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July 8 (R) – Three former employees of JPMorgan Chase & Co (JPM.N) worked together to defraud other traders in the precious metals futures market, a US prosecutor told a jury during opening statements in a closely watched criminal trial in Chicago on Friday.

Former head of the bank’s global precious metals division Michael Nowak, precious metals trader Gregg Smith and salesman Jeffrey Ruffo face racketeering and conspiracy charges in the US Department of Justice’s most aggressive case yet, targeting the manipulative trading tactic known as spoofing.

Prosecutor Lucy Jennings told jurors each played a role in the plan to create phantom supply or demand by placing buy or sell orders and then quickly canceling them.

“Definitely someone got ripped off,” she said.

She said a JPMorgan witness would testify that the deals violated bank guidelines.

“The defendants knew from day one that this type of trafficking was wrong and they did it anyway,” she said.

Attorneys for the defendants were due to make opening statements Friday afternoon.

The three men are accused of using the tactic to manipulate futures on metals such as gold, silver, platinum and palladium between 2008 and 2016.

Spoofing was outlawed in 2010 when Congress passed the Dodd-Frank Act in the wake of the financial crisis. Since then, prosecutors have argued that previous cases constituted fraud.

The Blackmail Statute, a federal law enacted in 1970 to take down the mafia, is rarely used to prosecute corporate crime. It allows prosecutors to charge a group of people, including those indirectly involved in alleged wrongdoing, on the basis that they were involved in a “criminal enterprise”.

Better Markets, a Washington nonprofit that advocates for stronger financial regulation, called the case a “potential gamechanger” because the blackmail law would allow prosecutors to seek harsh sentences if the defendants are convicted.

In addition to racketeering and conspiracy, Nowak faces 13 other charges, including fraud, spoofing and attempted market manipulation, and Smith faces 11 other charges.

Christopher Jordan, a dealer who left JPMorgan in 2009, has also been charged and will face a separate trial.

The jury trial is expected to last about five weeks. Prosecutors are expected to subpoena three former dealers, all of whom have separately pleaded guilty to related charges, as cooperating witnesses. According to court records, alleged victims of the system can also comment.

Commodity tampering, and spoofing in particular, has become a major focus of the Justice Department, which has launched several other cases in recent years, including against NatWest and former traders at Deutsche Bank and UBS.

JPMorgan also agreed to pay more than $920 million in 2020 and admitted wrongdoing to speak with the Justice Department and the Commodity Futures Trading Commission about the conduct of the traders, who have pleaded guilty or are facing trial , to settle.

Reporting by Jody Godoy; Edited by Michelle Price, David Gregorio and Jonathan Oatis

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Traders on the NYSE floor, June 29, 2022.

Source: New York SE

Consumer inflation data and the start of the second quarter earnings season could be two catalysts that will give markets a bumpy ride in the coming week.

Results from PepsiCo are the first major report of the week on Tuesday and Delta Air Lines on Wednesday. JPMorgan Chase and Morgan Stanley open reporting season for banks on Thursday, followed by Wells Fargo, Citigroup and PNC Financial among others on Friday.

A slew of inflation reports could impact markets as they help set the tone for how aggressive the Federal Reserve must be in its fight to calm inflation.

The June CPI is trading high on Wednesday and economists expect it could get hotter on a yearly basis than May’s 8.6%. It’s also the report that could move the markets the most.

“The headline is expected to be higher. That’s largely because of the energy,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. He added that core inflation excluding food and energy could be lower. West Texas Intermediate crude oil futures traded as high as $122 a barrel in June but have since fallen back in July to trade at around $104 a barrel on Friday.

“The question is to what extent moderation in commodity prices will be offset by persistently rising service prices, which are mainly driven by rent,” Boockvar said. “Government statistics still have a lot of catching up to do when it comes to rent.”

Also on Thursday is June’s PPI, and investors are keeping an eye on the University of Michigan’s Friday July consumer sentiment report. This report contains consumer expectations about future inflation, a key metric tracked by the Federal Reserve. June retail sales, another consumer measure, will also be released on Friday.

“PPI is the seed for CPI… and could hit another 10%,” Boockvar said.

The new inflation data follows Friday’s strong jobs report. In June, the economy created 372,000 jobs, about 120,000 more than expected. Strategists say the report has boosted expectations that the Federal Reserve will hike rates by another 75 basis points later this month. A basis point is one hundredth of a percentage point.

“It was enough to continue on the path we had taken. It’s not until we see unemployment rising monthly that I think the Fed will start to buckle,” Boockvar said.

A key question for markets is when inflation will peak, as it has been rising for much longer than the Fed originally expected.

“I think one risk to markets is that inflation may not have peaked yet,” said Michael Arone, chief investment strategist at State Street Global Advisors. “I still think markets are at least hopeful, if not expecting, that inflation will slow.”

As investors watch the pace of inflation, the second quarter earnings season begins. Corporate earnings could be the source of some market turmoil if analysts are forced to trim estimates for the remainder of the year, as many expect.

“The street hasn’t really changed the estimates. Sales growth has fallen. Margins are declining. Analysts are leaving their estimates unchanged,” said Boockvar. “If there is to be a readjustment, this is the right time.”

According to Refinitiv I/B/E/S data, earnings for the S&P 500 are expected to rise 5.7% in the second quarter. Estimates for the third and fourth quarters have moved down slightly but are still at 10.9% and 10.5%, respectively.

“I think the market is gearing up for a challenging earnings quarter, so it’s unclear how much this will add to volatility,” Arone said. He said the companies would keep hitting, but maybe not as hard. “I think they’re going to lower their guidance. Why not? It just makes it easier to walk down the road. I think earnings season is going to be a disappointment. It will be interesting to see how the market reacts.”

Stocks have been higher for the past week, with the S&P 500 gaining 2.3% on Friday afternoon and the Nasdaq gaining 4.3%. Shares were initially lower following the June jobs report but reversed course and rallied on Friday.

The main worst performing sectors for the week were Utilities and Energy. S&P’s consumer discretionary sector, which is benefiting from lower oil prices, rallied more than 4.3% for the week on Friday afternoon.

The 10-year Treasury yielded about 3.09% on Friday, but the 2-year Treasury yield outperformed the 10-year last week for the third time since late March. The result is what is known as an inverted yield curve, which sometimes signals a recession. The 2-year yield was 3.11% as of Friday afternoon.

Calendar of the week ahead

Monday

1:00 p.m. Auction of $43 billion in three-year Treasury bills

2:00 p.m. New York Fed President John Williams

Tuesday

Revenue: PepsiCo

6:00 a.m. NFIB survey

12:30 p.m. Richmond Fed President Thomas Barkin

1:00 p.m. Auction of $33 billion in 10-year Treasury bills

Wednesday

merits: Delta Air Lines, Fastenal

8:30 a.m. June CPI

1:00 p.m. Auction for $19 billion in 30-year bonds

14:00 federal budget

2:00 p.m. Beige book

Thursday

Merits: JPMorgan Chase, First Republic Bank, Conagra, Morgan Stanley, American Outdoor Brands, Cintas, Taiwan Semiconductor

8:30 am Weekly initial jobless claims

8:30 am June PPI

11:00 am Fed Governor Christopher Waller

Friday

Merits: Wells Fargo, Citigroup, PNC Financial, Bank of New York Mellon, US Bancorp, State Street, United Health

8:30 am June retail sale

8:30 a.m. Import prices

8:30 a.m. Empire State Manufacturing

8:45 am Atlanta Fed President Raphael Bostic

9:15 a.m. Industrial production

10:00 a.m. Consumer sentiment in July

10:00 a.m. Company inventory

The weapon used in the assassination of former Japanese Prime Minister Shinzo Abe was home-made and is of great concern to authorities around the world.

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The manufacture of guns worries police because they don’t have to go through customs before they get into the hands of users.

Japan is the G7 country with the lowest rate of gun ownership among civilians. In 2018, according to the Small Arms Survey, there were around 375,000 firearms in circulation, a rate of 0.4 firearms per 100 residents.

In contrast, Canada is the second most armed G7 country by population. There were more than 13,000,000 firearms in circulation in 2018, which corresponds to 34.7 guns per 100 inhabitants.

Canada has 35 times more guns among the population than Japan. However, the country has around 87,000,000 fewer inhabitants…

Francis Langlois, an expert on gun policy at the Raoul Dandurand Chair, explains that Japan is a very safe country.

“I lived in Japan for more than a year to work and I walked around every day with $700-$800 in my pocket and I was never, never scared,” he recalls.

craft weapons

The manufacture of artisanal weapons then poses a major challenge for the Japanese authorities as the technology is increasingly developed for artisanal manufacturers.

“With new technologies we can now print quality guns and by using metal components we can have printed guns assembled at home,” emphasizes Mr. Langlois.

The specialist points out that the practice is becoming increasingly affordable and easier to do, a sign that the problem for the police is significant.

***See the full interview with Francis Langlois above***

Federal Reserve Governor Lael Brainard speaks at the National Association of Business Economics (NABE) Annual Meeting in Arlington, Virginia on Monday, September 27, 2021.

Al Drago | Bloomberg | Getty Images

Federal Reserve Vice Chair Lael Brainard became the latest official to comment on crypto, saying on Friday that regulation is needed or the industry could become a greater threat.

“Innovation has the potential to make financial services faster, cheaper and more inclusive in ways that are inherent to the digital ecosystem,” she said, speaking at a Bank of England conference in London. “It is important that the foundations for sound regulation of the crypto-financial system are laid now, before the crypto ecosystem becomes so large or interconnected that it could pose risks to the stability of the broader financial system.”

The lack of regulatory guidelines has been a confusing and bothersome issue for the crypto industry, whose participants are interested in developing and growing businesses but unclear the regulatory parameters within which they can do so.

Despite this year’s crash — Bitcoin’s price is currently about 70% below its all-time high of $68,982.20 set in November — US regulators continue to draw attention to the potential, growth and reach of the industry, as well as the possible fallout from it missing release frame for it.

Brainard’s comments come a month after Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (DN.Y.) introduced legislation creating a regulatory framework for crypto that would empower the Commodity Futures Trading Commission to cover most of the industry to regulate.

Earlier this year, President Joe Biden announced a cryptocurrency executive order that sought to address the lack of a framework for crypto development in the US

Brainard highlighted the volatility of cryptocurrency prices on Friday.

She also pointed to recent events that have further weighed on crypto prices and dampened sentiment, most notably the collapse of Terra, as well as attempts to create decentralized stablecoins and the current liquidity crisis involving Three Arrows Capital.

“New technology and financial engineering alone cannot transform risky assets into safe ones,” Brainard said.

“Despite significant investor losses, the crypto financial system does not yet appear to be large enough or sufficiently connected to the traditional financial system to pose systemic risk,” she added. “This is the right time to determine what crypto activities are allowed for regulated entities and under what restrictions, so that the impact on the core financial system remains well contained.”

Fans haven’t often seen Vancouver Canucks head coach Bruce Boudreau smile on TV, but Friday at the Bell Center they were treated to an exception provided by none other than Quebec wrestler Kevin Owens.

The latter was a keen viewer of the National Hockey League (NHL) amateur draft and he performed, to put it mildly, when he appeared in front of the cameras of the NHL Network. At the time, Boudreau — an admirer of the World Wrestling Entertainment (WWE) wrestler — was chatting with the hosts about hockey-related topics. Clearly surprised, he flashed an eloquent smile as he shook hands with Owens, who came out to meet him in the midst of his televised intervention.

On screen, we wanted to remind that the Montérégie native was actually the Canucks driver’s favorite wrestler.

The discussion was certainly cordial, and the two men also made sure to have their photos taken for the Canucks’ Twitter account.

Multiple outlets, including the Wall Street Journal, reported Thursday that Twitter would lay off around 30% of its talent acquisition team, fewer than 100 employees. A Twitter spokesman confirmed the layoffs to CNN, saying the cut was made to reflect changing business needs. Twitter said in May — just weeks after Musk agreed to buy the company — that it would stop most hiring and hiring, except for “mission-critical” roles, and scale back other non-labor costs. At the same time, several executives announced their departure from the company. Like other tech companies, Twitter (TWTR) has been hit by a downturn in the stock market. Shares of the company are down about 4% as of Friday morning and are down more than 12% since the beginning of this year. Twitter’s shares are trading about 30% below Musk’s asking price, reflecting serious doubts about the deal, at least as it’s currently proposed. Despite signing a definitive agreement to buy the company in April, Musk has suggested he might try to go out of business over concerns about the number of bots on the platform — the rationale analysts have suggested could simply be an attempt , creating an excuse to exit a deal that appears overpriced given the market downturn. Shares of Tesla (TSLA), on which Musk partly relies to fund the deal, have also fallen sharply since the Twitter acquisition agreement. The latest twist in the saga came Thursday when the Washington Post reported that Musk’s deal to buy Twitter was “seriously in jeopardy” over alleged challenges in verifying Twitter’s spam account numbers, which are attributed to three people involved with are familiar with the mindset of Musk’s team. That’s despite Twitter handing Musk over his “firefighters” of data about tweets on the platform after he asked for more information.

Twitter held a background call with reporters earlier Thursday to explain its process for measuring spam and fake accounts — using both human and automated systems that examine public and private data like IP addresses and geolocation data — from which it consistently has reported that they are below 5% of its monetizable daily active users. Musk has placed them much higher, citing his own experiences on the platform but with no obvious evidence.

Should Musk attempt to pull out of the deal, it could result in a protracted legal battle with the company.

Faced with the rise in monkeypox cases and the difficulties in tracing the chains of infection, France announced on Friday the extension of vaccination, which, like other countries, is now offered preventively to the most exposed groups, especially homosexuals.

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It joins this approach of the UK, US or Canada, as called for by LGBTQ+ associations, health professionals and left-wing parties.

Until then, vaccination was only offered to adults, including caregivers, who had risky contact with a patient. About 700 people were vaccinated.

But “given the spread of the monkeypox virus, the kinetics of the epidemic and the difficulties in tracing the contacts of infected people”, the High Authority for Health (HAS) recommended extending vaccination in order to be able to apply it preventively to those most exposed through “their sexual practices or occupation.”

France has had 721 cases, including 4 women and 2 children, mostly in Île-de-France, according to the latest Public Health France report published on Thursday.

As in other countries, the majority of reported cases involve men who have sex with men.

The possibility of preventive vaccination concerns “men who have sex with men and trans people who report multiple sexual partners, people in a situation of prostitution, workers in places of sexual consumption,” specified the HAS.

The government hopes to start vaccinations “from the beginning of next week”, Health Minister François Braun said on Friday.

The vaccine is given in two doses 28 days apart. A single dose is sufficient for people who have been vaccinated against smallpox in the past. A third is recommended for the immunocompromised.

The monkeypox virus can be transmitted through direct contact with a patient’s skin or mucosal lesions, as well as through droplet infection. “Sexual intercourse, with or without penetration, meets these conditions for contagion, and having multiple partners increases the risk of exposure to the virus,” Public Health France reminded.

Contamination can also occur through contact with the patient’s environment (bed linen, clothing, bath linen, etc.). At this stage, cases reported in Europe are mostly mild and no deaths have been reported. This viral disease usually heals spontaneously after 2 to 3 weeks.

Outside central and west African countries, where the virus is endemic, an unusual surge in cases has been noted since May, with about 6,000 cases recorded worldwide, according to the WHO.

With more than 80% of cases, Europe remains by far the most affected region. Germany, the UK and Spain are the hardest-hit countries, each with more than 1,000 cases.

CNBC: Alphabet and Google CEO Sundar Pichai is interviewed by Deirdre Bosa.

CNBC

Google has offered to split parts of its ad tech business into a separate company under its parent company Alphabet in a bid to stave off a second expected Justice Department antitrust lawsuit, the Wall Street Journal reported Friday.

Such a concession would keep the ads business under Alphabet’s umbrella, but still represent a significant shift in the digital advertising landscape, where Google is a massive player on both sides of the market. Although Google is best known for its search engine, Google’s main business is online advertising. Alphabet reported revenue of $257 billion for 2021.

But it’s unclear if the offer would satisfy the DOJ.

The ministry’s cartel chief, Jonathan Kanter, insists he prefers to go to court rather than accept settlements. Speaking before the Antitrust Section of the New York State Bar Association in January, Kanter said published court opinions are critical to moving the law forward.

“In short, we will remedy – no comparisons. We cannot compromise when there is a violation of the law,” Kanter said at the time.

Kanter has been suspended from working on Google monopoly investigations while the DOJ determines whether he should retire based on previous work for Google competitors, according to a May report in Bloomberg, citing unnamed sources. The DOJ has not confirmed the report. But it’s likely that his colleagues leading the investigation respect his philosophy, if that’s the case.

The Journal reported that a new antitrust lawsuit over Google’s ad tech business could come as early as this summer, according to sources.

A DOJ spokesman declined to comment on the report.

“We have worked constructively with regulators to address their concerns,” a Google spokesman said in a statement. “As we have said, we have no plans to sell or exit this business and we are fully committed to bringing value to a wide range of publisher and advertising partners in a highly competitive sector.”

Still, according to the Journal’s report, Google’s proposal would be to keep the ad tech business under its same owner, rather than sell it outright. The speaker declined to address that specific point.

Founded in 2015, Alphabet is essentially a holding company for Google, generating almost all of its sales and profits. Google has always presented itself as a technology company, investing in many broad areas of technology — such as web search, phones, artificial intelligence, driverless cars, and healthcare technology.

Google has spun off other companies, like its self-driving car company Waymo and its life sciences company Verily, while staying under the Alphabet umbrella.

Google has been the leader in online advertising for well over a decade. Over the years, the company has developed and acquired a range of ad tech tools that enable content publishers to monetize advertising and allow ad buyers to target the audiences they want on Google Search, YouTube, Maps and other sites on the Internet.

A new lawsuit would add to the already formidable legal challenges Google faces over its alleged dominance in several companies.

The DOJ filed its long-awaited antitrust lawsuit against Google in 2020, marking the first time a serious federal antitrust lawsuit had been filed against Google in its home country.

Google also faces separate lawsuits from major coalitions of attorney generals, including one led by Texas, alleging illegal monopoly of the online advertising market.

The company has also come under scrutiny outside the US, particularly from Europe, where it has faced several competition allegations, including one over its shopping comparison service, which was upheld by a European court.

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