Hits & Takes
John Lothian & JLN Staff
Today is one of the most dangerous of all days, a St. Patrick’s Day that falls on a Friday. Holiday drinking will meet end of week drinking and the results will not be pretty. Luckily, a much older and wiser man knows better and will be enjoying March Madness in the quiet of the adult community I am back at in Sarasota after leaving a successful FIA Boca week.
Speaking of Boca, FIA President & CEO Walt Lukken told the remaining stragglers at the closing cocktails fundraiser for Futures For Kids on the 9th green of the golf course at the Boca Raton resort that FIA will be returning in 2024 and 2025 to The Boca Raton for the March conference. BTW, former FTX President Brett Harrison and his new company, Architect Financial Technologies Inc & FIA, were the sponsors of the closing cocktail party fundraiser.
The Russians are not just good at impacting elections, they may also be effective at influencing bank runs as well. A Bloomberg story says, “Russian media outlets, far-right websites, short sellers and doomsday preppers were among those who pushed and amplified conspiracy theories online focused on the collapse of Silicon Valley Bank, according to disinformation specialists.” Now researchers are starting to examine the role social media played in spreading the hysteria around the second-largest bank failure in US history.
Cboe Global Markets is holding a Global Risk Management Conference in Austin, Texas from October 17 to 20, 2023. The Cboe’s RMC conferences are an educational forum dedicated to exploring the latest products, trading strategies and tactics used to manage risk exposure and enhance yields.
The NFA Board Update of its February 2023 meeting is out, including a visit from CFTC Commissioner Kristin Johnson.
There are several stories reporting that Sam Bankman-Fried was paid or took loans totaling $2.2 billion from Alameda Research, while former Alameda CEO Caroline Ellison only received $6 million. First thing, there does seem to be a pay disparity here between genders. Second, we know Sam did not spend the money on expensive clothes. Third, $2.2 billion is too much to snort or gamble away without a trace, so where is the money? The story of only having $100,000 in a bank account is not cutting it. There must be a mattress somewhere that is very uncomfortable to sleep on. Or maybe Sam is a crypto-pirate, and in the Bahamas there is some buried treasure.
U.S. Treasury Secretary Janet Yellen has pronounced the U.S. banking system sound, but not all deposits are guaranteed, Bloomberg reported. There are no blanket guarantees, unless rich people are going to lose a lot of money, and then they all get covered with every blanket, throw, quilt and down comforter available. OK, I added that last part. I would like to see what happens when a minority-owned bank has difficulty before my irreverent jab is judged.
Bloomberg has a story about ChatGPT that reminded me of something that former NFA President Dan Roth once told me when we were discussing regulators keeping up with current trends. At the time we were discussing social media. The Bloomberg story headline is “ChatGPT Advances Are Moving So Fast Regulators Can’t Keep Up.” Roth told me, regulators are never going to be out front, but they never like to lose sight of the taillights.
Here is an example of why it is good to work with your children. Yesterday, we had a last minute opportunity to interview a Microsoft executive for the JLN Industry Leaders video series from FIA Boca. As I was deep in the interview, rather than saying Microsoft, I said IBM. My son Robby Lothian quickly corrected me, very politely. Smart kid, pays attention and is sensitive to situations. After his second Boca and fourth FIA conference, he is starting to recognize people and generate ideas for JLN to improve the impact of its content.
Speaking of Robby, we are in discussions with him to send him to FIA Asia in Singapore this fall. JLN needs to show the flag in Asia after not being there for years and Robby is making friends with the SGX crowd, who made a good pitch at the SGX press lunch at Boca to come to FIA Asia.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Peter Thiel said he had $50 million in a personal account at Silicon Valley Bank when it collapsed, despite telling his portfolio companies to pull their money
Samantha Delouya – Business Insider
Despite advising clients to pull their cash from Silicon Valley Bank last week, Peter Thiel, a billionaire tech mogul, said that he had a large sum of his own money tied up in the doomed bank when it collapsed on Friday. “I had $50 million of my own money stuck in SVB,” he told the Financial Times.
****** Thiel forgot about the vacation fund money at SVB, how embarrassing!~JJL
Men’s College Basketball Players Are Already Making Twice as Much as Women
Carly Wanna – Bloomberg
The men’s and women’s March Madness tournaments are structured identically. Sixty-eight teams play 67 games – each lasting 40 minutes – to vie for college basketball’s top prize. There’s one inescapable difference: the men make twice as much money. For a second year, college athletes – male and female – can profit from playing ball. In June 2021, the Supreme Court cleared the way for college athletes to benefit from the use of their name, image and likeness.
****** Is this the market at work, or discrimination? Or is it the fact that there is better media coverage of men’s sports?~JJL
Lax Enforcement of New York’s Marijuana Law Endangers Kids; Weed stores have become ubiquitous in much of New York City. Unsurprisingly, drug-related incidents in the schools are on the rise.
Michael R. Bloomberg – Bloomberg
About a decade after states began legalizing recreational marijuana use, there’s little doubt who the biggest winners have been: criminals. And it’s equally apparent who the biggest losers have been: kids. New York state’s disastrous experiment with legalization is making both of those facts painfully – and dangerously – obvious.
***** Weed went from an underground commodity to an in-your-face full-brand marketed and differentiated product. Is it any wonder the kids are paying attention and impacted?~JJL
Thursday’s Top Three
Our top clicked item Thursday was the first of the three videos Patrick Lothian of John Lothian Productions produced for the FIA Hall of Fame ceremony. Second was How Credit Suisse turned Switzerland’s banking industry into a national embarrassment, from The Telegraph. Third was a tie between the second of the three FIA Hall of Fame videos from John Lothian Productions and CME CEO Says Wife’s Carjacking Highlights ‘Insane’ Chicago Crime, from Bloomberg, which was a repeat from Wednesday’s top three.
27,244 pages; 243,609 edits
Wall Street banks to deposit $30bn into First Republic; Lenders flock to Fed facilities, borrowing record $153bn from discount window
Ortenca Aliaj, Joshua Franklin and James Politi – Financial Times
The largest US banks have banded together to deposit $30bn into First Republic Bank in an attempt to bolster its finances and contain the fallout from the collapse of two big lenders in the past week. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo will each deposit $5bn into First Republic, a California-based lender. Goldman Sachs and Morgan Stanley will put in $2.5bn apiece while BNY Mellon, PNC Bank, State Street, Truist and US Bank are depositing $1bn each.
$2.7 Trillion Wall of Expiring Options a Worry for Traders Reeling From Bank Crisis; Triple witching, index rebalance set to spur trading volume; Event may help ‘unpin’ S&P 500 from the 4,000 level: BI
Lu Wang – Bloomberg
Just as a week of global bank drama winds down, Friday’s options expiration risks creating fresh turmoil for traders. An estimated $2.7 trillion of derivatives contracts tied to stocks and indexes are scheduled to mature, obliging Wall Street managers to either roll over existing positions or start new ones. The process usually involves portfolio adjustments that lead to a spike in trading volume and sudden price swings. While the event has its benefits, such as amping up liquidity, that may not be enough to appease investors reeling from shocks ranging from the collapse of three US banks to hawkish comments from Federal Reserve Chair Jerome Powell.
Japan Finance Ministry, BOJ Ready to Respond on Bank Sector Woes
Yoshiaki Nohara and Lily Nonomiya – Bloomberg
Senior Japanese officials from the finance ministry, central bank and financial watchdog said they are ready to respond if needed in the wake of recent turmoil in the global banking industry. A coordinated front was particularly important given possible risks during the leadership transition at the Bank of Japan, said Masato Kanda, a senior official for international affairs at the finance ministry. BOJ Governor Haruhiko Kuroda hands over the reins to Kazuo Ueda next month.
SVB parent files for bankruptcy protection after bank collapse; Company to use court-supervised process to salvage value from surviving units
Sujeet Indap and Ortenca Aliaj and Robert Smith – Financial Times
The parent company of Silicon Valley Bank, the lender taken over by US regulators last week, has filed for Chapter 11 bankruptcy in a federal court in New York. The move by SVB Financial Group is an attempt to salvage value from two units – a broker-dealer and a technology investing business – that are separate from the main deposit-taking bank that failed last week, sending shockwaves around global financial markets.
Silicon Valley Bank Parent Company Files for Chapter 11 Bankruptcy Protection; SVB Financial Group’s bankruptcy will ease a sale of its nonbank businesses
Alexander Saeedy – The Wall Street Journal
Silicon Valley Bank’s parent company filed for bankruptcy, easing a sale of its remaining assets after the technology-focused bank at the core of its business was seized by federal regulators. SVB Financial Group filed for chapter 11 protection on Friday in New York bankruptcy court, the largest bankruptcy filing stemming from a bank failure since Washington Mutual Inc. in 2008.
All the Obstacles Hong Kong Faces to Regain Its Former Hub Glory; Resident exodus, shattered economy among domestic pressures; ‘Hello Hong Kong’ tourism campaign kicks off charm offensive
Kari Soo Lindberg – Bloomberg
For the first time since protests began in June 2019, Hong Kong has returned to a state resembling business as usual, with residents no longer facing transport shutdowns, quarantine, social distancing restrictions or a mask mandate. Yet the legacy of the past few years means the city has a number of obstacles to overcome to return to its former condition. At stake is the future of the principle conduit for capital flowing in and out of China, as well as bragging rights as Asia’s primary international finance hub.
Three and a Half Myths About the Bank Bailouts
Paul Krugman – The New York Times
Last weekend, U.S. policymakers went all in on bailing out two medium-size banks: Silicon Valley Bank and Signature Bank. And yes, they were bailouts. I wish the Biden administration weren’t trying to claim otherwise. Yes, stockholders were cleaned out. But legally, deposits are insured only up to $250,000; by choosing to make all depositors whole, the feds have done holders of big accounts a major favor.
ChatGPT Advances Are Moving So Fast Regulators Can’t Keep Up; As governments try to figure out how to regulate artificial intelligence, the latest developments add new challenges.
Lucy Papachristou and Jillian Deutsch – Bloomberg
Calls for governments to regulate artificial intelligence far predate OpenAI’s release of ChatGPT in late 2022. But officials haven’t come up with an approach to deal with AI’s potential to enable mass surveillance, exacerbate long-standing inequities or put humans in physical danger. With those challenges looming, the sudden emergence of so-called generative AI-systems such as chatbots that create content on their own-is presenting a host of new ones.
Why Regional Banks Are More Important Than You Think; Scared by the collapse of SVB, their reluctance to lend could speed a “hard landing,” Apollo’s Torsten Slok warns.
Michael P. Regan and Vildana Hajric – Bloomberg
Torsten Slok had been firmly in the “no landing” camp of economists. More positive than a “soft landing,” its adherents say the Federal Reserve will tame inflation without triggering a recession at all. But for Slok, chief economist of Apollo Global Management, that all changed with the failure of Silicon Valley Bank. Now he’s bracing for a “hard landing.”
‘An untenable equity story’: what’s next for Credit Suisse? The bank’s liquidity is not its fundamental problem, rather its business model is unprofitable
Owen Walker – Financial Times
The $54bn lifeline Credit Suisse negotiated from the Swiss central bank on Wednesday night was meant to act as a “circuit breaker” on the stricken lender’s woes, according to people involved in the talks. But by close of play on Thursday, the bank’s shares still traded 11 per cent below where they started the day before. The drop in its credit default swaps – a measure of investor bearishness – and bond yields was also minimal.
Crypto’s Deribit to Offer Futures for Bitcoin Volatility Trading
Suvashree Ghosh – Bloomberg
Deribit, the largest Bitcoin and Ether options exchange, plans to launch futures contracts to facilitate Bitcoin volatility trading. The BTC DVOL futures will be built on the Deribit Bitcoin Volatility Index, a measure of implied volatility in the market for the biggest digital asset, the company said in a statement earlier this week.
Hong Kong Lures Data Provider Kaiko in Its Push to Build Crypto Hub; Kaiko feeds crypto data to the likes of ICE, Deutsche Boerse; CEO Ambre Soubiran expects investment to flow to Hong Kong
Annabelle Droulers – Bloomberg
Cryptocurrency market data provider Kaiko plans to relocate its Asian headquarters to Hong Kong from Singapore, drawn by the city’s push to establish a global hub for the digital-asset industry. Hong Kong’s pro-crypto policy pivot and emergence from Covid-related curbs contributed to the Paris-based company’s decision, Chief Executive Officer Ambre Soubiran said in an interview on Thursday. Kaiko feeds data to the likes of Deutsche Boerse and ICE Global Network.
Crypto Is Finally Getting Its First Supreme Court Appearance; Court hears arguments next week in suits over scam, Dogecoin; Crypto market may be defined by cases winding through courts
Greg Stohr – Bloomberg
A clash involving disgruntled Coinbase Global Inc. customers will give the US Supreme Court its first taste of the world of cryptocurrency, foreshadowing future cases that could help define the industry. The justices on Tuesday hear arguments stemming from Coinbase’s efforts to push two lawsuits into arbitration. The joint case comes as higher-stakes fights work their way toward the court, shaping the rights of customers and companies alike in the fledgling industry.
Crypto Infects Banks, Banks Return the Favor
Emily Nicolle – Bloomberg
The risks that loom in crypto for the traditional financial system have been discussed at length by banks and regulators alike. What those in the crypto sector didn’t anticipate, however, is the hazard that banks might pose to them instead.
Fed Blocked Mention of Regulatory Flaws in Silicon Valley Bank Rescue; Federal government officials wanted a joint statement to include a reference to regulatory shortcomings that they believe helped lead to the bank’s demise.
Jim Tankersley, Jeanna Smialek and Emily Flitter – The New York Times
As U.S. regulators prepared to announce an extraordinary government rescue of depositors at Silicon Valley Bank and Signature Bank on Sunday, officials from the Biden administration pushed to formally spotlight shortcomings in financial regulation that they blamed for the banks’ rapid descent to insolvency, according to several people involved in or close to the discussions.
Inside the $30 billion rescue of First Republic Bank; An 11-bank plan to save First Republic began with a brainstorming session between JPM CEO Jamie Dimon, Fed chair Jerome Powell and Treasury secretary Janet Yellen
David Hollerith – Yahoo Finance
The $30 billion rescue of First Republic Bank began with a series of phone calls Tuesday between JPMorgan Chase CEO Jamie Dimon, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen. Dimon was in Washington, according to a person familiar with the events, and he wanted to discuss some issues that concerned bank capital. The subject soon turned to the fate of the nation’s 14th-largest bank.
ECB watchdog sees no Europe contagion after US, Swiss bank rescues
Balazs Koranyi, Pete Schroeder and Tom Westbrook – Reuters
European Central Bank supervisors see no contagion for euro zone banks from recent sector turmoil, a source said on Friday, after U.S. lenders threw First Republic Bank a $30 billion lifeline and tapped record amounts from the Federal Reserve.
Eleven Banks Deposit $30 Billion in First Republic Bank; U.S. regulators say the group’s deposit ‘demonstrates the resilience of the banking system’; JPMorgan and other big banks were earlier in talks on a rescue
David Benoit, Dana Cimilluca, Ben Eisen, Rachel Louise Ensign and AnnaMaria Andriotis – The Wall Street Journal
Eleven banks have deposited $30 billion in First Republic Bank FRC 9.98%increase; according to a joint statement from the heads of the Treasury, Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. “This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” the federal officials said. The biggest banks in the U.S. earlier Thursday discussed a joint rescue totaling more than $25 billion to shore up the beleaguered lender, people familiar with the matter said.
Banks Borrow $164.8 Billion From Fed in Rush to Backstop Liquidity; Discount-window borrowing surged to record $152.85 billion; New facility usage totaled $11.9 billion in first three days
Alex Harris and Craig Torres – Bloomberg
Banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities in the most recent week, a sign of escalated funding strains in the aftermath of Silicon Valley Bank’s failure. Data published by the Fed showed $152.85 billion in borrowing from the discount window – the traditional liquidity backstop for banks – in the week ended March 15, a record high, up from $4.58 billion the previous week.
Sam Bankman-Fried Was Paid $2.2B Mostly From Alameda-Ex-CEO Caroline Ellison Only $6M
Mathew Di Salvo – Decrypt
Ex-FTX boss and co-founder Sam Bankman-Fried received $2.2 billion in payments and loans, mostly from Alameda Research, according to a Wednesday announcement from the failed exchange’s new management. That figure may appear even more striking when compared to the payouts received by other executives, including former Alameda CEO Caroline Ellison, who only received $6 million.
Ripple executives say XRP lawsuit ruling will have little impact on global business operations
Danny Park – Forkast
The court ruling in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against payments processor Ripple Labs Inc. will have minimal impact on the company’s global business expansion, Ripple’s APAC region policy director Rahul Advani said at a press conference in South Korea on Wednesday, according to local media reports.
Ex-Goldman Banker Says $35 Million US Demand Is Unconstitutional
Hadriana Lowenkron – Bloomberg
Former Goldman Sachs Group Inc. banker Roger Ng, who was sentenced to 10 years in prison last week for his role in the 1MDB fraud, is claiming he can’t meet US prosecutors’ demand that he also pay $35 million because the Malaysian government already took all of his money. Federal prosecutors had asked US District Judge Margo Brodie in Brooklyn, New York, to order Ng to forfeit that amount as ill-gotten gains from the conspiracy to loot the Malaysian sovereign wealth fund at his March 9 sentencing. Ng’s lawyer, Marc Agnifilo, argued that no other penalties were needed and that his client had no funds in any case.
US banking system sound but not all deposits guaranteed, Yellen says
David Lawder and Doina Chiacu – Bloomberg
The U.S. banking system remains sound and Americans can feel confident that their deposits are safe, Treasury Secretary Janet Yellen said on Thursday, but she denied that emergency actions after two large bank failures mean that a blanket government guarantee now existed for all deposits.
JPMorgan says UBS should be Credit Suisse’s savior
Nate DiCamillo – Quartz
The most likely scenario to resolve Credit Suisse’s crisis is an acquisition by fellow Swiss bank UBS, analysts from JPMorgan wrote in a research note on Thursday. The analysts suggested that UBS could buy Credit Suisse and close down its investment banking division, put up its retail bank in an initial public offering, and keep its wealth management and asset management divisions.
UBS, Credit Suisse Oppose Idea of Forced Tie-Up; Swiss lenders aim to pursue separate strategies, avoid overlap; Scenario planning for forced tie-up and CS breakup continues
Dinesh Nair, Myriam Balezou and Jan-Henrik Foerster – Bloomberg
UBS Group AG and Credit Suisse Group AG are opposed to a forced combination, even as scenario planning for a government-orchestrated tie-up continues, according to people with knowledge of the matter.
First Republic Set to Get $30 Billion of Deposits in Rescue; JPMorgan, Citi, BofA among big banks that would contribute; Details of the deal may be announced as soon as Thursday
Gillian Tan, Hannah Levitt, Sridhar Natarajan and Saleha Mohsin – Bloomberg
The nation’s biggest banks are close to agreeing upon a plan to deposit as much as $30 billion with First Republic Bank in an effort supported by the US government to stabilize the battered California lender, according to people with knowledge of the matter. Banks including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Wells Fargo & Co., Morgan Stanley, U.S. Bancorp, Truist Financial Corp. and PNC Financial Services Group Inc. are part of the discussions, said the people, asking not to be identified because the talks are private.
FTX’s Administrators Say Sam Bankman-Fried Got $2.2 Billion Mainly From Alameda Research; FTX’s founders, top brass got $3.2 billion in payments, loans; Bankman-Fried awaiting trial after being accused of fraud
Suvashree Ghosh – Bloomberg
Founders and key employees of the collapsed FTX group of crypto firms received $3.2 billion in payments and loans, mainly from trading house Alameda Research, according to court filings. The sum includes about $2.2 billion for Sam Bankman-Fried, the filings show. Bankman-Fried is an FTX co-founder who is now awaiting trial after pleading not guilty to a years-long fraud at the helm of the digital-asset exchange.
HSBC and the City won this round – but hard work lies ahead; Regulations put in place in the UK after the global financial crisis passed their first big test with the Silicon Valley Bank rescue
Philip Augar – Financial Times
Last weekend’s rescue of SVB UK was a win for HSBC and the City of London at a time when both needed it. Under pressure from Chinese insurer Ping An to split its Asian and western operations, HSBC used the confidence given by a balance sheet built up on one continent to underpin an acquisition in another. It’s not a definitive answer to calls for a break-up of HSBC, but it certainly helps.
Vanguard attracts under-30s to UK retail platform; Asset manager says about 40% of new clients last year were younger investors
Anna Devine – Financial Times
About 40 per cent of new clients on Vanguard’s personal investing platform in the UK last year were under the age of 30, according to the asset manager. The $7.2tn asset management giant, which primarily sells passive funds, said its UK direct-to-consumer platform drew new clients “across all cohorts” but continued to “resonate with younger investors in particular”.
Fireside Friday with… Murex’s Julien Martinez; The TRADE speaks to Julien Martinez, head of market data analytics product team at Murex about the impacts of interest rate rises and the cessation of US Libor, potential hurdles to overcome and how technology can aid in the current market climate.
Wesley Bray – The Trade
What impact have rising interest rates and the cessation of US Libor had on rates desks?
ION Markets promotes from within for head of electronic trading role; New head has been with the firm since 2019, most recently as head of equities product marketing, after spending over two decades with Fidessa.
Wesley Bray – The Trade
ION Markets has named Bruce Bland as its new head of electronic trading. As part of his new role, Bland will manage the design and development of both the ION Markets global algorithmic suite, as well as its market connectivity solutions.
Special forces: The ongoing evolution of market making – and why pre-hedging matters; Thibault Gobert, head of liquidity pool at Spectrum Markets, talks about the paradigm shift in market making over the past decade – and why pre-hedging should be the topic on everyone’s lips right now.
Thibault Gobert – The Trade
Market making is not a new form of trading, but paradigm changes in regulation, market structure and technology have also changed the approaches of market makers over the past decade or so. Aiming at preserving capital and balance sheet capacity, an ever-increasing focus is on hedging strategies, with pre-hedging being a critical topic now.
‘Ukraine doesn’t have any time to waste’: U.S. races to prepare Kyiv for spring offensive
Lara Seligman – Politico
The U.S. military is rushing equipment to the battlefield and training Ukrainian forces at a rapid pace, ahead of a major offensive against Russia expected by late spring. Defense Secretary Lloyd Austin projected a sense of urgency on Wednesday after a virtual meeting of the multinational Ukraine Defense Contact Group, saying that “Ukraine doesn’t have any time to waste.”
US Says Video of Drone Encounter Shows Russia ‘Flat-Out Lying’; Officials say the US will continue flights over the Black Sea; Biden looks to counter claim that drone crashed on its own
Jordan Fabian and Peter Martin – Bloomberg
The Biden administration released dramatic footage of an encounter between Russian fighter jets and an American surveillance drone as the US sought to show that Russia was lying with claims that its warplane never hit the US aircraft. The 42-second video, filmed from the bottom of the MQ-9 Reaper, shows a jet approach in a clear blue sky, release a plume of fuel then swerve away.
Wagner’s convicts tell of horrors of Ukraine war and loyalty to their leader
Filipp Lebedev and Felix Light – Reuters
In October last year, a Russian news site published a short video of Yevgeny Prigozhin, founder of the Wagner Group, the Russian mercenary army, sitting with four men on a rooftop terrace in the resort town of Gelendzhik, on Russia’s Black Sea coast. Two are missing parts of a leg. A third has lost an arm. They are identified as pardoned former convicts, returned from the front in Ukraine after joining Wagner from prison.
Moscow was likely trying to send a message by harassing a US drone, but officials say the Russian pilot ran into it because they’re bad at flying
Jake Epstein – Business Insider
A Russian fighter jet dumped fuel on and then clipped a US military drone operating over the Black Sea this week in what looks like a botched attempt at aggressive messaging. The American aircraft ultimately crashed into the waters below as a damaged Russian plane landed elsewhere.
Fighter jets are ‘worthless’ over Ukraine, and it’s a sign of what US pilots and troops may face in future battles; Watch this F-15E Strike Eagle receive a special paint job in this incredible time-lapseScroll back up to restore default view.
Christopher Woody – Business Insider
After a year of fighting, neither the Russian nor Ukrainian air forces have been able to take control of the skies over Ukraine. This has severely limited the role that fighter jets have played in the conflict, and it’s a preview of what US troops could face in the future, US Air Force officials say. While Russian and Ukrainian aircraft are still active, each side’s air-defense weapons – such as major Soviet-era anti-aircraft systems like the S-300 or newer shoulder-fired missiles like the US-made Stinger – have forced the other to make tactical adaptations, such as launching less-accurate rocket attacks from longer ranges rather than sending aircraft to provide close air support over the front lines.
Who Blew Up Nord Stream? Investigators Focus on Six Mysterious Passengers on a Yacht; A boat rented in Germany sailed close to the spots in the Baltic Sea where explosions sabotaged the gas pipeline from Russia
Bojan Pancevski, William Boston and Sune Engel Rasmussen – The Wall Street Journal
The small marina on the edge of this north German city is a popular summertime spot for recreational sailors. German intelligence believes it was also the jumping-off point for the sabotage of the Nord Stream gas pipelines, an assault on Europe’s civilian energy infrastructure unprecedented since World War II.
Exchanges, OTC and Clearing
ICE’s Global Commodity and Energy Markets Reach Record Open Interest with Record Volume in Oil Options
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record open interest (OI) across its global commodity and energy futures and options markets, with record volume in oil options. On March 15, 2023, ICE hit record OI of 51.1 million contracts across commodities futures and options, up 10% since the start of the year, as well as record OI in energy futures and options of 47 million. Across ICE’s global oil markets, OI is up 18% since the start of the year at 11.37 million contracts, with OI in Brent futures and options up 28% at 4.98 million contracts.
Cboe to Host Global Risk Management Conference, October 17-20 in Austin, Texas
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced it will host its global Risk Management Conference (RMCSM) from Tuesday, October 17 to Friday, October 20, 2023, in Austin, Texas. Cboe RMC is an educational forum dedicated to exploring the latest products, trading strategies and tactics used to manage risk exposure and enhance yields.
CME Group Hits Daily Trading Volume Record of More Than 66 Million Contracts
CME Group – PR Newswire
CME Group, the world’s leading derivatives marketplace, today reported its highest daily volume on record, with 66,250,862 contracts traded on March 13. This follows the company’s fourth highest daily volume on March 10, when 56,433,765 contracts traded. “Given the extreme volatility in today’s environment, exacerbated by the recent failures of Silicon Valley Bank and Signature Bank, we are seeing a flight to futures as participants turn to our deeply liquid markets,” said CME Group Chairman and Chief Executive Officer Terry Duffy.
ASX adds dedicated CIO position as it deepens focus on enterprise technology and pursues data opportunities
ASX today announced it will deepen its focus on enterprise technology by splitting the current Group Executive, Technology and Data and CIO role, to create a standalone technology division under a dedicated Chief Information Officer.
GET Baltic to become part of EEX Group: a further step towards a Pan-European Gas Market
After an international tender process, the European Energy Exchange AG (EEX) and GET Baltic, the regional gas exchange operating in the Baltic states and Finland, are announcing their strategic partnership. The transaction will enhance EEX’s strong position as European natural gas trading operator and will further improve liquidity on gas markets.
Daily Price Limits to be Broadened : 1 issue
The following issue has fallen under the following (1) or (2) for two consecutive business days. As such, TSE wishes to bring to your attention that it will broaden only the upper (or lower) daily price limit on the next business day (March 20) as follows.
NSE Indices launches Nifty SDL June 2028 Index
NSE’s index services subsidiary, NSE Indices Limited today launched a new target maturity index Nifty SDL June 2028 Index. The Nifty SDL June 2028 Index follows a target maturity structure with maturity date of June 30, 2028. The index measures the performance of portfolio of 20 State Development Loans (SDLs) maturing during the twelve month period ending June 30, 2028.
SET Launches “ESG Impact Assessment Report: THSI 2022” For Positive Impacts Of All Sectors
The Stock Exchange of Thailand (SET) has released the “ESG Impact Assessment Report: THSI 2022” summarized the environmental, social and governance (ESG) performances of listed companies in the Thailand Sustainability Investment (THSI) list that have built positive impacts on both internal and external stakeholders. The report launch is aimed to be case studies and to inspire all sectors to realize the significance of sustainable business development and investment.
Language Was the Original Technology, and It’s Under Threat
Drake Bennett – Bloomberg
Humanities without humans
Enrollment in the humanities at American universities is in drastic decline. Subjects like English and history and philosophy, once popular and identified in the public mind as typifying a certain sort of college experience, have fallen into the no man’s land of subjects like Latin and Greek. They’re now redolent of a kind of fusty, unremunerative scholasticism.
Goldman Sachs Backs Saudi Fintech Tamara With $150 Million Facility (NYSE:GS)
Nicolas Parasie – Bloomberg
Saudi financial technology company Tamara secured a $150 million debt facility from Goldman Sachs Group Inc, defying a funding slowdown in the global venture capital sector. Founded less than three years ago, Tamara has emerged as one of the Gulf region’s leading “buy now, pay later” companies, having now raised $366 million in debt and equity. It counts a subsidiary of Saudi Arabia’s sovereign wealth fund and Checkout.com, one of Europe’s most valuable startups, among its investors.
Walmart pumps $200 mln in Indian fintech PhonePe in ongoing fundraise
Indian digital payments firm PhonePe said on Friday it has raised $200 million from majority backer Walmart Inc (WMT.N) at a pre-money valuation of $12 billion. PhonePe, already India’s most valuable payments firm and among the country’s most highly-valued startups, said the investment is part of its ongoing fundraise of up to $1 billion.
Stripe Founders Shed Billions in Painful Shift to ‘Leaner Times’; John and Patrick Collison’s net worth has dropped almost 50%; They still rank as the richest self-made billionaires under 35
Benjamin Stupples and Jennifer Surane – Bloomberg
John and Patrick Collison became two of the world’s richest millennials over the past decade as Stripe Inc.’s valuation surged more than 5,000% – an ascent emblematic of the easy-money era.
ION Markets promotes from within for head of electronic trading role; New head has been with the firm since 2019, most recently as head of equities product marketing, after spending over two decades with Fidessa.
Wesley Bray – The Trade
ION Markets has named Bruce Bland as its new head of electronic trading. As part of his new role, Bland will manage the design and development of both the ION Markets global algorithmic suite, as well as its market connectivity solutions. Bland has been promoted to the role after initially joining ION Markets in 2019 as head of European product marketing.
SEC Proposes New Cybersecurity Rules for Financial Firms
Paul Kiernan – The Wall Street Journal
Brokers and asset managers would have to notify their customers of data breaches as part of a raft of cybersecurity and resiliency rules the Securities and Exchange Commission proposed Wednesday. The customer-notification requirement would give firms no more than 30 days to alert individuals whose sensitive information was likely to have been accessed without authorization. The new rule would come alongside additional expansions to the SEC’s 24-year-old regulation governing financial firms’ protection of customer data, which SEC Chair Gary Gensler tied to soaring reports of identity theft.
How ChatGPT is changing the cybersecurity game
Help Net Security
The latest report details projects developed by Sophos X-Ops using GPT-3’s large language models to simplify the search for malicious activity in datasets from security software, more accurately filter spam, and speed up analysis of “living off the land” binary (LOLBin) attacks.
FERC expands cybersecurity supply chain standards to low-impact assets
Ethan Howland – Utility Dive
The Federal Energy Regulatory Commission Thursday approved a new cybersecurity standard extending supply chain risk management requirements to “low-impact” bulk electric system cyber systems. A coordinated attack on multiple low-impact assets with remote electronic access connectivity could have an interconnection-wide effect on the bulk power system, according to a 2019 supply chain risk assessment by the North American Electric Reliability Corp., FERC said in its decision.
2023 cybersecurity outlook: Crime keeps on slippin’ into the future
Aamir Lakhani – Security Magazine
If security leaders hoped that 2022 would be a year to collectively catch a breath after the global turmoil of the previous two years, hopes were dashed. In almost all facets, 2022 has been a tumultuous year – and that goes double for cybersecurity. From increased attacks on critical infrastructure to the rising use of cyber warfare, it’s been a busy year for security professionals, forcing security leaders to evolve faster and faster as bad actors come up with new methods.
Pay My Legal Bills Before Anyone Else, Sam Bankman-Fried Tells FTX
Leo Jakobson – CoinMarketCap
Sam Bankman-Fried would like FTX’s new management to make paying his legal bills a priority – and put him on top of the payout list. Specifically, SBF is asking the bankruptcy court to give him access to FTX’s $10 million director and officer insurance policies. These cover legal expenses not indemnified by the company for “all loss … which the insured persons become legally obligated to pay on account of any claim first made against them … for a wrongful act,” the filing said.
Ethereum’s Shanghai Hard Fork: 5 Things to Know
The Shanghai Upgrade, expected in mid-April 2023, puts the final touch on Ethereum’s transition to proof-of-stake. Etherworld Founder Pooja Ranjan explains the significance of the network upgrade, what it means for withdrawals, ether (ETH) price and why ‘Shapella’ should now be part of your crypto vocabulary.
Former FDIC Regulator: Friendliness Toward Crypto ‘Does Not Exist
Fran Velasquez – CoinDesk
U.S. regulators may be using recent turmoil in the financial world as a way to kick crypto companies out of the banking system, said Jason Brett, a former regulator at the Federal Deposit Insurance Corporation (FDIC). “It’s about the friendliness towards crypto, and it just does not exist,” Brett, managing director at consulting firm Key Bridge Advisors and a Forbes regulatory analyst for digital assets, told CoinDesk TV’s “First Mover” on Thursday.
Bitcoin Fund Seeks $100 Million to Capitalize on Market Mayhem; Fund investors say banking crisis reflects a need for Bitcoin; Bitcoin rally in wake of bank sector fallout has been cooling
Hannah Miller – Bloomberg
A group of investors has set out to raise $100 million for a Bitcoin-focused fund even as implosions and scandals rock the crypto world. Dubbed The Bitcoin Opportunity Fund, the investment vehicle caters to high-net worth investors looking to diversify into the world’s largest cryptocurrency. Led by six investors, including managing partners James Lavish and David Foley, the fund will target both public and private Bitcoin-adjacent companies.
Ethereum’s Shanghai Upgrade to Enable Withdrawals Set for April; Software upgrade will let users ‘withdraw staked’ Ether; Ether stakers may have to wait in line to withdraw tokens
Olga Kharif and David Pan – Bloomberg
Ethereum’s next major software upgrade, which could make crypto’s biggest commercial highway more attractive to investors and developers alike, will take place around April 12. Called Shanghai, it will let people who pledged their Ether tokens to order transactions on the Ethereum blockchain to withdraw them. Currently, some 17.5 million of such so-called staked Ether, worth about $29 billion at current prices, can’t be accessed on the network, although the coins do earn their owners a yield.
US, Germany shut ChipMixer for alleged ties to US$3 bln crypto laundering
Valida Pau – Forkast
U.S. and German authorities announced Wednesday that they have shuttered ChipMixer, a cryptocurrency service that allegedly laundered more than US$3 billion in crypto since 2017.
Sam Bankman-Fried’s companies racked up a $400,000 DoorDash bill, documents show, after reportedly giving staff $200 a day to spend on food deliveries
Pete Syme – Business Insider
Court documents filed Wednesday show Sam Bankman-Fried’s companies spent over $400,000 with DoorDash. Lavish spending at the now-bankrupt companies founded by Sam Bankman-Fried saw them rack up bills of $400,000 with food delivery company DoorDash in just a matter of months, according to court filings reviewed by Insider.
Crypto Winter Meets Banking Crisis: A Tale of Three Banks (Podcast)
Stacy-Marie Ishmael, Chris Nagi and Sharon Beriro – Bloomberg
It’s been another wild week in financial markets, and this time the chill of the crypto winter seemed to have come for the banks. First, there was Silvergate Capital, which counted big crypto companies like Coinbase and Gemini among its customers before it shut down operations. The California-based lender also serviced a now notorious client: crypto exchange FTX, an exposure which contributed to its decline.
Crypto’s brush with disaster after SVB collapse; Plus, fresh updates on crypto’s murky underworld
Scott Chipolina – Financial Times
Crypto’s banking crunch is in full swing. Silicon Valley Bank, Signature Bank and Silvergate Capital once served as a vital tripartite of lenders happy to take deposits from crypto companies – but now they’ve all gone. The demise of the trio has left an industry with already-thin links to the established banking system with even fewer options.
Tennessee’s Ban on Drag Performance Violates Freedom of Speech; Singing, dancing and dressing are modes of self-expression and protected by the First Amendment.
Noah Feldman – Bloomberg
Tennessee has passed a law aimed at restricting drag performances, an art form that often involves exaggerated gender performance and cross-dressing. Similar bills have been introduced in 14 other states as part of the revived culture war against LGBTQ people. The Tennessee law was written to survive judicial scrutiny by presenting itself as designed to protect minors. But the law is nevertheless unconstitutional, violating the First Amendment in several ways.
TikTok Distrust Goes Bipartisan as CEO Prepares to Testify
Alex Barinka – Bloomberg
In a week’s time, TikTok Chief Executive Officer Shou Chew will testify before Congress at what may be the fight of his career: pleading the case that TikTok isn’t a secret spying tool for the Chinese government. The backdrop is dire. News broke Wednesday that, not for the first time, the office of a US president has told ByteDance Ltd. that it needs to sell its stake in TikTok or risk the app being banned in America. Joe Biden’s Treasury Department is leading the discussion this go-round through the Committee on Foreign Investment in the US, or Cfius.
Russia’s Oil Trade Is Starting to Show Signs of Clogging Up; Ships laden with fuel float off Europe, Africa, Latin America; Tankers bounce between Chinese ports after loading Russian oil
Alex Longley and Sharon Cho – Bloomberg
Across the world, there are increasing signs that the smooth flow of Russian petroleum is starting to get snarled. Even after the world’s main oil forecasting agency said output could fall by 30%, exports from the OPEC+ producer have so far been resilient as the sanctions, along with price caps on Russian oil, were intended to keep the flow going. However, cargoes are now starting take longer in finding homes.
Russian Media, Crypto Scammers Seize on SVB Panic; ‘Conspiratorial narratives’ are inflaming social media panic over bank collapse, according to researchers.
Margi Murphy – Bloomberg
Russian media outlets, far-right websites, short sellers and doomsday preppers were among those who pushed and amplified conspiracy theories online focused on the collapse of Silicon Valley Bank, according to disinformation specialists. Researchers are just starting to explore how powerful of a role social media played in spreading hysteria around the second-largest bank failure in US history.
Deepfake ‘news’ videos ramp up misinformation in Venezuela; UK tech company developed software used in fake news videos promoted by authoritarian government
Joe Daniels and Madhumita Murgia – Financial Times
As Venezuela prepared for carnival season last month, an English-language video was published on the “House of News” YouTube channel. Its presenter Noah lauded an alleged tourism boom as millions of citizens flocked to the country’s Caribbean islands to party.
Transcript: The Regulatory Blunders Behind the SVB Disaster; A disaster a long time in the making.
Joe Weisenthal and Tracy Alloway – Bloomberg
By now we have a decent understanding of the business choices that caused Silicon Valley Bank to fail. It made a bad bet on interest rates. Its depositors were not as sticky as they might have assumed. But of course, banks also have regulations, and supervisors intended to avoid such errors. So what went wrong on the regulatory side? On this episode, we speak with Columbia Law School professor Lev Menand about the history of banking regulations and the choices that lead up to this disaster.
CFTC Statement on Swaps Rules Implicated in Recent Bank Failures
The Commodity Futures Trading Commission today issued a statement on certain swaps impacted by the failures of Silicon Valley Bank and Signature Bank solely related to the transfer of such swaps to bridge banks by the Federal Deposit Insurance Corporation.
The Basel III “Endgame” Reforms To Transform US Capital Requirements
Editorial Staff – Traders Magazine
The Basel “Endgame” package will significantly increase banks’ capital requirements over-and-above their already historically high levels in the past several years, resulting in significant additional funding costs for businesses, consumers, and investors, according to SIFMA. Policymakers should be transparent about the costs and benefits of implementing the Basel Endgame package, taking into account the totality of prudential reforms introduced since the Great Financial Crisis (GFC), SIFMA said in the second of a series of blog posts on bank capital requirements and their impacts.
NFA Board Update-February 2023 Meeting
National Futures Association
Video Transcript: Visit from Commissioner Johnson. NFA’s BOard was honored to welcome CFTC Commissioner Kristion Johnson to its February meeting. Commissioner Johnson addressed the Board regarding, among other thing, cybersecurity, third-party service providers, the upcoming CFTC MRAC meeting agenda and digital assets.
Court Asks SEC to Weigh In on Whether Loans Should Be Securities
Scott Carpenter and Bob Van Voris – Bloomberg
A federal appeals court in New York is asking the Securities and Exchange Commission to share its views on whether syndicated loans are securities, the court said in an order Thursday. Any reclassification of syndicated loans as securities under the SEC would have enormous consequences, forcing issuers and banks to adhere to more regulations and forcing a rethink of the way issuers tap capital markets. The syndicated loan market is around $1.4 trillion in size.
SEC Charges Cannabis Company American Patriot Brands, CEO, and Others with Fraud
The Securities and Exchange Commission today charged American Patriot Brands Inc. (APB), a cannabis cultivation and distribution company, its CEO, and five other entities and individuals for their participation in a long-running scheme in which they raised more than $30 million from more than one hundred investors across the country and siphoned off millions of those funds to enrich themselves.
ASIC grants conditional relief to facilitate reissue of certain life insurance policies
ASIC has provided conditional relief for life insurers from the design and distribution obligations (DDO) when reissuing life insurance policies in certain, limited circumstances.
FMA appoints three new Directors within regulatory leadership team
Financial Markets Authority
The Financial Markets Authority (FMA) – Te Mana TÄtai Hokohoko – today confirmed it has substantially completed senior appointments as part of its organisation redesign. Three directors have been appointed to new roles in the strategic leadership cohort: Michael Hewes – Director – Deposit Taking, Insurance and Advice; John Horner – Director – Markets, Investors and Reporting. Mr Hewes and Mr Horner report to Clare Bolingford, Executive Director, Regulatory Delivery; Peter Taylor – Director Specialist Supervision and Response, reporting to Paul Gregory, Executive Director, Regulatory Response and Enforcement.
Fed Alarms at SVB Began More Than Year Ago as Examiners Changed; New team began flagging problem after problem as it took over; One of their predecessors got new role: monitoring Silvergate
Hannah Levitt, Sridhar Natarajan and Saleha Mohsin – Bloomberg
Just over a year before Silicon Valley Bank’s collapse threatened a generation of technology startups and their backers, the Federal Reserve Bank of San Francisco appointed a more senior team of examiners to assess the firm. They started calling out problem after problem.
Investing and Trading
Investcorp Joins Global Funds in Betting on Indian Warehouses; Logistics sector is booming amid Modi’s manufacturing push; PE investment in Indian warehousing climbed 45% in 2022
Alex Gabriel Simon and Preeti Singh – Bloomberg
Investcorp Holdings BSC, the Middle East’s biggest alternative asset manager, is doubling down on warehouse investments in India, betting the nation’s manufacturing ambitions and e-commerce boom will fuel demand for logistics. Warehousing currently accounts for almost 16% of the Bahrain-based firm’s $350 million real estate portfolio in India, and it’s planning to boost that share in the coming year, according to Ritesh Vohra, the firm’s real estate head in the nation.
Traders on Tenterhooks After Whipsaw Week as Fed Decision Looms; Gauge of bond volatility jumps to highest since 2008 crisis; Swaps are pricing in 80% odds of quarter-point hike next week
Marcus Wong – Bloomberg
Bond traders are turning their focus to next week’s pivotal Federal Reserve meeting after what has been the most volatile five days in US debt markets in more than a decade. US two-year yields have whipsawed at least 20 basis points a day for six straight sessions through Thursday as concern over the global banking system and relief at central bank stabilization measures have kept investors on tenterhooks.
Loan ETFs Suffer Record Outflows in June
Investors pulled more money than ever before from US-listed ETFs investing in bank loans in June. With recessionary fears growing and traders seeking the highest quality debt, exchange-traded funds holding loans posted outflows of $2.3 billion in the month, according to data compiled by Bloomberg. That means the cohort has now erased all inflows for the year.
ECB Risks Policy Error by Hiking Into a Banking Storm; The euro zone’s central bank is dangerously complacent in continuing to tighten monetary policy during a bank liquidity crisis.
Marcus Ashworth – Bloomberg
The European Central Bank’s governing council was set on autopilot to hike the official deposit rate by 50 basis points to 3%, and it duly delivered its sixth consecutive hike since July at Thursday’s meeting. While inflation remains a clear and present danger, the central bank is dangerously complacent in ignoring the current banking storm. The euro’s failure to rally against the dollar, despite a bigger rate increase than some had expected, suggests traders are concerned about a possible policy mistake.
Female Participation in Alternatives Improves Marginally
Shanny Basar – Markets Media
The number of women working in alternative assets improved marginally in the last 12 months but they still occupy less than a fifth of senior roles in every asset class. Female employment in the alternatives industry rose to 21.3% in 2022, up from 20.9% in the previous year, according to Preqin’s latest annual Women in Alternatives report. Data provider Preqin said recent efforts toward gender balance have had little effect in the alternatives industry with progress being incremental at best.
Another Chaotic Week for Banks Marks the End of an Era for the Global Economy; “Pax Volckeriana” is over, with the pressure of higher rates and inflation showing up – and squeezing out – weaker points in the financial system. How far will it spread and what can the Fed do?
John Authers and Isabelle Lee – Bloomberg
The financial world feels as though it’s just turned upside down, and in many ways it has. As the week ends, let’s take you through a blow-by-blow account of what has hit us, and then look at how we got here and where we’re going next:
China Does U-Turn on Bond Feeds After Sudden Halt Roiled Market; Brokers allowed to resume providing prices to data vendors; Suspension had caused confusion, plunge in trading volumes
Traders in China were able to access widely used bond price feeds again after an abrupt suspension of the data earlier in the week roiled the $21 trillion market. At least three data vendors were showing bond quotes on Friday for the first time since Tuesday, according to a company statement and screenshots seen by Bloomberg. The resumption came after the regulator told some brokers they could restart providing feeds to financial data platforms, Bloomberg reported earlier.
China Cuts Reserve Requirement Ratio To Boost Economy; PBOC reduces RRR by 25bps for first time since December; Economists say move aims at maintaining strong bank lending
China cut the amount of cash banks must keep in reserve at the central bank in an effort to support lending and strengthen the economy’s recovery from pandemic restrictions and a property market slump. The People’s Bank of China reduced the reserve requirement ratio for almost all banks by 0.25 percentage points, effective from March 27, it said in a statement on Friday. The PBOC last cut the RRR in December, by the same magnitude.
Where to Look for Signs Financial Turmoil Is Impacting the US Economy; Less lending, tighter standards would signal softer spending; Business surveys will be parsed for signs of growing caution
Reade Pickert – Bloomberg
The key to if – or when – the US economy falls into recession will depend on how the latest turmoil in the banking sector spills over to Main Street. Less lending and tighter loan standards would make it tougher for people to buy cars and homes, and harder for businesses to expand and invest. Elevated concerns about the banking system and heightened odds of a recession also risk turning households more cautious about spending and businesses wary of beefing up payrolls or pursuing capital investments.
Environmental, Social and Corporate Governance
Take Five: IPCC Chair Issues Spoiler Alert
Chris Hall – ESG Investor
A selection of this week’s major stories impacting ESG investors, in five easy pieces. Investors and policymakers signalled mixed progress in their support for net zero transition this week, ahead of a critical report from scientists. Spoiler alert – One of the most influential meetings for the future of climate policy took place this week. In Interlaken, Switzerland, governments conducted the painstaking business of approving the key messages for policymakers of the latest Synthesis Report from the Intergovernmental Panel on Climate Change (IPCC), aka the world’s foremost climate scientists.
Foxconn Finds EVs Are Harder to Build Than iPhones; The contractor’s dreams of building electric cars are running into the reality of recalls and fledgling partners in Lordstown.
Sean O’Kane – Bloomberg
Over the past decade, Foxconn Technology Group has followed increasingly complex plans from Apple Inc. to turn silicon, glass, plastic, copper and other materials into hundreds of millions of iPhones. And Apple is just one of the Taiwanese company’s dozens of A-list customers; Google, Microsoft, Sony and many others have hired it to make phones, computers, tablets, game consoles, servers and more. So it’s not much of a stretch to think Foxconn might do the same for cars.
The Three A’s of High-Quality ESG Data
Jean-Grégoire Manoukian, Wolters Kluwer Enablon – TabbForum
What’s worse than failing to produce ESG disclosures? Producing inaccurate ESG reports that give rise to accusations of greenwashing and reduce your credibility when you claim to incorporate environmental factors in your business. Your ESG data must be accurate for obvious reasons. Accurate data leads to accurate ESG disclosures, helps to reduce risks of non-compliance, and protects your brand’s reputation. Jean-Grégoire Manoukian, Content Thought Leader at Wolters Kluwer Enablon, explains further.
Why Biden won’t budge on ESG; While Republican lawmakers will unlikely gather a sufficient two-thirds majority vote to overturn Biden’s veto, ESG investing still faces challenges on both legislative and legal fronts
Evie Liu – Financial News
President Joe Biden is set to use his first veto over an obscure issue that most Americans aren’t aware of – whether retirement funds should be allowed to consider factors other than financial measures in their investment choices.
Between the Lines of Larry Fink’s Annual Letter; The head of the largest asset manager highlighted the billions of dollars that clients are investing with the firm and reiterated the company’s stance on sustainability and other issues.
Michael Thrasher – Institutional Investor
In his well-read annual letter to investors on Wednesday, BlackRock chairman and CEO Larry Fink shared more than 9,000 words about a wide range of topics. “Republican” was not one of them, even though BlackRock has borne the brunt of a politicized debate over ESG investing principles. Republican-controlled states have already pulled at least $4 billion from BlackRock’s management over the past 12 months and proposed legislation is forcing institutional investors to boycott certain companies.
Republicans Are Making A Mistake By Waging War On ESG Investing
James Broughel – Forbes (contributor)
Congressional Republicans, joined by a handful of Democrats, recently voted to overturn a Department of Labor regulation that would allow retirement funds to consider climate change and other socially conscious factors when deciding how to invest. The resolution is likely to be vetoed by President Biden. Even so, this may be just the beginning of a new Republican strategy to declare war on so-called ESG investing principles, which Republicans view as wokism run amok in corporate America.
The road to COP28
Tom Evans, Alex Scott – E3G
On Monday, climate ministers from across the world will gather for the Copenhagen Climate Ministerial. It is the first major climate meeting of 2023 – and a critical chance to define the expectations for how they will deliver a radical ‘course correction’ in global climate action this year. On the same day, a new Intergovernmental Panel on Climate Change (IPCC) report will summarise the opportunity ministers face. Yes, the world is warming dangerously out of control. But rapid action to stop it can reap enormous economic and societal benefits.
Guest post: What 13,500 citations reveal about the IPCC’s climate science report
Sarah Connors, Felix Chavelli – Carbon Brief
In August 2021, the Intergovernmental Panel on Climate Change (IPCC) published their long-anticipated report on the “physical science basis” for climate change. The report concluded that climate change is “unequivocally” caused by humans and already affecting every region on our planet. These findings were reported around the world, drawing international attention.
Robinhood backs down over Signature Bank bets; Broker makes exception to its short position ban for clients who had winning ‘puts’ against failed lender
Jennifer Hughes – Financial Times
Robinhood has caved in to irate customers sitting on a windfall from betting on a fall in Signature Bank shares, after the online broker had threatened to let their lucrative positions expire without a payout. The investors had bought short-dated options on the Robinhood site that stood to net them big gains if the share price of Signature fell before the contracts expired.
UBS, Credit Suisse Oppose Idea of Forced Combination, Sources Say; Swiss lenders aim to pursue separate strategies, avoid overlap; Scenario planning for forced tie-up and CS breakup continues
Dinesh Nair, Myriam Balezou and Jan-Henrik Foerster – Bloomberg
UBS Group AG and Credit Suisse Group AG are opposed to a forced combination, even as scenario planning for a government-orchestrated tie-up continues, according to people with knowledge of the matter. UBS would prefer to focus on its own wealth-centric standalone strategy and is reluctant to take on risks related to Credit Suisse, the people said, asking not to be identified as the deliberations are private.
SVB Hunts for a Buyer After Tense, Dragged-Out FDIC Sale Failed; Infighting between FDIC’s Gruenberg, regulators marred efforts; Big banks cut out of process, burned by memories of 2008
Saleha Mohsin, Hannah Levitt and Allyson Versprille – Bloomberg
The effort to wind down Silicon Valley Bank was marred by an unmotivated seller, infighting between regulators and, ultimately, a failed auction. It’s left a mess that government officials, banking agencies and potential bidders are still trying to work out as they also navigate a deal for Signature Bank and try to bolster First Republic Bank.
JPMorgan Joins Those Saying Cash in Bond Gains as Hikes Loom; ‘I don’t want to chase this rally,’ says Pendal’s Xie Patrick; Fed isn’t done with hiking and will move next week: JPMorgan
Garfield Reynolds and Ruth Carson – Bloomberg
Bond investors who had bet that central banks were too hawkish in the face of recession risks should now book profits as this week’s rally is overdone. That’s the view of strategists at JPMorgan Chase & Co. and TD Securities Inc. who say it’s time to close out long positions in Treasuries as the Federal Reserve may still tighten policy next week. US government bonds have surged in recent days as traders cut wagers on Fed rate hikes amid turmoil in the banking sector.
You Can Trust Your Money Fund Not to Fail This Time; Sleep tight. A repeat of the 2008 financial crisis when the Reserve Primary Fund “broke the buck” should be of no concern.
Alexis Leondis – Bloomberg
In recent history, when there have been tremors in the banking system, money-market funds have shuddered. People who had thought you put a dollar in, get a dollar out find that’s not necessarily the case. If anyone is worried this time around – as would be natural – they can rest a bit easier. In 2008, the Reserve Primary Fund, a money-market fund, “broke the buck,” or had its net asset value fall below $1 due to its holdings of $785 million in commercial paper issued by Lehman Brothers.
Mexico Banks Safe From Global Problems, Finance Chief Says; Policymakers confident in Mexico banking system’s strength; Top bankers gathering at annual industry convention in Yucatan
Maya Averbuch – Bloomberg
Mexico’s financial system is safe from the problems with liquidity facing banks in other countries after the collapse of Silicon Valley Bank because its lenders have weathered crises before and have behaved in a cautious manner, the country’s finance minister said. Mexican banks haven’t overextended themselves and its central bank didn’t cut rates close to zero and then keep them there, helping to insulate Mexico to some degree from the issues rattling investors in other parts of the world, Rogelio Ramirez de la O said in an interview Thursday with El Financiero Bloomberg TV.
Executives Yank Money From Banks as Some Deposits Look Riskier; CFOs, treasurers review financing, cash management strategies; Market turmoil brings corporate risk frameworks in focus
Nina Trentmann – Bloomberg
With Credit Suisse Group AG having wobbled this week and a handful of regional US banks collapsing, company executives are getting more concerned about where they can safely keep their cash. Some of them are yanking money from their banks and depositing it at other lenders, moving it to money market funds, or buying Treasury bills directly, according to corporate treasurers and advisers. The rapid moves are leaving certain banks with quick drops in deposits while helping to pull borrowing rates lower on short-term government debt, adding to turmoil in financial markets.
Summers Gives Lagarde an A+, Urges Fed Rate Increase Next Week; Former Treasury secretary speaks after ECB raised rates; Forecasts are divided on Fed’s rate decision next week
Rich Miller – Bloomberg
Former Treasury Secretary Lawrence Summers praised European Central Bank President Christine Lagarde for raising interest rates by a half percentage point Thursday and said the Federal Reserve should follow with its own, smaller, move next week. “Lagarde gets an A+ today,” said Summers, a Harvard University professor and paid contributor to Bloomberg Television.
Kenya Bank With Worst Bad Loan Level Falls on Dividend Cut
Bella Genga – Bloomberg
KCB Group Plc shares plunged on Thursday, heading for the lowest level since August 2020 after Kenya’s second-largest bank proposed a lower dividend. The Nairobi-based lender posted 19% growth in net income to 40.6 billion shillings ($312.6 million) for last year, but the decision to lower the payout to 2 shillings per unit from 3 shillings a year earlier was below expectations, Nairobi-based Sterling Capital said in an emailed note. The stock slipped as much as 9.99% in Nairobi.
A Fast and Furious Year by the Fed That Blindsided Everyone
Simon Kennedy – Bloomberg
It was March 16, 2022, when Federal Reserve Chair Jerome Powell and his colleagues finally began to take on the surge in inflation they had thought would fade, eventually moving faster and more furiously than anybody expected. It was a slow start with a quarter-point hike. But that would become the first shot in a series of increases which has so far totaled 4.5 percentage points and included four 0.75 percentage-point salvos. The benchmark is now in a range of 4.5% to 4.75%.
Global Banking Turmoil Threatens to Topple Mexico’s ‘Super Peso’; Peso is worst performing emerging-market currency this week; The slump comes days after currency hit a five-year high
Davison Santana – Bloomberg
Just days after the Mexican currency hit a five-year high against the dollar, the era of the so-called super peso may have come to an abrupt end. The peso is down 5.9% since the banking crisis started on March 9, the worst performing among 23 major emerging-market currencies tracked by Bloomberg over that period.
Credit Suisse Puts On a Brave Face
Matt Levine – Bloomberg
I don’t think I’ve ever seen a debt tender offer announced at 2 a.m.? You just fell asleep reading the words “debt tender offer,” didn’t you? Nobody stays up until the wee hours of the morning due to the excitement or urgency of a debt tender offer. But this seems to have hit the wire at 1:45 a.m. Zurich time:
Even in Asia, SVB Trauma May Linger for Awhile
Vlad Savov and Jane Zhang – Bloomberg
In the space of a handful of days, a US bank has gone from relative obscurity to overshadowing the Oscars and AI chatbot hype. Silicon Valley Bank roiled startups all over the world with its sudden collapse. Now founders and investors, already shell-shocked after years of painful cutbacks, are wondering how deep the wounds run.
How Dimon and Yellen Helped Secure $30 Billion Lifeline for First Republic; Eleven banks deposit $30 billion to backstop distressed firm; Flurry of calls persuades some CEOs wondering, ‘Will it work?’
Hannah Levitt, Annmarie Hordern, Jennifer Surane and Saleha Mohsin – Bloomberg
Jamie Dimon and Janet Yellen were on a call Tuesday, when she floated an idea: What if the nation’s largest lenders deposited billions of dollars into First Republic Bank, the latest firm getting nudged toward the brink by a depositor panic. Dimon was game – and soon the chief executive officer of JPMorgan Chase & Co. was reaching out to the heads of the next three largest US lenders: Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.
Schwab Clients Shift From Prime Funds to Government Portfolios; Prime funds hit with biggest outflows in at least six months; The firm’s government and Treasury funds had inflows
Silla Brush – Bloomberg
Charles Schwab Corp. saw $8.8 billion in net outflows from its prime money market funds this week as investors rattled by turmoil at US banks plowed even more money into the brokerage’s other portfolios that favor assets with government backing. Clients moved money from two Schwab Value Advantage Money funds, which had a combined $195 billion of assets as of March 15, representing the largest redemptions in at least six months, according to company data compiled by Bloomberg. The data cover the three days through March 15.
Credit Suisse Got Its Lifeline. Now It Needs to Win Back Clients; Swiss lender’s SNB facility eases doubt about liquidity; Behavior of clients and counterparties still closely watched
Marion Halftermeyer, Lulu Yilun Chen and Steven Arons – Bloomberg
The $54 billion lifeline won by Credit Suisse Group AG on Thursday gives it a fighting chance to rebuild its business. Some clients aren’t waiting around to find out how that goes. In Asia, several ultra-wealthy clients continued to cut back their exposure amid the tumult this week. In the Middle East, some customers asked the bank to convert cash deposits into treasury bills and bonds.
Former JPMorgan Executive Staley to Face Deposition on Epstein; USVI says Dimon knew of Epstein’s trafficking in 2008; JPMorgan says Dimon claims not supported “at all” by evidence
Ava Benny-Morrison – Bloomberg
Former JPMorgan Chase & Co. executive Jes Staley faces a two-day deposition about his relationship with Jeffrey Epstein and what he knew about the late financier’s prolific sex-trafficking operation. Staley has emerged as a central figure in two lawsuits, filed by Jane Doe, a victim of Epstein, and the US Virgin Islands. JPMorgan is accused in both suits of facilitating Epstein’s sex-trafficking venture.
Peter Thiel had $50mn in Silicon Valley Bank when it went under
George Hammond – Financial Times
Peter Thiel said he had $50mn in Silicon Valley Bank when it went under, even after his venture fund warned portfolio companies that the tech-focused lender was at risk. The veteran technology founder and investor was widely blamed for precipitating a bank run in which depositors tried to pull more than $40bn in 24 hours last week. His venture capital firm Founders Fund was among those that had advised clients to spread their deposits to other lenders as concerns about the bank mounted.
Bank rescues ease crisis fears but investors worry it’s not enough
Pete Schroeder, Tom Westbrook and Scott Murdoch – Reuters
A $30 billion lifeline for First Republic Bank (FRC.N) hosed down market fears about an imminent banking collapse on Friday, but a late tumble in the troubled U.S. lender’s shares showed investors were still worried about cracks in the sector. Large U.S. banks injected the funds into San Francisco-based bank on Thursday, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size U.S. lenders over the past week.
FTSE Russell Wealth Survey Reveals Investors’ Surprising Views on Their Advisors and Index Funds Highlight Need for Education
FTSE Russell has released the results of its inaugural Wealth Survey today. While the findings offered much good news for financial advisors, it also revealed surprising gaps in retail investors’ understanding of index-based investing as well mixed views on their outlook for 2023.
Hedge Funds Burned by Yen Shorts as SVB Fear Lifts Haven Demand
Yumi Teso and Matthew Burgess -Bloomberg
Hedge funds held the biggest yen-bearish positions in six months last week, a painful trade as the collapse of Silicon Valley Bank suddenly boosted demand for Japan’s currency as a haven. Leveraged funds increased short positions on the yen to the most since September in the week through March 7, Commodity Futures Trading Commission data show. The Japanese currency rebounded from an almost three-month low reached on March 8, strengthening 3.5% in a little more than a week, as investors slashed bets on further Federal Reserve interest-rate hikes and concern about the health of the banking sector encouraged investors to hold safer assets.
Work & Management
Microsoft to Bring OpenAI’s Chatbot Technology to the Office; Word, PowerPoint and Outlook emails will get new AI assistants called Copilots
Dina Bass and Emily Chang – Bloomberg
Microsoft Corp.’s effort to overhaul its entire lineup with OpenAI technology has spread to one of the company’s oldest and best-known products: its Office apps. The software, including Excel, PowerPoint, Outlook and Word, will begin using OpenAI’s new GPT-4 artificial intelligence platform, Microsoft said on Thursday. AI-powered assistants called Copilots will be able to generate whole documents, emails and slide decks from knowledge the software has gained scanning corporate files and listening to conference calls.
Disabled People Can Help Ease the Shortage of Workers
Claudia Sahm – Bloomberg
At a time when some 10 million US jobs are unfilled, Covid-19 still lingers and the workforce is aging at an alarming rate, it’s never been more urgent for employers to strengthen their resolve to hire and retain workers with disabilities. Progress is happening, with the latest monthly jobs report showing that the employment rate is at a high of 22% among disabled adults. Still, that is only about one-third of the national average.
Google Is Making Breakthroughs Much Bigger Than AI; Generative AI is great, but what’s more impressive is the continued march toward quantum supremacy.
Tim Culpan – Bloomberg
Hype surrounding the rise of ChatGPT and the supposed ground Google is losing to Microsoft Corp. and OpenAI in the search wars has overshadowed more important developments in computing, progress that will have far greater implications than which website serves up better tax advice. Quantum computing is the holy grail of scientists and researchers, but it’s still decades away from reality.
Is GPT-4 Much Better Than GPT-3?
Rachel Metz and Dina Bass – Bloomberg
On Tuesday, OpenAI pulled back the curtain on GPT-4, the followup to the AI tool that powers its popular ChatGPT chatbot and Dall-E image-generation software. GPT-4, which stands for “generative pretrained transformer 4,” is meant to be a better creative partner than GPT-3, and more accurate. It’s currently available only to OpenAI’s paid ChatGPT Plus subscribers and users of OpenAI investor Microsoft’s Bing search engine, but if you can’t access it, don’t fret – we put it to the test for you, poking and prodding it, and comparing it to the artificial-intelligence model behind the standard version of ChatGPT.
Meta Layoffs Reveal a Deeper Truth: Tech Exceptionalism Is Dead; Silicon Valley for too long equated rapid head-count growth with success.
Beth Kowitt and Parmy Olson – Bloomberg
During the tech sector’s pandemic-era boom, employee headcount became one of the reigning barometers of success. Quarter after quarter, alongside traditional metrics like revenue growth and operating margin, companies across Silicon Valley reported to analysts and investors the thousands of workers they had added to their ballooning payrolls.
The Tech Behind Those Amazing, Flawed New Chatbots
Olivia Solon – Bloomberg
True paradigm shifts are rare, which helps to explain the buzz around ChatGPT, a chatbot driven by so-called generative artificial intelligence that promises to revolutionize the way people interact with computers. It’s become a global sensation since its November launch by giving seemingly sophisticated yet plain-language answers to almost any kind of question.
AI Is About to Transform Childhood. Are We Ready?
Tyler Cowen – Bloomberg
With the introduction of GPT-4 and Claude, AI has taken another big step forward. GPT-4 is human-level or better at many hard tasks, a huge improvement over GPT-3.5, which was released only a few months ago. Yet amid the debate over these advances, there has been very little discussion of one of the most profound effects of AI large language models: how they will reshape childhood.
A Tick-Borne Disease Is on the Rise in the Northeast, C.D.C. Reports; Babesiosis, which can cause flulike symptoms, could be spreading because of rising temperatures and the growing deer population.
Emily Anthes – The New York Times
March 16, 2023 Cases of a tick-borne disease, called babesiosis, more than doubled in some Northeastern states between 2011 and 2019, researchers from the Centers for Disease Control and Prevention reported on Thursday. Although many people with babesiosis are asymptomatic, others develop flulike symptoms, including fevers, chills, sweats and muscle aches. The disease can be severe or even fatal in people who have compromised immune systems or other risk factors.
Computer Glitch Causes Check-In Delays at Hong Kong Airport
Danny Lee – Bloomberg
Hundreds of passengers were delayed at Hong Kong International Airport on Thursday morning due to a technical issue affecting check-in systems. Images from the airport showed long queues at check-in desks, including scores of people at the counters of Cathay Pacific Airways Ltd., Hong Kong’s main airline. A person familiar with the matter confirmed that Cathay was affected. The malfunction only impacted certain check-in aisles, so not all airlines had issues, the person said.
New Zealand to ban TikTok on devices linked to parliament, cites security concerns
Lucy Craymer – Reuters
New Zealand said on Friday it would ban TikTok on devices with access to the country’s parliamentary network due to cybersecurity concerns, becoming the latest nation to limit the use of the video-sharing app on government-related devices. Concerns have mounted globally about the potential for the Chinese government to access users’ location and contact data through ByteDance, TikTok’s Chinese parent company.
Opportunity Knocks in the Middle East
Colin Lambert – The Full FX
Foreign exchange volumes globally have grown in recent years, but a recurring theme – especially while interest rates were hovering either side of zero in most major jurisdictions – has been a surge in activity in emerging markets. NDF volumes are up, as is local market activity in many centres. Foreign exchange volumes globally have grown in recent years, but a recurring theme – especially while interest rates were hovering either side of zero in most major jurisdictions – has been a surge in activity in emerging markets. NDF volumes are up, as is local market activity in many centres.
SVB Collapse Turns Banker Island Retreat Into Lobbying Blitz; Local banks fuming over larger fees spurred by bank collapse; Lawmakers split over how to proceed with $250,000 FDIC cap
Lydia Beyoud, Steven T. Dennis and Katanga Johnson – Bloomberg
The collapse of Silicon Valley Bank and Signature Bank and the ensuing news that US regulators were jacking up lenders’ fees for deposit insurance quickly transformed the Hilton Hawaiian Village this week into ground zero for a lobbying blitz by community lenders.
Even London’s Luxury Property Market Can’t Escape the SVB Fallout
The Secret Agent – Bloomberg
The last four weeks have been a crash course in the art of diplomacy. It is part of any good realtor’s job description but the state of war I’ve found myself in the middle of has forced a level of statesmanship that would do the United Nations proud. Despite my best efforts, the Mayfair triumvirate continue to hurl insults at one another. At this point, I’m no longer motivated by doing a good job (or making my commission). It’s now about getting these people out of my life.
A $24 Billion Dynasty’s Swiss Firm Gives Surprise Peek at Stocks; Longbow Finance, an investment firm for the Rausing family, disclosed for the first time its $742.4 million portfolio of publicly traded US companies.
Benjamin Stupples – Bloomberg
One of the most sophisticated investment firms for the world’s rich is opening up – just a little bit. Longbow Finance, a Swiss family office that’s catered to the $24 billion Rausing dynasty for the past six decades, revealed for the first time its ownership of US equities in a recent regulatory filing. The portfolio – 57 stocks valued at $742.4 million – mostly comprised tech, health care and consumer shares at the end of last year, with Microsoft Corp. as its biggest position.
California Crippling Drought Is Almost Over After Deluge of Rain; String of Pacific storms left record snowpack in Sierra Nevada; Best conditions in California since 2020, US forecasters said
Brian K Sullivan – Bloomberg
California’s three-year drought is on the verge of ending, thanks to a string of powerful Pacific storms in recent months that left behind a record snowpack in the Sierra Nevada range. By June, conditions across most of the state will be the best they’ve been since 2020, Jon Gottschalck, chief of the operational prediction branch at NOAA’s Climate Prediction Center, said in a conference call Thursday.
Wet winter eases California drought, giving way to spring flood risks
Steve Gorman – Reuters
The mixed blessing of California’s exceptionally wet winter is likely to play out this spring with somewhat heightened flood risks in a state left largely drought free for the first time in three years, U.S. government forecasters reported on Thursday. The higher odds of minor to moderate flooding across most of California from rain and runoff of melting mountain snow this spring is roughly in line with forecasts for much of the U.S., according to the National Oceanic and Atmospheric Administration (NOAA).