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  • Russia divestment promises largely unfulfilled

    Russia divestment promises largely unfulfilled

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    BOSTON — Nearly two years after Massachusetts moved to strip the state’s retirement fund of Russian-tied stocks and other holdings in response to its war in Ukraine, that pledge remains largely unfulfilled.

    Following Russia’s invasion of Ukraine in early 2022, state lawmakers approved a $1.6 billion bipartisan supplemental spending bill that called for divesting the state’s pension fund of an estimated $140 million in investments tied to the country. Then-Gov. Charlie Baker signed the bill, as well as an executive order directing executive branch agencies to conduct a review of state contracts to determine if there are any ties to Russian businesses that could be severed.

    Baker’s directive also called on independent agencies, public colleges and universities, and other constitutional offices to adopt similar policies.

    At the time, state leaders touted the move to pull out those investments was a small, but meaningful, way of expressing outrage over the unprovoked war, and showing solidarity with the Ukrainian people’s fight against Russian President Vladimir Putin.

    But nearly two years after the much publicized move, little has changed. The state’s pension fund still has an estimated $140 million in investments tied to Russia, according to Treasurer Deb Goldberg, whose office oversees the retirement system.

    In a recent report to House and Senate clerks, the Massachusetts Pension Reserves Investment Management said the pension fund still has millions of shares tied to Russian entities in its investment portfolio.

    “With markets at PRIM’s investment managers’ disposal being suspended from trading in the Russian securities and markets, our investment managers have been unable to liquidate out of the majority of positions,” PRIM’s executive director and chief investment officer Michael G. Trotsky wrote in the report. “They continue to monitor the situation.”

    The data shows retirement fund managers have been able to divest more than 1 million shares in Russian investments since July 2022, including shares in Sberbank PJSC, Russia’s largest bank, and retail giant Magnit.

    State pension officials said the remaining shares tied to restricted Russian assets are essentially worthless as of Dec. 31, with a market value of zero.

    The PRIM reports also said investment managers with indirect holdings of restricted securities “have not removed restricted companies from their funds nor have these managers created similar actively managed funds which exclude these restricted securities.”

    But Massachusetts isn’t alone. Other states that took steps in 2022 to have their public employee pension funds divest their holdings from Russian stocks or cease any new investments into those entities have also made little progress to fulfill those pledges, according to pension fund groups.

    Pension fund experts say the global reaction to Russia’s invasion of Ukraine two years ago cut off much of its economy from the rest of the world.

    But that has made it nearly impossible to move ahead with pledges of divestment by state retirement systems, university endowments and other public-sector holdings — as well as private investments like those in 401(k) accounts.

    Alex Brown, research manager at the National Association of State Retirement Administrators, said while many pension funds want to get out of Russian investments, it’s just not realistic to sell in the current environment.

    “The point wasn’t to engage in a fire sale of these assets, but rather to systematically identify opportunities to sell their Russian holdings in the most prudent manner,” he said. “It has to be a practical time to sell, but you also want to do it prudently.”

    Brown noted that collectively Russian investments account for only a “tiny fraction” of the more than $5 trillion value of state and local retirement funds. Much of the money was invested in Russian government bonds, oil and coal companies as part of emerging-markets index funds, experts say.

    Political observers also note that many investments in Russia purchased before the war are now almost worthless or substantially depreciated in value. That’s raised questions about whether divesting those funds is even necessary.

    Meanwhile, the Kremlin has also rewritten rules governing foreign ownership of Russian company shares in response to U.S. sanctions, which analysts say has triggered confusion among investors and increased their risks of heavy losses from holdings now stranded in the country.

    The Biden administration imposed a fresh slate of sanctions on more than 500 targets on Friday — the largest to date — in response to the death of opposition figure Alexey Navalny and on the eve of Russia’s two-year war in Ukraine.

    The United States and its allies have imposed sanctions on thousands of Russian targets in the past two years.

    “Two years ago, he tried to wipe Ukraine off the map,” Biden said in a statement. “If Putin does not pay the price for his death and destruction, he will keep going.”

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    By Christian M. Wade | Statehouse Reporter

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  • RBI, Govt support to fuel fintech firms growth: NPCI Chief Dilip Asbe

    RBI, Govt support to fuel fintech firms growth: NPCI Chief Dilip Asbe

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    With backing from the government and the Reserve Bank of India (RBI), the fintech companies in India can expand their global footprint said Dilip Asbe, MD and CEO of the National Payments Corporation of India (NPCI).

    Also read: Decoding fintech and its jargons

    “Creating an acquiring footprint, creating value-added services over that, I think it is very logical for fintechs in India. I would be really surprised if we lose that game. With the clear thinking of the government and RBI, Indian fintechs will go global, as simple as that,” he said at Razorpay’s annual event in Bengaluru.

    He noted that Indian fintech companies must spearhead the task of elucidating the country’s payment standards to the global market before exporting them.

    He also noted the need for investment, saying that payment startups are well-funded. He acknowledged the dilemma faced by fintechs regarding balancing focus between domestic and global markets, given India’s substantial market size.

    Asbe issued a caution to fintech founders regarding regulatory compliance, advising them to refrain from developing products that regulators have not explicitly authorised.

    He emphasised that if a particular activity or product has not been explicitly approved, the default stance should be to abstain from pursuing it.

    “Whatever is not written in regulation means a no…When we are part of managing other people’s money, we should be responsible. Compliance is good and risks become higher with size, if fintech founders are here to build long-term, I don’t see it without compliance,” said Asbe.

    Also read: Editorial. Paytm Bank fiasco raises fintech regulation concerns

    NPCI has also been pushing the lever on international expansion of UPI payments. The domestic service is currently live in countries including the United Arab Emirates (UAE) and Mauritius.

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  • Dow Jones Industrial Average Fast Facts | CNN

    Dow Jones Industrial Average Fast Facts | CNN

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    CNN
     — 

    Here’s a look at the Dow Jones Industrial Average.

    The Dow Jones Industrial Average is a stock index comprised of 30 “blue-chip” US stocks. It is meant to be a way to measure the strength or weakness of the entire US stock market.

    The Dow began in 1896 with 12 industrial stocks.

    Dow Jones & Co was founded by journalists Charles Dow and Edward Jones.

    Current Dow stocks

    Record high close – February 23, 2024, the Dow closes at 39,131.53 points.

    Biggest one-day point gain – March 24, 2020, the Dow gains 2,112.98 points.

    Biggest one-day percentage gain – March 15, 1933, the Dow closes up 15.34%.

    Biggest one-day point loss – March 16, 2020, the Dow closes down 2,997.1 points.

    Biggest one-day percentage loss – October 19, 1987, the Dow closes down 22.61%.

    1882 – Dow, Jones & Co. is created.

    1884 – Charles Dow creates the Dow Averages, the precursor to the DJIA.

    May 26, 1896 – The first index, made up of 12 industrial companies, is published and the Dow opens at 40.94 points.

    January 12, 1906 – The Dow closes at 100.25, the first close above 100.

    October 24, 1929 – The Stock Market crash of 1929 begins which leads to the Great Depression of the 1930s. It takes 25 years for the Dow to regain its September 1929 high of 381 points.

    1930 – Dow Jones becomes incorporated and the comma in the name is dropped.

    March 12, 1956 – The Dow closes at 500.24, the first close above 500.

    November 14, 1972 – The Dow closes at 1,003.16, the first close above 1,000.

    October 19, 1987 – The Dow closes down 508 points, at the time the biggest one-day drop ever in the Dow’s history.

    November 21, 1995 – The Dow closes at 5,023.55, the first close above 5,000.

    March 29, 1999 – The Dow closes at 10,006,78, the first close above 10,000.

    September 17, 2001 – Stock markets reopen after the 9/11 terror attacks.

    September 21, 2001 – After the first full week of trading post 9/11, the Dow falls more than 1,300 points, or about 14%.

    October 19, 2006 – The Dow closes at 12,011.73, the first close above 12,000.

    April 25, 2007 – The Dow closes at 13,089.89, the first close above 13,000.

    July 19, 2007 – The Dow closes at 14,000.41, the first close above 14,000.

    September 29, 2008 – Worst single-day point drop in history at the time, plunging 777.68 points – the same day the US House rejects the $700 billion financial bailout package.

    October 6-10, 2008 – Worst weekly point and percentage decline finishing at 8,451.19, or down 1,874.19 points and 18.15% for the week.

    February 21, 2012 – The Dow crosses the 13,000 level for the first time since May of 2008.

    February 1, 2013 – The Dow closes above 14,000 for the first time since October of 2007.

    May 7, 2013 – The Dow closes above 15,000 for the first time.

    November 21, 2013 – The Dow closes above 16,000 for the first time, at 16,009.99.

    July 3, 2014 – The Dow closes at 17,068.26, the first close above 17,000.

    December 23, 2014 – The Dow closes at 18,024.17, the first close above 18,000.

    August 26, 2015 – The Dow closes with a 619-point gain, the biggest daily point gain since 2008.

    January 7, 2016 – The Dow drops 5% in its first four days of the year, the worst four-day percentage loss to start a year on record.

    November 22, 2016 – The Dow closes at 19,023.87, the first close above 19,000.

    January 25, 2017 – The Dow hits the 20,000 milestone for the first time in history.

    March 1, 2017 – The Dow closes at 21,115.55, the first close over 21,000 in history.

    August 2, 2017 – The Dow closes above 22,000 for the first time, at 22,016.24.

    October 18, 2017 – The Dow closes above 23,000 for the first time, at 23,157.60.

    November 30, 2017 – The Dow closes above 24,000 for the first time, at 24,272.35.

    January 4, 2018 – The Dow closes at 25,075.13, the first close above 25,000.

    January 17, 2018 – The Dow closes at 26,115.65, the first time it has closed above 26,000.

    July 11, 2019 – The Dow closes at 27,088.08, the first time it has closed above 27,000.

    November 15, 2019 – The Dow closes above 28,000 for the first time, at 28,004.89.

    January 15, 2020 – The Dow closes above 29,000 for the first time, at 29,030.22.

    March 16, 2020 – The Dow records its worst one-day point drop in history, 2,997.1 points, and its worst performance on a percentage basis since October 19, 1987, also known as “Black Monday.”

    March 24, 2020 – The Dow closes with a 2,112.98-point gain, to become the biggest one-day point gain in history.

    November 24, 2020 – The Dow closes above 30,000 for the first time, at 30,046.24.

    January 7, 2021 – The Dow closes at 31,041.13, the first close above 31,000.

    March 10, 2021 – The Dow closes at 32,297.02, the first close above 32,000.

    March 17, 2021 – The Dow closes above 33,000 for the first time, at 33,015.37.

    April 15, 2021 – The Dow closes above 34,000 for the first time, at 34,035.99.

    July 23, 2021 – The Dow closes above 35,000 for the first time, at 35,061.55.

    November 2, 2021 – The Dow closes at 36,052.63, the first close above 36,000.

    December 13, 2023 – The Dow closes above 37,000 for the first time, at 37,090.24.

    January 22, 2024 – The Dow closes at 38,001.81, the first close above 38,000.

    February 22, 2024 – The Dow closes at 39,069.11, the first close above 39,000.

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  • Oil Spills Fast Facts | CNN

    Oil Spills Fast Facts | CNN

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    CNN
     — 

    Here’s a look at oil spill disasters. Spill estimates vary by source.

    1. January 1991 – During the Gulf War, Iraqi forces intentionally release 252-336 million gallons of oil into the Persian Gulf.

    2. April 20, 2010 – An explosion occurs on board the BP-contracted Transocean Ltd. Deepwater Horizon oil rig, releasing approximately 168 million gallons of oil in the Gulf of Mexico.

    3. June 3, 1979 – Ixtoc 1, an exploratory well, blows out, spilling 140 million gallons of oil into the Bay of Campeche off the coast of Mexico.

    4. March 2, 1992 – A Fergana Valley oil well in Uzbekistan blows out, spilling 88 million gallons of oil.

    5. February 1983 – An oil well in the Nowruz Oil Field in Iran begins spilling oil. One month later, an Iraqi air attack increases the amount of oil spilled to approximately 80 million gallons of oil.

    6. August 6, 1983 – The Castillo de Bellver, a Spanish tanker, catches fire near Cape Town, South Africa, spilling more than 78 million gallons of oil.

    7. March 16, 1978 – The Amoco Cadiz tanker runs aground near Portsall, France, spilling more than 68 million gallons of oil.

    8. November 10, 1988 – The tanker Odyssey breaks apart during a storm, spilling 43.1 million gallons of oil northeast of Newfoundland, Canada.

    9. July 19, 1979 – The Atlantic Empress and the Aegean Captain tankers collide near Trinidad and Tobago. The Atlantic Empress spills 42.7 million gallons of oil. On August 2, the Atlantic Empress spills an additional 41.5 million gallons near Barbados while being towed away.

    10. August 1, 1980 – Production Well D-103 blows out, spilling 42 million gallons of oil southeast of Tripoli, Libya.

    Union Oil Company
    January 28, 1969 – Inadequate casing leads to the blowout of a Union Oil well 3,500 feet deep about five miles off the coast of Santa Barbara, California. About three million gallons of oil gush from the leak until it can be sealed 11 days later, covering 800 square miles of ocean and 35 miles of coastline and killing thousands of birds, fish and other wildlife.

    The disaster is largely considered to be one of the main impetuses behind the environmental movement and stricter government regulation, including President Richard Nixon’s signing of the National Environmental Policy Act, the creation of the Environmental Protection Agency in 1970. It also inspired Wisconsin Senator Gaylord Nelson to found the first Earth Day.

    Exxon Valdez
    March 24, 1989 – The Exxon Valdez runs aground on Bligh Reef in Prince William Sound, Alaska, spilling more than 11 million gallons of oil.

    March 22, 1990 – Captain Joseph Hazelwood is acquitted of all but one misdemeanor, negligent discharge of oil. Hazelwood is later sentenced to 1,000 hours of cleaning around Prince William Sound and is fined $50,000.

    July 25, 1990 – At an administrative hearing, the Coast Guard dismisses charges of misconduct and intoxication against Captain Joseph Hazelwood, but suspends his captain’s license.

    October 8, 1991 – A federal judge approves a settlement in which Exxon and its shipping subsidiary will pay $900 million in civil payments and $125 million in fines and restitution. Exxon says it has already spent more than $2 billion on cleanup.

    September 16, 1994 – A federal jury orders Exxon to pay $5 billion in punitive damages to fishermen, businesses and property owners affected by the oil spill.

    November 7, 2001 – The US Court of Appeals for the Ninth Circuit rules that the $5 billion award for punitive damages is excessive and must be cut.

    December 6, 2002 – US District Judge H. Russel Holland reduces the award to $4 billion.

    December 22, 2006 – The Ninth Circuit Court of Appeals reduces the award to $2.5 billion.

    June 25, 2008 – The US Supreme Court cuts the $2.5 billion punitive damages award to $507.5 million.

    June 15, 2009 – The Ninth Circuit Court of Appeals orders Exxon to pay $470 million in interest on the $507.5 million award.

    BP Gulf Oil Spill
    April 20, 2010 – An explosion occurs aboard BP-contracted Transocean Ltd Deepwater Horizon oil rig stationed in the Gulf of Mexico. Of the 126 workers aboard the oil rig, 11 are killed.

    April 22, 2010 – The Deepwater Horizon oil rig sinks. An oil slick appears in the water. It is not known if the leak is from the rig or from the underwater well to which it was connected.

    April 24, 2010 – The US Coast Guard reports that the underwater well is leaking an estimated 42,000 gallons of oil a day.

    April 28, 2010 – The Coast Guard increases its spill estimate to 210,000 gallons of oil a day.

    May 2, 2010 – President Barack Obama tours oil spill affected areas and surveys efforts to contain the spill.

    May 4, 2010 – The edges of the oil slick reach the Louisiana shore.

    May 26, 2010 – BP starts a procedure known as “top kill,” which attempts to pump enough mud down into the well to eliminate the upward pressure from the oil and clear the way for a cement cap to be put into place. The attempt fails.

    June 16, 2010 – BP agrees to create a $20 billion fund to help victims affected by the oil spill.

    July 5, 2010 – Authorities report that tar balls linked to the oil spill have reached the shores of Texas.

    July 10, 2010 – BP removes an old containment cap from the well so a new one can be installed. While the cap is removed, oil flows freely. The new cap is finished being installed on July 12.

    July 15, 2010 – According to BP, oil has stopped flowing into the Gulf.

    August 3, 2010 – BP begins the operation “static kill” to permanently seal the oil well.

    August 5, 2010 – BP finishes the “static kill” procedure. Retired Adm. Thad Allen says this will “virtually assure us there’s no chance of oil leaking into the environment.”

    January 11, 2011 – The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling releases their full report stating that the explosion of the Deepwater Horizon rig launched the worst oil spill in US history, 168 million gallons (or about 4 million barrels).

    September 14, 2011 – The final federal report is issued on the Gulf oil spill. It names BP, Transocean and Halliburton as sharing responsibility for the deadly explosion that resulted in the April 2010 Gulf of Mexico oil spill.

    January 26, 2012 – A federal judge in New Orleans rules that Transocean, the owner of the Deepwater Horizon rig, is not liable for compensatory damages sought by third parties.

    January 31, 2012 – A federal judge in New Orleans rules that Halliburton is not liable for some of the compensatory damages sought by third parties.

    March 2, 2012 – BP announces it has reached a settlement with attorneys representing thousands of businesses and individuals affected by the 2010 oil spill.

    April 18, 2012 – Court documents are filed revealing the March 2, 2010 settlement BP reached with attorneys representing thousands of businesses and individuals affected by the oil spill. A federal judge must give preliminary approval of the pact, which BP estimates will total about $7.8 billion.

    April 24, 2012 – The first criminal charges are filed in connection with the oil spill. Kurt Mix, a former engineer for BP, is charged with destroying 200-plus text messages about the oil spill, including one concluding that the undersea gusher was far worse than reported at the time.

    November 15, 2012 – Attorney General Eric Holder announces that BP will plead guilty to manslaughter charges related to the rig explosion and will pay $4.5 billion in government penalties. Separate from the corporate manslaughter charges, a federal grand jury returns an indictment charging the two highest-ranking BP supervisors on board the Deepwater Horizon on the day of the explosion with 23 criminal counts.

    November 28, 2012 – The US government issues a temporary ban barring BP from bidding on new federal contracts. The ban is lifted on March 13, 2014.

    December 21, 2012 – US District Judge Carl Barbier signs off on the settlement between BP and businesses and individuals affected by the oil spill.

    January 3, 2013 – The Justice Department announces that Transocean Deepwater Inc. has agreed to plead guilty to a violation of the Clean Water Act and pay $1.4 billion in fines.

    February 25, 2013 – The trial to determine how much BP owes in civil damages under the Clean Water Act begins. The first phase of the trial will focus on the cause of the blowout.

    September 19, 2013 – In federal court in New Orleans, Halliburton pleads guilty to destroying test results that investigators had sought as evidence. The company is given the maximum fine of $200,000 on the charge.

    September 30, 2013 – The second phase of the civil trial over the oil spill begins. This part focuses on how much oil was spilled and if BP was negligent because of its lack of preparedness.

    December 18, 2013 – Kurt Mix, a former engineer for BP, is acquitted on one of two charges of obstruction of justice for deleting text messages about the oil spill.

    September 4, 2014 – A federal judge in Louisiana finds that BP was “grossly negligent” in the run-up to the 2010 disaster, which could quadruple the penalties it would have to pay under the Clean Water Act to more than $18 billion. Judge Carl Barbier of the US District Court for the Eastern District of Louisiana also apportions blame for the spill, with “reckless” BP getting two thirds of it. He says the other two main defendants in the more than 3,000 lawsuits filed in the spill’s wake, Transocean and Halliburton, were found to be “negligent.”

    January 15, 2015 – After weighing multiple estimates, the court determines that 4.0 million barrels of oil were released from the reservoir. 810,000 barrels of oil were collected without contacting “ambient sea water” during the spill response, making BP responsible for a maximum of 3.19 million barrels.

    January 20-February 2, 2015 – The final phase of the trial to determine BP’s fines takes place. The ruling is expected in a few months.

    July 2, 2015 – An $18.7 billion settlement is announced between BP and five Gulf states.

    September 28, 2015 – In a Louisiana federal court, the city of Mobile, Alabama, files an amended complaint for punitive damages against Transocean Ltd., Triton Asset Leasing, and Halliburton Energy Services, Inc., stating that “Mobile, its government, businesses, residents, properties, eco-systems and tourists/tourism have suffered and continue to suffer injury, damage and/or losses as a result of the oil spill disaster.” As of April 20, 2015, Mobile estimated the losses had exceeded $31,240,000.

    October 5, 2015 – BP agrees to pay more than $20 billion to settle claims related to the spill. It is the largest settlement with a single entity in the history of the Justice Department.

    November 6, 2015 – The remaining obstruction of justice charge against Kurt Mix is dismissed as he agrees to plead guilty to the lesser charge of “intentionally causing damage without authorization to a protected computer,” relating to deletion of a text message, a misdemeanor. He receives six months’ probation and must complete 60 hours of community service.

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  • ‘86% of Asia’s central banks, supervisory authorities adopting big data, ML’

    ‘86% of Asia’s central banks, supervisory authorities adopting big data, ML’

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    The share of Asian central banks and supervisory authorities adopting big data and machine learning has risen to 86 per cent. This involves nowcasting exercises, applications to granular financial data, and suptech/regtech applications such as the computation of the economic policy uncertainty (EPU) indices in India.

    An important area is fraud detection, with data reflecting that one-third of Asian central banks deploy big data algorithms for anti-money laundering/combating terrorism financing purposes, RBI Deputy Governor Michael Patra said, quoting a survey.

    “Machine learning has also been extensively used in Asia for research purposes to inform monetary policy decisions, facilitate data management, and support regulatory supervision,” Patra said as part of his address at the 59th SEACEN Governors’ Conference on February 15. The RBI released the text of the speech on Tuesday.

    Other applications include using text analysis to evaluate monetary policy credibility, ensuring consistency in central banks’ communication of supervisory issues to financial institutions, improving efficiency in the compilation of statistics, assessing the state of the labour market or of trade conditions, extracting information on tourism activities, and capturing firms’ sentiment or evaluating employees’ feedback.

    Growing interest in digital forms of payments worldwide has also led SEACEN central banks to explore the possibilities of central bank digital currency (CBDC), which is currently in various stages of experimentation in different member countries.

    “The overarching goal for developing CBDC as digital cash among the SEACEN central banks appears to be to create a resilient payment system for consumers and businesses to transact in any situation. SEACEN central banks are actively coordinating their efforts to develop CBDCs, with near real-time exchanges of information on progress,” he said.

    Inflation vs growth

    Citing a working paper from the SEACEN centre, Patra said estimates suggest that the sacrifice ratio — the loss of output to achieve a reduction in inflation by one percentage point — is between zero and 0.5 per cent of GDP, even as the extent of contraction in output was widely divergent across member economies.

    “Asia will likely contribute about two-thirds of global growth in 2024, a carryover of its blockbuster performance in 2023. Disinflation is expected to remain on track in Asia, and convergence with central bank targets is being sighted. Thus, the outlook for Asia in a stormy and unsettled global environment is one of sustained growth with stability,” Patra said.

    As a result, the region is a preferred habitat for international financial flows on the back of positive growth differentials vis-à-vis the rest of the world, deep and vibrant financial markets, and reasonable stability in financial asset prices.

    On the other hand, global spillovers from geopolitical developments, geo-economic fragmentation, and the tightening of financial conditions as a result of aggressive and synchronised monetary policy tightening worldwide have imposed downward pressures on currencies in the region, resulting in a widening of risk spreads and reversals of portfolio equity and debt flows.

    Capital inflows to SEACEN member economies more than doubled from an average of $400 billion in 2000-2010 to over $900 billion in 2011-2021. The volatility of capital inflows into SEACEN economies declined between 2000-2010 and 2011-2021. However, the variability of portfolio equity, trade credit, and advance flows rose, leading to a need for varied responses, he added.

    As such, changing workforce demographics, the rise of financial products and services beyond the conventional definition of banking, digitalisation, climate change, talent shortages, and persistent supply shocks, apart from the pandemic and the recent inflation experience, will continue to pose challenges.

    Patra also touched upon the fact that climate change poses a common and potentially overwhelming macrofinancial risk for all SEACEN member countries, given the alarming rise in the incidence and intensity of extreme weather events in recent years.

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  • AG’s office investigating private all-girls high school

    AG’s office investigating private all-girls high school

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    WENHAM — The state Attorney General’s Office is investigating complaints against the Academy at Penguin Hall, a private all-girls high school in Wenham.

    Assistant Attorney General Hanne Rush on Friday confirmed the existence of an investigation in response to a public records request by The Salem News for any complaints that have been filed against the school.

    In a letter, Rush said the AG’s office is withholding records because they “constitute investigatory materials related to an open investigation that reveal confidential sources,” and that disclosing the information would “cause a chilling effect on individuals to speak freely with law enforcement.”

    Molly Martins, the founder and president of the Academy at Penguin Hall, confirmed that the Attorney General’s office contacted the school and requested records.

    “We have provided the information that they requested and cooperated with their inquiry,” Martins said in an email. She declined to comment further.

    George Balich, the chair of Penguin Hall’s board of trustees, said he was unaware of any complaints against the school. He said officials from the Attorney General’s nonprofit organizations/public charities division visited the school in December after the school was delinquent in filing its annual financial audit.

    Penguin Hall provided the records and the AG’s office renewed the school’s certificate of solicitation, which charitable organizations need in order to solicit contributions, Balich said.

    “I don’t want to guess what’s going on,” he said, “but if someone there (in the Attorney General’s office) thought there was a problem we probably would not have gotten that certificate.”

    The Salem News reported last week the Academy at Penguin Hall, the only all-girls high school on the North Shore, is facing financial problems. The school has run up a deficit of millions of dollars since opening in 2016 and has struggled to pay its bills in recent months.

    In October, the town of Wenham threatened to shut off the school’s water due to unpaid water bills, and the IRS placed a lien on school property over unpaid payroll taxes.

    The Academy at Penguin Hall is an independent all-girls private school with about 120 students in grades 9-12. It operates as a 501©(3) nonprofit corporation and is required to file financial reports with the Attorney General’s nonprofit organizations/public charities division.

    The division “ensures appropriate application of charitable assets, investigates allegations and initiates enforcement actions in cases of breach of fiduciary duty,” according to the AG’s website.

    Penguin Hall had a negative fund balance of $6.5 million, according to the latest publicly available filing. The school has relied on millions of dollars in loans to stay afloat, including more than $2 million from Martins’ husband, Albert Martins, and his company, Martins Construction.

    Penguin Hall paid Martins Construction $960,000 in fiscal 2022. Molly Martins has said the payments were for renovations and other work at the school. Al Martins is also a member of the school’s board of trustees.

    Molly Martins is a former chairwoman of the Wenham Select Board.

    Penguin Hall recently announced a 40% increase in tuition, to $42,800, an attempt to resolve its financial problems, and has reached out to parents for donations.

    School officials have been meeting in small groups with parents about the school’s financial situation and are being “as transparent as possible,” Balich said.

    “Nobody’s hiding anything,” he said. “I’m being as blunt as I can and saying, ‘We need your help.’”

    Staff Writer Paul Leighton can be reached at 978-338-2535, by email at pleighton@salemnews.com, or on Twitter at @heardinbeverly.

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    By Paul Leighton | Staff Writer

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  • Citi warns its investment bankers—less affected when 20,000 jobs were cut—to control their drinking at client events

    Citi warns its investment bankers—less affected when 20,000 jobs were cut—to control their drinking at client events

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    Citigroup Inc. dealmakers were told to be disciplined when consuming alcohol at client events after the bank received complaints of unruly behavior, according to people with knowledge of the matter.

    In calls late this week, bankers at all levels — from analysts to managing directors — were reminded to keep the firm’s reputation in mind when drinking, said the people, who asked not to be identified discussing confidential information. The senior bankers leading the calls didn’t put a complete curb on consumption of alcohol, noting that drinking in business settings has wide cultural acceptance, the people said.

    A representative for New York-based Citigroup declined to comment.

    The stern words to Citigroup’s investment bankers come as Chief Executive Officer Jane Fraser is working to raise standards across the Wall Street giant after years of underperformance relative to peers. Citigroup’s management is cutting 20,000 roles, but has so far left investment banking less affected than other divisions.

    Read More: Citi to Cut 20,000 Roles in Fraser’s Bid to Boost Returns

    The bank last month reported that investment-banking revenue climbed 27% in the fourth quarter from a year earlier. Still, the division had a $322 million loss, largely the result of expenses surging 37%.

    Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

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    Gillian Tan, Todd Gillespie, Bloomberg

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  • RBC’s takeover of HSBC: What will happen to HSBC Canada customers? – MoneySense

    RBC’s takeover of HSBC: What will happen to HSBC Canada customers? – MoneySense

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    Although the transition will be largely managed internally by RBC, current HSBC customers might have questions about what’s coming up in the next two months. In this article, we’ll walk you through what to expect. 

    What will happen to HSBC Canada customers? 

    During the transition, most changes will be automatic, so HSBC customers can continue to bank as they normally would. Customers should look in the mail for a product and services guide, called Welcome to RBC, and keep it around during the transition as it contains reference information and links. Below we’ve outlined what is expected to happen with HSBC accounts, loans and investments. 

    Personal banking

    What’s happening: RBC will identify suitable bank accounts for HSBC customers based on the features of their current accounts and will send new RBC debit cards in the mail. Customers without an HSBC chequing or savings account will receive an RBC client card number. Expect to receive your cards or client card number by the end of February 2024. 

    What to do: Continue to use your HSBC card until the transition to RBC is complete. In the meantime, use your new RBC card or client number to enroll in RBC online banking or the RBC app. You can activate your debit card online. This will ensure that you have access to your RBC accounts once the transition is complete.

    Note: Your historical account information will migrate to RBC but you can also download it from HSBC to have it on hand. For more information, refer to Section 2 of your welcome package.

    Credit cards 

    What’s happening: As with your personal bank accounts, RBC will identify which RBC credit cards to offer you based on the features of your current HSBC credit cards, and the bank will mail them to you by the end of March 2024. Your personal credit limits and balances will be the same as they were with HSBC. Any insurance coverages and services you had through HSBC, however, will come to an end and be replaced with those offered by RBC, if applicable. 

    What to do: Activate your credit cards online right away, but also carry your HSBC cards until your RBC cards are ready to use. Find out more about credit cards in Section 5 of the welcome guide or by visiting RBC’s website. 

    Mortgages and other loans

    What’s happening: All HSBC lending products, including lines of credit, loans and mortgages will migrate to RBC at the end of March 2024. The terms of your mortgage agreement, including the interest rate, term, payment amount and frequency, amortization, portability and pre-payment privileges will remain the same until your current term ends. 

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  • Barclays to buy retail banking arm of supermarket chain Tesco for £600 million

    Barclays to buy retail banking arm of supermarket chain Tesco for £600 million

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    Tesco on Friday said it was selling the retailing banking business of Tesco Bank to Barclays for £600 million initially, and then another £100 million after the settlement of certain regulatory capital amounts and after transaction costs.

    The U.K. supermarket chain said it will use majority of a combined £1 billion, which also includes a special dividend previously announced from Tesco Bank, for a share buyback.

    It will retain insurance, ATMs, travel money and gift cards, that on a proforma basis account for roughly £80 million to £100 million in operating profit, and said the deal is mildly accretive to earnings per share.

    Barclays said it’s acquiring credit cards, unsecured personal loans, deposits and the operating infrastructure that includes £8.3 billion of unsecured lending balances with a credit quality consistent with its existing U.K. portfolios. The business it’s buying had an adjusted operating profit of approximately £85 million in the 12 months ended February 2023.

    Barclays also will enter into an exclusive strategic partnership with Tesco for an initial period of 10 years to market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, paying £50 million per year.

    Tesco
    TSCO,
    +0.89%
    shares have dropped 3% this year while Barclays
    BARC,
    -1.02%
    shares have declined by 7%.

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  • ED to probe Paytm Payment Bank if money laundering found

    ED to probe Paytm Payment Bank if money laundering found

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    The Directorate of Enforcement (ED) will probe Paytm Payment Bank if there are fresh money laundering charges by the Reserve Bank of India (RBI), a senior Finance Ministry official confirmed on Saturday.

    businesslineasked: “Is it correct that ED will probe Paytm Payment Bank if there are fresh charges of money laundering by RBI?” In response to this, the official said, “Yes.“

    The highly-placed official’s remarks are significant in the context of government agencies raising security concerns related to fund flows with links to China. Also, RBI has uncovered data breaches and found violations of the PMLA. Some reports also suggested that it might lose its payment bank license.

    Earlier this week, banking regulator RBI said that Paytm Payment Bank will not be allowed to take further deposits, credit transactions or top-ups in customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024. However, interest, cash-backs, or refunds may be credited anytime. It also said that the Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated as soon as February 29, 2024.

    Further, settlement of all pipeline transactions and nodal accounts (in respect to all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.

    “The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action,” RBI said while giving reasons for its action. However, it clarified that withdrawal or utilisation of balances by its customers from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., are to be permitted without any restrictions, up to their available balance.

    In March 2022, RBI directed Paytm Payment Bank to stop, with immediate effect, the onboarding of new customers. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of the new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by the RBI after reviewing the report of the IT auditors. This action is based on certain material supervisory concerns observed in the bank.” It said.

    Meanwhile, on Friday, Paytm founder Vijay Shekhar Sharma said there would be no impact on the paytm app, and it would continue to provide services as usual. ”Your favourite app is working, will keep working beyond February 29 as usual. I, with every paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services – with Paytm Karo as the biggest champion of it,” Sharma said.



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  • Trump says Powell is being ‘political’ with interest rates

    Trump says Powell is being ‘political’ with interest rates

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    Former President Donald Trump on Friday criticized Federal Reserve Chair Jerome Powell and said he’s playing politics with interest-rate policy.

    “It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected,” Trump said, in an interview on the Fox Business Network.

    “I think he’s political,” added Trump, the likely 2024 Republican nominee for president.

    Asked if he would reappoint Powell to a third four-year term, Trump replied “no.”

    Trump said he has a couple of choices in mind to replace Powell, but wouldn’t say who.

    Trump said he thinks lowering interest rates would lead to massive inflation. The conflict in the Middle East is likely to lead to “big inflation” from a spike in oil prices, he added.

    “Trump said he thinks lowering interest rates would lead to massive inflation. The conflict in the Middle East is likely to lead to “big inflation” from a spike in oil prices, he added.”

    Powell “is not going to be able to do anything,” Trump said.

    On Wednesday, Powell said he wasn’t giving a potential third term any thought. Powell’s current term expires in early 2026.

    Speculation on a third term “is not something I’m focused on,” Powell said.

    “We’re focused on doing our jobs. This year is going to be a highly consequential year for the Fed and monetary policy. We’re, all of us, very buckled down, focused on doing our jobs,” Powell said.

    Analysts say that the Fed will be criticized by both parties in the election year.

    On Sunday, Powell will appear on the CBS News program “60 Minutes” and will likely face more questions about the election.

    Earlier this week, top Democrats on the Senate Banking Committee urged the Fed to cut rates quickly, saying they were too high and hurting the housing market.

    “Keeping interest rates high will be detrimental to American workers and their families and do little to bring down prices or promote moderate economic growth,” said Sen. Sherrod Brown, a Democrat from Ohio, and the chairman of the Banking Committee, in a letter to Powell prior to Wednesday’s Fed meeting.

    At the meeting on Wednesday, the Fed kept its benchmark interest rate unchanged in a range of 5.25%-5.5%.

    Asked about the letter from the Democrats on Wednesday, Powell said Congress has given the Fed the job of stable prices. High inflation hurts people at the lower end of the income spectrum, he added.

    “It’s what society has asked us to do is to get inflation down. The tools we use to do it are interest rates,” he said.

    The Fed has penciled in three rate cuts for 2024. Powell said that a cut at the Fed’s next meeting in March was unlikely. He said the Fed wants to see more good inflation reports so it can have greater confidence that inflation is coming down to the 2% target.

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  • What Biden’s decision to pause new U.S. LNG exports means for the energy market

    What Biden’s decision to pause new U.S. LNG exports means for the energy market

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    The Biden administration’s announcement Friday that it’s pausing liquefied natural gas export approvals sparked political backlash, drew cheers from climate activists and stoked uncertainty in energy markets, but is unlikely to see the U.S. give up its title as the world’s top LNG exporter.

    The U.S. will delay its decisions on new LNG exports to non-free trade agreement countries, allowing time for the Energy Department to update the underlying analyses for LNG export authorizations, the White House said.

    Those analyses are roughly five years old and “no longer adequately account for considerations” such as potential cost increases for American consumers and manufacturers or the “latest assessment of the impact of greenhouse gas emissions,” it said.

    The Biden administration likely “realizes the role of LNG in foreign policy, but at the same time it needs to show the Democrat base that it is doing something for climate change,” said Anas Alhajji, an independent energy expert and managing partner at Energy Outlook Advisors, pointing out that the announcement comes during a presidential election year.

    “Delaying one project or stopping it may not be a big deal, but it is a problem if it becomes a trend,” he said in emailed commentary.

    Environmental groups, which have pushed for action, cheered the decision.

    The 12 impacted projects in the U.S. “would spew out as much climate-warming pollution as 223 coal plants per year, and they present explosion risks to the communities where they’re located and emit other health-harming chemicals,” the Sierra Club, an environmental group, said in a statement welcoming the decision.

    Top exporter

    The announcement is particularly important for a nation that became the world’s biggest LNG exporter in the span of less than a decade.

    The U.S. became the world’s largest LNG exporter during the first half of 2022 on the back of increases in LNG export capacity, international natural gas and LNG prices, and global demand, particularly in Europe, according to the Energy Information Administration.

    Less than a decade ago, U.S. LNG exports were negligible. The country had only started exporting LNG from the Lower 48 states in 2016, the EIA said.

    The country’s exports of LNG climbed to a fresh record in November 2023, with the EIA reporting domestic exports of 386.2 billion cubic feet, up from 384.4 bcf a month earlier. Exports in December 2016 were at just 41.8 bcf.

    U.S. LNG exports soared after 2016.


    EIA

    With 90% of U.S. LNG going to non-free trade agreement destinations, withholding licensing effectively “halts project development,” John Miller, managing director, ESG and sustainability policy at TD Cowen wrote in a Friday note.

    Equities

    LNG equities with operating facilities likely won’t benefit from the administration’s announcement, at least not immediately, until the impacts of this pause in export approvals to non-FTA countries becomes more clear, Jason Gabelman, director, sustainability & energy transition at TD Cowen said.

    U.S. companies with government approvals that have not been sanctioned, “could have a higher probability of moving forward this year, albeit modestly” as offtakers may be hesitant to sign up to new U.S. projects with LNG development getting “politicized,” he said. Among those, he pointed out approvals for proposed liquefaction units at NextDecade Corp.’s
    NEXT,
    +2.30%
    Rio Grande LNG export facility project in Brownsville, Texas.

    At the same time, it would not be a surprise if U.S. LNG companies pursuing growth that do not yet have non-FTA approval see downside pressure, said Gabelman.

    LNG projects take around 4 years to build and any delays to project sanctions today will take “multiple years to manifest in the market,” he said.

    Still, the U.S. announcement “introduces the risk of more stringent oversight that could limit new U.S. capacity” more than four years out, Gabelman said.

    Companies that supply equipment to LNG liquefaction projects include Baker Hughes Co.
    BKR,
    +0.59%
    and Chart Industries Inc.
    GTLS,
    -7.54%    ,
    said Marc Bianchi, a senior energy analyst at TD Cowen.

    Any slowing of approval would create “overhand on order growth,” he said.

    Climate change

    The White House said Friday that its decision will not impact the ability of the U.S. to continue supplying LNG to its allies in the near term but also acknowledged environmental concerns.

    “I think we’ve got to be clear eyed about the challenges that we face. The climate crisis is an existential crisis, and we’ve got to be, I think, really forward leaning into making sure that we’re taking that head on,” said Ali Zaidi, the White House national climate adviser, told reporters Friday.

    He added that given the number of approvals already completed, the number of projects under construction are set to double existing capacity with approvals beyond that set to double capacity yet again.

    “So there’s a long runway here, and we’re taking a step back and thinking, OK, let’s take a hard look before that runway continues to build out,” he said.

    Rob Thummel, senior portfolio manager at Tortoise, argued that U.S. LNG exports actually reduce global carbon emissions as natural gas typically “displaces coal to generate electricity in countries such as China and India.”

    They also improve global energy security as U.S. natural gas is becoming Europe’s primary energy supplier, replacing Russia, he said.

    In a statement Friday, Sen. Joe Manchin, a West Virginia Democrat and chairman of the U.S. Senate Energy and Natural Resources Committee, said that if the Biden administration has facts to prove that additional LNG export capacity would hurt Americans, it needs to make that information public. But if the pause is “another political ploy to pander to keep-it-in-the-ground climate activists,” he said he would “do everything in my power to end this pause immediately.

    Manchin plans to hold a hearing on the decision in the coming weeks.

    Market impact

    The U.S. decision to delay new LNG export permits is unlikely to have an impact on domestic natural-gas supplies or prices, said Energy Outlook Advisors’ Alhajji.

    Still, the EIA noted in its Annual Energy Outlook released in March of last year that it remains uncertain as to how LNG export capacity will affect domestic prices, consumption and supply.

    LNG prices and the rate at which new LNG export terminals can be constructed help determine LNG export volumes, the EIA said, and higher LNG exports can result in upward pressure on U.S. natural-gas prices, while lower U.S. LNG exports can pressure prices.

    On Friday, natural gas for February delivery
    NG00,
    +0.23%

    NGG24,
    +0.26%
    settled at $2.71 per million British thermal units, up 7.7% for the week.

    Meanwhile, the U.S. is likely to keep its position as the world’s top LNG exporter, according to Tortoise’s Thummel.

    The U.S. is the currently the largest LNG exporter at almost 12 bcf per day, with Qatar coming in second, he said.

    Qatar is expanding its LNG export capacity and is expected to have the ability to export almost 20 bcf per day by 2028, he said. The EIA reported recently that Qatar has averaged 10.3 bcf per day in exports during the last 10 years.  

    That would mark sizable growth. But the EIA reported in November that LNG export capacity from North America is likely to more than double from around 11.4 bcf per day to 24.3 bcf per day by the end of 2027.

    The EIA said North America’s LNG export capacity is likely to more than double by 2027.


    EIA

    Given expected growth in U.S. LNG export capacity, the U.S. is likely to “remain the largest exporter of LNG in the world” despite the U.S. announcement, said Thummel.

    —Victor Reklaitis contributed.

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  • 3 things to know about how the Fed might roll back quantitative tightening

    3 things to know about how the Fed might roll back quantitative tightening

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    The notion that the Federal Reserve will soon slow, or perhaps even end, its program of quantitative tightening is increasingly being talked about on Wall Street like a foregone conclusion.

    But while investors wait to hear more on the subject from Fed Chair Jerome Powell during next week’s post-meeting press conference, they could be forgiven for asking themselves some questions.

    What might an imminent taper of the Fed’s balance-sheet runoff look like? Why has it suddenly become so urgent? What might it mean for the six or so interest-rate cuts investors are expecting from the Fed this year, as well as for markets more broadly?

    We aim to answer these questions below.

    What inspired talk of tapering QT?

    It wasn’t until the minutes from the Federal Reserve’s December policy meeting were published earlier this month that investors started to take the notion of the Fed declaring “mission accomplished” on QT seriously.

    The minutes revealed that a number of senior Fed officials felt it was nearly time to “begin to discuss” the technical factors that would govern the Fed’s decision to slow the runoff of maturing bonds from its balance sheet.

    Shortly after the minutes’ release, several senior Fed officials came forward to discuss the importance of ending the balance-sheet runoff. Dallas Fed President Lorie Logan, the first senior Fed official to expand on what was noted in the minutes, said earlier this month that the Fed should start to slow the pace of its balance-sheet shrinkage once assets locked up in the Fed’s reverse-repo facility fell below a certain level.

    According to Logan, senior Fed officials had been unsettled by the drain of $2 trillion in assets from the RRP facility last year.

    But there was another issue that was also likely bothering monetary policymakers heading into the Fed’s December meeting.

    Sudden spikes in overnight repo rates late last year drew uncomfortable comparisons to the repo-market crisis of September 2019, which foreshadowed the end of the Fed’s previous attempt at tapering its balance sheet, according to TS Lombard’s Steve Blitz.

    See: Something strange is happening in the financial plumbing under Wall Street

    See: One of Wall Street’s most important lending rates will stay elevated for weeks, Barclays says

    TS LOMBARD

    What is the Fed’s ‘lowest comfortable level of reserves’?

    A re-run of the repo-market crisis of 2019 is what the Fed is presumably trying to avoid. Economists are so concerned the central bank might accidentally bump up against the lower bound for reserves in the banking system, that they have come up with a name for the concept: They’re calling it the “lowest comfortable level of reserves.”

    According to this idea, strain in overnight-financing markets should emerge once reserves in the banking system retreat below a certain threshold. This would, in turn, likely force the central bank to scale back or even reverse quantitative tightening immediately, according to several economists.

    In order to avoid such a risk, Jefferies economist Thomas Simons said in a note to clients earlier this month that he expects the Fed will announce plans to start tapering QT after its March meeting.

    Across Wall Street, most economists expect the Fed will begin by tapering the pace at which Treasurys are redeemed from its balance sheet — perhaps cutting it in half to start, from $60 billion a month to $30 billion a month. Reducing the pace at which mortgage-backed securities are running off won’t matter as much until prepayments begin to climb.

    Going even further, economists at Evercore ISI said in a report shared with MarketWatch earlier this week that they expect the tapering to begin around the middle of 2024 and continue potentially through 2025, until the Fed has succeeded in reducing the size of its balance sheet to about $7 trillion.

    The balance sheet presently stands at $7.7 trillion, according to data published by the Fed. It peaked at nearly $9 trillion in April 2022.

    However, one key issue may complicate the Fed’s efforts to ascertain the “LCLoR.” According to Jefferies’ Simons, the amount of banking-system reserves counted as liabilities on the Fed’s balance sheet has been more or less steady since the Fed started its latest round of balance-sheet tapering. It stood at roughly $3.3 trillion recently, according to Fed data cited by Jefferies.

    Why stop at $7 trillion if bank reserves haven’t been all that heavily impacted by QT anyway? It’s probably worth noting that, whatever happens, nobody on Wall Street expects the Fed would attempt to shrink the size of its balance sheet back toward pre-crisis levels, when the amount of bonds on its balance sheet was miniscule compared to today.

    Why? Because there is simply too much debt sloshing around the global financial system to justify such a withdrawal of support, according to Steven Ricchiuto, chief economist at Mizuho Americas.

    “The Fed is not in a position to remove all that extra liquidity because now the system needs it just to function,” Ricchiuto said.

    What does this mean for markets?

    Because quantitative tightening is a hawkish policy stance, its rolling back should be bullish for stocks and bonds. But there are other considerations that could impact the outcome, market strategists said.

    Not only would a reduction in the pace of the Fed’s monthly runoff introduce a fresh dovish tilt to the Fed’s monetary policy, but by reducing the amount of bonds it allows to roll off its balance sheet every month, the Fed would become more active in the Treasury market, said James St. Aubin, chief investment officer at Sierra Investment Management, during an interview.

    There are also a few contextual factors that could impact how the equity market reacts. For example, as St. Aubin pointed out, context is equally as important as the nature of the decision itself. Should the Fed decide to end QT abruptly because the U.S. economy is sliding into a recession, then the decision could hurt stocks.

    Another issue, raised by a different market strategist, is the notion that the Fed could decide to start tapering QT in lieu of cutting interest rates — or at least in lieu of cutting them as quickly as investors expect. This could buy the central bank more time to press its battle against inflation while mitigating the risks that it could hurt the economy by keeping policy uncomfortably tight for too long, economists said.

    Ben Jeffery, U.S. interest-rate strategist at BMO, said in a recent note to clients that, based on Logan’s comments from earlier this month, he would lean toward this being the most likely scenario. Additionally, he said, tapering QT could potentially impact the Treasury’s refunding announcement due in May.

    Jeffery calculated that the Fed tapering QT by $20 billion beginning in April would save the Treasury from issuing nearly $250 billion in bonds compared to if the Fed had continued with its balance-sheet runoff apace.

    This should lead to lower Treasury yields, all else being equal. And lower long-dated Treasury yields are typically seen as beneficial for stocks, according to Callie Cox, a U.S. equity strategist at eToro.

    Although, once again, the outcome for markets would likely depend on the specific context.

    “Higher yields probably aren’t a good thing for stock investors these days, but in particular environments, higher yields and less Fed intervention could hint that the economy is healing,” Cox said.

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  • Oaktree Capital calls commercial real estate ‘most acute area of risk’ right now

    Oaktree Capital calls commercial real estate ‘most acute area of risk’ right now

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    Distressed-debt giant Oaktree Capital sees big opportunities in credit unfolding over the next few years as a wall of debt comes due.

    Oaktree’s incoming co-chief executives Armen Panossian, head of performing credit, and Bob O’Leary, portfolio manager for global opportunities, see a roughly $13 trillion market that will be ripe for the picking.

    Within that realm is high-yield bonds, BBB-rated bonds, leveraged loans and private credit — four areas of the market that have only mushroomed from their nearly $3 trillion size right before the 2007-2008 global financial crisis.

    “Clearly, the most acute area of risk right now is commercial real estate,” the co-CEOs said in a Wednesday client note. “That’s because the maturity wall is already upon us and it’s not going to abate for several years.”

    More than $1 trillion of commercial real-estate loans are set to come due in 2024 and 2025, according to the Mortgage Bankers Association.

    A retreat in the benchmark 10-year Treasury yield
    BX:TMUBMUSD10Y,
    to about 4.1% on Wednesday from a 5% peak in October, has provided some relief even though many borrowers likely will still struggle to refinance.

    Related: Commercial real estate a top threat to financial system in 2024, U.S. regulators say

    “There’s a need for capital, especially for office properties where there are vacancies, rental growth hasn’t materialized, or the rate of borrowing has gone up materially over the last three years. This capital may or may not be readily available, and for certain types of office properties, it absolutely isn’t available,” the Oaktree team said.

    With that backdrop, the firm expects to dust off its playbook from the financial crisis and acquire portfolios of commercial real-estate loans from banks, but also plans to participate in “credit-risk transfer” deals that help lenders reduce exposure.

    Oaktree also sees opportunities brewing in private credit, as well as in high-yield and leveraged loans, where “several hundred” of the estimated 1,500 companies that have issued such debt are likely “to be just fine” even if defaults rise, they said.

    Another area to watch will be the roughly $26 trillion Treasury market, where Oaktree has some concerns “about where the 10-year Treasury yield goes from here” — given not only the U.S. budget deficit and the deluge of supply that investors face, but also how foreign buyers, once the “largest owners in prior years, may be tapped out.”

    Related: Here are two reasons why the 10-year Treasury yield is back above 4%

    U.S. stocks
    SPX

    DJIA

    COMP
    fell Wednesday after strong retail-sales data for December pointed to a resilient U.S. economy, despite the Federal Reserve having kept its policy rate at a 22-year high since July.

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  • Hang Seng leads selloff for Asia stocks, with 4% slump after China data

    Hang Seng leads selloff for Asia stocks, with 4% slump after China data

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    TOKYO (AP) — Asian shares slid Wednesday after a decline overnight on Wall Street and disappointing China growth data, while Tokyo’s main benchmark momentarily hit another 30-year high.

    Japan’s benchmark Nikkei 225
    NIY00,
    -0.95%
    reached a session high of 36,239.22, but reverted lower, last down 0.3% to 35,477. The Nikkei has been hitting new 34-year highs, or the best since February 1990 during the so-called financial bubble. Buying focused on semiconductor-related shares, and a cheap yen helped boost exporter issues.

    Don’t miss: Wall Street firms catch up to Buffett enthusiasm on Japan as Nikkei keeps hitting records

    Hong Kong’s Hang Seng
    HK:HSCI
    tumbled 4% to 15,220.72, with losses building after data showed China hitting its economic growth target of 5.2% for 2023, surpassing government expectations, but short of the 5.3% some analysts expected. The Shanghai Composite
    CN:SHCOMP
    shed 2% to 2,833.62.

    Read on: China hit its economic-growth target without ‘massive stimulus,’ boasts Premier Li Qiang

    Australia’s S&P/ASX 200
    AU:ASX10000
    slipped 0.2% to 7,401.30. South Korea’s Kospi
    KR:180721
    dropped 2.4% to 2,435.90.

    Investors were keeping their eyes on upcoming earnings reports, as well as potential moves by the world’s central banks, to gauge their next moves.
    Wall Street slipped in a lackluster return to trading following a three-day holiday weekend.

    See: What’s next for stocks as ‘tired’ market stalls in 2024 ahead of closely watched retail sales

    The S&P 500
    SPX
    fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average
    DJIA
    dropped 231.86, or 0.6%, to 37,361.12, and the Nasdaq
    COMP
    sank 28.41, or 0.2%, to 14,944.35.

    Spirit Airlines
    SAVE,
    -47.09%
    lost 47.1% after a U.S. judge blocked its takeover by JetBlue Airways
    JBLU,
    +4.91%
    on concerns it would mean higher airfares for flyers. JetBlue rose 4.9%.

    Stocks of banks were mixed, meanwhile, as earnings reporting season ramps up for the final three months of 2023. Morgan Stanley
    MS,
    -4.16%
    sank 4.2% after it said a legal matter and a special assessment knocked $535 million off its pretax earnings, while Goldman Sachs
    GS,
    +0.71%
    edged 0.7% higher after reporting results that topped Wall Street’s forecasts.

    Companies across the S&P 500 are likely to report meager growth in profits for the fourth quarter from a year earlier, if any, if Wall Street analysts’ forecasts are to be believed. Earnings have been under pressure for more than a year because of rising costs amid high inflation.

    But optimism is higher for 2024, where analysts are forecasting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. That, plus expectations for several cuts to interest rates by the Federal Reserve this year, have helped the S&P 500 rally to 10 winning weeks in the last 11. The index remains within 0.6% of its all-time high set two years ago.

    Treasury yields
    BX:TMUBMUSD10Y
    have already sunk on expectations for upcoming cuts to interest rates, which traders believe could begin as early as March. It’s a sharp turnaround from the past couple years, when the Federal Reserve was hiking rates drastically in hopes of getting high inflation under control.

    The Tell: No rate cuts in 2024? Why investors should think about the ‘unthinkable.’

    Easier rates and yields relax the pressure on the economy and financial system, while also boosting prices for investments. And for the past six months, interest rates have been the main force moving the stock market, according to Michael Wilson, strategist at Morgan Stanley.

    He sees that dynamic continuing in the near term, with the “bond market still in charge.”

    For now, traders are penciling in many more cuts to rates through 2024 than the Fed itself has indicated. That raises the potential for big market swings around each speech by a Fed official or economic report.

    Yields rose in the bond market after Fed governor Christopher Waller said in a speech that “policy is set properly” on interest rates. Following the speech, traders pushed some bets for the Fed’s first cut to rates to happen in May instead of March.

    On Wall Street, Boeing fell to one of the market’s sharper losses as worries continue about troubles for its 737 Max 9 aircraft following the recent in-flight blowout of an Alaska Air
    ALK,
    -2.13%
    jet. Boeing
    BA,
    -7.89%
    lost 7.9%.

    In energy trading, benchmark U.S. crude
    CL00,
    -1.55%
    lost 90 cents to $71.75 a barrel. Brent crude
    BRN00,
    -1.37%    ,
    the international standard, fell 78 cents to $77.68 a barrel.

    In currency trading, the U.S. dollar
    USDJPY,
    +0.44%
    rose to 147.90 Japanese yen from 147.09 yen. The euro
    EURUSD,
    -0.10%
    cost $1.0868, down from $1.0880.

    MarketWatch contributed to this report

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  • Capital City Sunday: GOP medical marijuana proposal, Wisconsinites’ tax burden still near historic low | News – Medical Marijuana Program Connection

    Capital City Sunday: GOP medical marijuana proposal, Wisconsinites’ tax burden still near historic low | News – Medical Marijuana Program Connection

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    MADISON (WKOW) — Wisconsin Repubicans have unveiled a new proposal to establish a medical marijuana program in the state.

    The bill would limit the drug to only those who are severely ill with chronic diseases like cancer. Smokeable marijuana would not be allowed.

    The proposal also regulates medical cannabis growers, processors, and testing laboratories, and requires the state to establish five state-owned dispensaries to grow and sell medical cannabis products.

    Cannabis lawyer Jason Tarasek worked closely with lawmakers in Minnesota to hone the state’s adult-use cannabis bill that legalized recreational marijuana in the state. He said this week that he sees similarities between Wisconsin’s proposal and Minnesota’s initial medical marijuana program that was established in 2014. Assembly Speaker Robin Vos has indicated this proposal is based on Minnesota’s program.

    Tarasek said that their initial program was similarly restrictive, but has loosened in recent years to include other conditions such as autism, intractable pain, and sleep apnea. 

    “Like everything with marijuana, it is very controversial when it’s first introduced, the stigma is real around marijuana,” he said. “I think it’s interesting to watch these states come online, and I’m certain that if the medical marijuana program is introduced in Wisconsin, as intended, society will see this…

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  • SEC weighing ‘additional measures’ after hacked post on bitcoin ETF approval

    SEC weighing ‘additional measures’ after hacked post on bitcoin ETF approval

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    The Securities and Exchange Commission on Friday said that a social-media post on X falsely stating that it had approved spot bitcoin exchange-traded funds was created after an “unauthorized party” obtained control over the phone number connected with the agency’s account on the platform.

    The markets regulator said its staff would “continue to assess whether additional remedial measures are warranted” in the wake of the breach, which occurred Tuesday and raised questions about cybersecurity at both the agency and the social-media platform, formerly known as Twitter.

    The agency said it was coordinating with law enforcement on the matter, including with the FBI and the Department of Homeland Security.

    “Commission staff are still assessing the impacts of this incident on the agency, investors, and the marketplace but recognize that those impacts include concerns about the security of the SEC’s social media accounts,” the SEC said in a statement.

    The confusion began on Tuesday afternoon, when the hacked post appeared on the SEC’s X account.

    “Today the SEC grants approval for #Bitcoin ETFs for listing on registered national securities exchanges,” the post read. “The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”

    A second post appeared two minutes later that simply read “$BTC,” the SEC noted in its statement. The unauthorized user soon deleted that second post, but also liked two other posts by non-SEC accounts, according to the agency. The price of bitcoin
    BTCUSD,
    -0.71%
    rose sharply in the wake of the posts, before soon pulling back.

    In response to the hack, SEC staff posted on the official X account of SEC Chair Gary Gensler announcing that the agency’s main account had been compromised, and that it had not yet approved any spot bitcoin exchange-traded products. Staff then deleted the initial unauthorized post, un-liked the liked posts and used the official SEC account to make a new post clarifying the situation, the agency said Friday.

    The SEC also said that it had reached out to X for assistance Tuesday in the wake of the incident, and that agency staff believe the unauthorized access to the SEC’s account was “terminated” later in the day.

    “While SEC staff is still assessing the scope of the incident, there is currently no evidence that the unauthorized party gained access to SEC systems, data, devices, or other social media accounts,” the agency said.

    The following day, the SEC announced that it had, in fact, approved the listing and trading of spot bitcoin ETFs.

    Wednesday’s move marked a breakthrough for the crypto industry, which for years has tried to get such ETFs off the ground in hopes of drawing more traditional investors to the digital-asset space.

    Bitcoin was down 7.6% over a 24-period as of Friday evening.

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  • After Bitcoin ETFs, watch for the next most popular crypto to go the same route

    After Bitcoin ETFs, watch for the next most popular crypto to go the same route

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    After long-awaited spot bitcoin exchange-traded funds made their debut this week, investors are now weighing the prospects of eventual approval of similar ether ETFs.

    The U.S. Securities and Exchange Commission on Wednesday greenlighted 11 spot bitcoin
    BTCUSD,
    -1.58%
    ETFs for the first time. The products, which made its debut trading on Thursday, logged a relatively strong first day. 

    However, bitcoin fell 6.8% on Friday, leaving it with a 3.2% gain over the past seven days, according to CoinDesk data. It underperformed ether
    ETHUSD,
    +1.82%    ,
    which rose 17.6% over the past seven days while it declined 1.2% on Friday.  

    The news about bitcoin ETFs was mostly priced in, while investors are now looking past it to a potential approval of ether ETFs, analysts said.

    “I see value in having an ETH ETF,” Larry Fink, chief executive at the world’s largest asset manager BlackRock, told CNBC’s Squawk Box on Friday. BlackRock, which just launched its iShares bitcoin Trust
    IBIT,
    in November filed an application for a spot ether ETF.

    “It’s hard to know exactly what the U.S. regulators would do” about ether ETF applications, said Alonso de Gortari, chief economist at Mysten Labs, an internet infrastructure company.

    However, “I would expect that once you open the door, it becomes easier and I think the industry is very excited about it,” de Gortari said. If bitcoin ETFs see an impressive institutional inflow in the coming months, it could make such products more established and set a good precedent for other crypto ETF applications, he said.

    Read: Vanguard’s decision to shun bitcoin ETFs triggers backlash — with some customers moving to crypto-friendly competitors like Fidelity

    Also see: Why the debut of bitcoin ETFs could be bad news for crypto stocks, futures ETFs

    The enormous competition and huge inflows into bitcoin ETFs will only boost investors’ interests in an ether ETF, according to Paul Brody, EY’s global blockchain leader. “There’s no doubt that ETH is the next big market and has immediately become a priority for financial services companies,” Brody said in emailed comments.

    Compared with bitcoin, the Ethereum blockchain offers more utility and has unique advantages, noted Fadi Aboualfa, head of research at digital assets custodian Copper. 

    Sandy Kaul, head of digital asset and industry advisory services at Franklin Templeton, said she eventually expects the arrival of ETFs that track a basket of cryptocurrencies. Such products, instead of those based on single crypto, would dominate the space if they are approved, she said.  

    “Just like the S&P 500 has 500 stocks in it, right? You don’t have just one stock.” Kaul said in a phone interview. The arrival of a bitcoin ETF, is just a “baby step into really beginning to think about the future market structure of crypto,” Kaul added. 

    However, not everyone is that optimistic. Will McDonough, founder and chairman of Corestone Capital, said the approval of an Ethereum ETF has “a long way to go.” 

    SEC chairman Gary Gensler previously said bitcoin was the only cryptocurrency he was prepared to publicly label a commodity, rather than a security. 

    The agency also went after companies that offered crypto staking, which allows investors to earn yields by locking their coins to secure blockchains such as Ethereum. The SEC shut down crypto exchange Kraken’s staking business in the U.S. last year.  

    One possibility is that “companies will be able to offer an ETH ETF, but they will not be allowed to stake that ETH and earn yield,” noted EY’s Brody.

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  • Vanguard Won’t Offer Spot Bitcoin ETFs on Its Platform

    Vanguard Won’t Offer Spot Bitcoin ETFs on Its Platform

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    Updated Jan. 11, 2024 3:06 pm ET

    Bitcoin’s trip to Main Street just took a detour.

    Vanguard said Thursday it won’t offer the new spot bitcoin exchange-traded funds on its brokerage platform.

    Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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