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Say hello to JPM Coin
JPMorgan Chase this morning announced the first cryptocurrency to be rolled out by a major U.S. bank.
How will it be used? The new tokens, each of which represents a U.S. dollar, will help settle some payments between the bank’s clients. CNBC reports that the new digital coin will enter testing “in a few months.” It will facilitate a “tiny fraction” of its wholesale payments business.
What’s the point? “Money sloshes back and forth all over the world in a large enterprise,” Umar Farooq, the head of JPMorgan’s blockchain projects, told CNBC. “Is there a way to ensure that a subsidiary can represent cash on the balance sheet without having to actually wire it to the unit? That way, they can consolidate their money and probably get better rates for it.”
It also gives JPMorgan first-mover advantage. This will be one of the world’s first real-world crypto applications for banking, and the biggest move into the sector yet by an American lender. It also sets the bank up for a future in which crypto could be an integral part of the financial sector.
The bank has come a long way on crypto. Its C.E.O., Jamie Dimon, famously declared Bitcoin a “fraud” in 2017 and said he would fire any employee caught trading it. (He later regretted his comments and added that he believed in the value of blockchain, the technology behind cryptocurrencies.)
The threat of a government shutdown fades
Congress is expected to vote on a bipartisan border deal this evening that would ward off another government shutdown.
President Trump may be resigned to signing it. “I don’t want to see a shutdown,” he told reporters yesterday. “A shutdown would be a terrible thing.”
A lot of people need to be persuaded. Congressional leaders acknowledged that the bill doesn’t allow for the wall that Mr. Trump and his allies want. (White House aides spent yesterday pitching the legislation to the likes of Lou Dobbs and Sean Hannity.) But it assigns more money to border fencing and immigration detention than left-wing Democrats would like.
Still, no one sees a better option. “As with all compromises, I say to people, ‘Support the bill for what is in it,’ ” Speaker Nancy Pelosi told reporters yesterday. The Senate majority leader, Mitch McConnell, warned his colleagues against letting “unrelated cynical partisan plays get in the way of finishing this important process.”
It’s not done until Mr. Trump puts pen to paper. CNN reminds us that he backed out of a previous compromise at the last minute, triggering the longest-ever government shutdown. This time, he could try to find further border funding from elsewhere in the government to claim some sort of victory.
The U.S.-China trade talks get serious
After three days of what Reuters calls “deputy-level meetings” in China, Treasury Secretary Steven Mnuchin and the U.S. trade representative, Robert Lighthizer, will embark on high-level trade negotiations in Beijing today.
China is stepping up. The U.S. officials will meet today with Vice Premier Liu He, President Xi Jinping’s top economic adviser. According to the South China Morning Post, Mr. Xi himself may attend tomorrow.
So far, it’s unclear what progress is being made. President Trump has said only that discussions are “going well,” adding that Chinese negotiators were “showing us tremendous respect.” Beijing has offered few details.
But a deadline extension could help. America is scheduled to increase tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent if a deal isn’t reached by March 1. Mr. Trump has said he might let that slide; Bloomberg puts the possible deadline extension at 60 days.
Europe fights the U.S. over ‘dirty money’
Relations between Washington and Brussels soured yesterday after the E.U. added four American territories to a blacklist of money-laundering regions, Jack Ewing and Alan Rappeport of the NYT write.
On the list: Puerto Rico, American Samoa, Guam and the U.S. Virgin Islands joined an ignominious group that includes North Korea, Libya, Yemen and Saudi Arabia. European banks must apply greater scrutiny to any transactions in those areas.
The E.U.’s rationale: “Dirty money is the lifeblood of organized crime and terrorism,” Vera Jourova, the European commissioner for justice, said yesterday. “It was high time for Europe to act.”
The Trump administration’s response: The Treasury Department condemned the list as flawed and unnecessary, and complained that it “was not provided any meaningful opportunity to discuss with the European Commission its basis for including the listed U.S. territories.”
Where things get tricky: “The deteriorating relationship between the longtime allies will complicate a resolution on trade,” the NYT notes. “Talks between the European Commission and the White House are on the back burner while the Trump administration focuses on resolving its trade war with China. But trade talks are expected to intensify in the coming months.”
Airbus will stop building its giant jumbo
Airbus will cease production of its A380 passenger jet, Amie Tsang of the NYT reports:
• “Citing reduced orders from Emirates Airline, a major customer, and an inability to find other buyers, the company said it would halt deliveries of the jumbo jetliner in 2021, although it said it would continue to support existing A380s.”
• “The decision will lead to job cuts at Airbus, possibly as many as 3,500 over the next three years, and Airbus said it would start discussions in the next weeks about the consequences for its work force.”
• “The A380 “was built for a time when crowded airports would demand that planes carry more people to reduce congestion. But flight traffic instead shifted to smaller planes, which are cheaper to maintain, flying to regional airports, a move that reduced demand for larger aircraft.”
Was an Apple insider-trading lawyer insider trading?
Federal authorities yesterday charged Gene Levoff, a former senior director of corporate law at Apple, with illegally trading on inside information, according to Dai Wakabayashi of the NYT:
• “The S.E.C. said Mr. Levoff violated insider trading laws three times from 2015 to 2016. On one occasion, Mr. Levoff sold roughly $10 million of Apple stock — nearly his entire holdings — from his personal brokerage account four days before Apple announced quarterly earnings on July 21, 2015.”
• “The company’s stock price fell 4 percent after the earnings report, in which Apple revealed it had fallen short of analysts’ estimates for iPhone sales. Mr. Levoff had already seen a draft of the announcement and avoided about $345,000 in losses by dumping his Apple shares before the official announcement, the S.E.C. said.”
• The S.E.C. said Apple cooperated with its investigation, and that Mr. Levoff was placed on leave in July and fired in September.
• A lawyer for Mr. Levoff said in a statement, “Gene Levoff was a trusted Apple executive for many years, and has never before been accused of wrongdoing of any kind.”
Brexit remains a mess
The state of negotiations on Britain’s withdrawal from the E.U. is still divided and confused, and Brussels doesn’t like what it sees.
British lawmakers still don’t like Theresa May’s plan. They will debate and vote today on a series of amendments to her proposal. The main focus: a bid to rule out leaving without a deal. (Mrs. May insists that remain an option.)
Britain’s opposition party, Labour, is divided. “Moderate Labour MPs are plotting to form a breakaway political party within weeks,” the FT reports, if their leader, Jeremy Corbyn, doesn’t back an amendment calling for a second referendum on Brexit.
Surprise! Europe remains unimpressed. “E.U. leaders are still waiting for a signal from British Prime Minister Theresa May on the next steps in negotiating a critical divorce deal,” the WSJ reports. “In the meantime, they are losing confidence in her capacity to deliver a majority in her own parliament for any agreement.”
More Brexit news: Britain so far has rollover arrangements for only about £16 billion, or $21 billion, of the £117 billion in E.U. trade deals it benefits from. Potential chaos could cause a surge in market abuse, according to a British financial watchdog. Switzerland will set quotas on British immigration in the event of a no-deal Brexit.
Banks are merging faster. Should they?
Analysts and investors think that BB&T’s proposed $28 billion takeover of SunTrust will spur a wave of bank consolidation. Such mergers would probably be completed more quickly than in the past, thanks to recent changes at the Fed and the Office of the Comptroller of Currency, Lalita Clozel of the WSJ writes.
How much faster? “The median time the Fed takes to approve or reject a bank merger receiving opposition from community groups — common in large deals — dropped to 3.8 months in the first half of 2018, from 5.6 months in the first half of 2017 and 7.0 months for all of 2015, according to a Fed report,” Ms. Clozel writes “At the O.C.C., the average time for handling all mergers dropped to 1.9 months in 2018, from 2.6 months in 2016, the agency said.”
What changed? The Fed and the O.C.C. now review deals differently. One example: The O.C.C. says previous enforcement actions aren’t necessarily red flags that could kill a transaction.
Banking deal makers are happy. “We were very pleased with the efficiency of the regulatory approval process,” said Kessel Stelling, the C.E.O. of Synovus, whose deal to buy FCB Financial Holdings won Fed approval in just four months.
Others are not. Community groups, who usually press merging banks to increase lending in underserved areas, think they’re being sidelined. And Democratic lawmakers like Senator Elizabeth Warren worry that the new review regime may lead to “a wave of bank consolidation to the detriment of consumers and the financial system.”
BlackRock has hired Stanley Fischer, the former vice chairman of the Fed, as a senior adviser.
The speed read
• Levi Strauss plans to go public again, potentially giving its founding family a multibillion-dollar windfall. (FT)
• Goldman Sachs reportedly considered buying the boutique investment banks William Blair and Harris Williams to gain mid-market corporate clients. (Bloomberg)
• Johnson & Johnson agreed to buy Auris, which builds robotic tools to aid surgery, for $3.4 billion. (Bloomberg)
• Four of Deutsche Bank’s biggest shareholders want deeper cuts to its investment bank. (FT)
Politics and policy
• Michael Bloomberg is reportedly willing to spend more than $500 million, on his own campaign or the Democratic nominee’s, to defeat President Trump in 2020. (Politico)
• Fighting climate change and creating jobs are great goals. The Green New Deal may not be the best way to do either. (WSJ)
• Republican senators threatened to vote against Andrew Wheeler, Mr. Trump’s pick to lead the Environmental Protection Agency, unless he promises to relax biofuel requirements. (Bloomberg)
• Europe’s top antitrust cop, Margrethe Vestager, may have endangered her chances of leading the European Commission by vetoing a big rail merger. (FT)
• President Trump reportedly won’t rush to place tariffs on car imports. (FT)
• His struggles in border wall negotiations may be a bad sign for the new North American trade agreement. (Bloomberg Opinion)
• It’s “an appropriate time for Congress to consider comprehensive internet privacy legislation,” a report by the Government Accountability Office says. (Axios)
• Why hasn’t A.I. eaten your job yet? (MIT Technology Review)
• Here’s a report card on America’s autonomous cars. Spoiler: Waymo’s still the team to beat. (WSJ)
• Quadriga has “inadvertently” moved more Bitcoin into a wallet that only its deceased founder could open. (Bloomberg)
• How Silicon Valley may be using trade secrets to hide race problems. (Bloomberg)
Best of the rest
• Wall Street’s move into residential real estate has come at a cost to tenants. (Atlantic)
• Confidence in the economy has faded. Can it rebound? (DealBook)
• Renault will cancel tens of millions of euros in scheduled compensation for Carlos Ghosn. Also: What if the auto executive had been charged in the U.S.? (NYT)
• Why Santander ruffled feathers by delaying the repayment of a €1.5 billion, or $1.7 billion, capital bond. (FT)
• Edward Lampert’s plan to resuscitate Sears? Small stores and fewer clothes. (WSJ)
• The inside track on the struggle to control PG&E. (NYT)
Happy Valentine’s Day!
• Three months’ salary for an engagement ring? More like two weeks, actually. (NYT)
• Online dating scams cost Americans $143 million last year. (NYT)
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