>>> TradeGate Pre-Market Indications

DAX:
  • No major moves
MDAX:
  • Lufthansa (LHA TH) +1.2%
  • Rheinmetall (RHM TH) +1.2%
  • Thyssenkrupp (TKA TH) +0.9%
  • Telefonica Deutschland (O2D TH) +0.8%
SDAX:
  • Befesa (BFSA TH) +2.5%
    • Befesa 1Q Ebitda EU48.8M Vs. EU33.6M Y/y
  • RTL (RRTL TH) +1.6%
    • Broadcasters ​​​​​​​Have Streaming Opportunities, RTL Up to Buy: Citi
  • Talanx (TLX TH) +1.2%
  • Leoni (LEO TH) +1%
  • SGL (SGL TH) -0.8%
  • Bilfinger (GBF TH) -0.8%

WSJ : UBS Takes Surprise $774 Million Archegos Hit

UBS Takes Surprise $774 Million Archegos Hit
UBS is the latest bank to report a big loss from the implosion of Archegos, denting a strong first quarter

UBS Group AG UBS 0.33% said it lost $774 million from the implosion last month of Archegos Capital Management, a bigger hit than analysts expected, deepening the damage caused by the fund.

Switzerland’s biggest bank by assets said it lost the money from closing out a U.S. fund’s trades. It took $434 million off net profit in the quarter, which overall was up 14% at $1.82 billion because of a surge in investment banking revenue from strong stock markets. UBS said it has fully exited the fund’s positions now and the additional losses in the second quarter are immaterial.

UBS Chief Executive Ralph Hamers, in the job since November, said the bank is taking the incident very seriously, is disappointed and is reviewing its risk management systems to avoid such situations. He said it hadn’t stopped UBS from improving its capital position in the quarter and that the investment bank was able to bear the loss.

Archegos, the family office of Bill Hwang, wreaked havoc across Wall Street when it couldn’t meet margin calls in March. Credit Suisse lost $5.5 billion, Nomura lost around $2 billion, Morgan Stanley lost $911 million and other banks have also reported losses. UBS was one of about a half-dozen banks that lent to Archegos to take large, concentrated positions in stocks. Some of the positions reversed course in March and banks lost money selling the shares.

>>> Europe : Brokers Upgrades & Downgrades - 26th of April 2021

>>> Up
* ALK-Abello Raised to Buy at SEB Equities; PT 2,900 kroner
* Babcock Raised to Equal-Weight at Barclays; PT 315 pence
* Informa Raised to Outperform at Exane; PT 720 pence
* JCDecaux Raised to Neutral at Exane; PT 22 euros
* Kraft Bank Raised to Buy at Pareto Securities; PT 15 kroner
* Legal & General Raised to Buy at Citi
* Orkla Raised to Buy at SEB Equities; PT 96 kroner
* RTL Raised to Buy at Citi
* SSAB Raised to Add at AlphaValue
* UPS Raised to Hold at Berenberg

>>> Down
* AddNode Cut to Hold at Handelsbanken; PT 290 kronor
* ASR Nederland Cut to Neutral at Citi
* Avon Rubber Cut to Sell at Investec; PT 3,060 pence
* Bunzl Cut to Underweight at Morgan Stanley; PT 2,220 pence
* Kuehne + Nagel Cut to Underweight at JPMorgan
* Leonardo Cut to Equal-Weight at Morgan Stanley; PT 7.10 euros
* Tarkett Cut to Neutral at Exane; PT 20 euros
* Tarkett Cut to Equal-Weight at Barclays; PT 20 euros

>>> Initiation
* Adevinta Rated New Market Perform at Bernstein; PT 163.60 kroner
* Anima Holding Rated New Buy at SocGen; PT 5 euros
* Franchi Umberto Marmi Rated New Buy at Berenberg; PT 12.50 euros
* Maersk Guidance a Beat and Further Upside Risk Seen: Jefferies
* Schroders Rated New Hold at SocGen; PT 3,800 pence
* Vantage Towers Rated New Overweight at Barclays; PT 30 euros
* Vantage Towers Rated New Buy at Deutsche Bank; PT 33 euros
* Vantage Towers Rated New Buy at Jefferies; PT 35 euros
* Vantage Towers Rated New Overweight at Morgan Stanley
* Vantage Towers Rated New Buy at Goldman; PT 33 euros

>>> Call
* Bunzl Not Pricing In Slower Growth, Morgan Stanley Downgrades
* Insurers Supported by Strong Fundamentals, L&G Upgraded: Citi
* Broadcasters Have Streaming Opportunities, RTL Up to Buy: Citi

>>> What to look at today - 26th of April 2021

Asian stocks slipped Tuesday as traders considered the mounting risks to growth in the region from spiking Covid-19 cases and the implications of a broadening antitrust crackdown in China.
An Asia-Pacific share gauge snapped a three-day climb. Japan underperformed as pandemic-related curbs weighed on sentiment and the nation’s central bank left policy unchanged while cutting its inflation forecast. U.S. stock futures edged up after solid corporate earnings helped the S&P 500 Index to a record.
Shares retreated in China, where regulators are now investigating food-delivery giant Meituan for suspected monopolistic practices, an extension of the campaign to rein in the country’s technology behemoths.
The U.S. 10-year Treasury yield held well below last month’s peaks, and the dollar gained. Oil prices climbed on OPEC+ projections of a strong global recovery, despite the near-term threat of surging Covid-19 cases in India.
US After Hours TSLA -1.8%, AXTA -11.2%, AMP -10.3%, CDNS -3.8% lower on earnings; BRO +10.1%, WIRE +8.4%, SBAC +5.1%, TBI +4.1%, HSTM +3.7% higher on earnings

Nikkei -0.23% Hang Seng +0.28% CSI +0.07% Shanghai -0.14% Shenzen -0.30%

Eur$ 1.2076 CNH 6.4766 CNY 6.4820 JPY 108.22 GBP 1.3891 CHF 0.9155 RUB 74.8663 TRY 8.2782 WTI$ 62.50 +0.92% GOLD 1,782.75 +0.08% BTC 54,000 +610

S&P +0.24% Nasdaq +0.23% EuroStoxx +0.08% FTSE +0.02% Dax +0.05% SMI

Macro :
- London IPO Crown Threatened by Amsterdam, Frankfurt: ECM Watch

Keep an eye on :
- ABBN SW : ABB: Carving Out E-Mobility to Allow for Possible IPO (1)
- ATE FP : Alten 1Q Revenue EU681.1M Vs. EU690.1M Y/y
- ARJOB SS : Arjo 1Q Adjusted Ebitda Beats Estimates
- BFSA GY : Befesa 1Q Ebitda EU48.8M Vs. EU33.6M Y/y
- BHG SS : BHG Group 1Q Adjusted Ebit Beats Estimates
- BILL SS : BillerudKorsnas 1Q Adjusted Ebitda Beats Estimates (1)
- BIM FP : BioMerieux Cuts FY Organic Sales Forecast
- BP/ LN : BP Targets U.S. Retail Electricity Business: Reuters
- BOL SS : Boliden 1Q EPS Beats Estimates
- BUCN SW : Bucher 1Q Orders CHF906M Vs. CHF668M Y/y
- CABK SM : *SANTANDER, CAIXABANK, SABADELL SEEKS TO EXIT SAREB:CONFIDENCIAL
- COLR BB : Colruyt Buys Belgian Meal Caterer Culinoa; No Terms
- DSV DC : DSV AGREES TO BUY AGILITY’S GIL FOR $4.1B IN SHARES
- ELK NO : Elkem Share Sale Is Likely to Price at NOK33.50 Apiece: Terms
- EQT SS : Cox Is Said to Be Nearing Deal to Buy Segra’s Enterprise Unit
- EVO SS : Evolution 1Q Ebitda Beats Estimates
- HABA GY : Hamborner REIT 1Q FFO EU12.7M Vs. EU13.3M Y/y
- HEMNET IPO : Hemnet Sets Price at SEK115 a Share in Stockholm IPO
- HSBA LN : HSBC 1Q Adjusted Pretax Profit Beats Estimates
- INWI SS : Inwido 1Q Net Sales Beat Estimates
- KEMIRA FH : Kemira 1Q Oper Ebitda Meets Estimates
- MS IM : Mediaset FY Ebit Beats Estimates
- ML FP : Michelin 1Q Revenue Meets Estimates
- COX FP : Nicox: U.S. Patent Office Issues Allowance Notice for Vyzulta
- NHY NO : Norsk Hydro 1Q Underlying Ebitda Beats Estimates
- NOVN SW : Novartis 1Q Core EPS Misses Estimates
- PNDXB SS : Pandox 1Q Sales Miss Estimates
- RESURS SS : Resurs Holding 1Q EPS SEK1.14 Vs. SEK1.02 Y/y
- ROG SW : Roche Granted FDA Orphan Drug Status for Cobimetinib
- SAB SM : *SABADELL TO HIRE RODRIGUEZ MAROTO TO MANAGE RETAIL: EXPANSION
- SU FP : Schneider Electric Raises FY Growth Targets
- SEM PL : Sodim Says Offer Period for Semapa Shares Ends on May 25
- SIKRIME NO : Sikri Holding Offering of 4m Shares Prices at NOK115/Share
- SSABA SS : Solidium Offloads Half Its SSAB Stake After 75% Rally
- SWEDA SS : Swedbank 1Q Net Income Beats Estimates (1)
- TE FP : Technip Energies Holder TechnipFMC Offers 25m Shares
- TSLA US : Tesla Faces Possible Fine Over Work on German Plant, ZDF Says
- TSLA US : Tesla Made $101 Million Selling Bitcoin in First Quarter
- UBSG SW : UBS Group 1Q Net Income Beats Estimates
- UBSG SW : UBS Takes Surprise $774 Million Hit From Archegos
- VOW GY : Volkswagen Mexico to Halt Production on Limited Semiconductors
- WIHL SS : Wihlborgs 1Q Income From Property Management Misses Estimates

FT : Anatomy of a hedge fund hack

Anatomy of a hedge fund hack
Complexity of scams, and the time and money fraudsters are prepared to invest, highlight growing threat to smaller firms

It was only when John made a final phone call to confirm the transfer of about €10m to his family trust that he realised he was about to fall victim to a highly sophisticated financial scam.

A fraudster had spent two months pretending to be one of John’s business associates in order to gain his confidence and trick him into diverting a standard loan repayment to a different bank account.

Having obtained emails through an earlier hack of a financial services company in Liechtenstein, they studied the habits and conversational style of John’s business associate and then imitated him on email.

John, a London-based private investor who invests his family’s money and who regularly works with a number of smaller financial firms across Europe, said the fraud was thwarted at the eleventh hour “purely by luck”.

The Financial Times has pieced together the details of how the attack on John unfolded, and how a separate phishing attack eventually forced the liquidation of the main hedge fund run by Levitas Capital, a Sydney-based firm with $75m in assets under management.

The complexity of the two scams, and the time and money the fraudsters were prepared to invest, highlight the threat now faced by smaller financial services firms such as hedge funds, brokers and administrators, as well as by family offices and wealthy individuals. Often, hackers who obtain valuable information through an attack on one financial firm will sell the stolen data on the dark web to criminal groups experienced in using such data for frauds.

Large banks are attractive targets for hackers, but the millions of pounds they spend each year on cyber security makes them tough to hack. Smaller hedge funds can be more enticing targets because they handle large sums of money but may only spend tens of thousands of pounds protecting themselves, according to cyber security firm Remora. The array of third-party companies that hedge funds use, for instance trustees, administrators and auditors, increases the number of potential weak links in the chain that hackers can target, and their principals are often more visible and easier to target.

Data on attacks is sketchy, in part because firms are often unwilling to admit they fell for a scam. According to a 2019 report by Boston Consulting Group, finance firms are 300 times more likely than other companies to be targeted by a cyber attack.

“Hedge funds and family offices do not spend anywhere near enough [on cyber security] which is why they are targets,” said Alex Mendez, Remora’s co-founder. “Hedge funds are more vulnerable because the principals within hedge funds are more visible and easier to target.”

The US Securities Exchange Commission last summer warned of increasingly sophisticated ransomware attacks on broker-dealers, investment advisers and investment companies, as well as on their service providers. In September it warned that hackers were using usernames, email addresses and passwords obtained on the dark web to try to log into firms’ websites and gain access to accounts.

“There’s a significant worry [about cyber risks] across the hedge fund world. It’s becoming increasingly dangerous, the impact could be catastrophic,” said Nicholas Wells, managing director at recruiter Quantum Chase.

“Hackers may not have stolen anything, but by damaging the reputation of the firm [they damage the firm].”

How the hack unfolded
John, the private investor, asked the FT not to use his real name. He was originally contacted by the fraudster, posing as the trustee, in early February last year in a genuine-looking email. The fraudster had even used the same central European greeting, “Servus!”, that the real trustee uses. The only, almost imperceptible, difference was a change to the sender’s email suffix, meaning it came from an entirely different source.

The email mentioned a regular loan repayment that John was due to make at the end of March, and asked a few questions about the timing, the currency and the account to be used.

“I had no idea it was not the real [trustee]”, said John, who answered the email cordially and said he would make the payment.

Several days later the scammer emailed again, this time pretending to be John’s lawyers in the Middle East. In total there were close to 30 emails exchanged over a couple of months. In some cases they asked about John’s art collection or dropped in personal information, such as the name of the hotel the real trustee would usually stay in when visiting Vienna.

In one email, John questioned the fake trustee about the interest rate on the loan repayment. The fraudster, who had already obtained a copy of the loan schedule, admitted the mistake within minutes and sent a corrected version of the loan spreadsheet.

“None [of the interactions] aroused my suspicion in any way whatsoever,” said John.

In fact, hackers had already obtained emails of Liechtenstein-based fund administrator Caiac Fund Management, which John says helped them to impersonate the real trustee. A spokesman for Caiac said “hackers intercepted email correspondence and unsuccessfully tried to use the information attained on a specific product to trigger payments”. It declined to comment on individual cases but said it informs relevant stakeholders in the case of any data breach.

In early April, John gave the green light to his bank to make the payment. He called the real trustee and then a UK phone number provided by the scammer but neither picked up. It was only when the real trustee called back 45 minutes later and was flummoxed by John’s questions that John realised what was happening. He quickly called his bank, which had not made the payment because it needed to check the exchange rate.

John went to the Metropolitan police’s cyber crime unit, who spotted a rare opportunity to investigate an attempted fraud still in progress and where the fraudster was unaware they had been foiled. They asked John to arrange a meeting in Mayfair’s Berkeley Square under the pretext of signing some routine documents. An undercover policeman would go in place of John.

But at the last minute the scammer cancelled, so John asked him for an address to send the documents to. The address given was on an East London council estate and was known to the police for previous criminal activity. The police decided against raiding it, believing they would only find a mule there.

John has contacted Liechtenstein police and said Europol has been informed. He is not aware of further progress on the case, which he said has been hindered by Covid-19 lockdowns. The Metropolitan police declined to comment.

A fake Zoom invitation
Police have also got involved in the case of Sydney-based Levitas, where money was transferred to the criminals.

In September last year co-founder Michael Fagan clicked on an innocuous-looking but fake Zoom invite that allowed a hacker to infiltrate Levitas’s systems and use Fagan’s email. The hacker then sent fake payment instructions to administrator Apex Fund Services.

Apex tried calling Fagan to check the payment but was unable to reach him. However, after receiving confirmation from Fagan’s email — sent by the hacker — Apex sent an instruction to trustee AET Corporate Trust to pay a ‘capital call’ notice for A$1.2m (US$936,250) to a company called Unique Star Trading, said Levitas CEO Michael Brookes.

Fagan eventually discovered the scam by accident when checking Levitas’s bank account almost two weeks after the phishing attack. Another A$2.5m had been paid out and a further A$5m had been approved for transfer. Fagan quickly stopped the payments and was able to recover most of the money.

Nevertheless, about A$600,000 had been stolen, according to Brookes. Had it been discovered a couple of days later, then the loss could have been A$8.7m, he said. The hack led Australian Catholic Super, Levitas’s largest client, to withdraw its money, and the fund is now being liquidated.

Apex declined to comment. Australian Catholic Super said it had received back its full investment in Levitas’s fund. New South Wales police said its investigation was ongoing but declined to comment further. Certane, which owns AET’s corporate trust business, said it is co-operating with authorities and that its ‘Pay’ system for processing client instructions was not compromised.

Brookes said the payment instructions should have aroused the suspicions of the trustee and administrator.

“It’s why the structure is set up as such, so that somebody will pick this up,” he said. “It’s devastating.”

>>> US After Hours Summary: TSLA -1.8%, AXTA -11.2%, AMP -10.3%, CDNS -3.8% lower on earnings; BRO +10.1%, WIRE +8.4%, SBAC +5.1%, TBI +4.1%, HSTM +3.7% higher on earnings


After Hours Summary: TSLA -1.8%, AXTA -11.2%, AMP -10.3%, CDNS -3.8% lower on earnings; BRO +10.1%, WIRE +8.4%, SBAC +5.1%, TBI +4.1%, HSTM +3.7% higher on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: BRO +10.1%, WIRE +8.4%, SBAC +5.1%, TBI +4.1%, HSTM +3.7%, LU +2.6%, SSNC +2.4%, OMF +2.1% (also to acquire Trim; also raises dividend and commences new buyback program), MKSI +1.9%, NXPI +1.5%, RRC +1.5%, AGNC +1.3%, PCH +0.4%, SUI +0.1%, WRI +0.1%

Companies trading higher in after hours in reaction to news: FCBP +25% (EFSC to acquire FCBP in all-stock merger agreement), GME +8.8% (completes previously announced at-the-market equity offering program), RETA +2.9% (announces FDA acceptance for filing of NDA for bardoxolone methyl as treatment for CKD), LYFT +2.4% (LYFT to sell self-driving car division to Toyota (TM) subsidiary Woven Planet for $550 mln), HAS +1.4% (to sell eOne Music for $385 mln in cash), SRRK +0.7% (announces issuance of US patent), COMP +0.6% (to acquire Glide Labs)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AXTA -11.2%, AMP -10.3% (also increases dividend), CDNS -3.8%, MASI -1.9%, TSLA -1.8%, TNET -1.6%, MEDP -1.2%, UHS -0.9%, AMKR -0.8%, JBT -0.2%, ARE -0.1%, CNI -0.1%, LXFR -0.1%

Companies trading lower in after hours in reaction to news: HYFM -8.1% (stock offering; also guides Q1 revs and EBITDA above consensus; also to acquire HEAVY 16, a line of premium plant nutrients), PQG -7.9% (announces 12.5 mln share offering by selling stockholders; also issues preliminary results for Q1), RNWK -6.7% (stock offering), EFSC -2.3% (EFSC to acquire FCBP in all-stock merger agreement), SNAP -1.7% (announces $1 bln convertible note offering), ESPR -0.9% (enters into licensing agreement with Daiichi Sankyo; also secures $50 mln funding from Oberland Capital), EARN -0.3% (stock offering), FTI -0.3% (receives Notice to Proceed for subsea contract for Santos Barossa project), TM -0.1% (LYFT to sell self-driving car division to Toyota (TM) subsidiary Woven Planet for $550 mln), EHC -0.1% (to purchase assets of Frontier Home Health and Hospice)

Breaking Views : Lagardere breakup can trade power for premium

French intrigue

Paris Match is known for its salacious gossip. But the main intrigue in France’s corporate world is currently taking place at the splashy magazine’s publisher Lagardere. Hedge fund Amber Capital and 27% stakeholder Vivendi’s long campaign for governance reforms may finally force some change at the 3 billion euro company. Trading effective control for a big premium could add up to a lucrative double-page spread for eponymous boss Arnaud Lagardere.

Shares in the media-to-travel-retail company jumped 7% on Monday after it confirmed it was “studying” an end to its arcane corporate structure which transforms Arnaud’s 7% stake into an effective blocking majority.

To shareholders, which include Lagardere family friend and LVMH owner Bernard Arnault, turning the conglomerate into a more conventional joint-stock company is a no-brainer. Thanks in part to its messy governance, Lagardere returned 149%, including dividends, since Arnaud became effective boss in March 2003. That’s half the total return on the benchmark STOXX Europe 600 Media index over the same period, according to Refinitiv data.

In return for giving up power, Arnaud might get a slug of new shares potentially giving him a 12% stake in the reformed company, according to a person close to discussions. That would be a lucrative move, particularly if the overhaul hastens a separation of the company’s disparate businesses.

Start with the publishing business, which made almost 250 million euros in operating profit last year. A takeover at 15 times that figure, broadly similar to what Germany’s Bertelsmann has offered for publisher Simon & Schuster, would yield a price of 3.7 billion euros. Then there’s Lagardere’s network of retail travel outlets, which made an operating profit of 152 million euros in 2019, before the pandemic struck. Valued on the same multiple as Swiss rival Dufry, the business might be worth 2.8 billion euros. After deducting net debt of 1.7 billion euros, Lagardere’s two biggest divisions alone might be worth some 4.8 billion euros combined – almost 60% more than its current market value. And that doesn’t include trophy assets such as business newspaper Le Journal du Dimanche.

The presence of billionaires Arnault and Vivendi-owner Vincent Bolloré on the share register means Lagardere would not have to look far for potential buyers for those businesses. Either way, giving up power could bring Arnaud Lagardere a handsome premium.

Breaking Views : Eleven-digit cyber LBO looks sober in crazy world

LBO thud

If a deal record falls in a frothy market, does anyone hear it? Buyout firm Thoma Bravo on Monday brought the 11-digit leveraged buyout back to the United States. The private equity firm is buying cybersecurity outfit Proofpoint for $12.3 billion, or $176 a share, a 34% premium to the California-based company’s closing share price on Friday. It is the largest U.S. buyout this year and the biggest software LBO on record, according to Refinitiv. But in the current crazy market, it looks fairly sober.

Proofpoint is yet another beneficiary of working from home, with businesses trying to secure their remote employees’ computer traffic. The company, which also reported earnings on Monday, said revenue rose 15% in the first quarter compared to the same period last year. Analysts expect its top-line growth to continue, with sales projected to rise mid-double digits through 2023 – faster than, say, Microsoft.

The multiple Thoma Bravo is paying looks reasonable, too. At roughly 12 times last year’s sales, it is in line with Microsoft’s current enterprise value-to-sales multiple, though slightly higher than Palo Alto Networks, another competitor. There are also a couple of quick financial wins that a newly private Proofpoint could consider.

First, the company is helping to maintain its growth by investing in its products, so its earnings are taking a hit. That’s one area where the private equity firm can tune up performance. Thoma Bravo specializes in software and technology deals, so it can help Proofpoint streamline costs and reap the benefits of earlier investments. Second, Proofpoint currently has no net debt, so the private investors can juice returns with leverage, even if it’s only a modest amount.

Overall, it looks like a relatively sober transaction in an excitable merger market. The value of global deals in the first quarter nearly doubled year-on-year to $1.3 trillion, per Refinitiv, partly thanks to frenzied activity by special-purpose acquisition vehicles, known as SPACs. North American private equity firms have a record $976 billion in dry powder, according to Preqin, making competition fierce. Unless another buyer tries to muscle in, Thoma Bravo has shown that even in toppy markets, good deals still exist.

>>> US Close Dow -0.18% S&P +0.18% Nasdaq +0.87% Russell +1.15%

Closing Stock Market Summary

The S&P 500 (+0.2%) eked out an intraday record high on Monday, as investors appeared cautiously optimistic for this week's big slate of events. The Nasdaq Composite (+0.9%) and Russell 2000 (+1.2%) outperformed, with the Nasdaq closing at a record high, while the Dow Jones Industrial Average decreased 0.2%. 

Advancing issues had a clear advantage over declining issues at the NYSE and Nasdaq, but the gains were relatively modest at the large-cap level as no sector in the S&P 500 advanced more than 1.0%. The biggest gains were scored in the small-cap, micro-cap, and cryptocurrency spheres, signaling enhanced retail sentiment.  

Within the S&P 500, the consumer discretionary (+0.6%), information technology (+0.6%), and energy (+0.6%) sectors were the top performers. The consumer staples (-1.2%), utilities (-0.6%), health care (-0.4%), and industrials (-0.3%) sectors lagged in negative territory. 

Amazon (AMZN 3409.00, +69.12, +2.0%) was an influential gainer in the Nasdaq, and consumer discretionary sector, amid speculation that the company could announce a stock split when it reports earnings on Thursday. Shares of Tesla (TSLA 738.20, +8.80, +1.2%) rose modestly ahead of its earnings report after today's close. 

Aside from the biggest week in earnings this season, the market has GDP/inflation data, the Fed's policy meeting, and President Biden's congressional speech on its calendar. The president is expected to outline his "American Families Plan" on Wednesday. 

In the Treasury market, the 10-yr yield settled unchanged at 1.57% after touching 1.60% in the morning. Buying interest increased after the release of the durable goods orders report, which showed a smaller-than-expected 0.5% m/m increase in total orders for March (Briefing.com consensus +2.0%). 

The 2-yr yield increased two basis points to 0.17%. The U.S. Dollar Index was little changed at 90.82. WTI crude futures increased 0.3%, or $0.19, to $61.96/bbl.

Reviewing Monday's economic data:

  • Total durable goods orders rose 0.5% month-over-month in March (consensus 2.0%) following an upwardly revised 0.9% decline (from -1.1%) in February. Orders, excluding transportation, jumped 1.6%, in-line with the Briefing.com consensus estimate, after declining an upwardly revised 0.3% (from -0.9%) in February.
    • The key takeaway from the report is that business spending bounced back after the February downturn. That was seen in the 0.9% increase in nondefense capital goods orders, excluding aircraft.

Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for April, the FHFA Housing Price Index for February, and the S&P Case-Shiller Home Price Index for February on Tuesday. 

  • Russell 2000 +16.4% YTD
  • S&P 500 +11.5% YTD
  • Dow Jones Industrial Average +11.0% YTD
  • Nasdaq Composite +9.7% YTD

FT : Tether claims $10bn monthly growth after New York fine

Tether claims $10bn monthly growth after New York fine
‘Stablecoin’ operator due to provide details on assets backing $50bn in digital tokens next month

The cryptocurrency operator Tether says it has doubled the number of its digital tokens in circulation in three months, taking their total value to $50bn just weeks after the New York attorney-general fined the company and banned it from the US state.*

In a tweet, Tether said it was growing by $10bn a month, and suggested the total value of its cryptocurrency could hit $100bn by the end of this year. It claims to match each Tether with one US dollar in reserves, making this a so-called stablecoin.

Tether must now report on the assets backing the coin by May 19, after the operator and the related trading platform Bitfinex pledged to offer more transparency on its reserves under the terms of its $18.5m settlement with the New York attorney-general’s office in February.

“They have to show how much is in digital assets, how much is in Tether gold and how much is liquid cash,” said Bennett Tomlin, a data scientist who has been critical of Tether and Bitfinex.

New York officials, in a keenly anticipated ruling this year, accused Tether and Bitfinex of covering up “massive” financial losses, adding the claim the cryptocurrency was fully backed by US dollars at all times “was a lie”.

At times, Tether had “no access to banking, anywhere in the world”, state attorney-general Letitia James added. Tether and Bitfinex agreed to pay a fine but admitted no wrongdoing.

In addition to barring Tether and Bitfinex from operating in New York, James mandated several reporting requirements within 90 days of the settlement. This includes detailing Tether’s reserve accounts and the categories of its assets.

In March Tether released an assurance opinion by the auditor Moore Cayman, which said that on February 28 it had sufficient assets to be fully backed. However, it is still unclear whether that backing persists at all times, and in what form.

The continued growth at Tether suggests that users are unfazed. “Tethers have always been fully backed,” said Tether’s general counsel Stuart Hoegner in a statement.

Hoegner said Tether had voluntarily provided the New York attorney-general with substantial information about the composition of its reserves.

Tether’s surging market capitalisation comes as largely unregulated cryptocurrencies have become increasingly mainstream, with the $75.9bn listing of the crypto exchange Coinbase on Nasdaq this month. Last week Coinbase listed Tether on Coinbase Pro, its trading platform designed for individual traders and cryptocurrency enthusiasts.