WSJ : Democrats Seek to Break Stalemate on Biden Nominees for FTC and FCC

Democrats Seek to Break Stalemate on Biden Nominees for FTC and FCC
Republicans have blocked appointments of Bedoya and Sohn, leading Senate Democrats to try for an end run

WASHINGTON—Under pressure from progressive activists, Democrats are planning to employ a rarely used parliamentary maneuver to push through President Biden’s nominees for the Federal Trade Commission and Federal Communications Commission, according to people familiar with the matter.

Republicans on the Senate Commerce Committee have so far blocked the nominations of Georgetown University law professor Alvaro Bedoya to the FTC and consumer advocateGigi Sohn to the FCC, largely on grounds that they are too partisan.

That left both commissions deadlocked with a 2-2 split between Democrats and Republicans, denying agency leaders the majorities they needed to advance the Biden administration’s priorities.

In response, Senate Democratic leaders are preparing to use a parliamentary maneuver known as a discharge petition to allow a floor vote on both nominees, the people familiar said.

The vote for Mr. Bedoya could happen as early as this week, the people familiar said. But the maneuver could be difficult to pull off and could take weeks to accomplish.

A majority vote of the Senate is required to advance the discharge petition and bypass a committee vote. Without Republican support—and so far at the committee level there has been none—that means all 50 Democratic-voting members along with Vice President Kamala Harris must be present to support the petition.

Covid-19 exposures and infections have complicated the Democrats’ effort. In the latest holdup, Sen. Bob Casey (D., Pa.), said March 22 that he had tested positive and would be isolated for five days.

But if Senate Democrats stay healthy this week, the discharge petition could be successfully deployed for Mr. Bedoya, the people familiar with the matter said.

The FTC is considered the higher-stakes vote by both parties. Under Biden-appointed chair Lina Khan, the FTC is expected to advance comprehensive consumer-privacy protections as well as detailed standards for judging whether industry competition is fair. FTC actions also could include new antitrust lawsuits challenging big companies’ dominance.

Many of the actions likely would target the tech industry, which Ms. Khan has criticized for years.

Mr. Bedoya’s work has focused on problems around facial recognition software and other technology that can disadvantage minorities. He declined to comment.

The U.S. Chamber of Commerce—which receives backing from major tech companies—has been so concerned that it publicly declared “war” on the FTC and Ms. Khan’s agenda late last year.

“It feels to the business community that the FTC has gone to war against us, and we have to go to war back,” Suzanne Clark, the chamber’s president and chief executive, said at the time.

Republicans also have chafed over the way Ms. Khan was appointed. Mr. Biden named her FTC chairwoman only after her Senate confirmation as a commissioner. Typically an agency chair is designated as such at the time of nomination, leading some conservatives to label the move a bait-and-switch.

Allies say opposition to Mr. Bedoya has little to do with his qualifications and instead is aimed at derailing the FTC’s regulatory agenda.

“The Republicans are simply trying to keep the FTC deadlocked, without a fifth commissioner, for as long as they can,” said David Vladeck, a former head of the FTC consumer protection bureau during the Obama administration, who is also a Georgetown law professor.

Ms. Khan has said in the past that big internet platforms have helped to create addiction, discrimination and predatory advertising, which she has compared to environmental pollution.

She recently said that the FTC’s regulatory agenda for 2022 would focus on those problems stemming from big tech platforms and the surveillance-based internet economy they have helped build up.

“Among the many pressing issues consumers confront in the modern economy, the abuses stemming from surveillance-based business models are particularly alarming,” the commission wrote.

The chamber, meanwhile, has followed through on its threats, employing its lobbying resources to focus on defeating the FTC initiatives.

Its lobbying disclosures for late 2021 show that it lobbied on the “overall direction of the Commission,” as well as “policies and practices related to the FTC expanding its authority” and the agency’s strategic plans for coming years.

As Mr. Bedoya’s selection for the FTC was being debated in the Senate, the chamber also lobbied in late 2021 on “nominations at Federal Trade Commission,” according to its disclosures, without providing details.

Several Republicans have argued that Mr. Bedoya’s past tweets on political topics such as immigration show him to be a Democratic partisan who would further polarize the FTC.

“I remain concerned by the frequency with which he has publicly expressed divisive views on policy matters rather than using a more measured and unifying tone,” Sen. Roger Wicker (R., Miss.), the Commerce Committee’s top Republican, argued before a vote on Mr. Bedoya’s nomination in early March.

“There has been a troubling trend of politicization at the FTC which we have not had in the past and I fear Mr. Bedoya would not bring the cooperative spirit that is so greatly needed.”

The vote was a tie, 14-14.

Democrats also hope to use the parliamentary maneuver to gain a floor vote on Mr. Biden’s nominee for the FCC, Ms. Sohn.

Ms. Sohn served as counselor to former FCC Chairman Tom Wheeler and led Public Knowledge, a public-interest group that advocates for stronger antitrust enforcement.

The outspoken progressive consumer advocate has drawn GOP fire for tweets on political topics that conservatives view as partisan—for example, tweeting that Fox News amounts to “state-sponsored propaganda” because of a lack of opposing viewpoints.

Fox News parent Fox Corp. and Wall Street Journal parent company News Corp share common ownership.

Ms. Sohn declined to comment. Progressives view her confirmation as important to a number of FCC priorities, including expanding access to broadband and re-establishing net-neutrality rules, which require internet service providers to treat all internet traffic equally. She also has drawn support from some conservative businesspeople and activists.

FT : The VXX plot thickens with Barclays’ £450m structured notes loss

The VXX plot thickens with Barclays’ £450m structured notes loss
Today’s announced £450mn hit is linked to its iPath exchange-traded notes business.

A few weeks ago Barclays abruptly stopped supporting two of its most popular exchange-traded notes, VXX and OIL.

The move to suspend share creations linked to the notes, designed to mimic Vix volatility futures and crude oil prices respectively, puzzled many, given how VXX in particular was a popular trading tool with nearly $1bn in assets. It also meant trading went haywire. At the time, all Barclays would say was:

This suspension is being imposed because Barclays does not currently have sufficient issuance capacity to support further sales from inventory and any further issuances of the ETNs. These actions are not the result of the crisis in Ukraine or any issue with the market dynamics in the underlying index components. Barclays expects to reopen sales and issuances of the ETNs as soon as it can accommodate additional capacity for future issuances.

We now have another oblique statement from Barclays that helps explain why the bank suddenly stopped supporting the two ETNs (FT Alphaville’s emphasis below).

As part of its structured products business, Barclays Bank PLC (“BBPLC”), a subsidiary of Barclays PLC (“BPLC”), is a frequent issuer of structured notes and exchange traded notes in the United States and elsewhere.

These securities are often issued to meet actual and anticipated client demand for such securities. BBPLC has determined that the securities offered and sold under its US shelf registration statement during a period of approximately one year exceeded the registered amount (such excess, the “Affected Securities”) 1 giving rise to a right of rescission among certain purchasers of Affected Securities requiring BBPLC to repurchase the Affected Securities at their original purchase price. As a result, BBPLC has elected to conduct a rescission offer to eligible purchasers of the Affected Securities. Details of the rescission offer will be published by BBPLC in due course.

Based on current market prices of the Affected Securities and the estimated pool of potentially eligible purchasers electing to participate in the rescission offer, Barclays expects the rescission losses (net of tax) to be c.£450mn.

Ouch.

A footnote reveals that Barclays had a registered maximum offering size of $20.8bn for its ETNs, and exceeded that by about $15.2bn. Quite the miss. Those securities now have to be bought back at the original purchase price, and incur the estimated $450mn loss.

Also note that Barclays only gives its estimated post-tax loss, which indicates the nominal loss is quite a bit higher. The hit will even delay the start of Barclays’ £1bn buyback programme to the second quarter.

ETNs are a form of exchange-traded products, but unlike the better-known exchange-traded fund, they work like a synthetic debt security issued by a bank, which then uses derivatives to ensure that it tracks the underlying index. The complicated beasts can be very lucrative thanks to both the management fees and the all the trading opportunities they create.

VXX and OIL — or to give them their formal names, the iPath Series B S&P 500 VIX Short-Term Futures ETN and iPath Pure Beta Crude Oil ETNs — still trade on the New York Stock Exchange and CBOE respectively, even though Barclays is no longer creating new shares in them.

That has meant they both became untethered from their underlying reference indices since March 14, as this Bloomberg article explains. It’s also worth noting that VXX has options referencing six times its share count, more than twice the ratio of any ETF or stock except the HYG and XRT, a junk bond and retailer stocks ETFs respectively, according to Goldman Sachs.

There will now be an investigation – both internal and by regulators. From today’s Barclays statement:

Barclays has commissioned an independent review of the facts and circumstances relating to this matter including, among other things, the control environment related to such issuances. Separately, regulatory authorities are conducting inquiries and making requests for information.

We look forward to finding out how this DB-level snafu happened.

>>> Europe : Brokers Upgrades & Downgrades - 28th of March 2022 V2(+)

>>> Up
* BASF Raised to Buy at HSBC; PT 65 euros
* Cloetta Raised to Buy at Nordea; PT 29 kronor (+)
* Frontier Developments Raised to Buy at Jefferies; PT 1,667 pence
* Kone Raised to Hold at Nordea (+)
* Maersk Drilling Raised to Buy at Arctic Securities (+)
* Moonpig Raised to Add at Peel Hunt; PT 300 pence
* Northern Ocean Raised to Buy at Arctic Securities; PT 15 kroner (+)
* Swissquote Raised to Buy at AlphaValue/Baader (+)
* Temple Bar Investment Trust PLC Raised to Buy at Investec
* VIB Vermoegen Raised to Buy at SRC Research; PT 51 euros

>>> Down
* Adecco Cut to Underweight at JPMorgan; PT 42 Swiss francs (+)
* Bouygues Cut to Equal-Weight at Morgan Stanley; PT 38 euros (+)
* EN+ Group Cut to Add at AlphaValue/Baader (+)
* Heineken Cut to Underweight at Barclays; PT 81 euros
* Husqvarna Cut to Hold at Nordea (+)

>>> Initiation
* Hertz Rated New Buy at Tigress; PT $32
* MorphoSys Reinstated Buy at Berenberg; PT 65 euros
* Nynomic Rated New Buy at Hauck & Aufhaeuser; PT 51 euros (+)
* Var Energi Rated New Overweight at JPMorgan; PT 42 kroner (+)

>>> Call
* Adecco Downgraded to Underweight at JPMorgan on Underperformance (+)
* BASF Upgraded to Buy With Trends Strong, Demand Resilient: HSBC (+)
* Dassault Aviation to Grow Further, Street High PT: Berenberg (+)
* Flat Yield Curve Not a Sell Signal for Stocks: JPM Strategists (+)
* Households, Firms to Drive U.S. Equity Demand: GS Strategists (+)
* Morgan Stanley Cuts U.S. Financials to Neutral on Growth Risks (+)
* Solid Cash Flow, Low Leverage Boost European Cash Returns, M&A

9to5 : Kuo: iPhone 14 Pro camera bump to be even larger thanks to new 48MP senso

Last September, one of the first iPhone 14 leaks claimed that the iPhone 14 would be the first iPhone model in years not to feature a camera bump of any kind. More recent leaks, however, have contradicted that claim, with the latest contradiction coming from Apple analyst Ming-Chi Kuo.

The latest iPhone 14 design rumors
Kuo took to Twitter on Sunday to offer an explanation as to why the iPhone 14 Pro will feature an even larger camera bump than the iPhone 13 Pro. This revelation first came last week, when leaked schematics showcased a thicker camera bump and an overall thicker design.
According to Kuo, the reasoning for this change (unsurprisingly) is that Apple has major enhancements in store for the iPhone 14 Pro camera this year. As he has previously reported, the iPhone 14 Pro and iPhone 14 Pro Max are expected to feature an upgraded 48MP camera sensor, which comes in a larger form factor.
Kuo explains:
The main reason for the larger and more prominent rear-camera bump of the 14 Pro/Pro Max is upgrading the wide camera to 48MP (vs. 13 Pro/Pro Max’s 12MP). The diagonal length of 48MP CIS will increase by 25-35%, and the height of 48MP’s 7P lens will increase by 5-10%.
Last September’s leak set high expectations for the iPhone 14 and iPhone 14 Pro. Rumored changes included no camera bump, a hole-punch design, iPhone 4-style rounded volume buttons, a titanium chassis, and more. Unfortunately, it appears that these changes won’t come to fruition this year.
It’s unclear if Apple scrapped this redesign in favor of something more modest, or if a redesign like the one rumored was ever in the cards to begin with. Regardless, the iPhone 14 and iPhone 14 Pro are expected to retain very similar designs to the iPhone 13. The biggest change will be a new hole + pill cutout instead of a notch on the iPhone 14 Pro, and the discontinuation of the ‘mini’ form factor.
What do you think of the iPhone 14 rumors so far? Are you planning to upgrade? Let us know down in the comments.

>>> Vallourec : Chairman and CEO Edouard Guinotte resigns, effective immediately

Vallourec : Chairman and CEO Edouard Guinotte resigns, effective immediately
- Mr. Édouard Guinotte resigned on March 25th, 2022 from his position as member of the Board of Directors, with immediate effect.
- In addition, it is reminded that the duties of Mr. Édouard Guinotte as Chairman and Chief executive officer were terminated on March 20th, 2022. As a consequence, and accordingly with the French commercial Code, the duties of Mr. Olivier Mallet as Deputy chief executive officer of the Company expired as of March 20th, 2022 (i.e. upon the appointment of Mr. Philippe Guillemot as new Chairman and Chief executive officer). This expiry was acknowledged by the Board of Directors on March 26th, 2022. From March 21st, 2022 onwards, the provisions of Mr. Olivier Mallet’s employment agreement as Chief financial officer, which were suspended during his appointment as Deputy chief executive officer, are back in force. Mr. Olivier Mallet will carry out his employee duties as Chief financial officer under the same remuneration conditions as those set forth in relation to his duties as Deputy chief executive officer of the Company.

>>> TradeGate Pre-Market Indications

DAX:
  • Continental (CON TH) +1%
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MDAX:
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    • CTS Eventim-Kapsch JV Wins Germany Compensation Arbitration
  • Jungheinrich (JUN3 TH) +1.6%
  • Duerr (DUE TH) +1.3%
    • Duerr Company Roadshow Scheduled By Baader Bank for March 28
  • Uniper (UN01 TH) +1.2%
  • Kion (KGX TH) +1.1%
  • Varta (VAR1 TH) -1.5%
SDAX:
  • SGL (SGL TH) +3.8%
  • AUTO1 (AG1 TH) +3.1%
  • Indus Holding (INH TH) +2.7%
  • SAF-Holland SE (SFQ TH) +2.3%
  • SMA Solar (S92 TH) +2%
  • Hornbach Holding (HBH TH) -1.5%

>>> Stoxx 600 Pre-Market Indications

  • CTS Eventim (EVD TH) +3.8%
    • CTS Eventim-Kapsch JV Wins Germany Compensation Arbitration
  • Verbund (OEWA TH) +3%
    • Verbund Begins Construction Of $88 Million Hydroelectric Power
  • Rio Tinto (RIO1 TH) +1.9%
  • Anglo American (NGLB TH) +1.8%
  • Orsted (D2G TH) +1.7%
  • Raiffeisen (RAW TH) +1.7%
    • Erste’s Russia Risk Mainly Driven by Rising Second-Order Effects
  • Thales (CSF TH) +1.6%
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  • Vestas (VWSB TH) +1.3%
  • CNH Industrial (37C TH) +1.3%
  • Naturgy (GAN TH) -0.9%
  • Bouygues (BYG TH) -0.9%
  • TotalEnergies (TOTB TH) -1%
    • OIL DAYBOOK EUROPE: China Oil Giant Plans for Record Spending
  • Shell (R6C0 TH) -1.1%
  • STMicroelectronics (SGM TH) -1.1%
  • MTU Aero (MTX TH) -1.5%
  • ArcelorMittal (ARRD TH) -1.6%
  • Mowi (PND TH) -1.9%
    • Mowi Profit May Thrive Despite Lower Harvest: Company Outlook
  • Repsol (REP TH) -2.1%
  • Orpea (OPA TH) -11%
    • France Wants Care Home Firm Orpea to Return Funds: Minister (1)

(ZH) "The Move Is A Big Deal" - Yen Tumbles After BOJ Intervenes To Cap JGB Yiel

"The Move Is A Big Deal" - Yen Tumbles After BOJ Intervenes To Cap JGB Yields Amid Global Selloff

Last Friday, when the BOJ unexpectedly failed to intervene with one of its trademark offers to purchase an unlimited amount of bonds when the 10Y JGB broke above 0.23% - a level which just one month ago prompted Kuroda to step into the market to contained further yield gains - and spiked the yen while pushing the 10Y JGB yield to a 6-year high and on the verge of rising above the 0.25% upper boundary of the BOJ's Yield Curve Control corridor, we said that "Japan, that paragon of MMT crackpots everywhere, suddenly finds itself trapped in a lose-lose dilemma: intervene in the bond market and spark a furious, potentially destabilizing and uncontrolled plunge in the yen which would also lead to galloping (if not worse) inflation, which could collapse what little faith remains in the BOJ, or do nothing and contain the slump in the yen while risking far higher yields which in a country where the debt is orders of magnitude greater than GDP, could also spell fiscal and monetary doom."
We then added the following: "As a result, the market - having long gotten used to amicable interventions from the BOJ - will now surely test one of these two outcomes, and how the BOJ responds could have dramatic consequences for this original MMT test case. Should the BOJ's reaction spark further erosion of faith in either Japan's fiscal or monetary policies, the outcome for the world's most indebted nation would be disastrous."
So fast forward to today, when bond traders pushed the 10Y JGB yield even more, rising as high as 0.245%, and clearly intending to force the BOJ to make a decision...
... Kuroda did just that and it was to keep JGBs in line while risk an accelerating collapse in the yen.
On Monday morning, one day after the BOJ left many stunned with its refusal to announce an open-ended bond market intervention as yields spiked, the central bank changed its mind and conceded that it was not willing to risk a bond market collapse, announcing that it will purchase an unlimited amount of 10-year bonds at a fixed rate of 0.25%.
The decision comes as interest-rate hikes by major peers such as the Federal Reserve have sent yields across the globe soaring, adding upward pressure on Japan yields. The 10-year yield stood at 0.242% at 10:23 a.m. in Tokyo, compared to a tolerated level by the BOJ of 0.25% under its yield-curve control policy.
And while JGB yields will remain at or below 0.25% (for now) courtesy of the BOJ's verbal intervention which however failed to actually prompt any actual trades...
  • *BOJ SAYS NO BIDS TENDERED FOR FIXED-RATE BOND-BUYING OFFER
... the same can not be said of the Yen which fell to a fresh 6-year low of 123.11 against the U.S. dollar, with little stopping the USDJPY rising as high as 130.
The move underscores the central bank’s commitment to keep monetary settings loose, following Governor Kuroda’s earlier remarks that policy will remain unchanged even if inflation jumps. Japan’s bond yields have been moving higher after the BOJ’s fixed-rate buying offer on Feb 14 - the first such operation since 2018 - helped push them lower.
Meanwhile, the dilemma facing the BOJ grows: the growing policy divergence between the BOJ and the Fed has heaped pressure on the yen, with the currency slipping to a six-year low against the dollar in March. Of course, by failing to keep a floor under the yen, the BOJ invites even higher inflation, which will - sooner or later - force the BOJ to break, and when it does it will lose control over both the yen and JGBs.
“The BOJ will automatically conduct such operations when the 10-year yield approaches 0.25%, as waiting for the yield to rise past that would invite unnecessary speculation and also prompt players to test yield upside,” said Takafumi Yamawaki, head of local rates and currency research at JPMorgan in Tokyo. “The BOJ probably separates bond purchases from risk of a weaker yen as changing its stance on bond purchase operations would undermine the current yield curve control framework.”
Meanwhile, much of the "developed" world tightening (with the sole exception of China), traders had been speculating that the BOJ will also have to start normalizing policy at some point. However, clearly that time is not now and Kuroda has repeatedly ruled out the possibility of near-term policy adjustments. Providing a modest buffer, Inflation in Japan is also far from a 2% target, unlike other countries where red-hot price gains have stoked concerns.
Meanwhile, the collapse in the yen is set to accelerate. As Bear Traps Report Larry McDonald reminds us, by collapsing to levels last seen in 2015, the Yen's freefall has reignited fears of a re run of events that led to the 2015 renminbi devaluation. In a recent note from last week, SocGen's Albert Edwards called this "an earthquake in the world of foreign exchange." So as Japan weakens the Yen to save the economy China is the loser and could force it to pursue another currency devaluation in a beggar they neighbor world.
This, as McDonald writes, is bullish hard assets; how can the Fed get aggressive into that? JPY weakness likely has the most negative impact on South Korea within emerging markets and won’t make China happy either.
Finally, McDonald quotes a CIO from a Florida based hedge fund, who writes that "I'm in the camp that the Yen move is a big deal. This is what happens when money printing goes too far... Zervos at a dinner this week in Miami said he thinks BOJ stays easy and has to ... he sees the USD/Yen at 130 by year end. This would make Japan very competitive very quickly, what will that mean for emerging markets?"
And more importantly, what does that mean for China and its untenably strong currency. We are about to find out.

FT : Shanghai imposes lockdown as officials struggle to contain Covid outbreak

Shanghai imposes lockdown as officials struggle to contain Covid outbreak
China’s financial centre hit by panic buying ahead of public transport shutdown and mass testing

Shanghai pushed ahead with a stringent lockdown on Monday that will divide China’s biggest city into two zones, as authorities struggled to stem record coronavirus cases in the country’s most important financial centre.

The government will shut down public transport this week as it conducts mass testing across Pudong, the city’s financial district, located east of the Huangpu river. Similar restrictions will apply from April 1 to the district of Puxi, west of the river.

The measures, which marked the first time authorities in Shanghai have imposed a lockdown that confined residents to their homes, sparked panic-buying across the city as shoppers rushed to stock up on vegetables.

The outbreak in mainland China’s most international financial centre is proving a big test for the country’s wider strategy to contain coronavirus. Authorities have instituted severe restrictions on other cities to eliminate outbreaks, although recently there had been signs that the approach was being tempered.

President Xi Jinping this month emphasised the need to “minimise the impact” of the virus on the country’s economy after southern tech hub Shenzhen was locked down. In Shanghai, authorities had indicated that a full-scale lockdown was not necessary a few weeks ago, although buildings with positive cases were often sealed off.

Some factories in China have set up isolated “bubble” systems, an approach comparable to the closed system employed for the Winter Olympics in February, which allowed staff to work during lockdowns as long as they did not leave the premises.

Shanghai, with a population of 26mn, recorded just 50 symptomatic cases on Sunday, according to official data, but notched a record 3,450 asymptomatic cases, compared with 5,134 asymptomatic cases across the rest of mainland China.

Over the weekend, the Shanghai World Expo and Exhibition Centre, a vast building in the Pudong district that hosted the Shanghai World Expo in 2010, was opened as a quarantine centre for mild and asymptomatic cases.

The city’s response to the outbreak contrasts with that taken in Hong Kong, which has recorded more than 1mn cases over the past two months after being largely free of infections for almost two years. Plans for mass testing in the territory, which also sparked panic buying, have been downplayed recently given the sheer scale of infections.

China’s stock market started the week lower following news of the lockdowns in Shanghai, with the country’s benchmark CSI 300 index falling as much as 2 per cent on Monday morning as traders weighed the implications for the country’s broader strategy.

“In the near term, China will stick to its zero-tolerance approach,” said Bruce Pang, head of research at China Renaissance. He added that while supply chain shocks had been minimal, the outbreaks would probably weigh on economic growth as Chinese consumers grappled with greater uncertainty.

Pang said that official statements, including from the latest meeting of the Chinese Communist party’s politburo, “imply any adjustment [to containment strategies] will come with the precondition of eliminating infection”.