US shale companies accused of collusion over oil price

May 13, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

At the request of IncubEx Chairman Neil Eckert, JLN has removed the video we conducted with him that was part of The History of Environmental Trading from the JohnLothianNews.com website. The interview, part of a historical series, was conducted in 2022, but not edited until 2023 and not published until last week. After initially publishing the video on Thursday, I re-edited the video on Friday night to remove some of the dated material from it that was not directly related to the purpose of the historical aspect series. However, we were asked to remove the video and we did. We had initially reported that the video was shot in 2023; however, that was when it was edited. We apologize for the error. All our social media posts related to this video have also been deleted.

The Annual Meeting of the CME Group covered several key agenda items, including voting on official proposals, general business updates, and a Q&A session. Shareholders of record as of March 11th, 2024, were eligible to vote, with materials available from March 18th. It was noted that a quorum was present for all proposals except the election of Class B directors, leading to existing directors continuing under Delaware law until the 2025 meeting.

During the meeting, shareholders were encouraged to vote if they hadn’t already, with the polls closing after proposal presentations. The proposals discussed included the election of 17 equity directors, ratification of Ernst and Young LLP as the public accounting firm for 2024, and an advisory vote on executive compensation, all recommended for approval by the board of directors.

A notable moment occurred during the Q&A session when a shareholder questioned the board’s discretion in accepting or rejecting the resignation of an unelected director, highlighting concerns about the potential undermining of shareholder voting rights. In response, the board emphasized their commitment to respecting shareholder feedback and making adjustments based on the votes received, particularly regarding executive compensation policies. This indicates the board’s intention to be responsive and accountable to shareholder input, ensuring that their governance policies align with shareholder interests.

The discussion concluded with a brief acknowledgment of litigation matters related to the Langer vs. CME Group lawsuit. CME Group Chairman and CEO Terry Duffy expressed confidence in the suit’s legal standing and chose not to comment further due to the ongoing nature of the lawsuits. However, he did say, “I think a lot of us who’ve been around here a long time understand what the charges are and what the validity of those charges are. We feel in a very strong position right now. We are not accruing anything as it relates to this.”

In answer to an inaudible question that according to one source was about a large dollar fund related to this lawsuit, he said, “Not only is it not true, it’s one of the great falsehoods I’ve ever heard in my entire life.”

The Commodity Futures Trading Commission (CFTC) Friday proposed new rules that would prohibit event contracts involving political contests, award shows, sports events, and other gaming activities from being listed or cleared by CFTC-registered entities. The proposal categorizes such event contracts related to gaming, war, terrorism, assassination, and unlawful activities as contrary to public interest under the Commodity Exchange Act. It provides a detailed definition of “gaming” that includes staking value on outcomes of political contests, awards competitions, athletic events, or related occurrences. The move comes amid an increase in the number and variety of event contracts listed by exchanges, as well as new applications from entities seeking to list such contracts. The CFTC aims to maintain public confidence in the integrity of regulated derivatives markets through these proposed restrictions.

Meanwhile, last week Kalshi self-certified event contracts for such burning issues as:

Will LeBron James Jr. be drafted?
Will a bill taxing or banning hedge funds from owning single-family homes become law before date?
Will movie have the highest Rotten Tomatoes score in period?
Will Tom Brady play in the NFL again before date?
Will coach be the next coach of team?
Will Beyonce’s next album appear on the Billboard chart?

Also, NADEX listed event contracts on:

HEDERA HASHGRAPH (HBAR) CRYPTOCURRENCY “TOUCH BRACKET” VARIABLE PAYOUT CONTRACTS
Hedera Hashgraph (HBAR) CRYPTOCURRENCY EVENT CONTRACTS

Patrick Young‘s May 7th episode of IPO-VID 142 is with Brian Hyndman, CEO of Blue Ocean, titled “Blue Ocean – A New Market Tide.”

Amazon sent me an email that has never been more true. It said,
“We found something you might like: Intern Management by Robert Khoury with John Selby.”

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

*****

Our most read stories from our previous edition of JLN Options were:
Cboe Global Markets and Metaurus Advisors, LLC Announce Plans to Launch Three New Innovative Equity Indices from Cboe.
Tradier Options Summit from Tradier.
CME Group Inc. Announces Preliminary Results from its 2024 Annual Meeting of Shareholders from CME Group. ~JB

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

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FIA Conference: Greg Schvey of Axoni Discusses Data Synchronization and Resiliency in Capital Markets
JohnLothianNews.com

At the FIA International Futures Industry Conference in Boca Raton, FL in March, Greg Schvey, CEO of Axoni, shed light on the company’s data synchronization platform and its role in addressing data inconsistencies and enhancing resilience in capital markets.

Watch the video »

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Derek Haworth of BornTec Emphasizes Data Integrity and Operational Resilience at FIA Conference
JohnLothianNews.com

In an interview with John Lothian News at the FIA International Futures Industry Conference in Boca Raton, FL, Derek Haworth, the founder and CFO of BornTec, underscored the importance of data integrity and operational resilience for firms in the futures industry.

Watch the video »

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Billionaire quant investing pioneer and philanthropist James Simons dies at 86
Niket Nishant and Svea Herbst-Bayliss – Reuters
Billionaire investor James Simons, the mathematician and Cold War code-breaker who founded one of the world’s most prominent and profitable hedge funds, Renaissance Technologies, has died at 86, his foundation said on Friday. The Simons Foundation did not give a cause of death. Sixty years ago Simons — who preferred to be known as Jim — shifted course from teaching mathematics and working in U.S. intelligence to investing. His pioneering use of computer signals for trading decisions earned him the nickname “Quant King.”
/jlne.ws/3UARcSG

****** Who will be the new quant king? Will this be another version of the Game of Thrones?~JJL

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Roaring Kitty is back, and GameStop stock is rallying. The company still is struggling to make money.
Steve Goldstein – MarketWatch
Roaring Kitty is back. Keith Gill, whose bullish analysis of the video-game retailer GameStop on Reddit during the pandemic created a national phenomenon, made his first social media post on the X service in three years, in a cryptic post meant to show he was paying attention. “My god it’s him, he’s really back,” said one user on Reddit’s GameStop message board. “To give a hedgefund bitch a heart attack. To make a million apes insomniac. It’s the guy… who’s not a cat ;-)”
/jlne.ws/3WHYvKP

***** If you wonder where Keith Gill has been for three years, he was HERE.

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Friday’s Top Three
Our top story Friday was The Smartest People in the Room Are All Listening to the Same Podcast, subtitled “How did Acquired become the business world’s favorite show?” Second was the notice for the Tradier Options Summit, “Navigating Volatile Markets,” a free virtual event to take place on May 22 at 10:00 a.m. ET. Third was How to find out if a woman is a psychopath – there’s one obvious tell, experts say, from the New York Post.

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Lead Stories

US shale companies accused of collusion over oil price; Wave of class action lawsuits come after regulators claim the industry conspired to curb production
Jamie Smyth and Myles McCormick – Financial Times
The US shale oil industry faces a barrage of lawsuits alleging some of the largest companies in the sector colluded to curb output and raise prices, after similar claims were made by US antitrust regulators. ExxonMobil, Occidental Petroleum and Diamondback Energy are among the companies named in at least 10 class actions alleging they conspired to co-ordinate and constrain shale oil production, which had the effect of raising US retail petrol prices.
/jlne.ws/3QHsI9d

China and ESG ETF closures soar in face of political backlash; Culls have been enacted despite surging enthusiasm for ETFs generally, with 58 successive months of global net inflows
Steve Johnson – Financial Times
More US-listed China-focused exchange traded funds have closed down since the start of this year than in any previous full year as investors continue to fight shy of the world’s second-largest economy. Liquidations of ETFs investing on the basis of environmental, social and governance (ESG) factors are also on track to smash through prior records – both in the US and globally – amid a backlash against the concept.
/jlne.ws/3yi7l80

Cyber Threats Rise Along With Scrutiny of How Companies Handle Hacks; Nine out of 10 compliance professionals surveyed by The Wall Street Journal said their cyber risks increased
David Smagalla – The Wall Street Journal
Cybersecurity threats increased for businesses over the past year, according to a Wall Street Journal survey of compliance professionals. Nine out of 10 companies said cybersecurity risks rose, with nearly half saying the risk shot up substantially. Almost all midsize companies-those with between $50 million and $1 billion in revenue-said they felt cyber threats had increased. The Wall Street Journal surveyed around 300 compliance professionals between Feb. 13 and March 11. More than three-quarters were based in the U.S. and about 4% in Canada. Around 36% of respondents worked in the financial services sector, while around 13% worked in professional and business services and around 9% in the technology sector. (For additional details about the survey’s methodology, please scroll to the end of the article.)
/jlne.ws/3WJTMbL

SGX FX realigns its CNH FX futures contracts to allow market participants to better manage their price risk exposures; Development will help global market participants improve risk management processes across OTC and futures.
Wesley Bray – The Trade
SGX FX has announced adjustments to the official reference rate and timing of the Final Settlement Price (FSP) for its CNH FX futures contracts to help market participants globally manage their price risk exposures better. Specifically, the development focuses on risk exposures between FX futures settlement and OTC FX spot prices.
/jlne.ws/3K11p62

Putin’s choice of new defence minister shows he’s preparing for confrontation with the West
James Kilner – The Telegraph
At first glance, Andrei Belousov does not appear to fit the mould of a Russian defence minister. Known for his spreadsheet wizardry and grasp of Keynesian economics, he is more at home with columns of data than of tanks. But Vladimir Putin has chosen Mr Belousov, described as the Kremlin’s most gifted and most illiberal economist, and given him a clear mission – to win in Ukraine and prepare Russia for a long-term conflict against Nato.
/jlne.ws/4bAKliG

NYSE President Sees More US Companies Pursuing Public Offerings
Katherine Doherty – Bloomberg
The market for US initial public offerings is opening up, with more companies deciding to sell shares for the first time, New York Stock Exchange President Lynn Martin said. “I’m incredibly optimistic given the amount of proceeds that have been raised so far in the markets,” Martin said Monday in a Bloomberg Television interview. NYSE Group Inc. has had about 25 IPOs of operating companies on the New York Stock Exchange this year, Martin said.
/jlne.ws/4bE9Foh

Carbon Dioxide Just Took an Ominous, Record-Breaking Jump; The world’s gold standard CO2 observatory experienced its biggest year-over-year increase as climate change-fueled disasters worsen.
Kendra Pierre-Louis – Bloomberg
Researchers have recorded the largest jump in global average carbon dioxide emissions leading to a record level of climate-warming gases in the atmosphere. This unprecedented rise comes as the Earth has experienced its 11th month in a row of record-breaking temperatures and a string of climate change-fueled disasters. “It’s a new milestone and it helps reinforce the point that CO2 is still rising faster than ever overall in the atmosphere,” said Ralph Keeling, director of the CO2 Program at the University of California at San Diego’s Scripps Institution of Oceanography, which has tracked the gas at Mauna Loa Observatory since the 1950s.
/jlne.ws/4dEf6W7

China is set to switch off real-time info on foreign flows in its stocks as soon as today, seeking to limit the effect on sentiment of selling by overseas funds; Data Drip: The Bloomberg Open, Asia Edition
Carrington York – Bloomberg
China is set to switch off real-time info on foreign flows in its stocks as soon as today, seeking to limit the effect on sentiment of selling by overseas funds. The Shanghai and Shenzhen exchanges will now disclose trading via links with Hong Kong once a day. Chinese equities have rallied since the planned change was announced in April.
/jlne.ws/3L4ciC4

‘Stunning’ Solar Activity Is a Warning to Grid Operators; The Sun sent streams of charged particles last weekend capable of impairing power infrastructure. The planet should be prepared for worse surges.
Brian K Sullivan – Bloomberg
Late last week, the Sun blasted millions of tons of super-heated gas off its surface toward Earth and everyone on it. Then it happened again, and again, and, well, you get the idea. The brilliant auroral displays captured around the world this past weekend will lead to a better understanding of what the star can do. You can almost hear those research papers being written, and they could help us understand how to protect crucial infrastructure. By Friday, the Sun had sent five of what are known as coronal mass ejections (CMEs) hurtling 93 million miles toward Earth. Another string of CMEs have come flying off the Sun’s surface, putting this event in rare territory.
/jlne.ws/3wzQsVQ

The Solar Storm Fried GPS Systems Used by Some Farmers, Stalling Planting; The storm interfered with navigational systems used in tractors and other farming equipment, leaving some farmers temporarily unable to plant their crops.
Livia Albeck-Ripka – The New York Times
The powerful geomagnetic storm that cast the northern lights’ vivid colors across the Northern Hemisphere over the weekend also caused some navigational systems in tractors and other farming equipment to break down at the height of planting season, suppliers and farmers said. Many farmers have come to rely on the equipment, which uses GPS and other navigational technology and helps them to plant more efficiently and precisely by keeping rows straight and avoiding gaps or overlap. But over the weekend, some of those operations in the Midwest, as well as in other parts of the United States and Canada, temporarily ground to a halt.
/jlne.ws/3wFP0RF

James Simons, mathematician, philanthropist and hedge fund founder, has died
Alex Veiga – Associated Press
James “Jim” Simons, a renowned mathematician and pioneering investor who built a fortune on Wall Street and then became one of the nation’s biggest philanthropists, has died at age 86. The charitable foundation that Simons co-founded with his wife, Marilyn, announced that Simons died Friday in New York. No cause of death was given.
/jlne.ws/44Elad9

World’s Top Coffee, Soy and Sugar Supplier Wants to Rule Cocoa, Too; More than 30 years after Brazil’s once-thriving crop was nearly decimated by disease, a shortfall on the other side of the Atlantic gives farmers a foothold.
Dayanne Sousa – Bloomberg
As West Africa’s cocoa production withers due to bad weather, aging trees and crop disease, enterprising farmers in an arid swath of Brazilian grasslands see an opportunity. Growers across the western part of Bahia state – a hot, dry region known for its influential farming families who’ve built fortunes exporting cotton and soy – are now cultivating cocoa for the first time. The trees are still young with most at least a year away from producing fruit, but the potential payday is big. That’s enticing independent growers and corporate behemoths alike to get in on the action.
/jlne.ws/3QGbmcC

Clear warning on escape hatch for optimisation trades; CCPs fear Emir clearing mandate carve-out for portfolio rebalancing could be abused
Luke Clancy – Risk.net
When a trade is labelled risk-reducing, it seems natural to assume that’s what it does. Yet some clearing houses are claiming new legislation in the European Union might permit the label to be used for a more nefarious purpose: to extract derivatives trades from central clearing altogether. Other market participants – including some central counterparties (CCPs) – are sceptical about the claim. They point out there are few incentives to employ portfolio optimisation trades as a way to evade the
/jlne.ws/3ypkYSG

Reasons to be cheerful about corporate climate targets; Investors might think they impede returns but FT research shows they do not mean underperformance
Matthew Vincent – Financial Times (opinion)
In July 2000, BP chief executive John Browne unveiled a rebranding of the oil and gas group, featuring a green and gold sunflower logo and the tagline “Beyond Petroleum”. Campaign, the ad industry bible, thought it something of a joke. It mocked Browne’s claim that the design’s “radiance is a daily reminder of our aspirations and purpose” by noting its resemblance to the motif on Flora margarine tubs. Greenpeace, the environmental campaign group, thought it a joke, too – of the unfunny kind. It reckoned the money spent on the rebrand – reported to be £136mn – was more than BP had invested in renewable energy projects in the entire previous year.
/jlne.ws/44HkJOX

What EU Sanctions on Russian LNG Would Mean for Global Gas; Russia transships some of its Arctic fuel at ports in Europe; Asian buyers, European companies with contracts seen affected
Anna Shiryaevskaya and Ewa Krukowska – Bloomberg
Since the start of Russia’s invasion of Ukraine, Europe and its allies have looked for ways to curb Moscow’s fossil fuel revenues without inflicting higher energy costs on their own citizens. The latest plan: ban use of European Union ports for re-exporting liquefied natural gas. Russian producer Novatek PJSC relies on stopovers in the EU to move Arctic fuel from ice-class ships onto conventional tankers. While choking off its access won’t prevent cargoes from reaching Europe – where LNG imports from Russia have actually increased in the aftermath of the war – it will make it harder to send them onward to third countries in Asia, potentially angering key buyers such as China or India.
/jlne.ws/3QH3t6O

US set to impose 100% tariff on Chinese electric vehicle imports; Move marks latest effort by Biden administration to protect domestic industry from cheap competition
Demetri Sevastopulo, James Politi and Aime Williams – Financial Times
The Biden administration plans to raise tariffs on Chinese electric vehicle imports from 25 per cent to 100 per cent, as it intensifies efforts ahead of the US election to protect American industry. The administration is expected to announce the move, and other tariffs on clean energy imports, on Tuesday, according to people familiar with the situation.
/jlne.ws/3QHIC37

Ukraine Invasion

Russia finds vast oil and gas reserves in British Antarctic territory
Jonathan Leake – The Telegraph
Russia has found vast oil and gas reserves in the Antarctic, much of it in areas claimed by the UK. The surveys are a prelude to bringing in drilling rigs to exploit the pristine region for fossil fuels, MPs have warned. Reserves totalling 511bn barrels of oil – about 10 times the North Sea’s entire 50-year output – have been reported to Moscow by Russian research ships, according to evidence given to the Commons Environment Audit Committee (EAC) last week.
/jlne.ws/4afd63x

Russia keeps accidentally dropping bombs on its own people as it struggles to hit intended targets, UK intel says
Nathan Rennolds – Business Insider
There have been numerous reports over the last year of incidents of Russian aircraft accidentally dropping bombs and missiles on Russian civilian areas around border regions with Ukraine. Belgorod, a region of Russia close to the besieged northeastern Ukrainian territory of Kharkiv, has borne the brunt of the apparent errors. Earlier this month, reports circulated that a Russian 1,100-lb FAB-500 bomb fell on a civilian area of Belgorod on May 4. Thirty houses were damaged, and five people were injured.
/jlne.ws/4agjx6n

Ukraine was a magnet for foreign fighters. After 2 bruising years, many are disillusioned or dead.
Cameron Manley – Business Insider
Three days after Russia’s full-scale invasion of Ukraine in 2022, President Volodymyr Zelenskyy issued a clarion call for “friends of peace and democracy” to join the fight from abroad. Zelensky’s International Legion of Territorial Defense of Ukraine (ILDU) was born, echoing the International Brigades that fought fascism in the Spanish Civil War of the 1930s. Many answered. Outside Ukraine’s embassy in London Business Insider found men lining up to serve.
/jlne.ws/3UADlMc

Ukraine says it flew a drone 930 miles into Russian territory to strike an oil refinery
Mia Jankowicz – Business Insider
Ukraine’s latest aerial attack on Russian soil is its farthest one yet, Ukrainska Pravda reported, with officials saying a drone traveled 930 miles to strike an oil refinery far inside Russia’s borders. Unnamed sources within Ukraine’s Security Service told the outlet that one of its drones struck a Gazprom refinery in the Russian republic of Bashkortostan on Wednesday.
/jlne.ws/4baqjMs

Zelensky sacks bodyguard chief after foiled assassination plot
Mariya Knight – CNN
Ukrainian President Volodymyr Zelensky dismissed the head of the the agency responsible for his protection after two of its officers were detained over an alleged assassination plot against him. The sacking of State Guard Service (UDO) chief Serhii Rud was revealed in a decree published on the presidential website. No reason for the dismissal was given.
/jlne.ws/4aw3AcF

Putin sacks Russian defence minister Sergei Shoigu
Our Foreign Staff – The Telegraph
Vladimir Putin has fired his defence minister as Russian troops seize villages in a surprise border raid that raised fears of an attack on the second city of Kharkiv. Dmitry Peskov, the Kremlin spokesman, said that Sergei Shoigu had been moved from the post he has held since 2012 and would instead become the secretary of Russia’s security council.
/jlne.ws/4dzqcvt

Russia’s ‘brazen’ and intensifying sabotage campaign across Europe
Dan De Luce and Jean-Nicholas Fievet and Carlo Angerer – NBC News
/jlne.ws/3QIC6t5

Russia attempts breakthrough in Ukraine’s Kharkiv region; Capture of more villages in north-eastern ‘grey zone’ intended to stretch Kyiv’s defences on eastern front lines
Isobel Koshiw – Financial Times
/jlne.ws/3QHxymM

Israel/Palestine Conflict

Inside Israel, It’s a Very Different War; There are few images of Gaza casualties on Israeli TV, widening the gulf in perspective between Israel and the outside world
David Luhnow – The Wall Street Journal
Every evening on TV news, Israelis get the latest on the Gaza war-cease-fire and hostage talks, Israeli military casualties, battlefield analysis and coverage of the Oct. 7 attacks by Islamist militant group Hamas that sparked the conflict. One thing that is almost always missing: the people of Gaza.
/jlne.ws/3QE4Nre

Exchanges, OTC and Clearing

Alasdair Were, Head of Environmental Markets, Abaxx Exchange and Clearinghouse; “The urgency is upon us. The time is now to be acting, and we really shouldn’t let the perfect be the enemy of the good.”
Smarter Markets
On this week’s installment of Carbon Frontiers 2024, we welcome Alasdair Were, Head of Environmental Markets at Abaxx Exchange and Clearinghouse, back into the SmarterMarkets™ studio. David Greely sits down with Alasdair to discuss the new futures contracts and technologies that the carbon markets need in order to develop faster, become more liquid, and scale.
/jlne.ws/3y8XYY3

Re: CPMI-IOSCO Report on Streamlining variation margin in centrally cleared markets – examples of effective practices
CCP12
The Global Association of Central Counterparties (“CCP Global”)1 is the international association for central counterparties (“CCPs”), representing 42 members who operate over 60 individual CCPs across the Americas, EMEA, and the Asia-Pacific region. CCP Global appreciates the opportunity to respond to the Report on Streamlining variation margin in centrally cleared markets – examples of effective practices 2 (“the Report”) prepared by the Committee on Payments and Market Infrastructures (“CPMI”) and the Board of the International Organization of Securities Commissions (“IOSCO”).
/jlne.ws/3UXBbre

DTCC Comments on Industry’s Affirmation Progress, With T+1 Implementation Two Weeks Away
DTCC
Today, May 13, 2024, DTCC issued the following statement: The U.S. transition to a T+1 settlement cycle is only two weeks away, and DTCC continues to actively work with the industry and regulators to ensure a seamless transition to a T+1 settlement cycle on May 28th, 2024, with a focus on increasing operational efficiencies, completing testing and ensuring readiness for the T+1 conversion weekend. Affirmation Rates: Our analysis shows that in April 2024, 83.5% of transactions were affirmed by the Depository Trust Company (DTC) cutoff time of 9:00PM ET on trade date. This represents a more than 8-percentage point increase from March’s 74.95% rate, significant progress as the industry moves closer to implementation.
/jlne.ws/3JZiBZn

Notice Regarding Stock Split as well as Related Items such as Amendment to Articles of Incorporation and Revision to Dividend Forecast
Japan Exchange Group
Today, Japan Exchange Group, Inc. (JPX) has decided to conduct a stock split and will partially amend the Articles of Incorporation and revise its dividend forecast in relation to said stock split as follows.
/jlne.ws/44GN08h

Nasdaq Announces End of Month Open Short Interest Positions in Nasdaq Stocks as of Settlement Date April 30, 2024
Nasdaq
At the end of the settlement date of April 30, 2024, short interest in 3,072 Nasdaq Global MarketSM securities totaled 11,683,381,571 shares compared with 11,407,213,969 shares in 3,081 Global Market issues reported for the prior settlement date of April 15, 2024. The end of April short interest represent 3.29 days average daily Nasdaq Global Market share volume for the reporting period, compared with 3.20 days for the prior reporting period.
/jlne.ws/3WDvpfu

Switzerland and Spain: Home of the Two Biggest IPOs Worldwide in 2024; The recent IPOs of Puig and Galderma in Spain and Switzerland have been the two largest in the world so far in 2024.
SIX
In a new interview, Bjoern Sibbern, Global Head Exchanges at SIX, elaborates on the significance of these listings for SIX Swiss Exchange and BME Exchange as well as for European capital markets as a whole. Bjoern Sibbern, how does it feel to see the two largest IPOs in the world taking place on the stock exchanges operated by SIX? The IPOs of Galderma and Puig are great news, especially given their significant size and placement volumes. Attracting leading global companies like Puig and Galderma is a testament to the strength and appeal of our markets, which are gaining momentum. This momentum positions SIX Swiss Exchange and BME Exchange as the listing destinations of choice for European companies. We remain dedicated to fostering a thriving market ecosystem that attracts leading firms to achieve their full potential.
/jlne.ws/3UWIZJG

SGX Securities launches world’s first ETF tracking Asia Pacific’s financial sector
SGX
SGX Securities today welcomed the listing of Lion-OCBC Securities APAC Financials Dividend Plus ETF. It is the first ETF tracking Asia Pacific’s financial sector, with assets under management (AUM) of S$47 million at launch. This ETF follows the performance of 30 of the largest financial institutions listed in Asia Pacific, which are tracked by the iEdge APAC Financials Dividend Plus Index. The financial services sector in this region is primed for growth with increasing economic integration and rising middle-class affluence.
/jlne.ws/4bvZphE

Fintech

Global Chips Battle Intensifies With $81 Billion Subsidy Surge; US and allies vie with China for semiconductor supremacy, powered by wave of domestic investment
Mackenzie Hawkins, Ian King, Jillian Deutsch, Yoshiaki Nohara, and Yuan Gao – Bloomberg
Superpowers led by the US and European Union have funneled nearly $81 billion toward cranking out the next generation of semiconductors, escalating a global showdown with China for chip supremacy. It’s the first wave of close to $380 billion earmarked by governments worldwide for companies like Intel Corp. and Taiwan Semiconductor Manufacturing Co. to boost production of more powerful microprocessors. The surge has pushed the Washington-led rivalry with Beijing over cutting-edge technology to a critical turning point that will shape the future of the global economy.
/jlne.ws/3JYX6Ih

Apple Nears Deal With OpenAI to Put ChatGPT on iPhone; Move is part of push to add AI features to Apple devices; Company also held talks with Google about using Gemini
Mark Gurman and Julia Love – Bloomberg
Subscribe to Power On with Mark Gurman, delivered weekly.
Apple Inc. has closed in on an agreement with OpenAI to use the startup’s technology on the iPhone, part of a broader push to bring artificial intelligence features to its devices, according to people familiar with the matter. An OpenAI accord would let Apple offer a popular chatbot as part of a flurry of new AI features that it’s planning to announce next month. Bloomberg reported in April that the discussions with OpenAI had intensified. Still, there’s no guarantee that an agreement will be announced imminently.
/jlne.ws/3UYjoz9

AI Pioneer Kai-Fu Lee Aims to Bring China Its ChatGPT Moment
Saritha Rai – Bloomberg
The Beijing startup founded by technology pioneer Kai-Fu Lee is introducing its first artificial-intelligence application for consumers, a step aimed at helping China capitalize on the promising technology. Lee’s firm, 01.AI, is launching a free productivity assistant called Wanzhi, the latest in a series of AI products it’s developing. Similar to Microsoft Corp.’s Office 365 Copilot, it helps users create spreadsheets, documents and slide presentations more quickly – though it’s mainly tailored for the Chinese market. It can interpret financial reports, take minutes for meetings and speed-read books as long as Elon Musk’s 600,000-word biography to give a quick synopsis. The app works in Chinese and English.
/jlne.ws/4bf1QFB

SoftBank Commits $5 Billion to AI After Three Years of Losses; Japanese tech investor’s assets are boosted by Arm’s share price, AI boom
Megumi Fujikawa and Kosaku Narioka – The Wall Street Journal
SoftBank Group said its net asset value surged thanks to its U.K. chip-design unit, Arm, and that it has committed to five investments in artificial intelligence on the scale of $1 billion each. SoftBank’s quarterly briefing Monday showed its transition to an AI focus, the latest makeover for a company that previously was centered on telecommunications and at one point had much of its value tied up in Chinese internet company Alibaba.
/jlne.ws/3wEBhuo

Cybersecurity

Cyber Threats Rise Along With Scrutiny of How Companies Handle Hacks; Nine out of 10 compliance professionals surveyed by The Wall Street Journal said their cyber risks increased
David Smagalla – The Wall Street Journal
Cybersecurity threats increased for businesses over the past year, according to a Wall Street Journal survey of compliance professionals. Nine out of 10 companies said cybersecurity risks rose, with nearly half saying the risk shot up substantially. Almost all midsize companies-those with between $50 million and $1 billion in revenue-said they felt cyber threats had increased.
/jlne.ws/44HxY27

Congressmen request Microsoft president testify about ‘cascade of security failures, cybersecurity shortfalls’
Peter Musurlian – Federal News Network
Leaders on the House Homeland Security Committee wrote to Brad Smith, the vice chairman and president of Microsoft, asking him to testify on May 22.
/jlne.ws/3WIfUmD

***** A story that may bear on this one, Microsoft is tying executive pay to security performance – so if it gets hacked, no bonuses for anyone.

Cryptocurrencies

Japan’s Metaplanet adopts bitcoin as reserve asset amid yen slump
Danny Park – The Block
Metaplanet Inc., a Tokyo-listed crypto investment and consulting firm, has adopted bitcoin as its strategic treasury reserve asset in response to the persistent economic adversity in Japan. “The move is a direct response to sustained economic pressures in Japan, notably high government debt levels, prolonged periods of negative real interest rates, and the consequently weak yen,” the company said Monday in a release.
/jlne.ws/3UHrOL1

Bitcoin worth over $60 million moved for the first time in 10 years
James Hunt – The Block
Bitcoin wallet addresses that had been dormant for more than 10 years transferred 1,000 yesterday – worth more than $62.8 million at current prices. A wallet address (16v…zEa) transferred 500 BTC ($31.4 million) at 9:46 a.m. UTC (4:46 a.m. ET) on Sunday. A second address, (1DU…fC5, also transferred 500 BTC 20 minutes later, according to on-chain data.
/jlne.ws/3UY9PkT

Bitcoin Miner Bitfarms Fires Interim CEO Early After Exec Files $27 Million Lawsuit; Geoffrey Morphy was appointed interim CEO in late 2022; Bitfarms chairman named as interim president and CEO
Emily Nicolle – Bloomberg
Bitfarms Ltd. said it had fired its outgoing interim president and chief executive officer, after the executive filed a lawsuit against the crypto miner claiming $27 million in damages for breach of contract among other issues. Geoffrey Morphy, who was appointed to both positions in late 2022, was announced on March 25 to be leaving the Toronto-based company, pending a search for his replacement. Morphy has now been terminated effective immediately and no longer serves as a director of the company, Bitfarms said in a statement on Monday.
/jlne.ws/3yf0psn

Crypto VCs Turn Back to ‘Professor Coins’ as Funding Rebounds; EigenLayer, Babylon restaking efforts spurs investor interest; Both projects seek to generate yield from cryptocurrencies
Hannah Miller and Muyao Shen – Bloomberg
Venture capitalists are turning back to crypto startups founded by professors as funding for the digital asset industry takes off again. Companies like Sahara, CheckSig and NEBRA were all launched by academics and raised fresh capital in the past two months, but two startups have stood out in a category that the industry has nicknamed “professor coins.” EigenLayer, founded by Sreeram Kannan, a former associate professor at the University of Washington, raised $100 million from Andreessen Horowitz in February, while Babylon, started by Stanford University Professor David Tse, secured $18 million in December. Both projects are focused on a growing area of crypto called “restaking,” which allows new projects and blockchains to get a head start by borrowing Ethereum or Bitcoin’s security infrastructure and resources.
/jlne.ws/3JXFkFi

Politics

Bitcoin Magazine CEO Discloses Links With Trump Campaign: “It’s Time for Bitcoin to Elect the Next President”
Sergio Goschenko – Bitcoin.com
David Bailey, CEO of Bitcoin Magazine, has disclosed his nexus with the campaign of former President Donald Trump. Bailey and his team have advised Trump to develop a Bitcoin and crypto-friendly agenda, including signing a crypto-focused executive order on day one. He declared that crypto enthusiasts will not vote for Trump but against Biden’s crypto policies in the upcoming elections.
/jlne.ws/3JW9UyW

How GPS warfare is playing havoc with civilian life; Military activity blamed for surge in jamming and spoofing incidents affecting smartphones, planes and ships
Clara Murray, Jana Tauschinski, Aditi Bhandari, Robert Wright and Philip Georgiadis – Financial Times
Ships that appear to be sailing through landlocked airports. Dating apps that match Israelis with Lebanese, assuming they are in one place. Tourist flights forced to turn around – mid-air – after sudden navigation troubles. Such is the fallout from a surge in the manipulation of navigation signals – modern GPS warfare – that has played havoc with civilian smartphones, planes and vessels on three continents.
/jlne.ws/3Wz1eGt

US and China agree on climate collaboration despite trade tensions; New envoys first in-person talks in Washington described as ‘in-depth and productive’
Aime Williams – Financial Times
The US and China said they would “intensify” their co-operation on replacing coal with clean power as top diplomats from the world’s two largest polluters met in Washington this week. The signs of co-operation follow the first substantial meeting between President Joe Biden’s top adviser on international climate policy John Podesta, and his Chinese counterpart Liu Zhenmin, following the retirement of their respective predecessors, John Kerry and Xie Zhenhua.
/jlne.ws/44Dn7Xc

Dangers of dollar nationalism hang over the world economy; Even more serious than Fed rate rises would be a politically driven devaluation of the US currency
Adam Tooze – Financial Times
The dollar is both America’s and the world’s currency. While the US accounts for roughly 15.5 per cent of global GDP (PPP), the dollar is involved in 88 per cent of all international currency transactions. Some 58 per cent of global reserves are held in the US currency. The economics of this lopsided situation are ambiguous. The dollar’s reserve status supports a US current account deficit that favours US importers and creates markets for the rest of the world, but also skews the US economy away from traded goods. The global spread of the dollar makes the Federal Reserve willy-nilly into the world’s central bank. The dollar’s ubiquity also confers huge power on the American state. US financial sanctions are a commercial death sentence.
/jlne.ws/3QJ6EuV

US and China to hold first talks to reduce risk of AI ‘miscalculation’; Tuesday’s meeting in Geneva part of ‘intense diplomacy’ to head off danger of ‘unintended conflict’
Demetri Sevastopulo – Financial Times
Chinese and US officials will on Tuesday hold the first meeting in a dialogue on artificial intelligence that Presidents Joe Biden and Xi Jinping agreed at a summit in San Francisco last year. US officials said the two sides would meet in Geneva following earlier discussions on the issue, including between US national security adviser Jake Sullivan and Chinese foreign minister Wang Yi.
/jlne.ws/4bkyLbV

**** Here is a related story from Bloomberg.

Trump Vows ‘Day One’ Executive Order Targeting Offshore Wind; Presumptive Republican nominee cites whale deaths as concern; Developers are building projects along US East and West Coasts
Jennifer A Dlouhy – Bloomberg
Donald Trump vowed to issue an executive order targeting offshore wind development if he wins a second term as president, making his most explicit threat yet toward the growing industry. The presumptive Republican nominee derided offshore wind projects as lethal for birds and whales during his oceanfront rally Saturday in Wildwood, New Jersey, and committed to take action.
/jlne.ws/3JZwu9X

Trading democracy for prosperity is a false choice for Indians; Modi’s government is popular despite the lived economic experience of people, not because of it
Raghuram Rajan – Financial Times
/jlne.ws/4ahZCnB

Regulation

Compliance headaches haunt City eight years on from Brexit; Regulators were ‘the adults in the game’, but post-Brexit rules are still far from clear
Justin Cash – Financial News
It’s nearly a decade since the UK voted to leave the EU, but financial services firms still face a raft of regulatory challenges. Some firms with a presence in both London and the EU still haven’t got to grips with new compliance demands, according to regulatory experts. Meanwhile, uncertainty remains over the potential burden divergence will place on banks, asset managers and trading groups.
/jlne.ws/3ylgugc

China Probes Hedge Fund With 795% Product Gain, Missing Owner
Bloomberg
China is probing a hedge fund firm with stellar returns after it stopped repaying investors, following tightening scrutiny on the 5.5 trillion yuan ($760 billion) industry. The China Securities Regulatory Commission said Saturday night it’s investigating alleged illegal activities at Zhejiang Ruifengda Asset Management Co. and would seek to resolve related risks “prudently.” The announcement came after local state media reported on Friday that the firm was no longer paying investors redeeming money and its controlling shareholder was missing.
/jlne.ws/3QJ0vil

Closure of Trump Media auditor delays IPOs and company results; SEC move to shut down BF Borgers threatens nine IPOs and could force dozens of listed firms to delay results
George Steer and Stephen Foley – Financial Times
The closure of the auditor behind former US President Donald Trump’s social media group threatens to derail a number of companies’ plans to go public and force dozens of listed firms to delay their financial results. The Securities and Exchange Commission this month charged BF Borgers – one of the US’s most widely used auditors, which was previously used by Trump Media & Technology Group – and its founder with falsely representing to clients that its audit work would comply with US standards. It accused it of “massive fraud” and said three-quarters of its audits were faulty.
/jlne.ws/3WI9Qun

Frank T. Poerio, Jr.; SEC Charges Pennsylvania Resident with Insider Trading in Dick’s Sporting Goods
SEC
Securities and Exchange Commission v. Frank T. Poerio, Jr., Civil Action No. 2:24-cv-700 (W.D.Pa. filed May 10, 2024)
The Securities and Exchange Commission today charged Gibsonia, PA resident Frank T. Poerio, Jr. with insider trading for misappropriating material, nonpublic information concerning Dick’s Sporting Goods Inc. and trading on that information, realizing illegal profits of more than $800,000.
/jlne.ws/3WInIEX

FAT Brands, Inc., Andrew Wiederhorn, Ron Roe, Rebecca Hershinger; SEC Charges Restaurant Group FAT Brands Inc., its Chairman and Former CEO, and its Two Former CFOs with Defrauding Investors
SEC
Securities and Exchange Commission v. FAT Brands Inc., Andrew A. Wiederhorn, Ron Roe, and Rebecca D. Hershinger, Civil Action No. 2:24-CV-03913 (C.D. Cal. May 10, 2024)
The Securities and Exchange Commission announced today that it filed fraud charges against FAT Brands Inc. (“FAT”), its founder, former CEO, and current Chairman, Andrew Wiederhorn (“Wiederhorn”), and its former CFOs, Ron Roe (“Roe”) and Rebecca Hershinger (“Hershinger”) concerning FAT’s disclosures about related person transactions with Wiederhorn and his family.
/jlne.ws/3wAo0mF

Robert Tye Cournoyer; Green Equity Group, LLC; RS Group Holdings, LLC; SEC Charges Recidivist and His Entities for Fraudulent Securities Offerings
SEC
Securities and Exchange Commission v. Robert Tye Cournoyer, Green Equity Group, LLC, and RS Group Holdings, LLC, No. 24-cv-01304 (D. Colo. filed May 10, 2024)
The Securities and Exchange Commission today announced litigated fraud charges against Robert Tye Cournoyer and two entities that he controlled for their alleged misappropriation of investor funds and false and misleading statements to investors.
/jlne.ws/4brmjqy

Dissenting Statement of Commissioner Caroline D. Pham on Event Contracts Proposal
SEC
I respectfully dissent from the Event Contracts Proposal because it takes the CFTC’s regulation of event contract markets backwards with its fundamental misunderstanding of how we regulate derivatives and the States regulate gaming. Instead of thoughtfully considering how to effectively regulate these markets while fostering innovation, the Event Contracts Proposal ties itself in knots over the bounds of gaming, which Congress has neither asked nor directed the Commission to regulate. I am simply disappointed in this wasted opportunity to regulate retail binary options, sidestepping our responsibility, and concerned about its legal impact.
/jlne.ws/3QHppia

Dissenting Statement of Commissioner Summer K. Mersinger Regarding Proposed Rulemaking on Event Contracts
SEC
I support the Commission[1] undertaking a rulemaking on event contracts, which is long overdue. During my tenure on the Commission, I have consistently called for a rulemaking process to establish a framework for the Commission to exercise the discretionary authority with respect to event contracts that Congress granted to the agency in our governing statute, the Commodity Exchange Act (“CEA”).[2]
/jlne.ws/4bB3HnQ

Statement of Commissioner Caroline D. Pham: The CFTC Needs to Get Serious. A Strategic Plan for Reform
SEC
Today, the Commodity Futures Trading Commission (CFTC) will take yet another step down a misguided path that encroaches so far onto States’ rights that it makes a mockery of the Tenth Amendment. It pains me to say that despite the road here being paved with good intentions, today’s event contracts rulemaking is yet another example of how far the Commission has strayed from the requirements of the Administrative Procedure Act and the Constitution, and how little the Commission seems to care for fairness and due process under the law. I have repeatedly raised troubling concerns that the breakdown of the Commission’s internal procedures and processes I have observed in the past two years severely compromises the Commission’s ability to fulfill our mission and statutory mandate set forth in the Commodity Exchange Act (CEA), faithfully serve the public interest, and treat market participants fairly. That is why, before the Commission is granted or usurps any additional jurisdiction over products or asset classes, I believe that a Government Accountability Office (GAO) study is necessary of the Commission’s procedures for rulemaking, examinations and compliance reviews, investigations and enforcement, adjudicatory proceedings, due process protections, and compliance with the CEA, APA, Good Accounting Obligation in Government Act, Government Management Reform Act of 1994, Government Performance and Results Act (GPRA) Modernization Act of 2010, and other laws and requirements applicable to administrative agencies.
/jlne.ws/4aemww5

Statement of Chairman Rostin Behnam Regarding Proposed Event Contracts Rulemaking
SEC
I support the proposed amendments to the Commission’s rules concerning event contracts. Before further discussion, I would like to acknowledge the tremendous work by many CFTC colleagues. I particularly would like to thank Vince McGonagle, Nora Flood, and Grey Tanzi for all of their thorough and thoughtful work on the proposal. Starting in 2021, there has been a significant uptick in the number of event contracts listed for trading by CFTC-registered exchanges. To put that increase into perspective, more event contracts were listed for trading in 2021 than had been listed in the prior 15 years combined. And that has continued to be true each year since.
/jlne.ws/4dARnpE

SEC Charges Pennsylvania Resident with Insider Trading in Dick’s Sporting Goods Securities
SEC
The Securities and Exchange Commission today charged Gibsonia, PA resident Frank T. Poerio, Jr. with insider trading for misappropriating material, nonpublic information concerning Dick’s Sporting Goods Inc. and trading on that information, realizing illegal profits of more than $800,000.
/jlne.ws/4bzWTqD

Guidance Note: For duty holders that are AML/CFT reporting entities
FMA – New Zealand
An update from the three AML/CFT Act Supervisors, the Ministry of Foreign Affairs and Trade (MFAT) and the New Zealand Police (NZ Police) to AML/CFT reporting entities who are duty holders under the Russia Sanctions Act. The three AML/CFT Act supervisors – FMA, DIA and RBNZ – along with their partner agencies – MFAT and NZ Police – have provided a Guidance Note for duty holders that are AML/CFT reporting entities. The Guidance Note specifically relates to notifying a customer of an asset freeze or blocked transaction under the Russia Sanctions Act.
/jlne.ws/4ad76IE

IOSCO welcomes IESBA’s consultation on the Proposed International Ethics Standards for Sustainability
IOSCO
IOSCO today congratulated the International Ethics Standards Board for Accountants (IESBA) on achieving an important milestone by publishing for consultation their Proposed International Ethics Standards for Sustainability Assurance (IESSA) and Other Revisions to the Code Relating to Sustainability Assurance and Reporting (the Paper).
/jlne.ws/4bflvFw

Appointment of New Chairman to MAS Board of Directors
Monetary Authority of Singapore
The Monetary Authority of Singapore (MAS) announced today that Mr Gan Kim Yong, Minister for Trade and Industry, will be appointed Chairman of the MAS Board of Directors for the period 15 May 2024 to 31 May 2026. Mr Gan has been Deputy Chairman of MAS since 8 July 2023. He replaces Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong, who has served as Chairman of MAS since 8 July 2023. Mr Wong had previously served as Deputy Chairman of MAS from 1 June 2021 to 7 July 2023, and was a member of the MAS Board from 10 June 2011 to 29 August 2016. Mr Wong will relinquish his positions as Chairman and member of the MAS Board from 15 May 2024.
/jlne.ws/4akMVsm

Joint press release of the PBoC, the SFC and the HKMA on Swap Connect enhancements to advance high-quality opening-up of China’s financial markets
SFC – Hong Kong
To implement the national strategy to steadily advance the opening-up of China’s financial markets, the mutual access between the Mainland and Hong Kong interest rate swap markets (“Swap Connect”) was launched on 15 May 2023. Since the launch, the trading and clearing arrangements of Swap Connect have been operating smoothly and its trading volume has been on the rise with active participation of Mainland and overseas investors.
/jlne.ws/3UWZnd7

SFC warns public of suspicious virtual asset-related product “LENA Network”
SFC – Hong Hong
The Securities and Futures Commission (SFC) today warns the public of a suspicious investment product named “LENA Network” involving virtual asset-related staking, borrowing and lending arrangements, and claiming to offer high returns to investors. The product has not been authorised by the SFC for offering to the Hong Kong public (Notes 1 and 2).
/jlne.ws/4bDrnZ5

Joining the Global CAPE to facilitate cross-border cooperation in the enforcement of Data Protection and Privacy Laws with international partners
FSC – Taiwan
To enhance the protection of personal data, the Financial Supervisory Commission (FSC) applied to join the Global Cooperation Arrangement for Privacy Enforcement (Global CAPE) through coordination of the National Development Council (NDC). In March 2024, the NDC informed the FSC that the application, reviewed by the managing authority of Global CBPR-Japan’s Ministry of Economy, Trade and Industry, has been approved. In the future, enhanced cross-border cooperation in the enforcement of Data Protection and Privacy Laws with international partners can be expected as a result of this agreement, strengthening the protection of Taiwanese people’s personal data.
/jlne.ws/4bdNZ2x

Investing and Trading

Traders boost bullish bets on European gas prices; Wagers on rising prices point to concerns over potential supply disruptions
Shotaro Tani – Financial Times
Traders have boosted their bets on a rise in European gas prices to the highest level in more than two years, indicating growing concerns about potential disruption to supplies. Net long positions held by investment funds in futures contracts linked to Europe’s main gas benchmark have soared to 96.4 terawatt hours, worth about EUR3bn at current prices, according to data from Intercontinental Exchange released on Wednesday. That represents the largest bullish bet since February 2022, days before Russia started its full-scale invasion of Ukraine and made deep cuts to its pipeline gas supplies to Europe, sending prices soaring.
/jlne.ws/3WECxZn

GameStop Surges as ‘Roaring Kitty’ Return Adds Fuel to Rally; Video-game firm’s shares set to best March 2021’s 87% gain; Fellow meme-stock AMC Entertainment also gains on Monday
Subrat Patnaik – Bloomberg
GameStop Corp. shares are poised for the kind of surge last seen during the meme-stock mania of 2021 – coinciding with the social media return of one of the stock’s biggest champions during that time. The stock jumped as much as 38% in premarket trading, putting the video-game firm’s monthly gain on track to top the 87% rally it saw in March 2021. Monday’s move follows a cryptic post on X from Keith Gill, more popularly known by his social media alias “Roaring Kitty.”
/jlne.ws/3wp1cGC

Rise of 40-Year Loans Indicates a Flawed Housing Market; Hard-pushed first-time buyers have replaced interest-only loans with ultra-long mortgages.
John Stepek – Bloomberg
Welcome to Money Distilled. I’m John Stepek. Every week day I look at the biggest stories in markets and economics, and explain what it all means for your money. Like it or not, Gen Z whippersnappers can teach asset managers a thing or two about investing, says Merryn Somerset Webb.There’s a bit of concern in the papers this morning about the rise of “ultra-long term mortgages” in the UK. According to a freedom of information request made by Steve Webb, the former pensions minister and now partner at pension consultancy LCP, data from the Bank of England shows that in the last quarter of 2023, 42% of new mortgages had terms going out beyond the state pension age.
/jlne.ws/3yrhDm7

Chicken Wings Are the New Inflation Hedge; Rising demand and lower animal-feed costs have helped sales and profits for meatpackers
Patrick Thomas – The Wall Street Journal
Chicken is reprising its role as the star of Americans’ dinner plates. Stung by the rising price of beef, diners are buying more wings at fast-food chains and frozen tenders at grocery stores. Meat giants like Tyson Foods and Pilgrim’s Pride, in turn, are bringing in higher profits from poultry as demand rises for their products and costs fall for livestock feed. Retail sales volumes of all U.S. chicken products were up about 3% for the 52 weeks ended April 21 compared with the prior year, according to market-research firm Circana. Pork and beef were each down slightly.
/jlne.ws/44FhibG

Some gentle inter-institutional investor violence; Compare and contrast
Robin Wigglesworth – Financial Times
You might think that by now there would be broad agreement on the optimal way to manage large sums of long-term money. But no. Approaches can vary wildly depending on whether you’re looking at a US university endowment, a Swiss insurance group, a European pension plan, a Brazilian family office or a Gulf sovereign wealth fund.
/jlne.ws/44Mj0bq

The Random Path to Stock-Market Riches; How we made 80% in a year without really trying
Spencer Jakab – The Wall Street Journal
Words rarely heard from star fund managers: “I just got lucky.” Some might blame poor timing or unforeseen events for a lousy year, but success is somehow never an accident. It most certainly was for Heard on the Street’s columnists as we once again trounced the best and the brightest in the hedge-fund world. There are lessons here that could boost anyone’s stock portfolio. Repeating an exercise from 2018, Heard’s columnists took a cue from Burton Malkiel, author of the investing classic “A Random Walk Down Wall Street,” and threw 12 darts at stock-market listings a year ago (he suggested using blindfolded monkeys). We competed against the fund managers presenting their best ideas at last May’s Sohn Investment Conference in New York City. Both the stocks and the type of bet, long or short, were beyond our control.
/jlne.ws/3QMHKdF

Where’s the Bond Market’s Breaking Point? It’s Not $35 Trillion; There’s a truckload of cash looking for the high Treasury yields and stellar economic story the US offers.
Robert Burgess – Bloomberg Opinion
Everyone is worried about the excessively high level of US government debt. Everyone, that is, except America’s creditors. Take last week’s quarterly refunding by the US government. The US Treasury Department auctioned $125 billion of three-, 10- and 30-year bonds. Investors submitted bids for about 2.5 times the amount offered at each of the auctions, which was slightly above the average going back to early 2020 when the government ramped up its borrowing to support the economy through the Covid-19 pandemic. When it comes to the benchmark Treasury, that’s even higher than the average during the late 1990s and early 2000s when the US was running budget surpluses!
/jlne.ws/3UGQkM8

Environmental, Social and Corporate Governance

The Surprising Force Stalling Climate Progress: California Restaurants; When Berkeley became the first US city to ban natural gas in new buildings, the California Restaurant Association fought back, and won. Now gas companies are planning to leverage that victory nationally.
Ben Elgin – Bloomberg
In the fight to ratchet down climate emissions and soothe the most dangerous effects of an overheating planet, one of the most withering setbacks in recent memory wasn’t delivered by the oil industry or coal excavators, but, rather, a group of restaurants in California. When Berkeley became the first city in the country to ban the extension of gas pipes into new buildings, it targeted a contentious source of climate pollution. The combustion of gas inside of homes and businesses to power things like furnaces, water heaters and stoves accounts for 9% of California’s emissions, or 33 million metric tons of heat-trapping gases per year, equivalent to the entire climate footprint of Hong Kong.
/jlne.ws/3QEdJNd

Big US banks dominated fossil fuel financing in 2023, campaign report says; Trends show increase in funding for companies examining expansion of LNG capacity
Attracta Mooney – Financial Times
JPMorgan Chase, Mizuho and Bank of America were named as the biggest fossil fuel industry financers last year, in a report by climate campaigners which calculates the world’s biggest banks have provided a total $6.9tn to the sector in the eight years since the Paris climate accord. The 15th annual report, produced by a coalition of campaign groups co-ordinated by the Rainforest Action Network, found the world’s 60 largest lenders had provided around $705bn in financing in 2023 alone.
/jlne.ws/3WDsK5K

Climate Extremes Slammed Latin America and the Caribbean Last Year. A New UN Report Details the Impacts and Costs; Some scientists in the region said many of the effects seen today weren’t expected until the second half of the century.
Bob Berwyn – Inside Climate News
Extreme climate shocks, intensified by global warming, killed hundreds of people and devastated livelihoods and ecosystems across Latin America and the Caribbean in 2023, scientists with the World Meteorological Organization said earlier this week when they released the annual state of the climate report for the region. Drought, heat, wildfires and extreme rainfall, as well as the strongest-ever landfalling Eastern Pacific hurricane had major impacts on health, food and energy security and economic development, said WMO Secretary-General Celeste Saulo.
/jlne.ws/4by7e6D

Massachusetts takes Uber, Lyft to trial over status of gig workers
Nate Raymond – Reuters
Uber Technologies (UBER.N) and Lyft (LYFT.O) are set to face trial on Monday in a U.S. lawsuit by Massachusetts’ attorney general alleging the ride-share companies misclassified their drivers as independent contractors rather than more costly employees. The non-jury trial in Boston comes amid broader legal and political battles in the Democratic-led state and elsewhere nationally over the status of drivers for app-based companies whose rise has fueled the U.S. gig worker economy.
/jlne.ws/4dAe2SZ

Exxon Is Hit With $726 Million Verdict Over Benzene and Cancer
Tope Alake – Bloomberg
A jury in Philadelphia found Exxon Mobil Corp. liable for $725.5 million in damages due a former mechanic who claimed its petroleum products exposed him to benzene that caused his cancer, according to his lawyers. The jury found that the oil company failed to warn Paul Gill of the risk of benzene in its products, including gasoline and solvents, while he worked as a Mobil service station mechanic from 1975 to 1980, his attorneys said in a statement Friday.
/jlne.ws/4byod8J

Renewable diesel glut hits US refiner profits, threatens nascent industry
Shariq Khan and Nicole Jao – Reuters
/jlne.ws/4dGzmq7

The EU should call time on Russian LNG imports; With one more careful push, the bloc could wean itself off Moscow’s gas entirely
The editorial board – Financial Times
/jlne.ws/4bhV9mg

Platinum’s Shortage to Persist as EV Slowdown Fuels Demand
Jack Ryan – Bloomberg
/jlne.ws/44HEXIn

First US-Built Boat Servicing Offshore Wind Farms Is Ready to Launch; The 262-foot Eco Edison will maintain wind turbines along the East Coast.
Josh Saul – Bloomberg
/jlne.ws/4dAydQK

Europe’s Gas Supply Once Again Hinges on One Company
Priscila Azevedo Rocha and Kari Lundgren – Bloomberg
/jlne.ws/3WED7Gh

Independent investors urge Equinor to align strategy with climate goals
Nerijus Adomaitis – Reuters
/jlne.ws/3yi3Tdy

Biden’s Solar Factory Boom Slows as Cheap Imports Flood Market; The Inflation Reduction Act helped spur new US solar manufacturing, but less than two years later, there are signs the boom is fizzling.
Jennifer A Dlouhy – Bloomberg
/jlne.ws/4bhOZm8

Institutions

Bank of Montreal Cuts More US Investment Bankers in Drive for Savings
Carmen Arroyo, Gillian Tan, and Paula Sambo – Bloomberg
Bank of Montreal is reducing staff in its US investment banking unit again, including at least two managing directors, as the Canadian lender continues to trim costs, according to people with knowledge of the matter. The recent layoffs include a number of bankers in the health-care division, said the people, who spoke on condition they not be identified because the details are private. A Bank of Montreal spokesperson declined to comment.
/jlne.ws/3QBD7TS

Banks feel FOMO as SEC rules keep them out of crypto custody
Jeff John Roberts – Fortune
Happy Friday. Earlier this week, I dropped by the Milken Institute’s swank annual conference in Los Angeles, where I met with State Street’s chief product officer Donna Milrod. She has an impressive knowledge of Wall Street history and, in particular, of the business of custody-the unflashy but vital task of holding onto customer assets and keeping them safe. Milrod also made clear that State Street, which is the second oldest bank in the U.S., is keen to get into the crypto game.
/jlne.ws/4dznRk8

JPMorgan Makes Massive Hire: $28 Billion Advisor Team From Merrill Lynch
Andrew Welsch – Barron’s
It may be the biggest recruiting move in wealth management history. On Friday, JPMorgan Chase’s wealth management unit hired a Merrill Lynch advisor team that oversaw $28 billion in client assets and generated $10 million in annual revenue. The Gray-Polverini team joined J.P. Morgan Wealth Management in Los Angeles. The team’s leaders, advisors Eric Gray and Lance Polverini, specialize in ultrahigh-net-worth clients and their families.
/jlne.ws/4dDoCIQ

RBC Reorganizes Investment Banking in a Play for More Deals; Bank names Matthew Stopnik global investment banking head, based in New York
Vipal Monga – The Wall Street Journal
Royal Bank of Canada is shaking up the leadership structure of its U.S. and global investment banking units in a bid to boost growth. Matthew Stopnik will become head of global investment banking as part of a reorganization that will merge regional units into a global structure, the bank said in an internal memo Monday.
/jlne.ws/3QJoHkn

Investors in Best Hedge Fund Bet of 2023 Review Climate Assumptions; Catastrophe bonds are being built with models that often underestimate the risks tied to climate events such as wildfires and thunderstorms.
Gautam Naik – Bloomberg
The risk models that helped drive one of the most lucrative bets of 2023 are increasingly being tested by smaller weather shocks fueled by climate change. Catastrophe bonds and other insurance-linked securities, which powered last year’s highest-returning hedge fund strategy, are built on calculations that can underestimate a new breed of risk stemming from high-frequency events such as wildfires and thunderstorms, according to veteran investors.
/jlne.ws/3yja80L

Funds Go All-In on FX Trades Driven by Central Bank Drama; ‘G-10 FX is getting a lot more interesting:’ TD Securities; Traders bet on a return to more volatile currency markets
Alice Atkins – Bloomberg
The Federal Reserve is backpedaling on plans to cut interest rates, Japan is propping up the yen, British central bankers are divided, and Sweden and Switzerland are already loosening monetary policy. For currency traders, all of this is great. It’s suddenly giving them an opportunity to make – or lose – a lot of money fast.
/jlne.ws/4dwL06V

Work & Management

From awareness to action: equipping managers to support mental health at work
Michelle Robinson Hayes – Training Journal
Employees across all age groups and demographics are experiencing increased stress levels, anxiety and burnout. In fact, stress, depression and anxiety accounted for 49% of all work-related ill health and 54% of working days lost due to such health issues in 2022 to 2023 – a rate which is higher than pre-pandemic levels, according to the Health and Safety Executive (HSE). With this in mind, it is, perhaps, unsurprising that mental health has emerged as a critical aspect of overall employee wellbeing.
/jlne.ws/3QJPSf4

Wellness Exchange

Trillion Dollar Shot; How a new class of drugs, led by Ozempic, is transforming bodies, fortunes and industries
The Journal – The Wall Street Journal
Last year Bradley Olson’s doctor prescribed him a new drug to manage his weight and Olson was astonished by the results. The medicine was one of a new class of drugs, led by Ozempic. After years of struggling with his weight, this new drug helped him lose pounds like nothing had before. But the high price tag and other factors meant that after five months, he stopped taking it.
/jlne.ws/3K02wmo

Pig-Kidney Transplant Patient Dies Nearly Two Months After Surgery; Richard Slayman received gene-edited kidney in March; hospital says ‘no indication’ death resulted from transplant
Ginger Adams Otis – The Wall Street Journal
The man who received a genetically modified pig kidney nearly two months ago in an unprecedented transplant at Massachusetts General Hospital in Boston has died. The hospital said there was no indication that the death of the patient, Richard Slayman, 62, was the result of his recent transplant. The hospital said it was “deeply saddened at the sudden passing” of Slayman, whose surgery was seen as a milestone in the effort to help people waiting for organs.
/jlne.ws/4dQVZbx

Regions

China Takes Advantage of Cheap Gas and Coal to Rebuild Stocks
Bloomberg News
China is taking advantage of lower international prices for coal and natural gas to replenish stockpiles of power fuels ahead of another long, hot summer. Gas imports through the end of April jumped 21% from the previous year, while coal purchases climbed 13%. The increase in coal in particular has defied predictions that imports would moderate from last year’s record-setting pace, and comes after domestic production posted its first quarterly drop since the third quarter of 2020.
/jlne.ws/3R5fsLR

Chinese Silver Trading Powerhouse Eyes Expansion in Singapore
Alfred Cang – Bloomberg
The commercial division of Chinese private smelter Henan Jinli Gold and Lead Group Co. is looking to expand its commodities trading team in Singapore, as the industry turns increasingly bullish on copper, aluminum and other metals. The division, which handled about half of China’s silver exports last year, is aiming to hire more physical and derivative traders for industrial and precious metals, said Eric Hu, general manager of the trading arm, in an interview in Singapore on Friday.
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Australia says inflation could ease to RBA target range by year end
Reuters
Australia’s government, preparing to announce the federal budget, said on Sunday inflation could moderate to the central bank’s 2%-3% target range by the end of the year, a faster easing than predicted in December. The Labor government also lowered down its economic growth forecasts.
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Australian regulator investigates ANZ over treasury-bond issuance
Reuters
ANZ Group Holdings (ANZ.AX) said on Monday Australia’s corporate regulator is investigating the lender for suspected violation of laws in executing the issuance of 10-year treasury bonds by the Australian Office of Financial Management (AOFM) in 2023. ANZ was appointed by the AOFM, which manages the Australian government’s debt portfolio, to act as a risk manager in relation to the issuance of the treasury bonds.
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China fires starting gun on $140bn debt sale to boost economy; PBoC and finance ministry firms up plans for long-dated bonds to support investment
Cheng Leng – Financial Times
Chinese authorities have kicked off plans to sell Rmb1tn ($140bn) of long-dated bonds, as Beijing raises spending to stimulate the economy. The People’s Bank of China has asked brokers for advice on pricing the sale of the first batch of the sovereign bonds, according to two people who received requests.
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China reduces access to live data on share trades by foreign investors; Regulators intensify efforts to curb volatility and introduce measures to bolster market sentiment
Cheng Leng – Financial Times
China has shut off live trading data on foreign investors’ dealings in mainland shares as regulators intensify efforts to bolster stock market sentiment and avoid a repeat of a steep sell-off in February. The change, which took effect on Monday, affects data on so-called northbound trades from Hong Kong – those made by investors buying and selling shares listed on the Shanghai and Shenzhen exchanges through the Stock Connect trading link.
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China and ESG ETF closures soar in face of political backlash; Culls have been enacted despite surging enthusiasm for ETFs generally, with 58 successive months of global net inflows
Steve Johnson – Financial Times
More US-listed China-focused exchange traded funds have closed down since the start of this year than in any previous full year as investors continue to fight shy of the world’s second-largest economy. Liquidations of ETFs investing on the basis of environmental, social and governance (ESG) factors are also on track to smash through prior records – both in the US and globally – amid a backlash against the concept.
/jlne.ws/3yi7l80

‘Choose France’ investment push bags record $16 billion in pledges
Sudip Kar-Gupta and Elizabeth Pineau – Reuters
France won a record 15 billion euros ($16.17 billion) in foreign investment pledges on Monday, allowing President Emmanuel Macron to bask in the limelight with global CEOs and forget about strained public finances and weak polls for a while. The bumper crop of pledges, in sectors ranging from artificial intelligence to pharmaceuticals and energy, stood Macron in good stead as he hosted business leaders for the annual “Choose France” summit at Versailles Palace.
/jlne.ws/3WGYQ0i

Most Gulf bourses rise; Egypt drops
Md Manzer Hussain – Reuters
Most stock markets in the Gulf ended higher on Sunday, amid rising oil prices, while the Saudi index slid after some weak corporate earnings. Oil prices, a catalyst for the Gulf’s financial markets, rose on Friday on stronger Chinese economic data and the ongoing Middle East conflict, with Brent settling at $84.24 a barrel.
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The Stock Market Has Rarely Been This Sleepy

Lead Stories The Stock Market Has Rarely Been This Sleepy Gunjan Banerji - The Wall Street Journal It's eerily calm out there in the stock market. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices...

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