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Fallout From Hedge Fund’s Defaults Spreads Through Markets: Live Updates Here’s what you need to know: A Credit Suisse branch in Basel, Switzerland. After the bank warned of significant losses on Monday, its shares fell 14 percent.Credit…Arnd Wiegmann/Reuters The fallout from a series of defaults at a New York hedge fund reverberated through markets for a second day on Monday, as global banks tried to size up their exposure to one firm’s string of bad bets. Shares in Credit Suisse, the Swiss bank, dropped 14 percent on Monday and the Japanese bank Nomura closed 16 percent lower, after the banks said they could face significant losses because of defaults by an American investment firm. U.S. stock futures fell on Monday, with the S&P 500 set to open 0.7 percent weaker. European stock indexes were mixed but an index of European banks was 1.6 percent lower. Neither Credit Suisse nor Nomura named the investment firm whose default could lead to big losses, but Bloomberg identified it as Archegos Capital Management, a New York-based family office that manages the wealth of Bill Hwang, a former hedge fund manager at Tiger Asia Management who was found guilty of wire fraud in 2012. Investment banks that provided services to Archegos, such as Goldman Sachs and Morgan Stanley, dumped huge quantities of stocks including ViacomCBS and Chinese tech companies on Friday. Archegos was forced into the stock sales, worth about $20 billion, after bets the fund made moved the wrong way, Bloomberg reported. Shares in ViacomCBS, one of Archegos’s positions, dropped 23 percent on Wednesday last week. On Friday, the share price plummeted a further 27 percent as the investment banks liquidated positions. Shares in Goldman Sachs and Morgan Stanley were about 3 percent lower in premarket trading. Shares in Deutsche Bank fell more than 4 percent on Monday, after it was said to also have some exposure to Archegos. Credit Suisse has already been roiled this month by the collapse of Greensill Capital, a London-based financial firm it sold funds for, and to whom it extended loans of $140 million. The Swiss bank told investors it would probably report some losses on the loan. “A significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” the Swiss bank said on Monday. It did not yet know the exact size of the loss from exiting its positions but “it could be highly significant and material to our first quarter results,” the statement said. Elsewhere in markets Oil prices fell and then recovered early losses after the container ship blocking the Suez Canal was only partially refloated. The movement raised hopes of restoring trade flows but authorities said more work was needed before maritime traffic could restart. Brent crude, the global benchmark, rose 0.3 percent to $64.73 a barrel, after falling as much as 2.2 percent on Monday morning. Yields on 10-year Treasury notes fell 2 basis points, or 0.02 percentage point, to 1.65 percent. President Nicolás Maduro of Venezuela promoted an unproven remedy for Covid-19 on Facebook, which prompted the company to freeze his page. Credit…Manaure Quintero/Reuters The Facebook page of Venezuela’s president, Nicolás Maduro, was frozen for “repeated” violations of its misinformation policies, including a post about an unproven remedy for Covid-19, the company said on Sunday, the latest example of the social media giant cracking down on political figures who violate its content policies. Mr. Maduro’s Facebook page will be frozen for 30 days in a “read-only” mode, the company said, “due to repeated violations of our rules.” “We removed a video posted to President Nicolas Maduro’s Page for violating our policies against misinformation about Covid-19 that is likely to put people at risk for harm,” a Facebook spokesman said. “We follow guidance from the W.H.O. that says there is currently no medication to cure the virus.” The spokesman was referring to the World Health Organization. Facebook’s move came after Mr. Maduro posted a video on his page that promoted Carvativir, a drug derived from thyme. He said in January that the medicine was a “miracle,” but did not provide evidence of its effectiveness — and declined to release the name of the “brilliant Venezuelan mind” that created the drug. In the video, Mr. Maduro falsely claimed that Carvativir can be used preventively and therapeutically against the coronavirus. In the past, Facebook has been criticized for its inaction against political figures who test the boundaries of the company’s content policies by spreading misinformation. Mark Zuckerberg, the founder and chief executive of Facebook, has said he does not want to be the “arbiter of truth” in public discourse. But in recent months, Facebook has cracked down on certain types of misinformation across the network. The company has banned posts containing false or misleading information regarding the coronavirus, and has shown willingness to take action against some political figures. And in the past, it has removed at least one post by Jair Bolsonaro, the president of Brazil, for false coronavirus remedy claims regarding the malaria drug hydroxychloroquine. In January, after insurgents stormed the United States Capitol, President Donald J. Trump’s account was banned indefinitely for inciting his supporters to violent action using the social network. In response to his account restriction, Mr. Maduro has said Facebook is practicing a form of “digital totalitarianism,” according to Reuters, which first reported Mr. Maduro’s suspension. Mr. Maduro said on Twitter on Sunday that he would continue to broadcast his regular coronavirus briefing from his other digital accounts, including Instagram, YouTube and Twitter. And to circumvent his suspension, he said he would use the Facebook account belonging to his wife, Cilia Flores, to broadcast Covid-19 information. Facebook would not comment on whether it would suspend Ms. Flores’s account. Tankers and freight ships near the entrance of the Suez Canal.Credit…Ahmed Hasan/Agence France-Presse — Getty Images Oil prices fell and then rose again Monday as news reports suggested that the Suez Canal drama might be drawing to a close. Prices dipped more than 2 percent early in the day after tugboats and dredgers succeeded in partly freeing the giant containership Ever Given, which has been blocking the canal since early last week. News reports raised the prospect that the tankers waiting at the entrances to the canal might be able to transit within days and deliver their cargoes to Europe and Asia. But then prices crept back up again after the Suez Canal authorities said there was more work to be done before maritime traffic could resume. By midday in London, Brent crude, the international benchmark, was selling for $65.15 a barrel, up 0.9 percent on the day. The Suez Canal is a key chokepoint for oil shipping, but so far the impact on the oil market of this major interruption of trade flows has been relatively muted. Though prices jumped after shipping on the canal was halted, oil prices still remain below their nearly two-year highs of about $70 a barrel reached earlier this month. Analysts say that traders are focused on other factors beyond the logjam, including the reimposition of lockdowns in Europe that may hold back the recovery of oil demand from the pandemic. From a global perspective, oil supplies are considered adequate, and the Organization of the Petroleum Exporting Countries, Russia and other producers, the group known as OPEC Plus, are withholding an estimated 8 million barrels a day, or about 9 percent of current consumption, from the market. Officials from OPEC Plus are expected to meet by video conference on Thursday to discuss whether to ease output cuts. Goldman Sachs’s headquarters in New York. A group of investors is suing the Wall Street bank over claims of fraud. Credit…Johannes Eisele/Agence France-Presse — Getty Images The Supreme Court will hear arguments on Monday from Goldman Sachs and pension funds over a claim that the Wall Street giant misled investors about its work selling complex debt investments in the prelude to the 2008 financial crisis. In its latest brief, Goldman makes an interesting argument, the DealBook newsletter reports: Investors shouldn’t rely on statements such as “honesty is at the heart of our business” or “our clients’ interests always come first” that appear in Securities and Exchange Commission filings and annual reports. The case is a test of shareholders’ ability to sue over claims of investment fraud. The pension funds sought to sue as a class over Goldman’s statements, saying they belied those statements of honesty, and lower courts agreed to let them proceed. Goldman has argued that the investors are engaged in “guerrilla warfare” and aren’t providing “serious legal arguments,” relying on support from the federal government instead. However, the Biden administration isn’t taking sides, technically. It will argue as a “friend of the court” on Monday that “meritorious private securities-fraud suits” are “an essential complement” to enforcing securities laws. “I expect the court to be troubled by the claim that companies cannot be held accountable for saying that clients come first and then acting otherwise,” Robert Jackson Jr., who served on the S.E.C. from 2018 to 2020 and is now an N.Y.U. law professor, told DealBook. The justices probably won’t agree with the claim that making a company “mean what it says” will lead to a tsunami of meritless lawsuits,” he added. Regardless, Goldman is right that the stakes are high, because the case is likely to decide whether shareholders can “hold corporate insiders accountable when they tell investors one thing and do another,” Mr. Jackson said. A rally on Friday in support of the Amazon workers outside the Retail, Wholesale and Department Store Union’s building in Birmingham, Ala.Credit…Charity Rachelle for The New York Times One of the most closely watched union elections in recent history is wrapping up on Monday, one that could alter the shape of the labor movement and one of America’s largest employers. Almost 6,000 workers at an Amazon warehouse near Birmingham, Ala., one of the company’s largest, are eligible to vote in this election. After years of fierce resistance from the company, they could form the first union at an Amazon operation in the United States. The outcome of the vote may not be known for days, but the union drive has already succeeded in roiling the world’s biggest e-commerce company and spotlighting complaints about its labor practices, The New York Times’s Karen Weise and Michael Corkery write. If the Retail, Wholesale and Department Store Union succeeds, it would be a huge victory for the labor movement, whose membership has declined for decades. A victory would also give it a foothold inside one of the country’s largest private employers. The company now has 950,000 workers in the United States, after adding more than 400,000 in the last year alone. If the union loses, particularly by a large margin, Amazon will have turned the tide on a unionization drive that seemed to have many winds at its back. A loss could force labor organizers to rethink their overall strategy and give Amazon confidence that its approach is working. Tugboats pulling at the Ever Given in the Suez Canal today.Credit…Suez Canal Authority, via Agence France-Presse — Getty Images A journey from the Suez Canal in Egypt to Rotterdam, in the Netherlands — Europe’s largest port — typically takes about 11 days. Venturing south around Africa’s Cape of Good Hope adds at least 26 more days, according to Refinitiv, the financial data company. The additional fuel charges for the journey generally run more than $30,000 a day, depending on the vessel, or more than $800,000 total for the longer trip. But the other option is sitting at the entrance of the canal and waiting for the mother of all floating traffic jams to dissipate, while incurring late fees for cargo — which can reach $30,000 a day. Since Tuesday, the Ever Given, one of the world’s largest container ships, has been stuck in the Suez Canal. The disruption now roiling the global shipping industry provides a reminder of why the Suez Canal was constructed in the first place. Only the Panama Canal looms as large in the transport of goods around the planet. The shutdown of the canal is affecting as much as 15 percent of the world’s container shipping capacity, according to Moody’s Investor Service, leading to delays at ports around the globe. Hansjörg Wyss, the former chief executive of the medical device manufacturer Synthes, said he had agreed to join a bid for Tribune Publishing.Credit…Ruben Sprich/Reuters A Swiss billionaire who has donated hundreds of millions to environmental causes is a surprise new player in the bidding for Tribune Publishing, the major newspaper chain that until recently seemed destined to end up in the hands of a New York hedge fund. Hansjörg Wyss (pronounced Hans-yorg Vees), the former chief executive of the medical device manufacturer Synthes, said he had agreed to join with the Maryland hotelier Stewart W. Bainum Jr. in a bid for Tribune, an offer that could upend Alden Global Capital’s plan to take full ownership of the company, Marc Tracy of The New York Times writes. Mr. Wyss, who has given away some of his fortune to help preserve wildlife habitats in Wyoming, Montana and Maine, said he was motivated to join the Tribune bid by his belief in the need for a robust press. “I have an opportunity to do 500 times more than what I’m doing now,” he said. Alden, which already owns roughly 32 percent of Tribune Publishing shares, is known for drastically cutting costs at the newspapers it controls through its MediaNews Group subsidiary. Last month, the hedge fund reached an agreement with Tribune, whose papers include The Daily News, The Baltimore Sun and The Chicago Tribune, to buy the rest of the company’s shares. The sale of Tribune, which the newspaper company hopes to conclude by July, requires regulatory approval and yes votes from company shareholders representing two-thirds of the non-Alden stock. “We are in a hyper-growth industry,” said Dhivya Suryadevara, Stripe’s chief financial officer.Credit…Richard Drew/Associated Press Thousands of financial technology start-ups are riding an investor frenzy driven by a growing realization that the industry is ripe for a tech makeover, writes Erin Griffith of The New York Times. When the pandemic forced businesses to speed up their usage of digital tools, including e-commerce and online banking, the demand for what is known as fintech exploded. Now start-ups with names like Blend, Brex and Dave that provide decidedly unglamorous banking, lending and payment processing offerings are hot tickets. That was punctuated this month when Stripe, a payments company, raised $600 million in a financing that valued it at $95 billion, the highest ever for a private start-up in the United States. Financial technology companies are also making a splash on the stock market. On Tuesday, Robinhood, a stock trading app popular with young adults, filed for an initial public offering. And Coinbase, a cryptocurrency start-up, is scheduled to go public in the next few weeks in what could be a $100 billion listing. In total, venture capital investors poured $44.4 billion into financial technology start-ups last year, up from $1.1 billion in 2009, according to PitchBook, which tracks private financing. Many investors are now making bold predictions that these start-ups will upend big banks, established credit card providers — and in some cases, the entire financial system. Source link Orbem News #Defaults #fallout #funds #Hedge #Live #Markets #Spreads #Updates