Thursday, October 24, 2024

Put on notice

Evening Briefing Americas

BlackRock and Vanguard face another round of scrutiny from the Federal Deposit Insurance Corp., which wants to keep the large asset managers from swaying banks where they have sizable stakes. In a letter last week to the two companies, FDIC staff are said to have sought details about the firms' investments in banks and asked for proof that they're operating as passive shareholders rather than activists. The letter puts the asset managers on notice that any stake held in an FDIC-supervised bank that exceeds the threshold of 10% could trigger tougher responses from the regulator. The missive follows a months-long debate among FDIC officials over how the agency could get more influence over asset managers' investments in banks.

What You Need to Know Today

A majority of American voters lack confidence that the US Supreme Court, controlled by six Republican-appointed justices including three picked by Donald Trump, would be politically neutral in resolving potential legal challenges around the 2024 presidential election, a survey from Pew Research Center found. Only 20% of registered voters polled are highly confident the court can be unbiased in any litigation tied to the Nov. 5 vote between Vice President Kamala Harris and her GOP opponent. The court's recent history of discarding long-established precedent to hand repeated victories to the right, including ending the federal right to abortion, loosening gun control laws and a key ruling for Trump in one of his four criminal prosecutions, likely hasn't helped.

A federal judge blocked the planned $8.5 billion acquisition by Tapestry, maker of Coach and Kate Spade handbags, of its rival Capri Holdings. US District Judge Jennifer Rochon on Thursday froze the deal after concluding it would be anticompetitive. That gives the Federal Trade Commission time for its own internal trial over the merger, a process that could take months and may doom the combination. Capri shares dropped as much as 56% in post-market trading following the decision. "The merging parties are close competitors, such that the merger would result in the loss of head-to-head competition," the judge said in her ruling. She found the acquisition would create a company with a 59% share of the accessible-luxury market.

A Coach store in New York City Photographer: Victor J. Blue

A trader who spent more than $45 million on Polymarket bets that Trump will win the upcoming US presidential election has been identified as a French national, following an investigation by the cryptocurrency-based prediction markets platform. Polymarket, which doesn't permit US users, determined the person behind four large accounts also had "extensive trading experience and a financial services background," a company spokesperson said in a statement on Thursday.

What do you get the wealthy client who has everything? The answer, if you're a clever money manager, is a loss-making investment. That's the thinking behind Wall Street's latest innovation, a cunning spin on the famous tax-loss harvesting which has been a controversial feature of wealth management for decades. Tax-loss harvesting is the strategy of selling losing investments to offset the tax owed on gains realized elsewhere in a portfolio. It's a powerful tool deployed often in equity holdings, but it has a key limitation: An investor doesn't always have losses to harvest. 

Taiwan Semiconductor Manufacturing Co. has achieved early production yields at its first plant in Arizona that surpass similar factories back home, a significant breakthrough for the US expansion project. The share of chips manufactured at TSMC's facility in Phoenix that are usable is about 4 percentage points higher than comparable facilities in Taiwan, Rick Cassidy, president of TSMC's US division, told listeners on a webinar Wednesday. The success rate, or yield, is a critical measure in the semiconductor industry because it determines whether companies will be able to cover the enormous costs of a chip plant. The accomplishment is also a sign of progress for President Joe Biden's efforts to revitalize American semiconductor manufacturing. TSMC, the main chip manufacturing partner for Nvidia Corp. and Apple Inc., is in line to win $6.6 billion in government grants and $5 billion in loans—plus 25% tax credits—to build three fabrication facilities in Arizona. The award from the 2022 Chips and Science Act isn't yet finalized.

US President Joe Biden at the Intel Ocotillo Campus on March 20 in Chandler, Arizona. Biden announced $8.5 billion in federal funding from the CHIPS Act for Intel to manufacture semiconductors in Arizona. Photographer: Rebecca Noble/Getty Images North America

Just blocks from London's luxurious Harrods department store sits an office that's a key cog in an Iranian oil kingpin's financial empire. The building at 180 Brompton Road is one of the main outposts for Ocean Leonid Investments, a hedge fund overseen by Hossein Shamkhani, the secretive commodities trader whose network is an influential player in both Iran and Russia, according to more than a dozen people familiar with the matter and documents seen by Bloomberg. Ocean Leonid, which was incorporated in the UK in June 2022, also operates from offices in Geneva, Dubai and Singapore. It is known in finance circles as a proprietary firm focused on the energy sector.

Days before Saudi Arabia kicks off its flagship investment conference, a handpicked selection of guests will get the first glimpse of Crown Prince Mohammed bin Salman's trillion-dollar bet that the kingdom has a future beyond oil. An exclusive group of financiers, entertainers and influencers from around the world will this week descend upon Sindalah Island, the first project to open its doors at the planned city of Neom. The resort is now home to ultra-luxury hotels and unspoilt beaches, plus an 86-berth marina where the uber rich can dock their yachts and dive into the crystal clear waters of the Red Sea.

NEOM project renderings in Davos, Switzerland. Photographer: Stefan Wermuth/Bloomberg

What You'll Need to Know Tomorrow

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