass questions whether firms benefit economy
A new conservative think-tank in Washington is launching its first campaign Wednesday with what could be a long-shot goal — persuading pro-business Republicans that they should cast a more skeptical eye on Wall Street’s private equity firms and hedge funds.
Trump’s Gamble on Reopening May Not Pay Off; Risking lives for the sake of the economy isn’t much of an electoral strategy.
Jonathan Bernstein – Bloomberg
The oddest thing in electoral politics over the past few weeks is what appears to be absolute, and unfounded, confidence among some Republican strategists that there’s a trade-off between public health and the economy, and that what matters for President Donald Trump’s re-election is the economy.
Odey Says Governments May Make Private Gold Ownership Illegal
Jack Farchy and Nishant Kumar – Bloomberg
Hedge fund manager predicts high inflation as lockdowns ease; Flagship fund was down 9.5% in April after surging in March
Crispin Odey, one of Europe’s highest-profile hedge fund managers, said that governments may ban private gold ownership if they lose control of inflation in the wake of the coronavirus crisis.
Chinese Companies Could Be Forced to Give Up U.S. Listings Under Senate Bill; Bipartisan measure addresses China’s unwillingness to grant American regulators routine access to audit records
Dave Michaels – WSJ
Chinese companies could be forced to give up their listings on American stock exchanges under legislation approved by the Senate on Wednesday.
TRADE Calls: Meritsoft – Delaying CSDR
Kiays Khalil – The Trade
Daniel Carpenter, head of regulation at RegTech and post-trade services provider Meritsoft, a Cognizant company, tells The TRADE about how the ongoing changes to CSDR will impact the industry, and explains why so many market participants are not satisfied with the current framework.
US bank regulator finalises controversial community lending rule; Change to act governing loans in poor communities comes as concerns rise about economic fallout
Robert Armstrong – FT
The US Comptroller of the Currency, one of the three key bank regulators, has finalised controversial changes to rules on bank lending in poor communities, just as comptroller Joseph Otting was reported to be stepping down from his post.
Finra Gives Advisors ‘Blunt Warning’ On Sales Of Oil-Linked Products
Tracey Longo – FA Magazine
Finra put broker-dealers on notice today that it is clamping down on sales practices and suitability obligations related to the sale of oil-linked exchange-traded products (ETPs).
FINSIA – The regulators: Priorities updated
Opening remarks by James Shipton, Chair, Australian Securities and Investments Commission, to the Financial Services Institute of Australasia (FINSIA) webinar ‘The Regulators: Priorities Updated’, 21 May 2020.
SEC Announces 2020 Small Business Forum, to Be Held Virtually
The Securities and Exchange Commission will virtually host its 39th annual Government-Business Forum on Small Business Capital Formation on the afternoon of June 18, 2020. The Forum is a unique event where members of the public and private sectors gather to craft suggestions for policy impacting emerging businesses and their investors, from startups to smaller public companies.
CFTC Division of Enforcement Issues Civil Monetary Penalty Guidance
The Commodity Futures Trading Commission today announced the Division of Enforcement has issued new guidance outlining factors the Division considers in recommending civil monetary penalties (CMPs) to the Commission to be imposed in CFTC enforcement actions. The guidance memorializes the existing practice within the Division and has been incorporated into the Division’s Enforcement Manual. This is the first Division CMP guidance issued publicly since the Commission published its penalty guidelines in 1994.
Frequently Asked Questions about Advertising Regulation
British Columbia Securities Commission Alleges Former Dealing Representative Provided False Information About Work History, And Reaches Settlement With Another For Providing False Information About Qualifications
The British Columbia Securities Commission (BCSC) alleges a former Surrey dealing representative provided false information about his previous employment in two registration applications.
Investing and Trading
Millions of Americans Skip Credit-Card and Car Payments; About 15 million credit-card accounts and 3 million auto loans didn’t get paid in April as the coronavirus ravaged the economy, data show
AnnaMaria Andriotis – WSJ
Millions of people are behind on their credit-card and auto-loan payments, the latest sign of the coronavirus pandemic’s financial devastation. Lenders in April had nearly 15 million credit cards in “financial hardship” programs, such as deferral programs that let borrowers temporarily stop making payments, according to estimates by credit-reporting firm TransUnion. That accounts for about 3% of the credit-card accounts the company tracks, TransUnion said Wednesday.
Fed considers giving clearer guidance on crisis policy; US central bank policymakers debated tying rate moves to targets for unemployment or inflation
James Politi and Colby Smith – FT
Federal Reserve officials debated ways to give clearer guidance on the future path of US monetary policy, including a stronger pledge to keep interest rates close to zero until the economic recovery reached certain milestones, according to minutes of last month’s meeting of central bank policymakers.
Biggest US shopping complex shows threat to mortgage-backed bonds; Vast Mall of America falls behind on payments that help underpin $500bn bond market
Eric Platt – FT
The biggest shopping mall in America is delinquent on its $1.4bn mortgage, in an ominous sign of how the pain in US retail is infecting the $500bn market for commercial mortgage-backed securities.
ESG Investing Is Having a Good Crisis. It’s Also Killing Jobs; Companies deemed to be virtuous also tend to employ very few people.
John Authers – Bloomberg
From Virtuous to Virtual
Coronavirus has accelerated many investment and financial trends and ESG investing is among them. Environmental, social and governance investing has been in vogue for a while. The pandemic has taken it to the next level. This is how flows into ESG exchange-traded funds this year have moved, according to Bloomberg:
Stock Pickers Should Be Winning. They’re Not; Volatile markets supposedly give active funds an advantage over passive competition. But recent performance is damning.
Mark Gilbert – Bloomberg
Active equity investors, they tell us, are far better stewards of our savings when markets are volatile. Their underperformance compared with passive investment products in recent years, they explain, is down to ever-rising stock markets flattering the returns available from index trackers. So the recent surge in volatility, with equity prices exhibiting unprecedented short-term swings, would have been their time to shine, right? Wrong.
S&P Global CEO: There will be an ‘increase in default levels up to about 10%’
Yahoo Finance Video
Douglas Peterson, S&P Global CEO, join Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss current demand of corporate debt, an increase in defaults, overall global markets and more.
Macy’s warns of up to $1 billion quarterly loss due to lockdowns
Macy’s Inc (M.N) said on Thursday it could rack up operating losses of up to $1.11 billion in the first quarter, as the department store operator was forced to shut stores due to lockdowns aimed at curbing the spread of the new coronavirus.
Delivery, Streaming Were Hedge Funds’ Biggest Bets at Pandemic Start
Hema Parmar, Melissa Karsh and Paul Murray – Bloomberg
As the coronavirus spread across the world earlier this year, hedge fund managers sought safety in companies set to benefit from social quarantines and enforced lockdowns.
Winners and Losers This Time Are Different From 2008; Housing, consumers and banks are holding up, while oil and big cities are in trouble.
Conor Sen – Bloomberg
The human inclination to compare the past and the present is irresistible. So looking for parallels between this economic downturn and the financial crisis of 2008-09 is natural, particularly given the alarming levels of unemployment and declines in economic output in both events.
Northern Trust shuts prime money market fund after turmoil; Prime Obligations Portfolio had halved in size because of redemptions
Robert Armstrong – FT
Northern Trust is shutting one of its main money-market funds after intense volatility caused by the Covid-19 crisis led to more than $2bn in investor withdrawals.
Banks Get a Glimpse of the Post-Coronavirus Future; The pandemic has accelerated the shift to digital banking by two years, says McKinsey. The finance industry needs to seize this opportunity.
Elisa Martinuzzi – Bloomberg
Like all businesses upended by the pandemic lockdowns, banks were forced to reorganize with little time. They managed to shutter large parts of their branch networks and to send most of their employees to work remotely. So far, the experiment has been largely free of glitches — and instructive.
WisdomTree shuts oil ETPs after Shell terminates swap deal; Counterparty departure forces closure of eight oil trackers with $580 million of assets Shell’s decision is understood to be for commercial reasons rather than due to a specific price move
Helen Bartholomew – Risk.net
WisdomTree will redeem eight commodity tracker funds with more than $550 million in combined assets, after its swap counterparty – Shell Trading – terminated the underlying derivatives agreements following recent volatility in oil markets.
BlackRock’s Biggest Credit ETF Swells to Record Amid Fed Pledge
Katherine Greifeld – Bloomberg
LQD has ballooned to $46.7 billion after Fed announced program; High-grade issuers have solid balance sheets: Al-Hussainy
The world’s largest credit ETF has ballooned since the Federal Reserve said it will backstop the market. Total assets in BlackRock’s iShares iBoxx $ Investment Grade Corporate Bond exchange-traded fund, ticker LQD, touched a record $46.7 billion on Tuesday, according to data compiled by Bloomberg. That compares to $28.2 billion on March 19, just days before the central bank said it would purchase investment-grade corporate bonds and certain ETFs that tracked them.
Commodity trading blow-ups dent Singapore’s reputation; Hidden losses at Hin Leong have raised serious questions about operations in city state
Neil Hume and Stefania Palma – FT
A series of scandals in Singapore, including a startling admission of financial irregularities by one of the country’s most successful businessmen, is threatening the city-state’s ambition to become the world’s leading commodity trading hub.
First Australian Dollar Bond From Asian Issuer in 2020 Sees Strong Demand
Kyungji Cho – Bloomberg
Relatively calm market, attractive costs attracting borrowers; Kexim deal will ‘pique the interest’ of other issuers: NAB
A sale of Australian dollar notes by Export-Import Bank of Korea met strong investor demand, in another sign that activity is reviving in the Kangaroo debt market after the coronavirus pandemic caused deal volumes to plunge.
Morgan Stanley to Expand Wealth-Management Business Into Canada
Doug Alexander – Bloomberg
New York firm’s Canadian entry to include robo adviser; Canaccord will be Morgan Stanley’s local platform provider
Morgan Stanley is expanding its wealth-management business into Canada, taking on the country’s large banks with services that will include a discount brokerage and robo adviser.
Malaysian Stock Index Posts Longest Rally in Almost Two Years
Yantoultra Ngui – Bloomberg
Malaysian stocks rallied Thursday led by glove makers, with the benchmark gauge capping its longest winning streak in almost two years. The FTSE Bursa Malaysia KLCI Index rose 1.2% to 1,452.11 at the close in Kuala Lumpur, its seventh day of gains, sending valuations to a 10-month high. Volumes for the whole market hit a record earlier this week. Top Glove Corp. jumped 8%, headed for a 13th week of gains. Glove makers have surged on the back of rising demand for their products in the wake of the global pandemic.
Netherlands Restricts Dividends, Bonuses in New Wage-Aid Plan
Joost Akkermans and Diederik Baazil – Bloomberg
Government allocates more than 13 billion euros for package; Fixed-cost support added to extension of wage-compensation aid
The Netherlands plans a second round of financial aid worth more than 13 billion euros ($14.3 billion) to help cushion the blow of the coronavirus pandemic.
Bunge’s Brazil unit signs contract to acquire two soy plants from Imcopa
Ana Mano – Reuters
Bunge’s Brazil unit has signed a contract to acquire two soy crushing plants from Imcopa, according to a statement sent to Reuters on Wednesday, marking another step to consolidate its position as Brazil’s largest soybean crusher.
(Video) Brexit Tension Flares, Increasing Risk of No Trade Deal
Relations between U.K. and European Union officials have been under strain for more than a month. Unless they can bridge them before ties are severed at the end of the year, Britain will leave the EU’s single market and customs union without a trade deal in place, spelling disruption and extra cost for businesses and consumers already reeling from the coronavirus. Wolfgang Munchau, co-founder and president of Eurointelligence, assesses the risks in an interview on “Bloomberg Surveillance.
No-deal Brexit ‘would overwhelm local emergency teams’
Patrick Butler – The Guardian
Preparing for the impact of a no-deal Brexit later this year would overwhelm local emergency response teams exhausted by the Covid-19 pandemic, a leaked Whitehall report has warned. A review by a committee set up to review the response to coronavirus said failing to seek an extension to Brexit negotiations threatened to “compound Covid-19 with a second UK societal-wide, economic and social, chronic threat”.
Brexit Threat to Banks Grows With Gulf Between U.K. and EU
Silla Brush – Bloomberg
Banks in Britain hoping to get easy access to European Union markets after Brexit are facing a setback after talks for a cross-border trade deal soured. With seven months until Britain leaves the EU’s single market and customs union, the gulf between the two sides widened this week after U.K. published its draft agreement that stands in stark contrast to the EU’s long-held positions.
Farmers urge UK government to protect food standards in post-Brexit trade bill
Sandra Laville – The Guardian
Farmers, environmentalists and consumer groups are pressing the government to honour its manifesto pledge not to undermine food standards with low-quality imports in a post-Brexit trade policy. A coalition of organisations, led by the National Farmers Union, failed to secure amendments in the Commons to the agriculture bill last week to protect UK farmers and producers from lower-quality imports from countries like the US.
Brexit: Reaction to government plans on goods entering NI
Politicians and organisations in NI have reacted to the government’s confirmation there will be new checks on some goods entering Northern Ireland from the rest of the UK. The details are contained in UK proposals for implementing the NI part of the Brexit deal.