Hits & Takes
John Lothian & JLN Staff
We have another remembrance of Hal Hansen today to add to the list, this one from former Cargill Investor Services executive Chris Malo. So far we have remembrances from Ray Carmichael and Bernie Dan. I am sure there are some other former CIS employees who are willing to share their remembrances.
I can remember a time when, if people wanted me to include something in JLN, they would call or email me. Sometimes these days I just get hashtagged in a post. #JohnLothian. It works most of the time.
At IDX last week, FIA President & CEO Walt Lukken interviewed Michael Haigh, head of commodities research at Societe Generale and a former colleague of Lukken’s at the CFTC. Haigh’s interview included a slideshow of some much-in-demand data which, Lukken said, “makes a compelling case for the new commodity super-cycle we are entering and why our challenges around commodities will not ease anytime soon.” You can find the slides from Haigh’s presentation HERE.
Speaking of the FIA, on July 12 it is holding a one-day program, FIA Forum: Frankfurt 2022 with the subject of “Key Trends in Cleared Derivatives.” The program starts at 9:00 a.m. and ends at 5:00 p.m CEST and is being held at the Hilton Hotel in Frankfurt, City Centre.
Euronext’s market opening gong ceremony today saw the gong struck by a journalist who was part of a group Euronext assembles every year for a four-day basic course in financial journalism. The exchange operator brings in financial and academic experts to update journalists on a large number of current financial topics. Topics also include the organization and impact of financial markets and the underlying Euronext products.
Today RSM US LLP welcomed more than 1,000 interns across the U.S. and Canada for a summer program.
You know things are bad for former crypto billionaires when they have to take second jobs. In this case, the Winklevoss twins took a gig singing. Evidently they have a band. And they are very BAD. They are the kind of bad that can get them unfriended on Facebook like, “I don’t know those guys.” Here is a NY Post story about their gig titled Winklevoss twins sing ‘Don’t Stop Believin’ days after layoffs at crypto startup.
Corrections: Sometimes I think I should not start writing until I finish my first cup of coffee. I was looking up a word yesterday to describe Ray Carmichael’s role as head of corporate communications at the Chicago Board of Trade and forgot to include the word “head” in describing his role. He is the former corporate communications “head” at the CBOT. Also, in my chatter about Dr. Mung Chiang, the new president of Purdue University, I referred to him the second time familiarly by his first name, Mung. The next time I referred to him I somehow melded his first and last names into “Chung.” I apologize for these errors.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The FIA is offering a webinar on Thursday, June 16 from 9:30 a.m. – 11:00 a.m. SGT called “The Road Ahead for Operations.” Speakers will discuss the challenges of the current operational environment, including increased market volatility and stress to the infrastructure, the current landscape in the Asia-Pacific region, and the impact of new regulatory priorities and compliance requirements. The speakers are Amanda Boteler, Head of APAC Futures Clearing Operations, Citi; Julian Chesser, Managing Director, Head of APAC, Osttra; Nachi Muthu, Global Head of Derivative Products & Solutions, Broadridge; Mezhgan Qabool, ED, Head of Market Development APAC, and Head of Equity and Index Sales APAC, Eurex; and Tom Vo, Head of Listing & Trading Operations, Singapore Exchange. The webinar will be hosted by Bradley Fraser, Head of Prime Derivatives Services, Asia, at Barclays. For more information and to register, go here. ~SR
The biggest crypto scams of 2022 (so far); We’re only halfway through the year!
Matt Binder – Mashable
We’re only six months into 2022 and billions of dollars in cryptocurrency have already been pillaged and plundered. While the value of cryptocurrency stolen is stunning, not everything is solely about the money. Last year, Mashable looked into the biggest crypto scams of 2021. Yes, some big bucks were being funneled via various scams and schemes included on that list. However, sometimes the audacity and uniqueness of some of these scams and hacks – perpetrated by people who only walk away with six figures worth of stolen crypto — are worth mentioning to. So, without any further ado, here are some of the biggest and boldest frauds, swindles, and rackets in cryptocurrency from 2022 thus far.
******Does Super Bowl advertising count?~JJL
Why the Index Industry Needs a Reset
Ron Bundy – Morningstar Indexes
As we celebrate 20 years since the founding of Morningstar Indexes, it is a good opportunity to reflect on the transformational growth of the index industry in the last few decades and where we may go from here. Since the first index-based investment funds were introduced in the early 1970s, indexes have become an extraordinarily central part of investing and, in the process, have become a big business. With this growth has come the emergence of a huge array of market benchmarks that help investors track investment performance, and, even more consequentially, underpin investment products such as ETFs which have been at the heart of the passive investing revolution.
***** I would look for the reset button. I would not use the CTRL-ALT-DLT buttons.~JJL
Swiss Investor Who Helped Form UBS Sells Up at Bank He Started
Steven Arons – Bloomberg
The Swiss investor who once was a driving force behind the creation of the country’s biggest bank, UBS Group AG, has sold a majority stake in the lender he founded, BZ Bank. Martin Ebner sold a 70%-stake in BZ Bank to Graubuendner Kantonalbank, the latter said in a press release on Monday. GKB didn’t disclose a price and only said it would use existing funds to pay for the deal. Ebner was a major driver of corporate change in Switzerland during the decade leading up to the dotcom bust in the early 2000s. His first major coup came in 1995 when Union Bank of Switzerland ousted chief executive Robert Studer after Ebner had criticized him for years. Two years later, the lender’s new management merged with Swiss Bank Corp. to form what was then the world’s second-largest bank by assets.
***** That is a sell everything liquidation story.~JJL
Monday’s Top Three
Our top story Monday was Putin is ‘preparing to starve much of the developing world’ in order to win Russia’s war in Ukraine, Yale historian says, from Business Insider. Second was John Lothian’s post on JLN of Remembrances of Hal Hansen from a number of Hansen’s former industry colleagues. Third was our MarketsWiki page for James A. Donaldson, who passed away on June 5. (Hal Hansen‘s MarketsWiki page was number 4.)
26,854 pages; 238,827 edits
Wall Street’s Out of Office Again Amid Covid Wave
Thomas Buckley and Jeremy Scott Diamond – Bloomberg
A recent surge of Covid-19 cases in New York that’s now plateauing is showing signs of lingering symptoms: Bankers aren’t rushing back to the office. In the downtown cluster that includes Wall Street, Pret A Manger Ltd’s sales of coffee and sandwiches are less than half of what they were before the pandemic began. Earlier this month, they fell to their lowest level since January after the city’s health authority recommended wearing masks again to contain the spread of the virus. Bankers are reluctant to return even after some of Wall Street’s top brass have been urging them to get back to the office for well over a year. It highlights a challenge many companies face as they try to balance company needs and employee demands to work from home, at least part of the week.
Investors overcharged in securities lending deals, says EU watchdog; Wide divergences in fee splits between fund managers and clients criticised by Esma
Chris Flood – FT
Big variations in the share of revenues from securities lending retained by asset managers raise questions over whether fund investors are being overcharged, according to the EU’s top financial watchdog. Securities lending — the practice among institutional investors of temporarily swapping stocks, bonds and exchange traded funds with each other in return for a fee — is a highly lucrative business which generated global revenues of almost $11bn in 2021, according to IHS Markit, a data provider.
Euronext to acquire technology business powering MTS from Nexi; The acquisition will help strengthen MTS and Euronext Securities Milan’s core operations and enable further development and product innovation.
Wesley Bray – The Trade
Euronext and Nexi have entered into an agreement for the acquisition of the former’s technology businesses which currently powers Euronext’s fixed-income trading platform MTS and Euronext Securities Milan. Euronext will acquire the businesses for EUR57 million, subject to closing conditions. The deal is expected to close in the second half of this year. The exchange said the transaction is a new step in its strategy to leverage its integrated value chain as it further enhances its technology competencies and capabilities in trading and post-trade. It will also strengthen MTS and Euronext Securities Milan’s core operations, while also internalising the core trading platform of MTS and its largest IT contract.
Credit Suisse banker removed from role for unauthorised messages to clients; Action taken as regulators target industry’s use of private applications to conduct business
Joshua Franklin and Ortenca Aliaj – FT
A senior Credit Suisse investment banker was removed from his position earlier this year after he was found to have used unapproved messaging applications with clients, according to people with knowledge of the matter. Anthony Kontoleon, known as “AK” to colleagues, was Credit Suisse’s global head of equity capital markets syndicate in New York and left his position in April. He is set to depart the bank, where he has worked for 28 years.
Virtu CEO blasts auction model for retail stock trading in US: ‘Zero commission trading will go the way of the dodo bird’
Declan Harty – Fortune
In an interview with Fortune, Virtu Financial CEO Doug Cifu called the recently floated idea of establishing an auction-based model for executing individual investors’ buy and sell orders “academically sophomoric,” warning that an elimination of the current wholesaling model that retail brokerages like Charles Schwab, Robinhood Markets, and others rely on is bound to lead back to a commission-fee-based trading regime in the U.S.
Crypto Exchange Coinbase to Lay Off 18% of Staff; The biggest cryptocurrency exchange in the U.S. has struggled to keep users this year
Caitlin Ostroff – WSJ
Cryptocurrency exchange Coinbase Global Inc. COIN -11.41% said Tuesday that it is cutting almost a fifth of its staff as part of a restructuring plan. The company said that it will reduce its workforce by 1,100 employees, amounting to 18% of its staff, as part of its efforts to manage operating expenses. Coinbase’s shares have plummeted this year alongside a decline in the value of cryptocurrencies. Shares fell a further 7.7% Tuesday in premarket trading after Coinbase posted the notice as part of a Securities and Exchange Commission filing.
What Happens When Stock Markets Become Bears; Steep downturns of stocks by 20 percent or more are relatively rare, but how long they last could portend damage — for you and the economy.
William P. Davis, Karl Russell and Stephen Gandel – NY Times
The S&P 500 on Monday dropped into its second bear market of the pandemic, crossing a symbolic and worrisome threshold as stocks plunge following a meteoric rise over the last two years. Bear markets — when stocks decline at least 20 percent from their recent peaks — are relatively rare, and they frequently precede a recession. This sell-off, dragging the S&P down from a peak on Jan. 3 (which reflects the new bear market’s starting point), comes as concerns mount over high inflation, the war in Ukraine, Covid and the Federal Reserve’s attempts to rein in the economy.
Binance resumes bitcoin withdrawals as crypto prices crater; Move could heighten regulatory scrutiny of crypto exchanges
Chris Matthews – MarketWatch
The world’s largest cryptocurrency exchange, Binance, resumed withdrawals of bitcoin after it instituted a “temporary pause” Monday morning that latest several hours, the company said. Binance founder and CEO Changpeng Zao announced the pause on Twitter earlier in the day. “Withdrawals on the Bitcoin network have now resumed,” the company said in a statement on its website, timestamped at 11:30 a.m. Eastern. “We are still working to process the pending Bitcoin (BTC) network withdrawals, and this is estimated to be completed in the next couple of hours,” the statement continued. “Please note that pending Bitcoin (BTC) network withdrawals will be rejected. In this case, the relevant users will need to resubmit their withdrawal requests.”
‘Things start to break:’ Crypto faces ‘liquidity crisis’
David Hollerith – Yahoo! Finance
It all started with inflation. Monday’s crypto selloff is the latest example that cryptocurrencies are following the fortunes of riskier assets after May’s inflation reading on Friday came in hotter than expected. A rout followed into the weekend, a crypto lender halted transactions, and the drawdown ensued into the new week with the largest crypto exchange also pausing transactions and another crypto lender cutting a fifth of its staff. Overall, the total crypto market cap has lost more than two-thirds of its value since peaking in November, according to Coinmarketcap, falling from $3 trillion at its apex to $962 billion as of Monday evening New York time.
Crypto Billionaire Fortunes Vanish as Quickly as They Were Made; Seven of the world’s richest crypto founders have lost a combined $114 billion since November as digital-asset values crumble.
Tom Maloney – Bloomberg
One built a massive fortune that rivaled the wealthiest US tech titans. Another amassed a war chest that he vowed would change politics and philanthropy. Some were given a second chance at riches after past ventures flamed out. The cryptocurrency craze turned Changpeng Zhao, Sam Bankman-Fried, Mike Novogratz and a handful of other digital-asset evangelists into billionaires several times over. But just as quickly as they became the new faces of global wealth, they’re now seeing their fortunes vanish at an astonishing rate. Worth as much as $145 billion on Nov. 9, when Bitcoin reached a record high of almost $69,000, seven billionaires with fortunes tied to crypto have since lost a combined $114 billion, according to the Bloomberg Billionaires Index. Many others who have bet big on Bitcoin, from Microstrategy Inc. Chief Executive Officer Michael Saylor to El Salvador President Nayib Bukele, are also feeling the pinch as the price of the world’s largest digital token slumped below $23,000 on Monday, the lowest since December 2020.
Crypto lender Celsius is ‘risking insolvency’ after it pauses withdrawals
David Hollerith – Yahoo! Finance
Crypto lender Celsius Network said on Sunday evening it would pause all withdrawals and transfers for customers as crypto assets continued to get battered. “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swap, and transfers between accounts,” Celsius Network said in their statement. “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.” Pausing account withdrawals is a drastic action, according to L.P., a pseudonymous crypto entrepreneur and investor who started and runs the crypto-focused investor protection and educational resource, RugDoc.io.
Celsius Crypto FOMO Proved Irresistible to Finance Pros Too; What was it about 18% yields that drew smart bankers to DeFi?
Lionel Laurent – Bloomberg
Another day, another blowup in the hype-driven world of cryptocurrency lending. And this time there’s a cautionary tale where even sophisticated bankers and pension funds were vulnerable to crypto’s Fear Of Missing Out (FOMO) chasing unrealistic rewards in the unregulated world of “decentralized finance.” Celsius Network Ltd.’s freezing of withdrawals, swaps and transfers on its platform Monday came just weeks after the $60 billion implosion of stablecoin Terra, and barely a day after Celsius boss Alex Mashinsky dismissed talk of halted withdrawals as “misinformation.”
We need a Bretton Woods for the digital age; Friendly democracies risk ceding global economic governance to an authoritarian China if they do not agree new rules
Mike Rogers – FT
In 1944 allied nations came together at Bretton Woods and established economic rules for the postwar era. These would provide much needed stability and structure. But as economies grew and financial interconnectedness increased, governments eventually needed greater freedom of action. The decision taken by the Nixon administration in 1971 to remove the dollar from the gold standard was a key driver of the demise of the so-called Bretton Woods system. Today, we find ourselves in the midst of a global ideological conflict between liberal democracy and authoritarianism. Friendly democracies need, once again, to come together to establish a new economic agreement — one based on the liberal values of free trade, competition and freedom. Think of this as a digital Bretton Woods to ensure continued growth and progress. Failure to reach such an agreement risks ceding the future of global economic governance to China and its model of authoritarian capitalism.
Charles Schwab to pay $187mn settlement to robo-adviser clients; SEC slams ‘egregious’ allocations of customer money that extracted ‘hidden costs
Madison Darbyshire – FT
Charles Schwab will pay $187mn in a regulatory settlement after the Securities and Exchange Commission condemned its robo-adviser service for “egregious” allocations of client money that saddled them with “hidden costs”. The largest publicly traded US investment services company will pay the penalty to clients that were harmed by the practice, settling SEC charges, the securities regulator said on Monday. The charges were the latest indication that the Wall Street watchdog, under Gary Gensler, has intensified scrutiny over the ways in which technology can put investors at a disadvantage. The SEC alleged that three Schwab investment adviser subsidiaries told robo-advised customers they were not being charged fees for the service, but managed their money in a way that extracted hidden profits from high cash balances, hurting customer returns.
Celsius/cryptos: heat is on; Blow-up shows risky investing and capital preservation are mutually exclusive
Celsius says it “is proud to provide a platform of curated services that have been abandoned by big banks”. These, the prominent cryptocurrency lending fintech adds, include “fair yields, zero fees, and lightning quick transactions.” That last boast no longer appears accurate. On Sunday, Celsius, which in May claimed to have nearly $12bn in client assets, announced that it was “pausing all withdrawals” amid plummeting crypto prices. Bitcoin had fallen a fifth since Friday, its lowest level in 17 months. The likes of Celsius — which advertises an annual percentage yield of 18.63 per cent — had seemed to offer the best of all worlds to crypto enthusiasts. Customers deposited crypto which Celsius lent out for a fee. Here, seemingly, was the chance for big returns along with capital preservation and immediate liquidity.
The new Gulf oil boom poses dilemmas for the west; War in Ukraine has forced US to seek help with supplies from Saudi Arabia
The Editorial Board – FT
In his State of the Union address days after Vladimir Putin’s forces invaded Ukraine, President Joe Biden listed measures the US was taking to punish Russia in a “battle between democracy and autocracy”. Yet as the west has sought to isolate one autocrat, it has been forced to seek help from others: Saudi Arabia and its fellow absolute monarchies in the oil-rich Gulf. Since Biden’s February speech, oil and gas prices have hit their highest in more than a decade as the west tries to strangle Russian energy exports. This month, the EU approved a plan to ban Russian seaborne oil imports. The bloc also agreed to co-ordinate with the UK on plans to ban insuring ships carrying Russian crude, which would further stymie Moscow’s ability to export. Before the war, Russia produced more than 10 per cent of global oil supplies and was a vital source of energy for Europe. The International Energy Agency has forecast its output could now decline by up to 3mn barrels a day. There will be shippers willing to transport Russian crude to China or India. But the level of Moscow’s exports is only heading in one direction, threatening a significant undersupply in the market.
Wanted Banker Says He Was ‘Lured’ by CIA Agent to Fly to UK; Peter Weinzierl was arrested off a private jet when he landed; Weinzierl fighting extradition to US to face laundering charge
Jonathan Browning – Bloomberg
An Austrian banker wanted by the US on money laundering charges claimed he was “lured” to fly his private jet to London by a longstanding CIA agent where he was promptly arrested at the airfield. Peter Weinzierl, the former chief executive officer of an Austrian private bank, better known by its old name Meinl Bank AG, is fighting extradition to the US. His lawyer said in a London court Monday that the arrest was an abuse of process by US authorities. Weinzierl, who is facing charges over his alleged role in a giant Brazilian corruption scandal, was deceived into thinking the intelligence agent was a business associate who wanted to meet him for lunch, his lawyer James Lewis said in a legal filing. “He would have not been here apart from this deceit,” Lewis said. The agent had told a person close to Weinzierl he worked for both the CIA and FBI, he said.
MicroStrategy’s Losses on Its Bitcoin Bet Near $1 Billion; Founder Michael Saylor began buying Bitcoin in August 2020; Software firm may need to to pledge additional funds on loan
Matt Turner – Bloomberg
MicroStrategy Inc. founder and Chief Executive Officer Michael Saylor’s big bet on Bitcoin has backfired in a major way as the paper loss for his firm’s holdings of the largest digital asset has reached roughly $1 billion. Over the last two years the software-maker has shelled out $3.97 billion as it amassed nearly 130,000 Bitcoins. The firm’s average purchase price for those tokens has steadily risen with each additional purchase since 2020 and sits at $30,700 as of March 31, according to its latest quarterly filing with the US Securities and Exchange Commission. With Bitcoin plunging by as much as 17% to $22,603 on Monday after crypto lender Celsius Network Ltd. paused withdrawals, swaps and transfers on its platform, MicroStrategy’s holdings are now worth just over $3 billion. That puts the company’s Bitcoin related losses at nearly $1 billion.
Municipal CUSIP Request Volumes Rise in May, Corporate Volumes Flat; Short-Term CDs Extend Five-Month Growth Streak
CUSIP Global Services (CGS) today announced the release of its CUSIP Issuance Trends Report for May 2022. The report, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity over the next quarter, found a monthly increase in request volume for new municipal identifiers, while requests for new corporate identifiers were largely flat on a monthly basis.
The rich are fleeing from Russia, and more than 15,000 millionaires — 15% of the country’s ultra-rich population — are expected to leave this year
Huileng Tan – Insider
More than 15,000 millionaires are expected to leave Russia this year as the rich flee Putin’s regime amid sweeping sanctions over the war in Ukraine, according to a report published on Monday. The expected exodus accounts for 15% of Russia’s millionaire pool, and it amounts to nearly three times the 5,500 millionaires who left Russia in 2019, according to the Henley Global Citizens Report. The report is based on information including official immigration data and real-estate purchases by millionaires.
49 million people face famine as Ukraine war, climate disasters intensify
Sarah Kaplan – The Washington Post
With temperatures spiking to 110 degrees once more, Jeetram Yadav sat in the shade on his farm outside New Delhi and cupped a handful of this season’s disappointing wheat between his calloused palms. The grains were brown and the size of cumin seeds, shriveled by heat. “I can speak for my village: Everybody has had the same fate,” said Yadav, a 70-year-old who grows wheat and rice on his 2.6-acre plot. Yadav’s shriveled grains are a small part of the dangerous feedback loop between climate-linked weather disasters and the war in Ukraine that have sent food prices soaring around the world and raising the risk of an epidemic of starvation.When Russia invaded earlier this year, threatening Ukraine’s exports of grains, crop-rich India was seen as a global buffer, making up for the shortfall. But this spring’s erratic rains and scorching heat killed crops and made it dangerous for farmworkers to harvest, devastating India’s production. In response, India announced in May it would shut down all grain exports, staving off famine in the country but threatening starvation abroad.
The West’s Energy War Against Russia Demands Sacrifice; Prevailing means acknowledging the need for political compromises and potentially hard choices for energy consumers.
Liam Denning – Bloomberg
Even as Russia and Western countries avoid a shooting war over Ukraine, they have already joined an energy war. Opening skirmishes have taken the form of selective cutoffs of, and encroaching sanctions on, Russian supply. Yet there is a yawning gap between the rhetoric of war and the realpolitik of energy diplomacy — one that Russia will exploit and that the West must find a way to close. In a recent essay in the New York Times, President Joe Biden wrote that standing by Ukraine and making Russia pay “a heavy price” was in our vital national interest, in part because not doing so: “… will put the survival of other peaceful democracies at risk. And it could mark the end of the rules-based international order and open the door to aggression elsewhere, with catastrophic consequences the world over.”
US Quietly Urges Russia Fertilizer Deals to Unlock Grain Trade; US seeks to boost supplies amid sanctions, global food crisis; Kremlin has made export relief a condition in grain talks
Elizabeth Elkin, Daniel Flatley, and Jennifer Jacobs – Bloomberg
The US government is quietly encouraging agricultural and shipping companies to buy and carry more Russian fertilizer, according to people familiar with the efforts, as sanctions fears have led to a sharp drop in supplies, fueling spiraling global food costs. The effort is part of complex and difficult negotiations underway involving the United Nations to boost deliveries of fertilizer, grain and other farm products from Russia and Ukraine that have been disrupted by President Vladimir Putin’s invasion of his southern neighbor. US and European officials have accused the Kremlin of using food as a weapon, preventing Ukraine from exporting. Russia denies that even as it has attacked key ports, blaming the shipment disruptions on sanctions imposed by the US and its allies over the invasion.
With Billions Going to Ukraine, Officials Warn of Potential for Fraud, Waste; While no instances of malfeasance have emerged, current and former officials say it is likely a matter of time
Warren P. Strobel and Gordon Lubold – WSJ
With the U.S. sending roughly $130 million a day in military aid to Ukraine plus economic and other assistance, current and former U.S. officials warn that more must be done to ensure arms and money aren’t diverted, stolen or misused. The nearly $54 billion that Congress has appropriated for the Ukraine conflict since January—with strong bipartisan support—dwarfs annual U.S. aid to any other country including assistance sent to Afghanistan at the height of U.S. military involvement there, the officials said. Since Russia’s Feb. 24 invasion of Ukraine, speeding support to Kyiv, which has fought back fiercely, has taken precedence in Congress and the White House over establishing new oversight mechanisms.
Russia’s war may deprive world of three Ukrainian wheat harvests – minister
Pavel Polityuk – Reuters
Russia’s invasion of Ukraine will create a global wheat shortage for at least three seasons by keeping much of the Ukrainian crop from markets, pushing prices to record levels, Ukraine’s agriculture minister told Reuters. Ukraine, sometimes known as Europe’s bread basket, has had its maritime grain export routes blocked by Russia and faces a maelstrom of other problems, from mined wheat fields to a lack of grain storage space.
Exchanges, OTC and Clearing
Bursa Malaysia Derivatives Completes First Physical Delivery Of East Malaysia Crude Palm Oil Futures In Sarawak
Bursa Malaysia Derivatives Berhad (“Bursa Malaysia Derivatives” or “the Exchange”) has successfully completed the first physical delivery of its East Malaysia Crude Palm Oil Futures Contract (“FEPO”) in Sarawak last Friday, 10 June 2022.
Expansion of Listing Schedule for the Tuesday Weekly Options on E-mini Standard & Poor’s 500 Stock Price Index Futures and the Thursday Weekly Options on E-mini Standard & Poor’s 500 Stock Price Index Futures Contracts
Effective Sunday, July 17, 2022, for trade date Monday, July 18, 2022, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will expand the listing schedule for the Tuesday Weekly Options on E-mini Standard & Poor’s 500 Stock Price Index Futures and Thursday Weekly Options on E-mini Standard & Poor’s 500 Stock Price Index Futures contracts (the “Contracts”) for trading on the CME Globex electronic trading platform (“CME Globex”) and for submission of clearing via CME ClearPort, as more specifically described in the table below.
Coronavirus (COVID-19); Trading from emergency locations; New regulations in the Exchange Rules
As part of the measures against the spread of the coronavirus (COVID-19), Trading Participants have so far been permitted to participate in trading at Eurex Deutschland (Eurex) from outside the registered trading locations. Accordingly, exchange traders are not required to physically operate in the registered trading locations, but may trade from substitute or emergency locations. Not only business premises but also private addresses of the traders can be registered as substitute and emergency locations (home work).
Important information for production start
Deutsche Börse Group will launch Release 10.1 of the T7 trading system on 27 June 2022.
Euronext announces the acquisition of the technology businesses from Nexi’s capital markets activities
Euronext Group (“Euronext”) and Nexi S.p.A. (“Nexi”) announce the signing of the sale and purchase of the technology businesses currently powering MTS, Euronext’s leading fixed-income trading platform, and Euronext Securities Milan (formerly called Monte Titoli) by Nexi to Euronext (the “Transaction”).
Ad Hoc Review on Guarantee Fund
HKSCC has performed a review of the size of the Guarantee Fund and the contributions required from each Clearing Participant. The required size of the Guarantee Fund excluding the Dynamic Contribution Credit for all Clearing Participants after the re-calculation is HK$5,287 million. The amounts of Basic Contribution and Dynamic Contribution required from a Clearing Participant are re-calculated based on its share of the average Expected Uncollateralised Loss (EUL) of all Clearing Participants, for the period from 14 March 2022 to 13 Jun 2022 pursuant to Section 18.2.1 of the CCASS Operational Procedures.
About the procedure for trading in the Swiss franc
From June 14, 2022, trading in Swiss francs will be suspended on the Moscow Exchange currency market. The restrictions will apply to spot and swap instruments on the Swiss franc – Russian ruble (CHFRUB) and US dollar – Swiss franc (USDCHF) currency pairs in exchange and over-the-counter modes.
Musk’s $44bn Twitter deal is an M&A arb dream — or nightmare; Most arbs seem to think that discretion is the better part of valour
George Steer – FT
Elon Musk’s fitful attempt to take over Twitter is shaping up to be the event of the year for hedge funds that bet on takeover deals going through or collapsing. Musk’s marijuana-inspired $54.20-a-share offer has helped keep Twitter’s shares aloft, even as the rest of the technology complex has been taken to the woodshed in recent months. For example, shares in Snap, another advertising-dependent social media company, have fallen 66 per cent since Musk first announced he had acquired a big chunk of Twitter in early April. If Musk succeeds in walking away from the agreed $44bn acquisition — as he now seems to be trying — then the collapse in Twitter shares will be the stuff of legend.
Atos (ATO) Considers Spinoff of Cybersecurity Unit, CEO to Leave
Benoit Berthelot – Bloomberg
Atos SE shares tumbled the most on record after the company said Chief Executive Officer Rodolphe Belmer would resign just five months into his tenure, following a failure to agree on a potential restructuring that will lead to a breakup of the French IT business.
Atos is studying spinning off its Big Data and Cybersecurity business in a separate entity, while Belmer will leave before September, the company announced at a capital markets day on Tuesday. Appointed in late January this year, Belmer said he has “no choice but to resign” following this reorganization, according to the statement.
Questions to improve enterprise cybersecurity awareness
Chris Clements – Security Magazine
It is no secret to anyone in the cybersecurity industry that IT security leaders often have a completely different understanding of risk from those organizations they are seeking to protect.
Practitioners and those working in the industry have heard the earthshakingly large numbers, such as that cybercrime will be worth $10.5 trillion by 2025, according to a report by Cybersecurity Ventures. Security is no longer a sidelined concern for organizations, individuals or nation-states — it is essential.
Why Less Is More When It Comes To Cybersecurity
John Milburn – Forbes
From identity and access management (IAM) to zero trust and everything in between, solutions for every security challenge have hit the market in droves. With threats growing in sophistication and frequency, enterprises have adopted a “more is better” mentality. While this approach is justifiable, it’s resulted in Frankenstein’s monster of siloed tools instead of leaving enterprises better protected. The technologies that organizations have in place are only as valuable as their ability to protect and operate where the work is happening.
Staking and custody support for NEAR is now live on Copper; New support from Copper paves the way for greater institutional access to the NEAR ecosystem.
Due to (extremely) popular demand, we’re delighted to announce that Copper now offers custody and staking support for NEAR, the native asset of NEAR Protocol, the high-performance layer one blockchain.
Why are crypto lenders central to the digital asset market?; Lenders serve as bridge between retail investors and vast universe of DeFi projects
Joshua Oliver – FT
The decision by Celsius to temporarily prevent its clients from withdrawing funds has shone a light on a group of crypto lending platforms that have been an important engine powering the growth of cutting-edge industry projects. These lenders have served as a bridge between do-it-yourself retail investors and the vast universe of decentralised finance or DeFi projects seeking financing to help them grow. The core business model of lending platforms, which include BlockFi and Nexo, is similar to a consumer bank. The platforms take deposits from customers, and then lend that money out for an agreed period to mainly institutional borrowers, such as market makers. The lending platforms then take a cut of the interest on those loans, and pay the rest of the interest back to the depositors.
There’s Something Different About This Bitcoin Drawdown; Bitcoin is on the verge of wiping out its halving gain; A drop below $19,511 could damage the investment case
Eddie van der Walt – Bloomberg
Another year, another Bitcoin collapse. At least, that’s what it looks like from the outside. But look closer, and this time really does look different. On Monday Bitcoin tumbled as much as 17% to $22,603, the lowest in about 18 months, after the freezing of withdrawals by the Celsius lending platform added to an overall risk-off backdrop as traders raise bets on more aggressive Federal Reserve tightening. Bitcoin is about to fall back below the highs of its previous halving cycle peak. That’s something that’s never happened before and matters for the investment case in crypto. Every four years or so, the amount of crypto that miners receive for solving the algorithmic problems that allow them to record transactions on the blockchain is halved. Every time this has happened, it triggered a parabolic rally. Every successive peak was higher than the last, and when a new peak was put in place, prices never revisited the lows again.
TerraUSD Meltdown Spurs Investor Lawsuit Against Binance.US; Lawsuit comes amid SEC investigation of stablecoin’s marketing; Crypto exchange says it’s registered by FinCEN, suit meritless
Chris Dolmetsch – Bloomberg
Binance.US was sued by an investor in TerraUSD who claims the cryptocurrency exchange flouted federal regulations, with “disastrous consequences” for its customers when the stablecoin crashed last month. Jeffrey Lockhart filed the lawsuit on Monday in federal court in San Francisco against BAM Trading Services Inc., which does business as Binance.US, alleging the exchange failed to disclose that TerraUSD is a security and seeking to represent other investors. “Investors who purchased UST on Binance US were wiped out, learning quickly that, contrary to Binance’s U.S. advertisements, UST was not ‘safe,’ ‘stable,’ or ‘fiat-backed,'” Lockhart said in the suit, adding that Binance had taken down the ads, “effectively conceding that UST was none of those things.”
BlockFi, Crypto.com Slash Jobs as Market Meltdown Worries Swirl; BlockFi is cutting its headcount by 20%, Crypto.com by 5%; Other crypto companies like Gemini are also cutting staff
Hannah Miller and Yueqi Yang – Bloomberg
Two big names in crypto are cutting jobs as the digital currency market continues to spiral downward. Crypto lending platform BlockFi Inc. said Monday that it will reduce its headcount by about 20%, while digital currency exchange Crypto.com announced a 5% cut on Friday. The layoffs are yet another sign of trouble for the once white-hot crypto industry. Celsius, another top crypto lending platform, said Sunday that it was pausing withdrawals, swaps and transfers following weeks of speculation that it would be unable to pay out the significant returns promised on its products. Earlier this month, crypto exchange Gemini Trust Co. said it plans to slash 10% of its staff and Coinbase Global Inc. also announced that it is rescinding job offers and freezing hiring.
Singapore-based crypto exchange Crypto.com slashes 260 jobs amid industry downturn
Wan Ting Koh – Yahoo Finance
Singapore-based digital currency exchange Crypto.com has announced a 5 per cent reduction in its workforce amid a “crypto winter”. Crypto.com, which is headquartered in Singapore, said it would make the “difficult and necessary decisions to ensure continued and sustainable growth” by reducing around 260 positions in its workforce, said its chief executive officer Kris Marszalek via Twitter on 11 June. The company, founded in 2016, has around 4,000 employees, according to its website.
Crypto Investors Who Bought the Hype Are Getting Hit Hardest; Most cryptocurrency traders bought in the past year, surveys show. Bitcoin is now trading at its lowest level in 18 months.
Misyrlena Egkolfopoulou and Claire Ballentine – Bloomberg
Retail investors who rode the crypto hype train over the past year are getting hammered. Data show that the majority of crypto traders are relative newbies, making them the largest and hardest-hit group in Monday’s brutal bout of selling, which sent Bitcoin to its lowest level in 18 months. It’s now lost about two-thirds of its value since hitting a high of nearly $70,000 in November, and has significantly underperformed the S&P 500 Index.
NFTs plunge in value as crypto sells off
Jennifer Schonberger – Yahoo! Finance
NFT values are plunging alongside traditional crypto, with one expert saying this is just the latest development in the ongoing ‘crypto winter’ saga. The floor price, or lowest price NFT can be purchased, of so-called blue chip NFT Bored Ape Yacht Club has dropped 14% in the last 24 hours, while Mutant Ape’s floor price is down 16%, according to Nansen. Meanwhile, Otherdeed for Otherside’s floor price is off 20% in the last 24 hours. The slide comes as bitcoin and other cryptocurrencies shed 10% or more on Monday on increasing expectations of more aggressive Federal Reserve rate hikes and, according to one expert, serves as a reminder that retail investors should exercise caution before diving into volatile non-fungible tokens.
BlockFi to lay off 20% of employees, the latest crypto company scaling back headcount
Frances Yue – MarketWatch
Crypto lending platform BlockFi is slashing about 20% of its head count, as the fast-changing macroeconomic environment weighs on the company’s growth rate. BlockFi has about 850 employees, up from 150 at the end of 2020, Zac Prince, the company’s chief executive tweeted Monday. The crypto lender made the decision as bitcoin BTCUSD, -3.03% is down 65% from its all-time high in November, while other smaller coins fell even more.
World’s largest crypto exchange Binance says it’s hiring for more than 2,000 roles amid a multi-trillion dollar slump in the crypto market
Weilun Soon – Business Insider
The CEO of the world’s largest cryptocurrency exchange, Binance, said the company would be doubling down on hiring despite the “crypto winter.” “We have a very healthy war chest; we, in fact, are expanding hiring right now. If we are in a crypto winter, we will leverage that. We will use that to the max,” Binance founder and CEO Changpeng Zhao said via video at the crypto-focused Consensus 2022 this past weekend in Austin, Texas, according to Fortune.
Bitcoin Miners Are Flocking To Texas Despite Its Fragile Power Grid; The Lonestar state is flush with Bitcoin prospectors. Can the Texas power grid handle it?
Victoria Vergolina – Bloomberg
Have you ever heard the saying, “Everything’s Bigger in Texas”? That same ethos applies to mining Bitcoin in the Lonestar state. The state of Texas is flush with bitcoin prospectors. The City of Fort Worth even started a small mining operation out of City Hall. In this episode, Bloomberg reporter Mike Smith shares his reporting about what makes this state so attractive to crypto enthusiasts. And Lee Bratcher, head of the Texas Blockchain Council explains why he sees Texas as the perfect environment for Bitcoin believers.
MicroStrategy Risks Margin Call as Bitcoin Breaches $21,000
Joanna Ossinger – Bloomberg
MicroStrategy Inc. may need to post additional collateral for a loan as Bitcoin tests a key price range flagged by the company last month. The software firm that invested heavily in Bitcoin said on a conference call in May that if the token’s price dropped enough, it would need to add to the digital asset originally pledged for the $205 million loan it took out in March. The initial value committed was around $820 million at the time but has since fallen to about half that.
As Bitcoin and Other Cryptos Fall, Digital-Asset Firms Pump Brakes on Deals; The declines in the once-hot market may make life difficult for those seeking to position themselves for the next cycle
Gregory Zuckerman – WSJ
Plunging cryptocurrency prices are starting to throw a wrench into the plans of firms that deal in bitcoin and related areas, amplifying the impact of an already brutal market retreat. Heading into 2022, crypto deal making was hot as companies sought to stake positions in an evolving industry. So far this year, there have been 42 announced acquisitions of crypto-related companies, a pace that would exceed last year’s 60 deals, according to Dealogic.
Meta Expands Instagram Parental Controls and Brings Supervision to the Metaverse; For parents who wish Instagram had a closing time, the app’s parental controls now let them set off-limits hours for their teens. Supervision for Quest VR headsets is also here
Shara Tibken – WSJ
Meta Platforms Inc. on Tuesday expanded its Instagram parental controls and introduced its first virtual-reality supervision tools, part of its effort to make its services safer for teens. The new tools for the photo-sharing social network let parents set limits on what hours their teens can use Instagram. And inside the app, teens who dwell on certain content will be redirected.
RealEstate.Exchange Token not Categorized as Security
German regulator BaFin classifies the RealEstate.Exchange (RE.X) token BRICK as a non-security in new statement. This enables DigiShares owned real estate exchange RE.X to facilitate network effects, payments, and yield generation of real estate investments in a fully compliant manner within their ecosystem. Today the Legal Counsel of RE.X, Volodymyr Havrylyuk-Yensen, announced that RealEstate.Exchange completed the review of their planned token sale, by the German Federal Financial Supervisory Authority (BaFin), and in terms of regulation RE.X is on track with their native token $BRICK now classified as a utility token.
Trump Scammed Supporters Out of $250 Million for Nonexistent Fraud Fund; Supporters who thought they were donating to “election integrity” instead saw some of their money funneled to Trump hotels
Ryan Bort – Rolling Stone
“Not only was there the Big Lie, there was the Big Ripoff,” said Rep. Zoe Lofgren (D-Calif.) near the end of the Jan. 6 committee’s second hearing in laying out how the Trump campaign scammed money from supporters over false claims of election fraud. The Trump campaign sent “millions” of emails to Trump supporters about how they needed to “step up” to protect election integrity, according to the Jan. 6 committee. The money would go to the so-called the “Official Election Defense Fund” — which doesn’t appear to have actually existed, according to testimony. The fund — which, again, did not actually exist — raised $250 million, most of which did not go to election litigation, but to Trump’s newly created Save America PAC. The PAC then made contributions to Mark Meadows’ charity, to a conservative organization employing former Trump staffers, to the Trump Hotel Collection, and to the company that organized the rally that preceded the attack on the Capitol last Jan. 6.
US senator seeks answers from HSBC over banker’s suspension; Republican asks whether British bank was pressured over response to climate remarks
Patrick Temple-West – FT
A Republican US senator has questioned whether HSBC faced pressure to suspend a senior executive who downplayed the risks of climate change. Stuart Kirk, global head of responsible investing at HSBC’s asset management division, was suspended by the bank after he told a Financial Times Moral Money conference in London last month that investors need not worry about climate risk and that “there’s always some nut job telling me about the end of the world”. The remarks were broadly approved by HSBC in advance, the FT has previously reported. In a letter to HSBC chief executive Noel Quinn released on Monday, Steve Daines, the Montana senator, said he was “concerned that this episode may involve breaches of US law. Based on the company’s prior approval of Kirk’s remarks, it appears to many that Kirk’s suspension was in response to pressure on HSBC from outside parties that may be legally prohibited from influencing the management of your company,” Daines said.
Texas’s Wall Street Showdown Over Gun Laws Costs Taxpayers Hundreds of Millions
Amanda Albright and Danielle Moran – Bloomberg
Texas taxpayers are footing the bill for the state’s war with Wall Street over guns. The state’s municipal borrowers have been hit with as much as $532 million of extra debt costs because of a new GOP law that’s led some banks to step back from Texas’s bond market. That’s the conclusion of a new paper by Daniel Garrett, a University of Pennsylvania professor, and Ivan Ivanov, a principal economist at the Federal Reserve. The researchers examined sales in Texas’s $50-billion-a-year municipal-bond market after a law took effect in September that targeted banks for their gun policies. The legislation, known as Senate Bill 19, bars governments from entering into contracts with companies that “discriminate” against firearms entities. It has caused banks including Bank of America Corp. and JPMorgan Chase & Co., among the biggest underwriters of state and city debt nationwide, to stop most public-finance business in the state.
Lawmakers Make Bipartisan Push for New Government Powers to Block U.S. Investments in China; Draft measure in Congress intends to limit U.S. involvement in China’s technology sector, rebuild supply chains
Kate O’Keeffe, Natalie Andrews, Heather Somerville – WSJ
Congress is pressing ahead with legislation that could rewrite the rules for American companies investing abroad, proposing the screening of investments in countries like China seen as adversaries to protect U.S. technologies and rebuild critical supply chains. The measure, part of broader legislation to bolster U.S. competitiveness with China, would require American companies and investors to disclose certain new outbound investments and authorize the executive branch to form a new interagency panel to review and block investments on national security grounds, according to congressional aides and a revised draft of the bill reviewed Monday by The Wall Street Journal.
Schwab to pay $187 million after SEC says robo-advisers misled investors; The brokerage giant’s automated advisory program held large portions of clients’ funds in cash even though they could have fared better on low-risk investments, the regulator says
Jacob Bogage – The Washington Post
Brokerage giant Charles Schwab will pay $187 million to resolve charges from federal regulators that its robo-adviser did not tell clients they would have been better off investing a larger share of their cash in funds rather than tie it up in Schwab’s bank. The Securities and Exchange Commission accused Schwab — which controls $7.28 trillion in client assets — of developing automated advisory products that recommended investors keep 6 percent to 29.4 percent of their holdings in cash, rather than invest them in stocks or other securities. Investors stood to gain significant income if that money had been invested; instead Schwab used the cash to issue loans and collect interest on those funds.
The ESG crackdown is coming for Goldman Sachs
Tim McDonnell – Quartz
Regulators in the US and Europe are cracking down on greenwashing by financial firms, and on June 10 targeted their biggest potential perpetrator to date: Goldman Sachs. In response to investor interest in climate-friendly products, banks and asset managers have been racing to slap “ESG” labels on their offerings, which ostensibly indicate an investment fund is composed of shares in companies with strong environmental, social, and governance credentials. But the absence of regulations around these labels means that firms like S&P and MSCI established their own ratings, using murky and sometimes dubious methodologies. As a result, many “ESG” funds still hold major emitters like ExxonMobil, and are only marginally less carbon-intensive than the market average.
SEC Charges Former Employee of Online Gambling Company with Insider Trading; Software Engineer Traded, Tipped Friend of Company’s Acquisition Plans
The Securities and Exchange Commission today announced insider trading charges against David Roda, a former software engineer at Penn National Gaming’s subsidiary Penn Interactive Ventures, in connection with the parent company’s $2 billion acquisition of Toronto-based Score Media and Gaming, Inc. The SEC’s complaint, filed in federal district court in Philadelphia, alleges that, while employed at Penn Interactive, which provides online and mobile gambling experiences for Penn National, Roda was given confidential information about Penn National’s interest in acquiring Score Media along with admonitions not to trade on that information. In breach of his duties, Roda purchased 500 out-of-the-money call options on Score Media in the weeks and days leading up to the announcement of the acquisition. Additionally, Roda tipped his longtime friend, Andrew Larkin, also charged by the SEC, who then purchased 375 Score Media shares. According to the SEC’s complaint, Score Media’s stock price increased nearly 80 percent after Penn National and Score Media publicly announced their deal, following which Roda and Larkin sold their holdings for unlawful profits of $560,762 and $5,602, respectively.
ASIC remakes relief on PDSs, superannuation dashboards and FSGs
ASIC has remade and combined seven legislative instruments relating to specific financial services disclosure requirements. These instruments were generally due to automatically repeal or cease in the next two years if not remade.
How to avoid ‘greenwashing’ for superannuation and managed funds
ASIC has released an information sheet to help issuers avoid ‘greenwashing’ when offering or promoting sustainability-related products. The publication will also assist issuers to provide investors with the information they should have to make informed decisions.
ESAS Propose Extending Temporary Exemptions Regime For Intragroup Contracts During Emir Review
The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) today published a final report with draft regulatory technical standards (RTS) proposing to amend the Commission Delegated Regulation on the risk mitigation techniques for over-the-counter (OTC) derivatives not cleared by a Central Clearing Counterparty (CCP) under the European Market Infrastructure Regulation (EMIR).
Information for customers of unauthorised firm BubbleXT
On 6 October 2020, the FCA published a Warning against BubbleXT, a firm we believe may be providing financial services or products in the UK without our authorisation.
FCA to strengthen protection of access to banking services
Banks and building societies will need to assess the impact of changes to their services, for example shorter branch opening times, under updated guidance proposed by the Financial Conduct Authority (FCA).
Summary of Results of the FSA-sponsored International Symposium; “Transition to Net-Zero: The Role of Finance and Pathway toward a Sustainable Future”
Climate change is an urgent issue that must be resolved globally. In order to achieve carbon neutrality, all industries need to make a transition that contributes to achieving the goals of the Paris Agreement. It is also important to properly evaluate these efforts and encourage the mobilization of capital.
MAS, IFC and UNDP Launch Global Programme for MSME Financial Literacy and Empowerment
Monetary Authority of Singapore
The Monetary Authority of Singapore (MAS), in partnership with the International Finance Corporation (IFC) and the United Nations Development Programme (UNDP), today launched an open financial education and action programme for micro, small and medium enterprises (MSMEs) in Asia and Africa. Known as the SME Financial Empowerment (SFE) , this programme aims to help MSMEs build foundational digital financial literacy skills, and gain a good understanding of cross-border financial services relevant to MSMEs, to help them thrive in the post-pandemic digital economy. The SFE was rolled out with market partners in Asia and Africa, starting with Ghana, India, the Philippines, and Singapore, and will benefit more than 400,000 MSMEs across both regions.
Investing and Trading
Sell-Everything Markets Are Serving Up Healthier Doses of Panic; Stocks to have hard time rebounding without VIX at 40: Emanuel; S&P 500 sinks almost 9% in three days, enters bear market
Vildana Hajric – Bloomberg
With stocks, bonds and crypto plummeting, inflation out of control and months of Federal Reserve tightening to come, it’s starting to feel like everything that can go wrong in financial markets is. Panic is in the air. For traders looking for a silver lining, that’s about the best that can be said. The S&P 500 has fallen nearly 9% in three days, a bruising stretch that has left virtually nothing unscathed, including energy shares, the year’s best-performing group. Selling in bonds has accelerated, with the yield on 10-year Treasuries touching the highest since 2011, and two-year rates at the highest since the financial crisis. The cost to protect investment-grade debt from default soared and an ETF tracking that sector plunged to the lowest since March 2020.
Wall Street Sours on S&P as Margin Woes Rattle Corporate America; Rising margin pressures are a ‘risk to earnings’: BlackRock; Equity valuations are ‘far from depressed’: Goldman’s Kostin
Farah Elbahrawy and Jess Menton – Bloomberg
Wall Street is afraid to buy the dip this time around. Even amid this latest leg of the stock market selloff, equities still aren’t fully reflecting the risks facing corporate earnings, according to strategists at Morgan Stanley, Goldman Sachs Group Inc. and BlackRock Investment Institute. Weaker consumer demand and aggressive tightening by the Federal Reserve in an attempt to fight the hottest US inflation in four decades can do further damage to corporate bottom lines and, in turn, share prices. “We’re not buying the stock dip because valuations haven’t really improved, there’s a risk of Fed overtightening, and profit margin pressures are mounting,” BlackRock strategists, led by Wei Li, wrote in a note to clients Monday.
Wall Street Floats 100 Basis-Point Fed Hike as Inflation Stings; Barclays, Jefferies raise forecast to 75bps for June meeting; Powell could evoke a ‘Volcker moment’ to combat inflation
Emily Graffeo, Amelia Pollard, and Edward Bolingbroke – Bloomberg
Pockets of Wall Street are raising the possibility that the Federal Reserve could go to extreme lengths on Wednesday in an attempt to control the hottest US inflation in four decades. While the consensus expectation for the US central bank’s interest rate increase at this week’s meeting is a half-percentage point, higher than expected consumer price index data last Friday prompted two banks, Barclays and Jefferies, to revise their calls for the potential of 75 basis points. Now, some are suggesting a full-percentage hike is on the table.
The investor who spotted Madoff’s fraud early has a whole new worry
Steve Goldstein – MarketWatch
Edward Thorp is an investing and mathematical legend — from spotting Bernie Madoff’s fraud as well as identifying Warren Buffett’s investing acumen early, to coming up with blackjack game theory. It was a sobering if measured reply — the inductee to the Blackjack Hall of Fame said he was reading about what’s going on with American society. “You could have the choices I just described — a devolution, evolution or revolution,” Thorp said.
London’s IPO Market Hasn’t Been This Slow in 13 Years: Chart
Kat Van Hoof – Bloomberg
The value of initial public offerings in London has fallen to the lowest since the global financial crisis, data compiled by Bloomberg show. Poor returns from recent listings, volatile markets and an intensifying cost-of-living crisis are all outweighing a charm offensive by Boris Johnson’s government to attract more innovative businesses post-Brexit. The outlook is equally bleak, as an unexpected contraction of the UK economy in April further dents investor appetite.
Market Rout Evokes Memories of Trading Before Lehman Blowup; Treasury yields spiked, stocks plunged and crypto went haywire; ‘I was glued to the screen,’ LPL Financial’s Krosby says
Ye Xie, Isabelle Lee, Amelia Pollard, and Peyton Forte – Bloomberg
Quincy Krosby couldn’t wait for Monday’s trading session to be over. “I was glued to the screen,” LPL Financial’s chief equity strategist said in an interview. It was just one of those days with losses so gigantic that solely looking at stocks wasn’t enough. Her eyes strayed to bonds, to credit default swaps and elsewhere as she tried to figure out how bad things were and might get.
Harold Hamm launches bid to take Continental Resources private; Energy billionaire wants to buy the 17% of Continental that his family does not already own
Mark Wembridge – FT
Energy billionaire Harold Hamm has launched a takeover bid for Continental Resources, in a move that would bring the US oil producer under the full ownership of its founder. Hamm, one of the main figures in the US shale revolution of the past two decades, on Tuesday launched an all-cash offer of $70 a share for the 17 per cent of Continental that his family does not already own.
Environmental, Social and Corporate Governance
Masks Come Off as Thousands Grab Face Time at Canada Mine Expo
James Attwood – Bloomberg
As China lockdowns rekindle concerns over metals demand, mining leaders on the other side of the world shed masks and rubbed shoulders at one of the industry’s biggest annual gatherings. Almost all of the thousands of executives, suppliers, investment bankers and government officials that poured into the Prospectors & Developers Association of Canada mining conference on Monday were showing their faces.
Offsets Watchdog Aiming for Clarity on Net Zero Risks Creating Confusion; A market initiative setup to check the credibility of net-zero claims tied to use of carbon credits might end up encouraging greenwashing in the unregulated offset market.
Natasha White and Akshat Rathi – Bloomberg
Are long-standing “carbon neutral” claims by Google and others credible? Hard scientific scrutiny is likely to say “no,” but a new claims watchdog could confusingly say “yes.”
ESG’s legal showdown: ‘There’s nothing to suggest DWS is a one off’; The boom in ESG investing is drawing regulatory scrutiny on both sides of the Atlantic
Adrienne Klasa, Patrick Temple-West, Stefania Palma and Joe Miller – FT
When about 50 German police officers raided the Frankfurt office of fund manager DWS last month as part of an investigation into greenwashing, the move marked the beginning of what many believe will be a long legal reckoning for the asset management industry. Interest in sustainable investing has taken off in recent years, with assets managed in ESG-labelled funds globally ballooning to some $2.7tn, but the industry has also been hit by claims its green credentials are inflated.
Power Company NextEra Plans to Cut Carbon Emissions to Close to Nothing by 2045; In an expensive gamble, owner of Florida Power & Light plans to go ‘real zero’ rather than ‘net zero’
Katherine Blunt – WSJ
While many companies have pledged to reduce greenhouse-gas emissions with “net zero” plans that involve buying carbon credits, America’s largest power company is attempting something quite different: “real zero.”
Deutsche Bank investors can sue in U.S. over Epstein, Russian oligarch ties
Jonathan Stempel – Reuters
A U.S. judge on Monday said shareholders can sue Deutsche Bank AG for allegedly hiding shortfalls in its internal controls while doing business with risky, ultra-rich clients like the sex offender Jeffrey Epstein and Russian oligarchs. U.S. District Judge Jed Rakoff in Manhattan said shareholders may try to prove in their proposed class action that the German bank was aware its know-your-customer and anti-money laundering controls were ineffective, and that its share price fell as the truth became known. In a 30-page decision, Rakoff said the complaint described specific processes that Deutsche Bank knowingly undermined through an “unwritten but pervasive practice” of exempting rich, politically connected clients from normal internal scrutiny.
JPMorgan, Goldman Halt Russian Debt Trading After US Tightens Ban; Firms’ continued trading had drawn the ire of Elizabeth Warren; Retreat follows surprise update in guidance from US Treasury
Laura Benitez and Sridhar Natarajan – Bloomberg
Two giant Wall Street banks are withdrawing from handling trades of Russian debt after the Biden administration’s surprise announcement last week it’s banning US investors from scooping up such assets. JPMorgan Chase & Co. and Goldman Sachs Group Inc. were still matching sellers who wanted out of the debts with interested buyers this month, according to market professionals. Now, JPMorgan is pulling back after the US Treasury’s Office of Foreign Assets Control said investors in the U.S. aren’t allowed to acquire them, a person with knowledge of the decision said. A spokesperson for Goldman said it’s halting such transactions, too. “Consistent with the updated OFAC guidance and Goldman Sachs’ wind-down of activities in relation to Russia, the firm will no longer be conducting certain client-related market making activities regarding Russian entities,” the bank said in the statement.
FDA Advisers to Consider Moderna’s Covid-19 Vaccine for Ages 6 to 17; Agency’s authorization could come soon if panel on Tuesday recommends expanding use of shot to children
Peter Loftus – WSJ
A panel of advisers to the Food and Drug Administration is set to meet Tuesday to consider whether use of Moderna Inc.’s Covid-19 vaccine should be expanded to include children ages 6 through 17. The advisory committee is expected to vote Tuesday afternoon on whether the benefits of vaccinating children in this age group outweigh the risks. The FDA will consider the vote in making a final decision on whether to clear the vaccine for use in children 6 years and older.
Diseases suppressed during Covid are coming back in new and peculiar ways
Karen Gilchrist – CNBC
The Covid-19 pandemic has abated in much of the world and, with it, many of the social restrictions implemented to curb its spread, as people have been eager to return to pre-lockdown life. But in its place have emerged a series of viruses behaving in new and peculiar ways. Take seasonal influenza, more commonly known as the flu. The 2020 and 2021 U.S. winter flu seasons were some of the mildest on record both in terms of deaths and hospitalizations. Yet cases ticked up in February and climbed further into the spring and summer as Covid restrictions were stripped back.
Millennials Hunting Returns Drive Risk-Hungry Investing in India; Sheer number of new investors sets India apart in global trend; Regulators watch as fintechs vow high returns amid inflation
Subhadip Sircar, Divya Patil, and Alex Gabriel Simon Thattil – Bloomberg
An impatient Indian investor class, largely driven by millennials, is leaping into riskier investments from peer-to-peer lending to cryptocurrencies in the hope of boosting returns rocked by one of the worst inflation rates in Asia. The sheer number of individuals pouring money into new and lightly controlled assets sets India apart, after the pandemic fueled the rise of retail investors globally and left many exposed to the potential for large losses. Others have been luckier and wracked up wins while racing to buy a first car or apartment. In Mumbai, Pratik Vora, 28, who works in finance, is shunning the plain vanilla saving deposits that were popular with Indians for generations. Instead, he’s investing in equities and cryptocurrencies. A self-taught investor, Vora started with stocks in 2015 and ventured into crypto investing in 2019 to buy a bigger house. He only narrowly escaped the giant plunge in cryptocurrencies this year after earlier withdrawing from them to avoid new taxes in India, yet he remains undeterred.
China’s Chipmaking Power Grows Despite US Effort to Counter It; A flood of machinery heading to China draws attention as the US struggles to bolster its domestic chip industry.
Jenny Leonard, Ian King, and Debby Wu – Bloomberg
China’s semiconductor industry is showing signs of flourishing even in the face of Biden administration efforts to counter its growth, raising alarm bells in Washington. Chinese orders for chip-manufacturing equipment from overseas suppliers rose 58% in 2021, making it the biggest market for those products for a second year running, according to data provided by industry body Semi. While those figures appeared in April, the flood of machinery headed to China is now drawing more attention — especially as a legislative push to bolster the US chip industry with investments and incentives falters. The US Commerce Department, meanwhile, appears unwilling to crack down harder on Beijing, irking critics.
Hong Kong fund managers plead with officials to reopen border; Lobby group representing $52tn in assets says city could ‘be put in an uncompetitive position’
Chan Ho-him and Primrose Riordan – FT
Hong Kong’s fund managers have called on the government to reopen the city’s borders and warned of a “permanent” loss of talent even as Covid-19 cases rose in the Chinese territory. Sally Wong, chief executive of the Hong Kong Investment Funds Association, which represents global and local groups that oversee more than $52tn in assets under management, made the plea as the financial hub’s outgoing leader Carrie Lam said on Tuesday that she would “not budge” in the face of industry pressure.
Chinese banks cut investment banking staff in Hong Kong during IPO drought; A flood of expected listings diverted from New York has yet to materialise
Cheng Leng – FT
Several big Chinese investment banks in Hong Kong including Haitong International and China Merchants Bank International have reduced staffing in their investment and equity capital divisions to cut costs during the city’s drought of initial public offerings, according to bankers.
BOJ ramps up bond buying to defend yield cap, undermining jawboning
Tetsushi Kajimoto, Daniel Leussink – Reuters
The Bank of Japan ramped up bond buying on Tuesday as its yield cap came under renewed pressure from rising global interest rates, highlighting its difficulty in remaining a dovish outlier in a global wave of monetary tightening.
European Gas Jumps After Technical Issues Curb Russian Flows; Dutch front-month futures gain as much as 13% on Tuesday; Russia’s Gazprom says Nord Stream flows to be cut by 40%
Verity Ratcliffe and Vanessa Dezem – Bloomberg
European natural gas surged after Russia’s Gazprom PJSC said technical issues could reduce flows through an important link to Germany by 40%. Gas jumped as much as 13% as Gazprom said supplies via the Nord Stream pipeline, the biggest link to the European Union, will be limited to as much as 100 million cubic meters per day. One of the reasons is that Siemens AG failed to return on time some equipment it was repairing for the Portovaya pumping station in the Baltic Sea, the Russian producer said on Tuesday.
JPMorgan Wins $1.7 Billion UK Trial Over Nigeria Transfers; Judge says Nigerian couldn’t show it had been defrauded; With hindsight, bank may have done things differently: judge
Jonathan Browning – Bloomberg
JPMorgan Chase & Co. won a $1.7 billion London court battle with the government of Nigeria over its role in the transfers of hundreds of millions of dollars to a former oil minister accused of corruption. Nigeria’s government said a contract awarded by one of its predecessors to explore the deep waters off the Gulf of Guinea to Dan Etete was corrupt. But Judge Sara Cockerill ruled Tuesday the Nigerian government couldn’t show that it had been defrauded.
Some European Factories, Long Dependent on Cheap Russian Energy, Are Shutting Down; Industrial energy costs are soaring in the wake of Russia’s war on Ukraine, hobbling European manufacturers’ ability to compete globally
Matthew Dalton – WSJ
For decades, European industry relied on Russia to supply low-cost oil and natural gas that kept the continent’s factories humming. Now Europe’s industrial energy costs are soaring in the wake of Russia’s war on Ukraine, hobbling manufacturers’ ability to compete in the global marketplace. Factories are scrambling to find alternatives to Russian energy under threat that Moscow could abruptly turn off the gas spigot, bringing production to a halt.
Canada Must Overcome Hurdles in ‘Urgent’ Critical Minerals Push; Natural resources minister notes opportunities at mining event; Canada has deposits in 31 critical minerals, Wilkinson says
Doug Alexander – Bloomberg
The global clean-energy transition offers metals-rich Canada a “generational economic opportunity,” as long as the mining industry can get past some key hurdles, Natural Resources Minister Jonathan Wilkinson said. Wilkinson highlighted Canada’s resource strengths and stability at Monday’s opening ceremonies of the Prospectors & Developers Association of Canada conference. Canada produces more than 60 minerals and metals, has more than 200 mines and is home to almost half of the world’s publicly listed mining and minerals exploration companies. Notably, he said, the country holds deposits of 31 critical minerals that will be “in greatest demand” as the world shifts to cleaner energy sources.
Red-Hot Lithium Boom Pits Wall Street Against the Wonks; A bearish forecast from Goldman set off a backlash among industry experts.
Mark Burton and Annie Lee – Bloomberg
There’s a fight brewing in the lithium market, after a controversial forecast from Goldman Sachs Group Inc. analysts set off a backlash among some of the industry’s most prominent experts. Lithium is a vital component of electric-vehicle batteries, which means the outlook for supply, demand and pricing is increasingly consequential. For years, a small group of niche consultants has dominated the conversation in a commodity that some say will become as important as oil in the coming century. Now, with prices surging and demand booming, they’re increasingly sharing the stage with Wall Street titans like Goldman. The bank made headlines when it warned that a searing rally in lithium will go into reverse this year as supply from unconventional new sources overwhelms demand. Credit Suisse Group AG also joined in predicting a correction. But specialists including London-based Benchmark Mineral Intelligence are loudly pushing back.