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U.S. Stock Futures Edge Up to Start the Week [WSJ]
Investors are attempting to gauge whether steps taken by President Trump over the weekend to offer aid to American households will go into effect despite challenges from lawmakers. Questions have also risen over whether those measures can effectively alleviate the economic fallout of the coronavirus pandemic and lockdown measures….
Market sentiment was briefly knocked by the Chinese foreign ministry’s comments that it will impose fresh sanctions against several senators including Ted Cruz and Marco Rubio over Hong Kong issues. That would mark the latest barb exchanged between the two countries with relations deteriorating in recent months.

Hedge-Fund Launches Pick Up Despite Covid-19 Pandemic [WSJ]
Hedge-fund manager Gaurav Kapadia has raised one of the biggest, with more than $1 billion in committed capital for his new firm, XN LP, according to people familiar with the firm…. Executives for both Goldman Sachs Group Inc. and Morgan Stanley currently expect to launch about 20% more hedge funds this year than last year if plans hold….
“We thought back in March and April that people planning on launching would delay, but they’ve gone forward” looking at the investment environment, said Darren Levy, Morgan Stanley’s co-head of prime brokerage in the Americas.

Billionaire Daniel Loeb’s Third Point Re set for merger with Sirius Group [FN]
The bulk of Nasdaq-listed Sirius Group’s shares are held by a Singapore-based arm of China Minsheng Investment Group, a sprawling privately held conglomerate that expanded aggressively during better times but has faced liquidity problems in the past year. Funds managed by Bain Capital, Carlyle Group and Centerbridge Partners have also invested in Sirius…. Loeb, chief executive and chief investment officer of hedge-fund firm Third Point LLC and Third Point Re’s largest individual shareholder, will buy $50m in shares of the combined company when the deal closes, likely in early 2021.

Saudi Aramco profit drops 50% for first half of the year as pandemic batters oil price [CNBC]
The company said net income plunged to $23.2 billion in the first six months of the year, down by half from $46.9 billion over the same period in 2019.
Saudi Arabia’s majority state-owned oil company and the world’s largest crude producer also maintained its second-quarter dividend of $18.75 billion, saying it will be paid in the third quarter…. “The worst is likely behind us,” Nasser told the earnings call. “We remain fairly positive about the long term demand for oil.” Prices flipped into negative territory in April, and while the market has stabilized, Brent crude oil prices are still down more than 30 percent this year.

Norway’s central bank accused of breaking law over oil fund appointment [FT]
Julie Brodtkorb, the centre-right politician who chairs the supervisory council of Norges Bank, told a hearing in Norway’s parliament on Monday that central bank governor Oystein Olsen could have broken the law by not informing the finance minister that [Nikolai] Tangen would be allowed to keep a controlling stake in the hedge fund he founded, AKO Capital…. Ms Brodtkorb’s sharp criticism raises the pressure on Mr Olsen, whose defence in May of Mr Tangen’s appointment and the process behind it was widely viewed as shaky and unconvincing by Norwegian media.

Denmark has one of the best-performing stock markets in the world this year. [NYT]
The Danish indexes, such as the OMX Copenhagen 25, are up more than 14 percent in 2020, or more than 20 percent if you calculate its return in dollar terms. That’s within spitting distance of other market bright spots, like the tech-heavy Nasdaq Composite, which has climbed more than 23 percent on the strength of lockdown-friendly companies like Amazon and Apple…. The main contributor to the Danish stocks’ performance is a matter of what the companies do rather than where they do it: Roughly 50 percent of the market capitalization of Danish stocks is in almost recession-proof health care and pharmaceutical companies — a solid portfolio in the midst of a global pandemic.

Amazon and Mall Operator Look at Turning Sears, J.C. Penney Stores Into Fulfillment Centers [WSJ]
Simon malls have 63 Penney and 11 Sears stores, according to its most recent public filing in May…. For Amazon, a deal with Simon would be consistent with its efforts to add more distribution hubs near residential areas to speed up the crucial last mile of delivery….
Simon’s other tenants might not celebrate a deal with Amazon. Many blame the giant online retailer for severely disrupting their business. Its presence as a new neighbor would likely do little to pacify them, especially if Amazon’s new distribution capabilities in well-located Simon malls help make it even more competitive by helping speed up its delivery times.
Amazon fulfillment centers wouldn’t draw much additional foot traffic to the mall, though some employees could eat and shop at the mall…. Simon would likely rent the space at a considerable discount to what it could charge another retailer. Warehouse rents are typically less than $10 a square foot, while restaurant rents can be multiples of that.

Millennials Slammed by Second Financial Crisis Fall Even Further Behind [WSJ]
For this cohort, already indebted and a step behind on the career ladder, this second pummeling could keep them from accruing the wealth of older generations…. Millennials have found it fundamentally more difficult to start a career and achieve the financial independence that allowed previous generations to get married, buy a home and have children. Even the most educated millennials are employed at lower rates than older college graduates, research shows, and millennials’ tendency to work at lower-paying firms has caused them to lag behind in earnings.
“It’s a sign that something has broken in the way the economy is working,” said Jesse Rothstein, professor of public policy and economics at the University of California, Berkeley, and a former chief economist at the Labor Department during the Obama administration. “It’s gotten harder and harder for people to find their footholds.”

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Pimco Sees 60% Chance of Global Recession in Five Years (Bloomberg) Pacific Investment Management Co., the world’s largest active bond manager, said investors should cut risk amid a more than 60 percent chance of a global recession in the next three to five years. Global growth will slow, keeping inflation in check, and “economic volatility” will increase, Saumil Parikh, a portfolio manager at Newport Beach, California-based Pimco, said in a report being posted on the firm’s website today. Investors shouldn’t add risk in the search for yield, he said. “The global economy experiences a recession every six years or so, and the frequency of global recessions tends to increase when global indebtedness is high and falling as opposed to when indebtedness is low and rising,” Parikh, who focuses on asset allocation, multisector fixed income and absolute-return portfolios, said in the report. The last global recession was four years ago, he said. Banks Get Reprieve on New Swaps Rule (WSJ) Some of biggest banks on Wall Street will get an additional two years to comply with a post-financial crisis rule requiring they move risky swap activities into separate affiliates. The Office of the Comptroller of the Currency said it granted extensions to seven banks, giving them until July 2015 to comply with so-called "swaps push-out" rules required by the 2010 Dodd-Frank law. ... The OCC notified Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., HSBC Holdings PLC, Morgan Stanley and U.S. Bancorp that they were granted a 24-month extension in response to their requests for a longer transition period. The move comes less than a week after the Federal Reserve said foreign banks also will be eligible for the two-year delay in complying with the rule, which is slated to take effect July 16. Emerging market assets suffer in fierce sell-off (FT) Emerging economies have been among the prime beneficiaries of ultra-loose global monetary policy as central banks led by the Fed have flooded financial markets with more than $12tn of extra liquidity since the financial crisis. But signs of an economic slowdown spreading from China and indications that the Fed could reduce the pace of its $85bn-a-month bond purchases have triggered a sharp correction in emerging markets. The South African rand and the Brazilian real touched four-year lows against the US dollar on Tuesday, and the Indian rupee fell to a record low. Even relatively robust countries like the Philippines and Mexico – long favourites of investors – have been hit by a spate of selling. Some central banks have begun to intervene to stem the currency slides. Is U.S. stock trading safer? Fewer erroneous trades seen (Reuters) More than three years after the "flash crash" terrified many by temporarily wiping out almost $1 trillion of U.S. stock market value in a few minutes, there are signs that the number of erroneous and aberrant trades is dropping. The use of circuit breakers for individual securities in the wake of the May 6, 2010 plunge, and the introduction of tougher risk-management controls for broker-dealers in November 2010 appear to have helped stabilize trading, market experts and regulators said. The Financial Industry Regulatory Authority, the security industry's watchdog, said the number of reports of "clearly erroneous" trades it received was down 84 percent in the last six months of 2012 compared with the first six months of 2009. Facebook Investors Press Zuckerberg on Stock Price at Annual Meeting (CNBC) Facebook CEO Mark Zuckerberg tried to tackle concerns about its stock head-on at the first annual shareholder meeting Tuesday, but investors pressed for answers about why the price is still down a year after the company went public. "The answer is we understand that a lot of people are disappointed with the performance of the stock, and we really are, too," Zuckerberg said in his opening remarks before taking questions. ... The stock, priced at $38 when the company went public in May 2012, hit $17 a few months ago and was trading at about $24 in afternoon trading Friday. Facebook can't control the stock price but is focused on developing the best products to create more shareholder value, Zuckerberg said. NJ Mayor Apologizes for Calling Residents "Annoying" (NBC) The mayor of Toms River apologized Tuesday night for comments he made about an area battered by Sandy, but not all residents were satisfied. Last week, Mayor Thomas Kelaher told Bloomberg News that he thought residents of Ortley Beach, where many are still without homes, were "annoying." "I certainly never intended to be disrespectful to the people who live in Ortley beach," Kelaher said at a meeting Tuesday. Marketfield Poet-Philosopher Pair Bet Europe for Top Fund (Bloomberg) Michael Aronstein, a poet, and Michael Shaoul, a doctor of philosophy, have made their MainStay Marketfield Fund the world’s fastest-growing by anticipating recoveries in the most-hated assets. Marketfield grew more than five-fold to $9.5 billion in the past year, the biggest increase of a fund with more than $5 billion in assets, after betting on a rebound in U.S. housing stocks and European shares. Now, their success relies on Irish and Italian stocks rallying and equities in China , Brazil and India tumbling. The New York-based fund has advanced 70 percent since July 2007, more than triple the return of the Standard & Poor’s 500 Index, data compiled by Bloomberg show. “I don’t know where the level is,” Aronstein, a former Merrill Lynch strategist who writes poetry in his spare time, said of the potential for further declines in developing nations’ stocks in an interview April 4. “But if we are right, it’s going to get to the point where people cannot stand it anymore.” Metacapital in Worst Slide as Bloodbath Roils Funds (Bloomberg) Deepak Narula rose to fame as manager of the best-performing hedge fund last year by navigating the government’s stimulus efforts. He’s having a far harder time as the Federal Reserve moves closer to an exit. Metacapital Management LP’s flagship $1.5 billion fund lost an estimated 6.4 percent last month, the worst decline since it started in 2008, according to a letter to investors obtained by Bloomberg News. That followed drops of 0.5 percent in April and 0.1 percent in March, after 17 months of consecutive gains including a 41 percent return last year. ... “It’s been a bloodbath the last four to six weeks,” said Troy Gayeski, a senior portfolio manager who helps invest client money in hedge funds at SkyBridge Capital, which manages about $7.7 billion. “It was a confluence of just about everything” from investors’ concerns that refinancing would pick up among some borrowers who’ve had trouble qualifying to the slump in the mortgage debt that the Fed is buying, he said. SoftBank's Son Felt Time Pressure to Push Sprint Deal Forward (WSJ) In the end, SoftBank Corp. Chief Executive Masayoshi Son concluded that time was money. After a weekend of wheeling and dealing, he was willing to sweeten the Japanese company's bid for Sprint Nextel Corp. that Mr. Son for weeks had been saying already was high enough. His hope with the new bid is to keep the acquisition on track for midsummer completion and resolve complications raised by a rival offer. Mr. Son agreed for SoftBank to throw another $1.5 billion on top of the $20.1 billion already offered to achieve the "certainty of timing" for closing the deal in early July, a person familiar with the new proposal said. Pattern of negative correlation between HY bonds and treasuries has been broken (Sober Look) Since the financial crisis, the correlation between treasuries and many credit assets such as high yield bonds (HY) has been strongly negative. ... Recent events however broke that pattern. We've had a number of days with both the longer dated treasuries and HY selling off. That means the HY asset class is now responding to rate moves (not just spread). The 3-month correlation between prices of longer dated treasuries and HY bonds is nearing zero. This move toward a "less negative" correlation with treasuries is also visible in other credit assets as well. Sub-investment-grade credit investors are all of a sudden paying much closer attention to rates. US warns EU against exempting film industry from trade talks (FT) The US government has warned Brussels that EU efforts to placate French demands to exempt its film industry from high-profile transatlantic trade talks could unleash a torrent of demands in Washington for similar reciprocal carve-outs that would imperil a comprehensive deal. ... José Manuel Barroso, the European Commission president, met European filmmakers on Tuesday, including “The Artist” star Bérénice Bejo, to reassure them the trade deal will not jeopardise their protections. “Let me state loud and clear: the cultural exception is not negotiable,” Mr Barroso said after the meeting. Most Americans Aren’t Excited About Their Jobs (WSJ) FYI. State Dept. officials deny prostitution cover-up allegations (CBS) The allegations were first brought to light by CBS News' John Miller, who reported that according to an internal State Department Inspector General's memo, several recent investigations were influenced, manipulated, or simply called off. One specific example mentioned in the memo refers to the 2011 investigation into an ambassador who "routinely ditched ... his protective security detail," and inspectors suspect this was in order to "solicit sexual favors from prostitutes." ... In response to the allegation, Gutman said on Tuesday: "I am angered and saddened by the baseless allegations that have appeared in the press and to watch the four years I have proudly served in Belgium smeared is devastating. I live on a beautiful park in Brussels that you walk through to get to many locations and at no point have I ever engaged in any improper activity."