History Says It’s Time to Buy Long-Term Bonds as Peak Rates Near


Ye Xie and Liz Capo McCormick
Sat, July 15, 2023 at 2:00 PM MDT·5 min read





(Bloomberg) -- Investors loading up on long-term bonds have history at their back.

For decades, Treasuries maturing in 10 or more years have consistently outperformed shorter-dated sectors immediately following the last in a series of interest-rate increases by the Federal Reserve. On average, they returned 10% over six months after the fed funds rate peaked.

Of course, only in hindsight is it known whether a rate increase is the last one. But investors have embraced the view that an expected quarter-point hike in the target range for the federal funds rate on July 26 will conclude the epic series that began in March 2022. And surveys by Bank of America Corp. and JPMorgan Chase & Co. have found that investors digesting the price action have jacked up their exposure to long-dated bonds.

“We like the idea of extending and adding duration at this point in the cycle,” said Nisha Patel, a managing director of SMA portfolio management at Parametric Portfolio Associates LLC. “Historically, over previous tightening cycles, yields have tended to decline” during the period between the last hike and the first rate cut, she said.

Bonds this week logged their biggest gains since March — when the failure of several regional banks unleashed haven demand — after a report showed consumer prices increased at the slowest pace in two years. Swap contracts that as recently as last week assigned more than 50% odds to another Fed rate increase after this month repriced that to around 20%, and added to wagers on rate cuts next year.

The sentiment shift kneecapped the dollar, which suffered its biggest weekly loss since November. With the European Central Bank and other major monetary authorities expected to remain in tightening mode, there’s probably more downside in store for the greenback, according to strategists at ING Bank N.V.

In bonds, the biggest moves in yield were in short- and intermediate-maturity tenors where expectations for Fed policy are expressed. The five-year rate tumbled nearly 35 basis points, compared with just 13 basis points for the 30-year.

But long-dated bonds’ greater price sensitivity to a given change in yield means investors can reap bigger rewards. On average, Treasuries maturing in 10 or more years have gained 10% in the six months after a Fed policy-rate peak, compared with 6.5% for bonds maturing between five and seven years and 3.7% for those due within three years, according to data compiled by Bloomberg. In 12 months, the longest-dated bonds returned 13%, outpacing the other sectors.

“There is finally income to be earned in the fixed-income market,” BlackRock President Rob Kapito told analysts Friday, calling the higher yields a “remarkable shift” and a “once-in-a-generation opportunity.”

As an end-of-cycle theme, it’s proven more reliable than wagering on relative changes in yields such as the one that occurred this week as two- to five-year rates dropped more than longer-dated ones, producing a steeper yield curve.

The difference between two- and 10-year yields increased in the six months after the Fed concluded a tightening cycle in December 2018, but it narrowed following the end of one in 2006.

“Going long duration at the end of the hiking cycle is a more consistent trade than the steepener, which is more conditional on a harder landing outcome from the Fed,” Bank of America’s strategists including Mark Cabana and Meghan Swiber wrote in a note.

A Bank of America investor survey conducted monthly since 2004 found that respondents had amassed a record amount of interest-rate risk relative to their benchmarks in June before trimming a bit this month.

“I love duration here,” said Eddy Vataru, a fixed-income manager at Osterweis Capital Management. Inflation, which cooled to 3% last month, its 12th straight drop from a peak of 9.1% last year, has scope to fall below 2%, he said.

To be sure, Fed policymakers remain on guard. Their quarterly forecasts for the policy rate released in June had a median expectation for two additional increases this year. Fed Governor Christopher Waller Thursday said he agreed with that even after the latest inflation reading as the labor market remains very robust.

Even if employment strength induces the Fed to keep tightening beyond July, investors may pile into Treasuries because yields are high enough to be a compelling hedge against a possible recession, said Michael Franzese, head of fixed-income trading for New York-based market-maker MCAP LLC.

“You have a lot of investors looking now to make a bet and buy” if yields move back up, he said. “We may see a wave of new buying coming in, as Treasuries are an asset that could start to accrete really well for investors when the Fed does eventually start cutting.”

WAR ON THE G IN ESG
House Republicans want to change the way shareholder meetings work. Here's how.

The ideas range from making it easier for corporate leadership to summarily dispatch shareholder proposals, to limits on the role of the SEC.

ESG needs to focus on 'investing first and not marketing': Strategist

- Investors are continuing  to pull away from ESG funds


Ben Werschkul
·Washington Correspondent
Sun, July 16, 2023

House Republicans unveiled a push last week aimed at changing how shareholder meetings work as part of their larger campaign against socially-conscious investing.

The effort included a whopping 13 bills as well as two separate Congressional hearings devoted to the subject.

Some ideas would make it easier for corporate leadership to quickly dispatch shareholder proposals without a vote. Others would place limits on the role of the Securities and Exchange Commission (SEC). The proxy voting process — which conservatives say introduces too many "non-material" topics — is also an area of intense interest.

Republicans are looking to potentially pass some proposals by the end of the month but the ideas are unlikely to be embraced by Senate Democrats. Nonetheless, the keen focus on these often non-political gatherings could put further pressure on companies as they try to strike a balance between rising shareholder activism and the political backlash against so-called environmental, social, and corporate governance (ESG) principles.

"We must prevent shareholder activism from diverting attention and resources away from the core issues at hand," House Financial Services Committee chair Patrick McHenry (R-NC) said as he kicked off his party’s ‘ESG month’. He promises that these proposals are serious efforts to force change not simply so-called messaging bills designed to make a political point.

Warren Buffett's image welcomes Berkshire Hathaway shareholders to a picnic during the company's annual meeting in Omaha, Nebraska in 2011. (REUTERS/Rick Wilking)

Democrats, meanwhile, charge that Republicans are unduly influenced by fossil fuel companies, and these efforts are little more than an attempt to shut down the voices of women and minorities in the corporate governance process.

"The reason for this hearing is not because investors won’t vote for these resolutions, it’s because they will," said Rep. Brad Sherman (D-CA). Rep. Maxine Waters (D-CA) added sarcastically that the proposals are designed to "protect investors from their own ideas."

The shareholder proposal process is typically a non-binding affair — CEOs and boards are usually free to ignore them if they wish — but they can exert pressure on companies to change behaviors. Corporate directors often feel the pressure most acutely, as the same group of shareholders putting forward these proposals also vote on their appointment or removal from office.
A movement in response to a rising trend of shareholder activism

The campaign in Washington comes in response to a surge in shareholder activism in the pro- and anti- ESG directions.

An analysis by ISS Corporate Solutions found a record number of shareholder proposals through the first five months of 2023 with just 8.3% being approved so far.

A big factor in the surge is a rise of anti-ESG efforts. ISS found this type of proposal has grown by more than 400% since 2020 and a recent Harvard University analysis found that concerns there were decidedly focused on diversity matters with two-thirds of the proposals in 2023. Only about 10% concerned the environment.

The rising shareholder activism has come in part following a change in the rules after Joe Biden took office. During the Trump administration, then-SEC Chair Jay Clayton often discouraged proposals with an agency that was empowered to take actions like so-called "no action letters" to short-circuit some shareholder proposals.

Rep. Patrick McHenry (R-NC) is chair of the House Financial Services Committee. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

Many of those rules were reversed in 2021 when Gary Gensler took office as chair of the SEC. In recent years, the agency has instead actively prodded corporate directors and shareholders to more forcefully consider issues like the climate.

Many of the latest bills introduced would re-implement some Trump-era rules but with the additional force of law.

One proposal would allow corporate boards to simply exclude a resolution "if the subject matter of the shareholder proposal is environmental, social, or political." Additional ideas take aim at proposals that are deemed repetitive with other GOP lawmakers focused on limiting the influence of asset management giants like BlackRock. Others would forbid the SEC from weighing in.
A focus on proxy advisory firms

Republicans have also unified around a key villain that they say is tipping the scales: Proxy advisory firms.

The two main companies in the space —Glass Lewis and Institutional Shareholder Services (ISS) — are far from household names but their purported influence came up again and again.

"I would love to see this duopoly broken up," said Rep. Bryan Steil (R-WI) in one of many heated moments in recent days.

These firms emerged over the past few years in concert with giant asset management giants like BlackRock and State Street who hold large stakes in companies across the economy due to the trillions that they manage for their clients.

Rep. Maxine Waters (D-CA) led Democrats lawmakers during a news conference to lambaste the GOP focus on corporate environmental and social policy investing. (Drew Angerer/Getty Images)

The proxy advisory firms' stated purpose is to provide information to the asset management companies about their investments but the charge from Republicans is that the companies have ESG-infused models that are essentially forcing the principles down companies’ throats.

The Business Roundtable has weighed in on what it says is an outsized influence for these firms. Kristen Silverberg, the group’s President and COO, wrote in a letter to lawmakers that "recommendations of proxy advisory firms often dictate the outcome of shareholder votes, and with them, some of the most important decisions facing public companies."

For their part, these firms deny any outsized influence, with both Glass Lewis and ISS appearing before lawmakers this week to defend themselves.

Steven Friedman, the general counsel at ISS promised lawmakers "we perform our work in a prudent, open, and honest manner, consistent with our fiduciary responsibilities."

Ben Werschkul is a Washington correspondent for Yahoo Finance.

Appeals court pauses order limiting Biden administration contact with social media companies


President Joe Biden gives a thumbs up as he walks with first lady Jill Biden to board Marine One on the South Lawn of the White House in Washington, Friday, July 14, 2023, as they head to Camp David for the weekend. 

(AP Photo/Stephanie Scarbrough)


KEVIN McGILL
Updated Fri, July 14, 2023 

NEW ORLEANS (AP) — A federal appeals court Friday temporarily paused a lower court’s order limiting executive branch officials’ communications with social media companies about controversial online posts.

Biden administration lawyers had asked the 5th U.S. Circuit Court of Appeals in New Orleans to stay the preliminary injunction issued on July 4 by U.S. District Judge Terry Doughty. Doughty himself had rejected a request to put his order on hold pending appeal.

Friday's brief 5th Circuit order put Doughty's injunction on hold “until further orders of the court.” It called for arguments in the case to be scheduled on an expedited basis.

Filed last year, the lawsuit claimed the administration, in effect, censored free speech by discussing possible regulatory action the government could take while pressuring companies to remove what it deemed misinformation. COVID-19 vaccines, legal issues involving President Joe Biden’s son Hunter and election fraud allegations were among the topics spotlighted in the lawsuit.

Doughty, nominated to the federal bench by former President Donald Trump, issued an Independence Day order and accompanying reasons that covered more than 160 pages. He said the plaintiffs were likely to win their ongoing lawsuit. His injunction blocked the Department of Health and Human Services, the FBI and multiple other government agencies and administration officials from “encouraging, pressuring, or inducing in any manner the removal, deletion, suppression, or reduction of content containing protected free speech."

Administration lawyers said the order was overly broad and vague, raising questions about what officials can say in conversations with social media companies or in public statements. They said Doughty's order posed a threat of “grave” public harm by chilling executive branch efforts to combat online misinformation.

Doughty rejected the administration's request for a stay on Monday, writing: “Defendants argue that the injunction should be stayed because it might interfere with the Government’s ability to continue working with social-media companies to censor Americans’ core political speech on the basis of viewpoint. In other words, the Government seeks a stay of the injunction so that it can continue violating the First Amendment.”

In its request that the 5th Circuit issue a stay, administration lawyers said there has been no evidence of threats by the administration. “The district court identified no evidence suggesting that a threat accompanied any request for the removal of content. Indeed, the order denying the stay — presumably highlighting the ostensibly strongest evidence — referred to ‘a series of public media statements,’” the administration said.

Friday's "administrative stay" was issued without comment by a panel of three 5th Circuit judges: Carl Stewart, nominated to the court by former President Bill Clinton; James Graves, nominated by former President Barack Obama; and Andrew Oldham, nominated by Trump. A different panel drawn from the court, which has 17 active members, will hear arguments on a longer stay.

THE POLITICAL ECONOMY OF WAR

Russia Ukraine War Grain Deal Explainer

Why allowing Ukraine to ship grain during Russia's war matters to the world
 

 A farmer collects harvest in a field ten kilometers from the front line, around a crater left by a Russian rocket in the foreground, in the Dnipropetrovsk region, Ukraine, July 4, 2022. 

(AP Photo/Efrem Lukatsky, File)

 

 Workers load grain at a grain port in Izmail, Ukraine, April 26, 2023. 

(AP Photo/Andrew Kravchenko, File)

 

Harvesters collect wheat in the village of Zghurivka, Ukraine, on Aug. 9, 2022. 

 (AP Photo/Efrem Lukatsky, File)

 Exterior view of the grain storage terminal during visit of United Nations Secretary General Antonio Guterres at the Odesa Sea Port, in Odesa, Ukraine, Aug. 19, 2022. Agreements that the U.N. and Turkey brokered with Ukraine and Russia to allow food and fertilizer to get from the warring nations to parts of the world where millions are going hungry have eased concerns over global food security. But they face increasing risks. Moscow has ramped up its rhetoric, saying it may not extend the deal that expires Monday July 17, 2023, unless its demands are met. 

(AP Photo/Kostiantyn Liberov, File)


COURTNEY BONNELL
Sat, July 15, 2023 

LONDON (AP) — Agreements that the United Nations and Turkey brokered with Ukraine and Russia to allow food and fertilizer to get from the warring nations to parts of the world where millions are going hungry have eased concerns over global food security. But they face increasing risks.

Moscow has ramped up its rhetoric, saying it may not extend the deal that expires Monday unless its demands are met, including ensuring its own agricultural shipments don't face hurdles.

The Black Sea Grain Initiative has allowed 32.8 million metric tons (36.2 million tons) of food to be exported from Ukraine since last August, more than half to developing countries, including those getting relief from the World Food Program.

If the deal isn’t renewed, “you will have a new spike for sure” in food prices, said Maximo Torero, U.N. Food and Agriculture Organization chief economist. “The duration of that spike will depend a lot on how markets will respond."

The good news is some analysts don't foresee a lasting rise in the cost of global food commodities like wheat because there’s enough grain in the world to go around. But many countries are already struggling with high local food prices, which are helping fuel hunger.

Here's a look at the crucial accord and what it means for the world:

WHAT IS THE GRAIN DEAL?

Ukraine and Russia signed separate agreements in August 2022 that reopened three of Ukraine's Black Sea ports, which were blocked for months following Moscow's invasion. They also facilitated the movement of Russian produce amid Western sanctions.

Both countries are major global suppliers of wheat, barley, sunflower oil and other affordable food products that Africa, the Middle East and parts of Asia rely on. Ukraine is also a huge exporter of corn, and Russia of fertilizer — other critical parts of the food chain.

Interrupted shipments from Ukraine, dubbed the “breadbasket of the world,” exacerbated a global food crisis and sent prices for grain soaring worldwide.

“One major agricultural producer is waging war on another major agricultural producer, which is affecting the price of food and fertilizers for millions of people around the world,” said Caitlin Welsh, director of the Global Food and Water Security Program at the Center for Strategic and International Studies.

The deal provides assurances that ships won't be attacked entering and leaving Ukrainian ports. Vessels are checked by Russian, Ukrainian, U.N. and Turkish officials to ensure they carry only food and not weapons that could help either side.

Meant to be extended every four months, the deal was hailed as a beacon of hope amid war and has been renewed three times — the last two for only two months as Russia insisted its exports were being held up.

WHAT HAS IT ACCOMPLISHED?

The deal helped bring down global prices of food commodities like wheat that hit record highs after Russia invaded Ukraine.

As the war caused food and energy costs to surge worldwide, millions of people were thrown into poverty and faced greater food insecurity in already vulnerable nations.

Once the grain deal was struck, the World Food Program got back its No. 2 supplier, allowing 725,000 metric tons (800,000 tons) of humanitarian food aid to leave Ukraine and reach countries on the precipice of famine, including Ethiopia, Afghanistan and Yemen.

“It is a pretty unique phenomenon to have two warring parties and two intermediaries agree to establish this sort of corridor to get humanitarian products — which is ostensibly what this is — out to markets that need it most,” said John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, which represents 80% of the world’s commercial fleet.

WHAT THREATENS THE DEAL?

Russian President Vladimir Putin said Moscow wouldn’t extend the grain deal unless the West fulfills “the promises given to us.”

“We have repeatedly shown goodwill to extend this deal," Putin told reporters Thursday. "Enough is enough.”

He said he wants an end to sanctions on the Russian Agricultural Bank and to restrictions on shipping and insurance that he insists have hampered agricultural exports.

Some companies have been wary of doing business with Russia because of sanctions, but Western allies have made assurances that food and fertilizer are exempt.

“It’s not uncommon in situations like this for countries to use whatever levers they have to try and get sanctions regimes changed," said Simon Evenett, professor of international trade and economic development at the University of St. Gallen in Switzerland.

U.N. Secretary-General Antonio Guterres sent a letter to Putin this week proposing to ease transactions through the agricultural bank, a spokesperson said.

Russian “claims that its agriculture sector is suffering are countered by the reality" that production and exports are up since before the war, Welsh said.

Russia exported a record 45.5 million metric tons of wheat in the 2022-2023 trade year, with another all-time high of 47.5 million metric tons expected in 2023-2024, according to U.S. Department of Agriculture estimates.

WHO IS AFFECTED?

The International Rescue Committee calls the grain deal a “lifeline for the 79 countries and 349 million people on the frontlines of food insecurity."

East Africa, for instance, has seen both severe drought and flooding, destroying crops for 2.2 million people who depend on farming for their livelihoods, said Shashwat Saraf, the group’s regional emergency director for East Africa.

“It is critical that the deal is extended for a longer term to create some predictability and stability,” he said in a statement.

Countries that depend on imported food, from Lebanon to Egypt, would need to find suppliers outside the Black Sea region, which would raise costs because they are further away, analysts say.

That would compound costs for countries that also have seen their currencies weaken and debt levels grow because they pay for food shipments in dollars.

For low-income countries and people, food “will be less affordable” if the grain deal isn't renewed, World Food Program chief economist Arif Husain told reporters.

WHAT ABOUT UKRAINE?

Ukraine's economy depends on agriculture, and before the war, 75% of its grain exports went through the Black Sea.

It can send its food by land or river through Europe, so it wouldn’t be cut off from world markets if the grain deal ends, but those routes have a lower capacity than sea shipments and have stirred anger from farmers in neighboring countries.

Nonetheless, the Ukrainian Grain Association wants to send more grain through the Danube River to neighboring Romania's Black Sea ports, saying it's possible to double monthly exports along that route to 4 million metric tons.

Ukraine’s wheat shipments have fallen by more than 40% from its pre-war average, with the USDA expecting 10.5 million metric tons exported in the coming year.

Ukraine has accused Russia of slowing down inspections of ships and preventing new ones from joining the initiative, leading to a drop in its food exports from a high of 4.2 million metric tons in October to 2 million in June.

WHAT ELSE AFFECTS FOOD SUPPLY?

Fallout from the pandemic, economic crises, drought and other climate factors affect the ability of people to get enough to eat.

There are 45 countries that need food assistance, the Food and Agriculture Organization said in a July report. High domestic food prices are driving hunger in most of those countries, including Haiti, Ukraine, Venezuela and several in Africa and Asia.

While drought can also be a problem for major grain suppliers, analysts see other countries producing enough grain to counterbalance any losses from Ukraine.

Besides Russia's huge exports, Europe and Argentina are increasing wheat shipments, while Brazil saw a banner year for corn.

“These markets adapt and producers adapt — and boy, the wheat and corn markets have adapted very, very quickly,” said Peter Meyer, head of grain analytics at S&P Global Commodity Insights.

___

AP reporter Edith M. Lederer at the United Nations contributed

Xi calls for 'solid' security barrier around China's internet



Reuters
Sat, July 15, 2023 

BEIJING (Reuters) - Chinese President Xi Jinping said China must build a "solid" security barrier around its internet under the supervision of the ruling Communist Party, in his latest call to safeguard online data and information.

China must persist in managing, operating and ensuring access to the internet in accordance with the law, Xi said in instructions delivered to officials attending a two-day cybersecurity meeting in Beijing that ended on Saturday.

"We must adhere to the Party's management of the internet and adhere to (the principle of) making the internet work for the people," state-run Xinhua news agency cited Xi as saying.

In the past decade, Xi has made preserving security a priority, with his concept of security covering everything from politics and the economy to the environment and cyberspace.

In 2015, China passed a national security law with a broader scope to include its cyberspace. A year later, a law was passed that contained requirements for security reviews and for data to be stored on servers in China.

In 2021, China rolled out regulations around so-called critical information infrastructure.

This year, lawmakers updated anti-espionage legislation to ban the transfer of information related to national security and broaden the definition of spying.

Navigating China's dense network of rules and laws on online data and information is not without risk for companies.

In April, U.S. consultancy firm Bain & Co said police visited its office in Shanghai and questioned some staff. The Financial Times, citing people briefed on the surprise visit, reported that the police also took away computers and phones.

Last year, regulators told China's biggest financial data provider Wind Information Co to stop providing offshore users with certain data, sources told Reuters at the time.

In 2021, authorities launched a cybersecurity investigation into ride-hailing giant Didi Global two days after it went public in the United States.

(Reporting by Ryan Woo; additional reporting by Beijing Newsroom; editing by Christina Fincher)

Alibaba's Ele.me food delivery platform extends welfare coverage to 3 million couriers with collective contract


South China Morning Post
Sun, July 16, 2023


Alibaba Group Holding-backed Chinese food delivery service Ele.me has committed to bring more social security and welfare benefits to its roughly 3 million couriers, following a similar move by JD.com in March to include its flexibly employed logistics workers in the firm's social welfare program.

The company held a meeting in Shanghai on Thursday, with 175 delegates approving and signing a collective contract and three specific contracts covering issues including wages, female employees and occupational health and safety, according to a report by state media Workers' Daily.

The contracts state that the basic delivery fee should tie in with factors such as the local consumer price index, delivery distance, and weather, to ensure couriers receive adequate compensation. Ele.me will also increase the roll-out of its smart helmet designed to safeguard riders and "stipulate a reasonable delivery time" for the orders, according to the report.

The signing of the contracts, witnessed by officials from the All-China Federation of Trade Unions, is expected to provide the 3 million couriers for China's second-largest food service platform with a wide range of social welfare benefits usually beyond the reach of the country's growing flexible workforce.

China has over 200 million flexible workers, defined as those without fixed-term contracts, many of whom work for the digital platforms of the country's Big Tech firms, such as Alibaba's Taobao marketplace, Meituan's food delivery service, and Didi's driver platform.

These workers are not covered by social security benefits, a situation that has long raised the ire of local governments in China.

In January 2022, the National Development and Reform Commission (NRDC) published a document on facilitating the healthy growth of the Big Tech platforms, where it made a call to increase "the rights and interests" of the flexibly employed.

Ele.me's decision to offer social welfare to its large pool of workers is likely to put pressure on Meituan, its main rival and the country's largest food delivery platform, which as of last year had more than 6 million food couriers on its books.

"Providing benefits for flexible workers by way of collective contracts is a practical approach. It's an important and meaningful step [towards offering them more security]," said Leo Yu Xin, a Beijing-based legal counsel at Jingtiangong Cheng Law Firm.

The move by Ele.me came two day after the Chinese government, in a reversal of its years of hostility towards the country's internet platforms, lauded those same platforms for helping technology development and economic growth.

Alibaba owns the South China Morning Post.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

US Virgin Islands wants JPMorgan to pay $190 million and implement anti-human trafficking policies in Jeffrey Epstein lawsuit

Jordan Hart
Sat, July 15, 2023 

The financial giant and the US territory have been in a heated blame game for months.

Leonardo Munoz/Getty Images

The US Virgin Islands is suing JPMorgan Chase in connection with the Jeffrey Epstein case.


Court filings show it wants the bank to hire a compliance consultant to combat human trafficking.


JPMorgan said the claims were "not well founded" and would be challenged in court.

The US Virgin Islands is seeking at least $190 million from JPMorgan Chase for its alleged involvement with Jeffrey Epstein, as well as implement measures to prevent human trafficking.

In a brief filed in court on Friday, the US Virgin Islands' Department of Justice argued that the bank failed to properly scrutinize Epstein when he was a client and even benefited from his sex trafficking, according to the court documents.

The US Virgin Islands also requested that the bank brings in an independent consultant "to prevent human trafficking" and "overcome the economic incentives to underreport suspicious activity."

It also wanted JPMorgan to confirm customers' basic details before they could open a private account, and to prohibit "participation of any employee who has a personal relationship with a private banking client in the decision to retain or exit that client," per the filing.

In a statement, the bank said the US Virgin Islands' "misdirected damages theories" were "not well founded" and would be challenged in court.

Since the US Virgin Islands filed its lawsuit in December 2022, both parties have blamed the other for their roles in Epstein's sex trafficking operation.

In another lawsuit, JPMorgan alleged that Epstein paid the college tuition for the children of the former first lady of the US Virgin Islands.

In June The Wall Street Journal reported that Epstein also offered to help a former JPMorgan executive get his daughter into Columbia University. The bank did not comment on the claim to the newspaper other than repeating previous statements expressing regret about working with Epstein.

Epstein was arrested in 2019 on federal sex trafficking charges. He died later that year while being held at Manhattan's Metropolitan Correctional Center.

In June, JPMorgan agreed to pay $290 million to some of Epstein's victims, who alleged that the bank facilitated his sex trafficking and ignored his behavior.

Goldman Sachs accused of culture of bullying that made staff ‘sob through meetings’


Simon Foy
Sat, July 15, 2023 

Significant Event | 4d
Goldman Sachs Is About To Report Its Worst Quarterly Earnings In Years - Semafor

Goldman Sachs

Goldman Sachs’ former recruitment chief has accused it of creating a “culture of bullying” that caused staff to “sob” through meetings and led to him having a mental breakdown.

Ian Dodd, who left the bank in 2021, claimed that Goldman employees frequently “express distress” by crying and that “sobbing through meetings” was common behaviour, according to documents filed in the High Court.

Mr Dodd also alleged that there was a “culture of bullying” at Goldman and that comments such as “take that as your first punch in the face” or references to staff members receiving a “slap” or “punch” were condoned.

Goldman has been accused in the past of having a gruelling workplace culture that demands staff work ultra-long hours.

Mr Dodd, who was global head of recruiting, is suing the Wall Street titan for £1m, alleging that the pressure to work excessive hours caused him to have a mental breakdown.

He alleged that senior managers at the bank ought to have known that he was becoming unwell, that he was at real risk of suffering a breakdown and that this was due to his work.

In its defence Goldman denied all of the allegations. The bank said: “If [Mr Dodd] felt pressure, it was self-generated; it was not imposed on him. If he did work excessive hours, this was not because it was required or expected of him.”

Known for their long hours culture, investment banks have tried to soften their image in recent years in an attempt to retain staff.

In 2021, junior Goldman bankers begged to work just 80 hours a week, after a leaked survey highlighted how “inhumane” expectations were leading to mental health issues among staff.

At the time, bosses at the bank said they would introduce new measures to ease the pressure, including potentially forgoing new business to help balance workloads.

Mr Dodd, who joined Goldman at the end of 2018, also claimed that expressions of “fearfulness” and complaints that staff were struggling to cope and sleep were commonplace at the lender.

In its defence, Goldman argued that Mr Dodd caused or contributed to his breakdown by failing to report to bosses that he was unwell and giving a false account to colleagues concerning his mother’s ill health and death.

It added that Mr Dodd “was not subjected to unreasonable work demands or required to work excessive hours. He was provided with appropriate support [and] had a variety of wellness resources available to him”.


Goldman Sachs declined to comment. Lawyers representing Mr Dodd were contacted for comment.

Ernst & Young scores mega audit deal with UBS bank



Jai Hamid 

- July 16, 2023

Ernst & Young (EY) wins major contract to audit UBS after its acquisition of Credit Suisse.
EY will start auditing the merged UBS-Credit Suisse entity from 2024.
This contract is one of the highest in global banking, EY will use international resources.

In the highly competitive landscape of financial services, professional service titan Ernst & Young (EY) has landed an exceptional contract to audit UBS, the Swiss multinational investment bank and financial services company.

EY is taking over from PricewaterhouseCoopers (PwC), following UBS’s recent acquisition of Credit Suisse.

A change in guard for UBS: From PwC to EY

EY has had a long-standing relationship with UBS, serving as the bank’s external auditor since 1998. As UBS integrates Credit Suisse into its operations—a process that experts predict will span several years—EY will begin auditing the enlarged entity from 2024.

This is one of the world’s most substantial banking audit contracts, so much so that EY is expected to draw upon its international workforce to fulfill the demands of this assignment. Although PwC has been Credit Suisse’s auditor, they will wrap up their involvement by auditing the bank’s 2023 accounts.

In the grand scheme of the world’s financial services, this auditing contract marks an impressive win for EY. The sum that UBS paid to EY for auditing in the previous year amounted to $70 million, while Credit Suisse paid PwC $90 million—a ten percent increase from the prior year.

These hefty payouts reflect the value and prestige of these audit assignments in the European market. However, for the merged UBS-Credit Suisse entity, the audit fee is anticipated to be less than the combined amount paid by the two banks separately.

Nevertheless, it still ranks among the highest audit fees in the global banking arena.

To put these numbers in perspective, HSBC paid PwC $148 million for auditing last year, and Barclays paid KPMG £71 million. The auditing fees of the Wall Street heavyweights—Citigroup, JPMorgan Chase, and Goldman Sachs—ranged between $95 million and $103 million.

EY’s global edge and recent triumphs

The global reach and integration of EY’s financial services audit practice enable the firm to harness resources and specialized skills from across its network. This arrangement is said to be more seamless compared to EY’s competitors, allowing the firm to easily share resources across borders.

This UBS audit contract reaffirms EY’s position as a dominant player in the European market for financial services auditing. Last year, the firm won a share of the €60 million-a-year audit contract of BNP Paribas, France’s largest bank. EY also serves as the auditor for Deutsche Bank, Germany’s most substantial lender.

These recent successes have come despite EY facing reputation damage from its involvement in the Wirecard scandal. However, EY has demonstrated resilience, showcasing its ability to continue winning substantial contracts in the face of adversity.

As EY gears up for this high-stakes audit assignment, it may have to discontinue its consulting services for Credit Suisse, adhering to conflict of interest regulations. The firm was previously hired by Credit Suisse to review anti-money laundering procedures in its Asian wealth business.

The Swiss Federal Audit Oversight Authority, when questioned about EY’s independence as an auditor for the unified UBS-Credit Suisse entity, chose not to comment as the matter is currently “under consideration”.

In a world where credibility and expertise are the cornerstones of success in financial services, EY’s new auditing contract with UBS affirms its position in the big leagues of global auditing.

With this venture, EY not only elevates its standing but also sets the stage for its continued growth in the audit sector of financial services.

AMERIKA

Future retirees plan to work longer, partly due to savings shortfalls

Over half of future retirees plan to continue working amid savings insecurities



Kerry Hannon
·Senior Columnist
Sat, July 15, 2023

Many Americans plan to work longer to cover their retirement savings shortfall. But it may be a pipe dream.

According to a new survey by the nonprofit Transamerica Center for Retirement Studies (TCRS) 55% of workers plan to work after they retire. That includes almost 20% who plan to work full time and more than a third who plan to toil part time. More eye-opening: a staggering 15% of all workers expect their primary source of retirement income to come from working,

TCRS, in collaboration with the Transamerica Institute, polled 5,725 workers over age 18 who worked in a for-profit company employing one or more employees between November 8 and December 13, 2022.

Five years ago, 66% of baby boomer workers, for example, expected to retire after age 65, compared with 71% in late 2022, while 54% planned to work in retirement (compared with 55% in 2022).

Total household retirement savings have increased—from $164,000 five years ago to $289,000 in 2022— but "for many, their savings may be inadequate for a retirement that could last more than 20 years," Catherine Collinson, CEO and president of Transamerica Institute and TCRS, told Yahoo Finance.

The outlook is bleak for a hefty share of workers. Most workers (53%) say they simply don’t have enough income to save for retirement, according to the researchers. Those surveyed expect a range of sources of retirement income, including savings from 401(k) to Social Security. But more than a third—36%—said they’re planning on working to make ends meet.

While working longer is all well and good, these folks may not want to bank on it.

"In theory, envisioning working longer and retiring later sounds like an ideal solution to not having enough retirement savings," Collinson said. "However, it can be very difficult to achieve in practice, especially if you're not taking good care of your health and keeping your job skills up to date."

And, put simply, many workers aren’t doing the work to ensure they can, well, keep working. Fewer than six in 10 workers say they’re staying healthy so they can continue working (58%), and less than half (49%) are keeping their job skills sharp. Even fewer workers are taking classes to learn new skills (24%), and earning a new degree, certification, or professional designation (17%).

What’s spurring the work until you drop thing? The lack of confidence in the retirement system from concerns about how much they have saved to uncertainty about Social Security and Medicare to not understanding where to turn for financial advice.

In fact, retirement confidence in the US has declined by the largest margin since the Great Recession, according to the latest annual survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research. Just 64% of workers are very or somewhat confident they’ll have enough money to live comfortably in retirement, down sharply from 73% in 2022.

That large of a drop in retirement confidence hasn’t happened since 2007 to 2008 and 2008 to 2009 when the economy was in a severe recession, said Craig Copeland, director of Wealth Benefits Research at EBRI, a nonpartisan research institute in Washington, D.C., and chief researcher for the group's 33rd annual Retirement Confidence Survey.

Transamerica Center for Retirement Studies
Workers ‘across generations’ planning to work in retirement

The notion of continuing to earn a paycheck in retirement is not just one embraced by a handful of not ready-to-pack-it-in folks. Workers across generations plan to continue working in retirement, according to the Transamerica survey. More than half of Generation Zers, 56% of millennials, 54% of Gen Xers, and 55% of baby boomers all plan to work in their golden years.

Here’s some data that shows why: Workers planning to work past age 65 and/or in retirement—or are already doing so—cite both healthy-aging (80%) and financial reasons (78%). Other frequently cited considerations are "concerned that Social Security will be less than expected" (33%), "can’t afford to retire" (31%), and "need health benefits" (27%).

Hanging in: About one-quarter of workers surveyed by Transamerica Center for Retirement Studies said their employer offers flexible schedules. And a tiny 21% allow employees to trim work hours and shift from full-time to part-time. (Getty Creative)
'Employers just aren't getting it'

The truth is continuing to earn a paycheck of some sort after stepping away from a primary career is a smart plan even if you have saved enough to cover your living expenses in retirement. It can be a financial safety net and makes it easier to stave off tapping into retirement savings, so the funds can continue to grow. And it can make it easier to delay Social Security benefits. If you choose to wait to tap your benefits until age 70, you earn delayed retirement credits, which come to roughly an 8% per year annual increase in your benefit for each year between your full retirement age until you hit 70 when the credits stop accruing.

There are also psychological and health reasons to take into account, including keeping involved with a social network and feeling relevant.

The problem is that life often comes at you with the unexpected–from health issues to caring for family members like a spouse–that puts the kibosh on it.

Another glaring glitch: A sizable 17% of workers say their employers are not age-friendly, per Transamerica. Only four in ten (41%) said their employer offers retirement transition assistance such as flexible work schedules and arrangements (23%). And a tiny 21% allow employees to trim work hours and shift from full-time to part-time, 18% enable workers to shift to positions that are less stressful or demanding.

Transamerica Center for Retirement Studies

That’s going to be a problem for the more than four in ten of workers who envision transitioning into retirement either by reducing their hours with more time to enjoy life (26%) or working in a different capacity that is either less demanding and/or brings greater personal satisfaction (18%), according to Transamerica.

"It's exciting to see people setting their sights on longer working lives and recognizing the potential for living longer than earlier generations," Collinson said. "But by and large, many employers just aren't getting it yet…many employers’ business practices are still aligned with what is now an outdated mindset that work and retirement are mutually exclusive."

In the end, the worker shortage may provide more job opportunities. "A steep drop in fertility rates has eviscerated working-age populations in leading economies, causing employers to seek out new sources of labor, including older workers," Bradley Schurman, a demographic strategist and the author of The Super Age, told Yahoo Finance. "And that’s pushing some leading employers to devise new retention and recruitment strategies."

Kerry Hannon is a Senior Reporter and Columnist at Yahoo Finance. She is a workplace futurist, a career and retirement strategist and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on Twitter @kerryhannon.