| May 11, 2022 | "Irreverent, but never irrelevant" | | |  | John Lothian
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Hits & Takes
John Lothian & JLN Staff
Today's lead story in JLN via the Financial Times is penned by none other than former FT and now freelance journalist Jeremy Grant. The story is part of a Special Report by the FT on Risk Management. Jeremy's story concludes with a quote from FIA's Walt Lukken about a pink elephant. Sorry, I mean a black swan. The stories for the report are:
- Ukraine war reveals 'black swan' danger; Finance is being weaponised by the conflict — placing risk managers in the crosshairs of geopolitical tensions by Jeremy Grant - FT
- Credit Suisse admits lax approach led to scandals; Report admits 'fundamental failure' of bank's management and a 'lackadaisical attitude' to risk by Owen Walker - FT
- Firms wrestle with realities of new remote workplaces; Keeping remote staff engaged and switched on requires a deft touch by Jane Wild - FT
- Banks face grilling over carbon emissions; Financial watchdogs are demanding greater transparency from lenders over the environmental impact of their clients by Patrick Temple-West - FT
- How risk managers can survive a 'perfect storm'; It is vital to strengthen operational resilience and crisis management frameworks by Evgueni Ivantsov - FT
- The sun starts to set on Wild West days of crypto; Concerns over money laundering and market crashes are growing as more consumers bet on digital assets by Eva Szalay - FT
The OIC conference kicked off Tuesday in San Antonio, Texas with a good turnout of industry players. The weather is hot, but not unbearable so far. The venue for the conference is spectacular. So far we have logged video interviews with Cboe's Henry Schwartz, T3's Simon Ho and Matrix Execution Head of Strategy Joe Corona. With Joe we shot both an Industry Leaders interview about Matrix Executions and an Open Outcry Traders History Project interview. Joe and his then-partner Bruce Lawrence hired me at their trading firm, Meltdown Trading, in 1989 as an off the floor futures trader. It is an interview you will not want to miss, though it does not include any of the not-safe-for-work stories Joe kept to himself. Maybe he has plans for another book?
CFTC Chairman Rostin Behnam gave a keynote address to the 36th Annual General Meeting of ISDA at the Hotel Riu Plaza España in Madrid, Spain today. The title of the speech was "Shared Positives," which I hope does not involve swapping any viruses.
The U.S. tech industry is warning that more remote-work jobs are headed out of the U.S because of worker shortages and limited immigration into the U.S., the Wall Street Journal reported. The story says remote work tech jobs have jumped by 420% between January 2020 and last month, growth that was intensified by the pandemic. This is not off-shoring of service centers. This is sending jobs that formerly would have been U.S.-centric to anywhere in the world where a reliable workforce can be found.
It is good to know we are not the only ones to make an occasional editing error, though ours are far less costly than the one JP Morgan made. Several news outlets reported that JP Morgan's call that China was "uninvestable" was published in error. The bank cut the description from most research reports before publication. The error contributed to $200 billion in losses from U.S. and Asian markets and caused one Chinese technology company to take JPM down a notch in an underwriting role for an upcoming IPO.
Former U.S. Vice President Mike Pence doesn't like ESG investing and said so in a speech in Houston saying ESG elevates "left-wing goals" and that employee pension funds should "rein in" the use of such principles in investing, Bloomberg reported.
Pence, who is known as a religious conservative, is a potential candidate for the 2024 Republican nomination for president. Lets just say that there are different agendas at work here and the prospect of a presidential campaign can skew things even more.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
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FIA Tech Talks about Driving Standardization, Improving Collaboration as Keys to Improved Industry Efficiencies
JohnLothianNews.com
FIA Tech spent time in 2020 focused on improving collaboration and bridging gaps amid an unprecedented time in the markets. Then in 2021 it raised a sizable amount of cash based on the role it played in 2020.
Its current focus is on driving standards and best practices. It is also trying to improve collaboration.
Watch the video »
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FIA's International Derivatives Expo is returning to The Brewery in London this coming 6-8 June. Standing still is not an option in today's evolving cleared derivatives environment. Without adapting to new products, processes, technologies and regulations, your business won't meet the needs of tomorrow's industry. We're bringing together industry leaders, vendors and policymakers to discuss what's "now" in derivatives, and what lies ahead. Sign up here.
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The rich have always craved status symbols, from peerages to spaceships; Burnishing your credentials is much harder today, with deference all but gone and the glare of social media omnipresent
Rhymer Rigby - FT
Can class be bought? A spate of financial controversies involving the newly rich and the British royal family would suggest some still think so — and believe a cheque to charity or a loan write-off is a price worth paying for social elevation. Or just a wedding invitation. It speaks to a longstanding informal arrangement between the self-made and the aristocracy: We will bring the cash, you provide the cachet.
/jlne.ws/3M5BXM0
****** A good name is what everyone seeks in different ways.~JJL
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Coinbase trading volumes plummet as 'crypto winter' sets in; Exchange's shares fall after disappointing earnings and bleak outlook
Hannah Murphy - FT
Coinbase's trading volumes fell more than 40 per cent in the first quarter, as worse than expected earnings and a bleak outlook underscored the fallout from the crypto bear market. Shares in the largest US cryptocurrency exchange dropped more than 15 per cent in after-hours trading after the company reported net losses of $430mn, far greater than the $47mn expected by Wall Street analysts. Revenues, the majority of which come from trading fees, fell 35 per cent year over year to $1.2bn, missing analysts' expectations of $1.5bn.
/jlne.ws/3wm7x1g
****** Amid the bleak crypto winter is one of my favorite songs.~JJL
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Musk says he would reverse Trump's Twitter ban, calling it 'foolish' and 'morally wrong'; Tesla CEO takes aim at social media platform for 'strong left bias', blaming its San Francisco headquarters
Richard Waters - FT
Elon Musk has said he would reverse Donald Trump's ban from Twitter, accusing the social media company of leftwing bias that had aggravated political divisions in the US. "I think it was a morally bad decision, and foolish in the extreme," Musk said of the lifetime ban of Trump, which was imposed soon after a mob of the former president's supporters invaded the US Capitol on January 6 last year. Musk has agreed to buy the social media platform for roughly $44bn. "I would reverse the permaban [on Trump]," he added. "Obviously I don't own Twitter yet, so this is not a thing that will definitely happen."
/jlne.ws/3wgyQdy
***** Twitter has a lot of experience running Twitter. I think Musk will find social media with few rules to be problematic. Although it would be interesting to watch him try. ~JB
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Money Managers Are Swooping In to Fill Manhattan's Office Void; Firms want upgraded space to lure growing staff to buildings; Demand puts tiny dent in NYC's supply of available space
Natalie Wong and Hema Parmar - Bloomberg
Hedge funds and investment firms are coming out of the pandemic embracing an out-of-favor asset: Manhattan office space. Blackstone Inc. and Citadel are on the hunt for new locations. Boston's Wellington Management, a $1.3 trillion asset manager, last month signed a letter of intent for its first New York office. Hedge fund Verition Fund Management recently relocated on Park Avenue in a massive expansion, while Sculptor Capital Management is scoping out space.
/jlne.ws/3w2rewc
***** Somewhere, at some price, there is a tenant.~JJL
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Tuesday's Top Three
Our top story Tuesday was CME shareholders: CEO got paid too much, from Crain's Chicago Business, about criticism of the $23 million package for Terry Duffy. Second was Flow Traders Executive Leaves After Swedish Ski Trip Incidents, from Bloomberg, about Thomas Wolff, who was chief technology officer at the Amsterdam-based company. Third was MIAX-Parent Miami International Holdings Confidentially Files for U.S. IPO, from Reuters.
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MarketsWiki Stats
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| All MarketsWiki Sponsors» | | | | | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
Publisher | | | Sarah Rudolph
Editor-in-Chief
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| Lead Stories | Ukraine war reveals 'black swan' danger; Finance is being weaponised by the conflict — placing risk managers in the crosshairs of geopolitical tensions
Jeremy Grant - FT
Financial institutions have been grappling with conflict-related sanctions and resultant risks for decades, including those that emerged in the wake of the 2001 terrorist attacks on the US and Moscow's annexation of Crimea in 2014. Yet the economic restrictions that the US, acting with the G7 and the EU, has rolled out in response to Russia's invasion of Ukraine are unprecedented in scale and scope. They represent "a new kind of economic statecraft with the power to inflict damage that rivals military might", as US president Joe Biden put it, in a recent speech in Warsaw.
/jlne.ws/3w3udEL
Traders Prepare to Ditch Moscow Ruble Rate as Market Split Grows; Trade group suggests use of offshore rate in derivatives; Proposal came amid split in Russian local, foreign FX market
Sydney Maki and Libby Cherry - Bloomberg
Currency traders are preparing to jettison Russia's local exchange rate for the ruble on some transactions, a sign of the growing split between the country's domestic currency market and its international counterpart since the outbreak of the war in Ukraine. The Trade Association for the Emerging Markets is recommending that, starting on June 6, traders use pricing data from WM/Refinitiv as a primary settlement rate option for some derivative contracts, according to an April 20 statement. That could come as a relief to traders who had questioned the reliability of the ruble's foreign-exchange rate since Russia was slapped with wide-reaching sanctions and imposed capital controls after the invasion.
/jlne.ws/3wbyXs5
Microstrategy's looming margin call; Sleepwalking over the crypto precipice
George Steer - FT
Microstrategy says its business model is built around two core strategies: buying and holding vast, vast quantities of bitcoin and developing software, in that order. It's an excellent plan when the price of bitcoin is on the up. Chief executive Michael Saylor, lord of cyber hornets, sees no reason why a single token (of which his company owns at least 129,218, valued in total at just over $4.1bn at pixel time) won't eventually be worth more than $10mn and "keep going up forever" after that. Alas, the world's biggest digital asset by market cap has plunged more than 14 per cent in the past five days and is currently hovering around Microstrategy's average in-price of $30,700.
/jlne.ws/3N4HOBo
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NASA Is Building Moon Rockets, Maybe for the Last Time
Space Launch System rocket program has faced delays and rising costs as the agency and contractors work toward launches
Micah Maidenberg - WSJ
NASA's costly rocket program could be the last time the agency mounts such an effort, according to some former NASA officials and space industry executives, as private space companies attempt to build cheaper vehicles more quickly.
/on.wsj.com/3FyCDHk
Regulator to force UK banks to offer scam victims compensation; Announcement comes alongside government commitment to ensuring access to cash
Siddharth Venkataramakrishnan - FT
The UK's regulator for payment services is to gain the power to force banks to offer compensation to blameless victims of "push payment" scams, highlighting "disparities" in the current voluntary approach. The proposed measure was announced on Tuesday as part of the financial services and markets bill, alongside a commitment to ensuring continued access to cash withdrawal and deposits. "Scam victims currently face a reimbursement lottery depending on who they bank with, so the regulator must now be ready to ensure firms treat their customers consistently and fairly, with tough enforcement for those that break the rules," said Rocio Concha, director of policy and advocacy at consumer group Which?
/jlne.ws/3L48vV6
Citi Warns More Regulators Probing Wall Street's Texting Habits
Jenny Surane - Bloomberg
Citigroup Inc. warned that more regulators are investigating the company over employee use of "unapproved messaging channels." Citigroup said in a quarterly regulatory filing that it is cooperating with the investigations, which it said were brought by "certain U.S. regulators and authorities." The firm had previously only said the U.S. Securities and Exchange Commission was conducting an investigation into the matter.
/jlne.ws/3L5hyp4
JPMorgan's 'Uninvestable' Call on China Was Published in Error; Bank cut the label from most research notes before publication; Controversy underscores debate over investments in China
Cathy Chan and Hannah Levitt - Bloomberg
In the buttoned-down world of Wall Street research, JPMorgan Chase & Co.'s description of Chinese Internet companies was an instant shocker: "uninvestable." The evocative label helped erase about $200 billion from U.S. and Asian markets and prompted one Chinese technology company to downgrade JPMorgan's underwriting role on an upcoming initial public offering.
/jlne.ws/3FzQ89E
FTX US Appoints Marissa MacDonald as Chief Compliance Officer of FTX Trust; MacDonald joins FTX US from Fidelity Digital Assets to serve as CCO for the Company's to-be established New York State Limited Purpose Trust Company.
FTX US
FTX US ("the Company") today announced that it has appointed Marissa MacDonald to serve in the role of Chief Compliance Officer for FTX Trust Company, LLC, FTX US's to-be formed New York State limited purpose trust company (pending regulatory review and approval). FTX US has applied for a trust charter with the New York Department of Financial Services to operate in New York and bring FTX US markets to NY users.
/jlne.ws/3Fyt7UA
FTX poaches Fidelity exec as crypto exchange nears NY approval
Lydia Moynihan - NY Post
FTX, the $32 billion global crypto exchange, is gearing up to take on the final frontier: New York. The digital asset exchange — which boasts investments from celebrities including power couple Tom Brady and Gisele Bündchen — has hired former Fidelity Digital Assets executive Marissa MacDonald in its bid to obtain a license in the Empire State.
/jlne.ws/3FE8Dde
U.S. Likely to Step Up White-Collar Crime Enforcement; Former prosecutors at WSJ Risk & Compliance Forum discuss white-collar enforcement challenges facing companies
Jennifer Williams-Alvarez - WSJ
Businesses with ties to the U.S. shouldn't take much from a recent dip in the number of Foreign Corrupt Practices Act cases, a former federal prosecutor said at the WSJ Risk & Compliance Forum on Tuesday. The U.S. Justice Department and the Securities and Exchange Commission brought 18 FCPA-related enforcement actions in 2021, the lowest number in a decade, according to Stanford Law School's FCPA Clearinghouse. The law prohibits companies with ties to the U.S. from bribing foreign government officials to benefit their business.
/jlne.ws/3N4HTVI
MicroStrategy Options Hedge Risk of 96% Drop After Bitcoin Rout; With stock around $230, put options target a drop to $10; Company has served as a proxy for bets on cryptocurrency
Joanna Ossinger - Bloomberg
Few companies are tethered as closely to Bitcoin as MicroStrategy Inc., a software company that's plowed its profits and borrowed money into the cryptocurrency. Shares of the Tysons Corner, Virginia-based company have tumbled alongside Bitcoin, dropping more than 50% since the end of March to around $230. Yet options activity shows some investors are eager to protect against -- or bet on -- an even deeper hit. Some of the most active options traded Tuesday were puts with January expirations that give the owner the right to sell the stock at $40, $20 and even $10. There had been no open interest in those contracts before.
/jlne.ws/3M3PfZv
Elon Musk's Go-Private Tweets About Tesla Were Reckless, Judge Found
Joel Rosenblatt - Bloomberg
"No reasonable jury could find that Mr. Musk did not act recklessly." That's the upshot of a federal judge's review of Tesla Inc. CEO Elon Musk's 2018 tweets about taking the company private, as revealed in an order that was sealed for more than a month before it was made public Tuesday. U.S. District Judge Edward Chen's conclusion that Musk was misleading in his Twitter posts was disclosed weeks ago in a court filing. But the ruling wasn't released while Tesla fought to limit how much the public could learn about regulatory scrutiny and shareholder criticism of the billionaire's past tweeting habits.
/jlne.ws/3FBY8Xv
SEC's Gensler Says Crypto Exchanges Trading Against Clients; Gensler concerned about 'commingling' of platforms' services; Stablecoins also pose risks for anti-money laundering efforts
Allyson Versprille and Olga Kharif - Bloomberg
Gary Gensler is ratcheting up his criticism of digital-asset exchanges, arguing that some platforms are shirking rules and may be betting against their own customers. The US Securities and Exchange Commission chair reiterated Tuesday that most digital assets fall under his agency's purview and venues trading them should register with the regulator. The SEC is also beefing up its enforcement efforts, he added.
/jlne.ws/3l1rrcC
TerraUSD Stablecoin Plunges as Crypto Market Awaits Rescue; Stablecoin crashes further from its intended dollar peg; Wider crypto markets holding up with Bitcoin little changed
Muyao Shen and Philip Lagerkranser - Bloomberg
TerraUSD, the controversial algorithmic stablecoin, slumped on Wednesday as crypto markets await a rescue led by primary backer Do Kwon. The token fell further from its intended 1-to-1 peg to the US dollar to trade at around 50 cents at 10 a.m. in London, wiping out billions of dollars of value, data compiled by Bloomberg show. Luna, a coin that's part of the peg mechanism for TerraUSD, tumbled 83% over the past 24 hours, according to CoinMarketCap.
/jlne.ws/3PhKMV8
US Price Gauges Top Forecasts in Sign Inflation Persisting
Reade Pickert - Bloomberg
US consumer prices rose by more than forecast in April, indicating inflation will persist at elevated levels for longer and keeping the Federal Reserve on the path of aggressive interest-rate hikes.
The core consumer price index, which excludes food and energy, increased 0.6% from a month earlier and 6.2% from April 2021, according to Labor Department data released Wednesday. The broader CPI rose 0.3% from the prior month and 8.3% on an annual basis, a slight cooling but still among the highest readings in decades.
/jlne.ws/3l5KT80
TRADETech Daily launches in Paris with official guide to the event; The magazine features exclusive interviews, insights, and the official accompanying event agenda.
Laurie McAughtry - The Trade
The TRADE is delighted to present the digital edition of the TRADETech Daily 2022, the official magazine of the TradeTech Europe event offering 40+ pages crammed full of news, stories, interviews and content.
/jlne.ws/3yr8KqV
Man Group trading platform chief of staff departs for Jupiter; Executive had been with the investment manager for 18 years in roles across its trading platform, transformation, equity trading and investment management services.
Annabel Smith - The Trade
Chief of staff for Man Group's trading platform and core technology has left the firm after almost two decades to join Jupiter Asset Management, The TRADE can reveal.
/jlne.ws/3wlWUeN
Global buy-side perspective: Technology will shape the liquidity landscape of the future; The TradeTech discussion centred around the influence that technology has on trading strategies - but it's a marathon, not a sprint.
Laurie McAughtry - The Trade
Technology will shape the trading strategies of the world going forward, and those firms that don't adapt to this will get left behind, agreed a global buy-side perspective panel at TradeTech in Paris, in a discussion on which trading strategies should be prioritised to best adapt to another year of market uncertainties.
/jlne.ws/3N1ig82
TradeTech: Opportunity for European asset managers as US investment strategy shifts; US investors are looking to diversify both geographically and in terms of asset class, reveals TradeTech panel, while inflation and climate change remain a key issue for asset managers in 2022.
Laurie McAughtry - The Trade
At the Economic Fireside Chat at TradeTech in Paris this morning, a panel of leading economists, researchers and practitioners discussed how the coronavirus pandemic has impacted global economic activity and what this could mean from both a balance sheet and fund flow perspective
/jlne.ws/3l0VoJS
Stocks Turmoil Spreads to Junk Bonds, Hurts Deals
Prices drop to lowest levels since 2020; some companies pull new sales
Matt Wirz - WSJ
Shock waves from the stock market's declines are spreading into junk bonds, sending prices tumbling and forcing some companies to cancel new deals. Average prices of U.S. high-yield bonds fell to around 91 cents on the dollar Monday, the lowest level since May of 2020 when pandemic shutdowns slammed the global economy, according to data from Bloomberg.
/on.wsj.com/3M7PvGT
Stock Futures Fall on Inflation Data
Data show first inflation deceleration since August
Joe Wallace - WSJ
Stock futures gave up their gains Wednesday after fresh data showed inflation eased slightly in April but not as much as economists expected. Futures for the S&P 500 slipped 1%, reversing a gain of more than 1% ahead of the release of the data. The index snapped a three-day losing streak Tuesday, hitting pause on a stretch of pressure that came as investors braced for the Federal Reserve to keep raising interest rates to curb decades-high inflation.
/on.wsj.com/38j8Iql
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| Ukraine Invasion | | News about the invasion of Ukraine by Russia and its military, economic, political and humanitarian impact | House Approves Ukraine Aid Package but No Deal in Senate
Package proposes about $40 billion in military and economic aid as Ukraine battles invading Russian forces
Natalie Andrews and Eliza Collins - WSJ
The House approved a package to send $40 billion in aid to Ukraine, which is expected to face objections in the Senate; as fighting rages, the U.N. said the civilian death toll topped 3,300; the U.S. spy chief said Russia is preparing for a prolonged conflict.
/on.wsj.com/3NaoLFR
Expect More Russia Sanctions, Export Controls, Top U.S. Official Says; Sanctions packages targeting Russia likely to grow as U.S. seeks to hobble Russia, Commerce Department official says
Richard Vanderford - WSJ
Russia will likely be targeted by yet more U.S. sanctions and export controls in response to its invasion of Ukraine, a top Commerce Department official said. U.S. agencies are contemplating adding more restrictions on doing business with Russia, rather than concentrating on merely enforcing the sanctions and controls already in place, Matthew Axelrod, a senior official for the Commerce Department's Bureau of Industry and Security, said Tuesday at the WSJ Risk & Compliance Forum.
/jlne.ws/3PdkAKX
Ukraine's Economy to Drop 30% This Year From War, EBRD Says
Aaron Eglitis - Bloomberg
Ukraine's economy will plunge by almost a third in 2022, more than previously expected, in a scenario in which the war ends this year, the European Bank for Reconstruction and Development said. The expected downturn is deeper than the 20% contraction the EBRD estimated in March because of a "larger-than-previously-expected contraction in Ukraine as the war drags on," it said in its report.
/jlne.ws/3KWCnD2
Leader of Pussy Riot Band Escapes Russia, With Help From Friends; After more than a decade of activism, Maria Alyokhina disguised herself as a food courier to evade the police — and a widening crackdown by President Vladimir Putin.
Valerie Hopkins and Misha Friedman - NY Times
Maria V. Alyokhina first came to the attention of the Russian authorities — and the world — when her punk band and performance art group Pussy Riot staged a protest against President Vladimir V. Putin in Moscow's Christ the Savior Cathedral. For that act of rebellion in 2012, she was sentenced to two years in prison for "hooliganism." She remained determined to fight Mr. Putin's system of repression, even after being jailed six more times since last summer, each stint for 15 days, always on trumped-up charges aimed at stifling her political activism.
/jlne.ws/3sr5dFe
Ukraine says it will stop transporting some Russian gas.; The operator of Ukraine's natural gas grid said Russian troops were endangering the pipeline system's "stability and safety."
Stanley Reed - NY Times
Ukraine's natural gas grid operator said on Tuesday that it would stop transporting Russian gas through an eastern border entry point called Sokhranivka, raising fears of a cutoff of flows to Europe. The Gas Transmission System Operator of Ukraine said that, beginning Wednesday, it would quit accepting Russian gas at the entry point because the Russians were interfering in technical processes at gas facilities and endangering "the stability and safety of the entire Ukrainian gas transportation system."
/jlne.ws/3LakGA8
Why Russia's air force failed to dominate Ukraine
Niamh Cavanagh - Yahoo! News
Many observers expected Russia's air force to blow away Ukraine's forces in the opening days of the Kremlin's invasion. Ukraine's military would be left completely vulnerable as Russian warplanes could pick off targets at whim. But that hasn't happened. More than two months later, Russia has still not established air supremacy over large swaths of Ukraine, despite having the world's second-largest air force — and a highly advanced one at that. The New York Times reported Monday that, according to the U.S. Defense Department, Ukraine "continues to fly its own fighters and attack jets against Russian troops."
/jlne.ws/3so2NH9
U.S. and Western Europe officials worry about the costs of an 'unwinnable' grinding war in Ukraine
Associated Press
An interminable and unwinnable war in Europe? That's what NATO leaders fear and are bracing for as Russia's war in Ukraine grinds into its third month with little sign of a decisive military victory for either side and no resolution in sight. The possibility of a stalemate is fueling concerns that Ukraine may remain a deadly European battlefield and a source of continental and global instability for months, or even years, to come.
/jlne.ws/39Hp7VO
Russian Debt Default Could Become the Ukraine Conflict's Next Bargaining Chip
David Beers - Barron's
Since the start of Russia's invasion of Ukraine in February 2022, there has been intense debate in both financial markets and the media—and not a little confusion—about a possible default by Russia on its sovereign debt. This raises important questions about the current status of the Russian Federation's obligations, the mechanics of a default and, if there is one, its repercussions. I will focus on Russia's bonds denominated in foreign currency, but bear in mind that the federal government has other forms of sovereign debt as well.
/jlne.ws/3FBSjcP
Russia's Medvedev, Volodin lash out at U.S. aid to Ukraine
Reuters
Former Russian president Dmitry Medvedev accused the United States on Wednesday of waging a "proxy war" against Russia after the House of Representatives approved a $40 billion aid package for Ukraine, and said the U.S. economy would suffer. Writing on the messenger app Telegram, Medvedev said that the bill approved by the House on Tuesday was a bid "to deal a serious defeat to our country and limit its economic development and political influence in the world." Medvedev said: "It won't work. The printing press by which America is constantly increasing its already inflated government debt will break faster."
/jlne.ws/3N9P4Mq
Germany's Uniper Confident It Can Keep Russian Gas Flowing
Vanessa Dezem - Bloomberg
German utility Uniper SE is confident its next payment for Russian natural gas will comply with Kremlin demands without violating sanctions, in the latest sign that European companies and their Russian supplier are finding ways to keep the gas flowing.
/jlne.ws/3M3fkHW
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| Exchanges, OTC & Clearing | | Top news from exchanges, clearing, settlement and trade execution facilities | CHESS replacement project update - confirmation of delay to April 2023 go-live
ASX
ASX is today providing a CHESS replacement project update to CHESS users, software providers and other stakeholders. On 28 March 2022, ASX advised the market about changes to the CHESS application software release schedule and indicated there was a strong likelihood that the April 2023 go-live date would change.
/bit.ly/3sGw54D
Reminder: Derived block trade eligibility for all CME E-mini S&P Select Sector Futures and CBOT Dow Jones US Real Estate Index Futures Contracts
CME Group
Effective Sunday, May 22, 2022 for trade date Monday, May 23, 2022, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. and The Board of Trade of the City of Chicago, Inc. (collectively, the "Exchanges") shall permit derived block trading for all of the CME E-mini S&P Select Sector Futures and the CBOT Dow Jones US Real Estate Index Futures contracts listed in Table 1. below (the "Contracts").
/bit.ly/3PaSVKY
OTC FX New Release Advisory - USD/RUB NDF Fixing Change
CME Group
Please be advised that CME will amend the USD/RUB Non-Deliverable FX Forward ("USD/RUB NDF") fixing rate from RUB MOEX (RUB05) at approximately 12:35pm Moscow to WM/Refinitiv MID (WMR03) at 10am London in New Release on May 13, 2022.
/bit.ly/3FBvXYL
Review of Collateral Haircuts Advisory
CME Group
In conjunction with the regular review of market volatility and to ensure adequate collateral coverage, please find below the current acceptable collateral and haircuts for CME Clearing. All assets utilized to meet PB requirements in different currencies are subject to an additional cross-currency haircut. For applicable haircuts and more details, please see the CME cross-currency haircut file and the CME Financial and Collateral Management page. Should you have any questions, please contact the Financial Management group at 312-207-2594.
/bit.ly/3MhAzpq
Trading Arrangements of Bosera SZSE ChiNext Daily (2x) Leveraged Product
HKEX
Exchange Participants are requested to note that Bosera SZSE ChiNext Daily (2x) Leveraged Product (Stock Code: 7234) has been authorized under collective investment scheme by the Securities and Futures Commission and is expected to commence trading on the Exchange and admitted to the list of Designated Securities eligible for short selling on 12 May 2022 (Thursday). Investors should always refer to the details about the Product provided by the Fund Manager, e.g. Net Asset Value per Unit, before trading the Product. Detail of its trading arrangements (Attachment 1) is attached for reference.
/bit.ly/3LbvUV2
Launch of Real-time Calculation of Prime, Standard, and Growth Market Indices
JPX
JPX Market Innovation & Research, Inc. (JPXI) hereby announces the launch of real-time calculation for the Tokyo Stock Exchange Prime Market Index, Tokyo Stock Exchange Standard Market Index and Tokyo Stock Exchange Growth Market Index, which are currently calculated on an end-of day basis.
/bit.ly/3kYHzeX
JPX Monthly Headlines - April 2022
JPX
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users. Every month, we showcase the highlights of these efforts in short and concise summaries just for you.
/bit.ly/3N1cEdS
LME clear margin collateral haircuts update
LME
LME Clear Members are advised that new margin collateral haircuts have been set, as marked on the website located here: https://www.lme.com/en/Clearing/Collateral-management/Haircut- methodology. The changes will be made effective at close of business 16th May 2022 and will be reflected in the collateral valuation on the morning of 17th May 2022.
/bit.ly/3624ceb
Research scholarship in derivative instruments
TMX
Are you conducting an innovative research project on a problem related to derivatives? Are you interested in current issues, such as fintech, cryptocurrencies, NFTs, sustainable finance, ESG factors, big data analytics, etc.? Apply now and you could receive a scholarship for research in derivatives in an amount of up to $25,000. The application deadline is Tuesday, May 31, 2022, at 5:00 p.m. (ET).
/bit.ly/3steooC
Nasdaq Announces End-of-Month Open Short Interest Positions in Nasdaq Stocks as of Settlement Date April 29, 2022
Nasdaq
At the end of the settlement date of April 29, 2022, short interest in 3,405 Nasdaq Global MarketSM securities totaled 10,357,447,523 shares compared with 10,094,454,540 shares in 3,381 Global Market issues reported for the prior settlement date of April 14, 2022. The end-of-April short interest represent 3.11 days average daily Nasdaq Global Market share volume for the reporting period, compared with 3.03 days for the prior reporting period.
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| Fintech | | A roundup of today's market tech news and a look at tomorrow's disruptors | Made-in-China PC Rule Won't Advance Nation's Tech Prowess; Requiring government computers to be sourced locally probably will boost domestic sales, but it won't do much to spur development of advanced technologies.
Tim Culpan - Bloomberg
Beijing's new requirement that government agencies ditch foreign computers and buy local is designed to wean the nation off overseas products. The move will certainly boost sales of Chinese-made PCs domestically, but it won't do much to advance the nation's long-held ambition to deepen its tech prowess and catch up to global leaders.
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Apollo Plans to Lead $1 Billion Financing for Musk's Twitter Bid; Sixth Street, other firms also may participate in the funding; Musk is seeking to take Twitter private in $44 billion deal
Heather Perlberg - Bloomberg
Apollo Global Management Inc. is in talks to lead a preferred financing for Elon Musk's proposed buyout of Twitter Inc., according to people with knowledge of the deal. The funding, arranged by Morgan Stanley, will exceed $1 billion and may include Sixth Street Partners, among other firms, the people said. Apollo, Sixth Street and Morgan Stanley declined to comment.
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Tech Industry Warns That More Remote-Work Jobs Are Headed Out of U.S.; Worker shortages, limited immigration in the U.S. may favor jobs in Canada and elsewhere
Julie Bykowicz - WSJ
Tech-industry representatives are coming to Capitol Hill this week to warn that the remote-work trend will lead to more offshoring of software developer and other technology jobs unless the U.S. admits more high-skilled immigrants. Remote jobs in tech jumped by more than 420% between January 2020 and last month, growth that was intensified by the pandemic, according to a jobs data review by Tecna, a trade group for regional tech councils. In February, more than 22% of all tech jobs were listed as remote, compared with 4.4% in January 2020.
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UK Money Manager Fasanara Raising New Crypto and Fintech Fund
Ivan Levingston - Bloomberg
London-based asset manager Fasanara Capital Ltd is raising a new $350 million venture capital fund to invest in financial technology and cryptocurrency companies, giving it fresh cash to seize opportunities at a time when many investors are sitting out reeling markets.
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| Cybersecurity | | Top stories for cybersecurity | U.S. Support for Connectivity and Cybersecurity in Ukraine
US Department of State
Leading up to and during Russia's unprovoked and illegal further invasion of Ukraine, the United States is supporting Ukraine's continued access to the Internet and to enhance Ukraine's cyber defenses. These efforts, coordinated across the U.S. government, include:
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Purdue cybersecurity experts coached guardians of Ukrainian critical infrastructure
Purdue University
Purdue University, a leading seat of cybersecurity expertise, may have helped cybersecurity personnel guarding power plants, the electrical grid and other critical infrastructure in Ukraine successfully fend off recent cyber attacks.
/jlne.ws/3kWkB8q
Hackers are using tech services companies as a 'launchpad' for attacks on customers
Danny Palmer - ZDNet
A warning from international cybersecurity agencies has urged IT service providers and their customers to take action to protect themselves from the threat of supply chain attacks.
The cybersecurity agencies warn that Russia's invasion of Ukraine has increased the risk of cyberattacks against organisations around the world. But they also suggest a number of actions that IT and cloud service providers, along with their customers, can take to protect networks from supply chain attacks, where attackers gain access to a company that provides software or services to many other companies.
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| Cryptocurrencies | | Top stories for cryptocurrencies | Does Your Country Really Need Digital Cash?; Everyone's jumping on the bandwagon. But it all depends if your economy is more like Poland's or Peru's.
Andy Mukherjee - Bloomberg
Nine out of 10 central banks are exploring electronic versions of physical cash, according to the Bank for International Settlements' 2021 survey of monetary authorities released this month. Nearly everyone, it seems, is convinced that the future of money is digital. While that might be right, does every country need to be on the bandwagon just yet? Not really. Whether you're Poland or Peru should make a big difference in deciding just how big a priority a central bank digital currency, or CBDC, should be.
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Coinbase Has No Risk of Bankruptcy, New 10-Q Disclosure Language Is SEC Requirement, CEO Armstrong Says
Sam Reynolds - Coindesk
Coinbase founder and CEO Brian Armstrong said in a tweet Wednesday that new language found in its latest 10-Q filing is simply a new requirement of the U.S. Securities and Exchange Commission and that Coinbase is in no danger of bankruptcy. Armstrong said the exchange had "included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties." The 10-Q, filed with the SEC Tuesday, says: "Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors," Coinbase wrote in its recent filing.
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Coinbase Stock Keeps Sliding After Earnings Report; The largest U.S. crypto exchange posts loss, says number of users is declining
Corrie Driebusch and Hardika Singh - WSJ
The biggest cryptocurrency exchange in the U.S. said it was bleeding users, reflecting continued destruction in the crypto market and investors' unease about risky assets. Coinbase Global Inc. said Tuesday that it lost hundreds of millions of dollars in the first quarter, sending the stock tumbling in after-hours trading. Following the after-market report, shares traded around $61—a far cry from the $381 where the stock opened trading when it went public a little over a year ago.
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**** Here is a Bloomberg version of this story. ~JJL
Runtime error: stablecoin not found; The ruinously expensive business of making Terra firmer
Bryce Elder - FT
The big story in crypto-land so far this week is the Terra stablecoin, which has proven to be neither strong nor stable. You'll probably know already that, by applying the Code is Law principle to monetary policy, Terra wants to become the internet's reserve currency. You'll also know that it's not going entirely to plan.
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Yellen Cites UST Breakdown While Calling for Stablecoin Rules; Treasury Secretary points to risk of financial instability; Fed warned this week that stablecoins are vulnerable to runs
Muyao Shen - Bloomberg
Treasury Secretary Janet Yellen said the de-pegging of TerraUSD shows the urgency to have a regulatory framework on stablecoins, which aim to minimize the volatile price swings seen in most cryptocurrencies. "A stablecoin known as TerraUSD experienced a run and had declined in value," Yellen said during testimony before the Senate Banking, Housing and Urban Affairs Committee on Tuesday. "I think that simply illustrates that this is a rapidly growing product and that there are risks to financial stability and we need a framework that's appropriate."
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Bitcoin Holds Rebound as Crypto World Awaits Stablecoin Rescue; Largest token hovers around $31,000 in Asian trading; Steps expected to bolster ailing TerraUSD stablecoin
Sunil Jagtiani - Bloomberg
Bitcoin held a partial rebound from this week's selloff amid steadier sentiment in global markets and expectations of help for a stablecoin whose struggles have cast a cloud over the cryptocurrency sector. The world's largest token hovered around $31,000 as of 9:12 a.m. in Singapore on Wednesday after bouncing from a brief dip below $30,000 a day earlier. Ether, Solana and a range of other virtual coins made modest gains.
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Blue-Chip NFT Collections Hit Harder Than Bitcoin in Crypto Rout; Sales prices of Bored Ape Yacht Club NFTs and others crumble; The entire crypto market has fallen into a deep rout recently
Olga Kharif - Bloomberg
Blue-chip NFT collections like Bored Ape Yacht Club, which for a while outperformed the rest of the crypto market, are being hit harder than cryptocurrencies by a deep rout that is souring sentiment across the sector. BAYC's average sales price plummeted 29% over the last seven days in US dollar terms, while transactions have tanked by 21% and user numbers are down 27%, according to NFT watchers Price Floor and DappRadar.
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Cryptocurrency TerraUSD Plunges as Investors Bail
Algorithmic stablecoin nosedived, briefly pushing it to less than a quarter of its original $1 value
Caitlin Ostroff and Elaine Yu - WSJ
A selloff in a cryptocurrency that was supposed to be pegged to $1 accelerated Wednesday, briefly sending its price to less than a quarter of that value. TerraUSD traded as low as 23 cents Wednesday, according to data from CoinDesk. As of 8:53 a.m. ET, it had rebounded partially to about 30 cents in volatile trading.
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| Politics | | An overview of politics as it relates to the financial markets | Elon Musk Says He Would Reverse Donald Trump's Twitter Ban; 'I think that was a mistake because it alienated a large part of the country,' he says
Rebecca Elliott - WSJ
Elon Musk said he would reverse Twitter Inc.'s ban on former President Donald Trump. "I do think that it was not correct to ban Donald Trump. I think that was a mistake because it alienated a large part of the country, and did not ultimately result in Donald Trump not having a voice," said Mr. Musk, who was speaking virtually at the Financial Times Future of the Car summit. Mr. Musk called the ban a "morally bad decision," saying permanent bans undermine trust in Twitter. "If there are tweets that are wrong and bad, those should be either deleted or made invisible, and a suspension—a temporary suspension—is appropriate, but not a permanent ban," Mr. Musk said.
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Lessons From China's Covid Lockdowns; Foreign companies would be wise to minimize their exposure to Communist Party political risk.
The Editorial Board - WSJ
Beijing's Covid lockdowns are an economic danger to China and everyone else, and the Communist Party seems to know it. Witness recent, belated attempts to pump up economic growth amid the zero-Covid policy disaster. Large swathes of China have been under some form of lockdown in recent months. That includes Shanghai, a crucial commercial hub, which has yet to emerge from restrictions after a month. The government shows little sign of recalibrating even as other countries abandon lockdowns in favor of learning to live with the virus.
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JPMorgan, Goldman Pushed to Name Clients Trading Russia Debt; CEOs are sent letters from Elizabeth Warren, Katie Porter; Info sought on whether 'dealings could benefit Putin's regime'
Hannah Levitt - Bloomberg
JPMorgan Chase & Co. and Goldman Sachs Group Inc. are being pressed to hand over extensive information on clients trading Russian debt, as US Senator Elizabeth Warren and Representative Katie Porter expand efforts to pry into whether Wall Street is profiting on the invasion of Ukraine. The Democrats sent JPMorgan Chief Executive Officer Jamie Dimon and Goldman CEO David Solomon letters Tuesday demanding lists of clients betting on Russian government and corporate debt since the war broke out in February, as well as the types and sizes of wagers and any gains. The lawmakers also want information on the banks themselves, including tallies of any trades they've handled and revenue generated.
/jlne.ws/3yo1RGO
Pence Rips Socially Minded Investing, Wants to 'Rein In' ESG; Former vice president giving energy policy speech in Houston; Pence is citing investor securing three seats on Exxon board
Mark Niquette and Kevin Crowley - Bloomberg
Former Vice President Mike Pence criticized investor-activist campaigns to force companies such as Exxon Mobil Corp. to follow socially conscious investing principles, saying they elevate "left-wing" goals over the interests of businesses and their employees. Pence, a potential 2024 Republican presidential candidate, delivered an energy policy speech on Tuesday in Houston and called for states such as Texas to "rein in" the push for employee pension funds to use environmental, social and governance principles in investing.
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Biden Says Inflation Is His 'Top Domestic Priority' and Lashes Out at G.O.P. Plan; Rising prices could hurt President Biden's party in the midterm elections, and he sought on Tuesday to turn the debate over the economy against his opponents.
Peter Baker and Michael D. Shear - NY Times
President Biden tried on Tuesday to deflect blame for rising prices with a direct attack on Republicans for pursuing what he called an "ultra-MAGA agenda," a phrase he has used in recent days as a reference to former President Donald J. Trump's "Make America Great Again" slogan. Mr. Biden's critics have assailed the president for months as inflation has risen to 8.5 percent, the fastest 12-month pace since 1981. A news release from the Republican National Committee on Tuesday accused him of being "desperate to blame anyone but himself for the worst inflation in 40 years," adding that "the American people know he is responsible."
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Germany Poised to Become LNG Powerhouse With Law to Cut Red Tape; Legislation set to cut approval time for import terminals; Nation is among EU states seeking to reduce reliance on Russia
Vanessa Dezem, Arne Delfs, and Anna Shiryaevskaya - Bloomberg
Germany is set to become a liquefied natural gas powerhouse within a year as it fast-tracks new import terminals to slash its dependence on Russian fuel. Germany's Federal Cabinet gave the green light to draft legislation to cut the approval process for such facilities to a 10th of the usual time. The government is planning four floating terminals, allowing it to replace at least 70% of Russian gas imports and marking a significant u-turn in energy policy after years of resisting costlier U.S. LNG.
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| Regulation & Enforcement | | Stories about regulation and the law. | UK financial regulator warns of intervention in tower block insurance market; Financial Conduct Authority concerned about rising costs for leaseholders since 2017 Grenfell Tower fire
Ian Smith and George Hammond - FT
The UK's financial regulator has warned that "significant" intervention might be required to tackle the soaring cost of insurance for leaseholders in high-rise buildings in the wake of the Grenfell Tower tragedy. The building safety crisis in the aftermath of the 2017 fire in a London block that killed 72 people has led to insurers pulling back from multi-occupancy buildings, or charging much higher premiums to cover potential payouts. In a letter sent on Tuesday to housing secretary Michael Gove, the Financial Conduct Authority's executive director, Sheldon Mills, said price increases could be a result of insurers "shying away" due to the costs of making buildings safe.
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Archegos Spurs CFTC Boss's Vow to Scrutinize Family Offices
Lydia Beyoud and Tom Schoenberg - Bloomberg
The top U.S. derivatives regulator is ratcheting up scrutiny of family offices after last year's blow up of Archegos Capital Management exposed significant blind spots in the swaps market. Commodity Futures Trading Commission Chairman Rostin Behnam said Monday that the collapse of Bill Hwang's firm shows a need to rethink some of the agency's rules. The episode also underscored the danger of one investor building up a massive swaps position while leaving regulators unaware, he added.
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CFTC Charges California Man and His Companies with Fraud and Misappropriation; Judge Grants Restraining Order
CFTC
The Commodity Futures Trading Commission today announced that it has filed a civil enforcement action in the U.S. District Court for the Eastern District of California against Eshaq M. Nawabi of either Salida or Manteca, California and his companies Nawabi Enterprise and Hyperion Consulting Inc. The complaint charges the defendants with fraud and misappropriation related to an off-exchange foreign currency (forex) trading scheme in which they solicited funds totaling at least $543,000 from at least seven investors.
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Keynote Address of Chairman Rostin Behnam at the ISDA 36th Annual General Meeting, Hotel Riu Plaza España, Madrid
Shared Positives
CFTC
Good morning and thank you to ISDA for bringing back this event in-person, and to Scott O'Malia for the warm introduction. It's a pleasure to join you here today in Madrid. This is my second post-pandemic international trip in two weeks, having traveled to the UK to participate alongside many of you during City Week in London.
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SEC Obtains Final Judgment Against Former California Real Estate Company CFO for Role in Ponzi Scheme
SEC
On April 25, 2022, the Securities and Exchange Commission obtained a final judgment against the former Chief Financial Officer of a Marin County, California real estate investment and management company for his role in a Ponzi scheme that defrauded investors. The SEC's complaint, filed on March 31, 2022 in the U.S. District Court for the Northern District of California, alleged that from October 2016 through May 2020, Marin, California resident, Manuel A. Romero falsified financial statements provided to investors and made fraudulent cash transfers as part of a Ponzi scheme operated by Professional Financial Investors, Inc. ("PFI") and its now-deceased founder and former president.
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| Investing & Trading | | Today's top stories from equities, indices and FICC (fixed income, currencies and commodities) | Wealthy investors pile into the carbon market; Amid the proliferation of net-zero commitments, money managers look to the rise of carbon-related assets
Camilla Hodgson - FT
The once-niche carbon market is attracting wealthy individuals in pursuit of a new way to make money. And, at the same time, as society's concerns over climate change grow, it is providing them with a potential route to a greener portfolio. The rich and their money managers are now taking an interest in the market for carbon offsets, the controversial units that organisations use to compensate for their emissions. Some private investors are also trading EU carbon credits — regulated units popular with institutional investors — that certain polluting companies are obliged under European law to buy to emit carbon.
/jlne.ws/399eOJU
Tougher IPO conditions mean companies have to switch tack; Investors are looking for more evidence that revenue will eventually turn into profits
Nicholas Megaw - FT
Last year, every company from salad restaurants to sneaker stores were pitching themselves as fast-growing tech companies in the hope of a warmer reception from public markets. This year even software firms have been trying to make themselves look more like a 169-year-old eyecare company. Market volatility encouraged by slowing growth, rising interest rates and war in Ukraine has brought an abrupt end to last year's record-breaking listings market. About $4bn has been raised in traditional US initial public offerings this year, according to Dealogic, compared with more than $56bn in the same period in 2021. Shares in companies that went public last year have declined an average of more than 40 per cent from their listing prices.
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Oil Sheds Almost 10% in Two Days to Drop Below $100 a Barrel; WTI, Brent futures settles at lowest price in two weeks; Record US fuel prices at the pump fan inflation concerns
Julia Fanzeres and Devika Krishna Kumar - Bloomberg
Oil continued its retreat into a second session as galloping US inflation fueled concerns it would force moves that risk pushing the economy into a recession. West Texas Intermediate fell 3.2% to settle below $100 a barrel for the first time since late April. The dollar advanced amid worries over tighter monetary policy, making commodities priced in the currency less attractive. Meanwhile, French President Emmanuel Macron and Hungarian Prime Minister Viktor Orban discussed energy security on Tuesday as the European Union seeks to persuade Budapest to drop its opposition to proposed sanctions on Russian oil imports.
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Don't Bother Paying Off Student Loan Debt Right Now, Advisers Say; Experts are recommending a wait-and-see approach as President Biden faces mounting pressure to move forward on a forgiveness plan.
Claire Ballentine and Ella Ceron - Bloomberg
Financial advisers rarely recommend not paying off debt, but this time is different. Since President Joe Biden was elected, millions of Americans with student loan debt have waited for him to fulfill a campaign promise of forgiving at least $10,000 per borrower. While Biden recently extended the payment moratorium for the loans until Aug. 31, pressure is mounting on the administration as the midterm elections approach.
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Wall Street Is Trying Desperately to Catch Up With Stock Rout; Analysts cut share-price targets at fastest pace in two years; It's latest evidence of souring sentiment on the equity market
Lu Wang and Jess Menton - Bloomberg
To see how much pressure the five-month equity selloff is putting on Wall Street, consider the plight of analysts, whose overwhelmingly bullish forecasts are being furiously rolled back. Researchers who focus on single stocks -- the buy/hold/sell crowd that weighs in when results are disclosed and almost always predicts shares will go up -- are slashing price targets for S&P 500 firms at the fastest pace since the pandemic crash in 2020. Altogether, their projected price level for the index fell 11 weeks in a row, the longest stretch of declines in a decade, data compiled by Bloomberg show.
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Your 401K Is Bad. How Bad? You Don't Need to Know; The best investment advice is the same as Santa Claus's classic: No peeking.
Jessica Karl - Bloomberg
The Money Don't Jiggle Jiggle: If you haven't checked your 401K all week, stop what you're doing and pat yourself on the back. You have officially reached the upper echelons of societal intelligence. You're smarter than me, your neighbor, certainly your neighbor's dog, and most definitely Mark Gongloff. You see, Mark's son recently asked him for investing advice (famous last words), and Mark told him to take his $40 and go for the sensible, low-cost index funds that eventually lead to lifelong riches. Ha ha ha. About that! Shortly thereafter his son was in the red by 11%.
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The stock market is freaking out because of the end of free money. It all has to do with something called 'the Fed put'
Will Daniel - Fortune
You might have noticed some turbulence in the stock market recently. It took a while to sink in after last week, but investors had a full freak-out from Friday through Monday when they realized just how serious the Federal Reserve is about fighting inflation. As a result, stocks have posted their worst start to the year since 1939, with the S&P 500 falling over 16%. What changed?
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The U.S. will have more people by 2100 — Russia and China won't. Why this matters to your stock portfolio now
Mark Hulbert - MarketWatch
Demography is destiny, the 19th century French philosopher Auguste Comte is quoted as having said. If so, then the United States' long-term economic prospects are relatively bright — relative to that of Russia and China, at least. The United Nations Population Division projects that the U.S. population will be 31% higher in 2100 than in 2020, while Russia's population is projected to be 14% smaller and China's 26% smaller.
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All of Wall Street Is Lining Up Behind the Dollar's Historic Run
Anchalee Worrachate and Naomi Tajitsu - Bloomberg
Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Societe Generale SA are all telling clients that as long as fear runs through markets, the U.S. currency will keep charging higher. "There's no other alternative," said Kit Juckes, chief FX strategist at Societe Generale. "If we get one big single bad event in the world, or a big big fall in equities, or a geopolitical event, the dollar will spike higher, so certainly nobody wants to be short of it."
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Diamond Prices Are Spiking and Even De Beers Can't Fill the Gap
Thomas Biesheuvel - Bloomberg
Prices are surging in some corners of the rough-diamond market, as sanctions on one of the world's two giant miners ripple through the supply chain. In the past, the industry could turn to behemoth De Beers to crank out extra gems when supply ran tight — but not this time.
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The Bubble Portfolio Is Getting Absolutely Crushed
Tracy Alloway - Bloomberg
For years, one way to get market-beating returns was to run towards assets with the highest prices. Now, that's changing fast and the hypothetical bubble portfolio shows just how much.
This bubblelicious basket is stuffed with securities that have long been accused of being over-inflated — with equal weightings given to everything from Chinese internet and real estate names to U.S. tech stocks like Netflix and Tesla, as well as cryptocurrencies and bonds with ultra-long maturities.
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| Environmental, Social and Corporate Governance | | Stories about environmental, social and governance investing | Oil Giants Sell Dirty Wells to Buyers With Looser Climate Goals, Study Finds; The transactions can help major oil and gas companies clean up their own production by transferring polluting assets to a different firm, the analysis said.
Hiroko Tabuchi - NY Times
When Royal Dutch Shell sold off its stake in the Umuechem oil field in Nigeria last year, it was, on paper, a step forward for the company's climate ambitions: Shell could clean up its holdings, raise money to invest in cleaner technologies, and move toward its goal of net zero emissions by 2050. As soon as Shell left, however, the oil field underwent a change so significant it was detected from space: a surge in flaring, or the wasteful burning of excess gas in towering columns of smoke and fire. Flaring emits planet-warming greenhouse gases, as well as soot, into the atmosphere.
/jlne.ws/3yz8dTX
California Seeks 91% Cut to Oil Use in Revamped Climate Plan; State issues road map to zero out carbon by 2045
David R Baker - Bloomberg
California officials released a road map for zeroing out greenhouse-gas emissions from the world's fifth-largest economy by 2045, a plan that would slash the use of oil and natural gas, shift residents to electric cars and pull excess carbon dioxide from smokestacks. The draft, if adopted by state regulators this year, would radically transform California's economy over two decades, cutting oil use by 91% from 2022 levels and powering businesses, buildings and transportation largely from solar energy, wind and other renewable sources. The plan, issued Tuesday by the California Air Resources Board, wouldn't entirely end carbon emissions by 2045. Instead, it calls for capturing and storing some emissions that can't easily be eliminated by the target date.
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Williams CEO Puzzled as U.S. Northeast Burns More Oil for Power
Gerson Freitas Jr - Bloomberg
"There's kind of this political version of the truth, and then there's good, hard science and facts," Armstrong said in an interview at Bloomberg headquarters in New York. "When I hear people that are really serious about climate change and they're ignoring those kinds of really hard facts, like right here, right now kind of solutions ... it's really odd to me." The right-here-right-now solution he's principally referring to is getting more natural gas pipelines into the Northeast.
/jlne.ws/3l5aOwB
EU Lawmakers Seek Carbon Market Restrictions to Curb Speculation
Ewa Krukowska - Bloomberg
Senior members of the European Parliament's environment committee endorsed a plan to limit financial investors' access to the European Union's carbon market, in a bid to curb speculation after emission prices hit records early this year.
As part of negotiations on the deepest yet reforms of the EU Emissions Trading System, Christian Democrats, Liberals and Conservatives on the committee agreed to propose that by July 2025 only polluters in the system and their financial intermediaries can operate accounts in the carbon registry used to transfer allowances.
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| Banks, Brokers & Managed Funds | | The latest from banks, brokers, hedge funds and managed futures | BlackRock's Star Trader Goes Net Short as Hedge Fund Loss Mounts; Alister Hibbert shifts strategy with stock markets tumbling; The Strategic Equity Hedge Fund is down 13% this year
Gillian Tan and Nishant Kumar - Bloomberg
BlackRock Inc. star money manager Alister Hibbert has turned bearish as his hedge fund endures its worst-ever losses amid a sharp decline in stocks. The BlackRock Strategic Equity Hedge Fund tumbled 13% this year through April, a person with knowledge of the matter said. That exceeds its worst annual decline of 11%. The money manager, who has profited from the historic surge in stocks since starting the fund in 2011, turned net short for the first time ever this month, said the person. His portfolio was net long about 35% at the end of last year.
/jlne.ws/3FAZm5x
SoftBank Faces Record Loss as Masayoshi Son's Bets Tumble Again; Vision Fund unit could report $10 billion loss, analyst says; SoftBank books profit and losses on its portfolio of startups
Min Jeong Lee and Takahiko Hyuga - Bloomberg
Billionaire Masayoshi Son is poised to set another record -- and not the good kind. When he reports earnings for the March quarter Thursday, SoftBank Group Corp.'s Vision Fund investment unit may have lost more money in one quarter than it ever has before. The world's largest tech fund is estimated to have lost about $18.6 billion on its public portfolio alone during the quarter ended Mar. 31, even greater than the record $18.3 billion drop marked in the fiscal second quarter, according to Kirk Boodry, an analyst at Redex Research who publishes on SmartKarma. That would mean a loss for the Vision Fund unit of about $10 billion, accounting for SoftBank's stake in each fund, Boodry estimates.
/jlne.ws/3l2p0GV
JPMorgan mistakenly called Chinese Internet stocks 'uninvestable' in a March research note that wiped out $200 billion from US and Asian markets, says report
Phil Rosen - Business Insider
A publishing error caused a JPMorgan research note in March to describe Chinese internet stocks as "uninvestable," Bloomberg reported. The bank's editorial staff had asked for the term to be removed from 28 research notes before they were published on March 14, sources told the publication. While "uninvestable" was removed from most of the research notes, it was published by error in four, including one on JD.com:
/jlne.ws/3L0TvHB
Brookfield Decides to Spin Off Its Asset-Management Unit
Layan Odeh and Scott Deveau - Bloomberg
Brookfield Asset Management Inc. plans to spin off its asset-management business, according to a person familiar with the matter -- a step designed to simplify the organizational structure at one of the world's largest alternative investment firms.
/jlne.ws/3MXt4Ei
Allianz Hit From Hedge Fund Implosion Reaches $5.9 Billion
Stephan Kahl - Bloomberg
Allianz SE is setting aside an additional 1.9 billion euros ($2 billion) to resolve lawsuits and regulatory probes tied to the collapse of a group of its hedge funds two years ago.
/jlne.ws/39bk1RF
Ex-Goldman Partner's Testimony Sought in Investor Suit Over 1MDB
Peter Blumberg - Bloomberg
Goldman Sachs Group Inc. investors are seeking sworn testimony from a former partner at the bank as part of a class action lawsuit accusing the bank and its top management of making misleading statements about the 1MDB scandal.
/jlne.ws/3M74Ozo
Credit Suisse in Court With Gupta After Debt Talks Stall
Eddie Spence and Marion Halftermeyer - Bloomberg
Credit Suisse Group AG is heading for a court battle with Sanjeev Gupta's GFG Alliance after talks over more than a billion dollars in debts to the bank stalled. In London on Tuesday the court hearing between the steel magnate and the Swiss bank that's been delayed by a nearly a year will take place. At stake is a large swathe of the tycoon's metals empire, which is heavily indebted to Credit Suisse and could be wound up.
/jlne.ws/3w319Nr
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| Wellness Exchange | | An Exchange of Health and Wellness Information | China Risks 1.6 Million Deaths in Virus 'Tsunami' If Covid Zero Is Abandoned: Study; Death toll could reach 1.6 million in unchecked spread: study; WHO chief calls on China to rethink its zero-tolerance policy
Peter Vercoe - Bloomberg
China risks a "tsunami" of coronavirus infections resulting in 1.6 million deaths if the government abandons its long-held Covid Zero policy and allows the highly-infectious omicron variant to spread unchecked, according to researchers at Shanghai's Fudan University. The peer-reviewed study, published in the journal Nature, found that the level of immunity induced by China's March vaccination campaign would be "insufficient" to prevent an omicron wave that would swamp intensive care capacity, given low vaccine rates among the elderly and the nation's reliance on less effective, domestic shots.
/jlne.ws/3N98h0K
Moderna Ousts New Finance Chief Jorge Gomez Amid Probe by Former Employer
Executive departs after being on the job for just days amid Dentsply's investigation into matters including financial reporting
Colin Kellaher - WSJ
Moderna Inc. on Wednesday said Jorge Gomez, who joined the vaccine maker this week as chief financial officer, has left amid an investigation by his former employer, Dentsply, into matters that include financial reporting.
/on.wsj.com/3stTZ2y
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| Regions | | Stories of local interest from the Americas, EMEA and Asia-Pacific regions | A Coal Mining Hub Could Decide Australia's Future; Australia's election has become a battleground over climate change for one of the developed world's biggest polluters.
Ben Westcott and Jason Scott - Bloomberg
A coal-mining community that has elected the same political party for more than a century could decide Australia's next government this month in an election that has divided the nation over how to battle climate change. Poll after poll has shown that the majority of Australians want to cut greenhouse gas emissions, but with the ruling conservative Liberal-National coalition holding power by a single seat and the two main political camps almost neck and neck, it could come down to a handful of constituencies where an abrupt end to coal mining would devastate communities, leaving thousands of workers without jobs.
/jlne.ws/3Pd2rwX
New Zealand to Fully Reopen Its Border At The End of July; Border will open to non visa-waiver nations like China, India; Government seeks to ease labor shortage with skilled migrants
Tracy Withers - Bloomberg
New Zealand will fully reopen its border two months early, allowing the arrival of tourists, students and migrants from non visa-waiver countries like China and India. The border will be accessible to all from 11:59 p.m. on July 31, Prime Minister Jacinda Ardern said Wednesday. Previously, the government had said the final re-opening step would occur in October, though it signaled the date would likely be brought forward. The maritime border will also open for cruise ships on July 31.
/jlne.ws/3kXwqLp
Chinese Online Platform KE Holdings Starts Trading in Hong Kong; Company listed shares in the Asian city by way of introduction; Shares listed in New York have plunged over 40% since the IPO
Filipe Pacheco - Bloomberg
KE Holdings Inc., a Chinese online property platform backed by SoftBank Group Corp., listed in Hong Kong without raising funds as it expands its investors base amid a risk of being kicked out of the U.S. market. The stock opened at HK$30 in its Hong Kong debut. KE Holdings executed a dual primary-listing in the Asian financial hub by way of introduction, joining a slew of Chinese companies that started trading closer to home ahead of possible delisting from American exchanges due to auditing requirements stateside.
/jlne.ws/37ySRUj
$3 Billion Hedge Fund Firm Bucks Trend by Planning to Set Up Hong Kong Office
Bei Hu - Bloomberg
U.S. hedge-fund firm North Rock Capital Management LLC plans to open its first Asian office in Hong Kong even as some peers seek other options following years of political unrest and Covid-19 travel restrictions in the city.
/jlne.ws/3L2fZZ2
China's Dollar-Bond Misery Is Set to Deepen With Fed Tightening
Bloomberg
China's credit market can't catch a break.
A property debt crisis. Lockdowns that have dragged on the economy. And now monetary tightening by the Federal Reserve that's driven up the dollar and threatens to draw more money away from emerging-market assets.
/jlne.ws/3kYDZ4r
China's Premier Urges Fiscal, Monetary Policies to Boost Economy
Bloomberg
Chinese Premier Li Keqiang urged officials to use fiscal and monetary policies to stabilize employment and the economy as the country reels from Covid outbreaks and rising inflationary pressure.
The world's second-largest economy came under greater downward pressure in April due to the latest virus outbreak and bigger-than-expected impact from international situations, China's state broadcaster CCTV reported, citing a State Council meeting headed by Li.
/jlne.ws/38lxBlg
How a City of London sheriff uses soft power to promote the capital; Alison Gowman wants to innovate the ancient institution and has her eye on the role of Lord Mayor
Daniel Thomas - FT
There have been just two women to hold the post of Lord Mayor of London in more than 800 years. Alison Gowman wants to be the third. The annual election of the Lord Mayor is hidden from public scrutiny, picked from and by a small group of mostly male City elders, a process seen by some as typical of the arcane processes that thread through operations in the governing City of London Corporation.
/jlne.ws/3kWB4cC
Four Russian governors resign as sanctions bite
Reuters
Four Russian regional governors resigned on Tuesday as the country braces for the impact of economic sanctions. The heads of the Tomsk, Saratov, Kirov and Mari El regions announced their immediate departures from office, while the head of Ryazan region said he would not run for another term. Elections are scheduled to take place in all five regions in September.
/jlne.ws/3ytjncx
Colombia President Election Candidate Gutierrez Warns of Excessive Interest Rate
Matthew Bristow - Bloomberg
Colombian presidential candidate Federico Gutierrez warned that interest rates that are set too high hurt economic growth.
"Excessive interest rates put a brake on the economy. This isn't viable, today we are in a phase of economic recovery," he said in a Tweet Tuesday evening.
/jlne.ws/38gDEHU
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