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Wells Fargo has named Derek Flowers as its new chief risk officer. He replaces Mandy Norton, who has served as the bank's chief risk officer since 2018 and is planning to retire in June, and will lead all aspects of the lender's risk management systems. Mr. Flowers has worked for Wells Fargo for 24 years, including in the role of chief credit and market risk officer, where he oversaw companywide credit, counterparty and market risk. “Over the last several years, he has played a critical role managing the build-out of the company’s risk and control frameworks,” Wells Fargo CEO Charlie Scharf said of Mr. Flowers. The Wall Street Journal notes that the appointment is made as the bank continues to wrestle with compliance issues.

 

Reuters

Wall Street Journal

Wireless carriers Verizon and AT&T have said they will go ahead with plans to switch on high speed 5G services nationwide today, except near airports, amid worries that high tech radio signals could interfere with navigational systems on some aircraft. Some long-haul international airlines have nevertheless cancelled or re-routed flights into the US. Carriers that use the Boeing 777 were particularly concerned. Two Japanese airlines cited the aircraft's vulnerability to 5G signals as behind their schedule changes. The 10 biggest U.S. airlines warned earlier this week that the impending switch-on of 5G mobile phone services would cause "major disruption" to flights. The carriers said the start of Verizon and AT&T 5G mobile phone services would cause a "completely avoidable economic calamity." Airlines fear C-band 5G signals will disrupt planes' navigation systems, particularly those used in bad weather. The warning was issued in a letter sent to U.S. aviation authorities.

 

BBC News

NPR

One in four Americans expects to return at least one holiday gift by next weekend, according to a report by UPS - at least 60m packages in a single returns season for the world's largest package shipper alone, and a 10% increase on 2020. Refunds are just the start of a retailer's costs. According to a recent analysis from companies involved in the returns industry, it costs $33 for retailers to process a $50 return item in 2021, a 59% increase over the previous year. Several familiar factors figure into those rising costs during the Covid era, especially for e-commerce retailers. Rising transportation costs have made it more expensive to move returned goods to specialized processing centers and then to their final destinations. Rising labor costs have pressured retailers in need of employees to open, assess and route returned products. The biggest costs are related to write-downs and liquidation of returns, on average, between $6.50 and $35.25 per $50 product. The flood of returns is so heavy (and growing) that it is difficult for retailers to assess whether each individual pair of jeans, porch furniture combo or Lego set is in resellable condition. 

 

Bloomberg

Hedgeweek reports that asset managers and hedge funds are said to be objecting to the Securities and Exchange Commission's proposed reform of securities lending laws, according to the Financial Times.  Jennifer Han, Head of regulatory Affairs at the Managed Funds Association (MFA), has described the regulator’s proposals for drastic changes in reporting and disclosure standards as “misguided.” The MFA fears the proposed changes, which would introduce detailed reporting of securities lending transactions, would allow other market participants to reverse-engineer or reconstruct hedge fund short-selling trading strategies. The U.K.’s Alternative Investment Management Association (AIMA) also has similar concerns, Hedgeweek reports.

 

Hedgeweek

The Bureau for Market Regulation in Chengdu, China, is investigating a Walmart Sam's Club store over alleged food-safety issues. The probe follows consumer complaints about spoiled beef, the regulator, a local branch of China’s top market watchdog, said. After initial sample checks, the regulator found that the product didn’t meet standards and has ordered the store to recall all products from the same batch, it said. The regulator said it also found improper practices at the store, including an imperfect system of rules and regulations, and overly high temperatures in its utility rooms.

 

Wall Street Journal

The FT interviews former FATF chief David Lewis. He says global efforts to combat money laundering have been inadequate, and tighter regulation and fines for miscreant banks were not effective.

 

Financial Times

Sony shares slumped in Tokyo after Microsoft announced plans to buy video games developer Activision Blizzard. The deal, worth $68.7bn, would be Microsoft's biggest ever buyout and the largest deal in gaming history, and give the U.S. tech giant ownership of popular gaming franchises including Call of Duty, Warcraft and Overwatch. It would be a significant advance for Microsoft's Xbox gaming brand in its battle against Sony's PlayStation, and comes a year after Microsoft bought gaming company Bethesda for $7.5bn. Microsoft said the Activision-Blizzard deal would help it grow its gaming business across mobile, PC and consoles as well as providing the building blocks for the metaverse. "We're investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all," Microsoft CEO  Satya Nadella said.

 

BBC News

Bloomberg

Wall Street Journal

Bloomberg reports that industrial metal markets are trading higher again amid production outages and diminishing inventories that have triggered concerns about global supplies of aluminium, zinc, nickel and copper. “We are at critical levels of inventory around the world, and prices are starting to move to reflect that,” Jeremy Weir, chief executive officer of trading giant Trafigura said at a conference on Wednesday last week. “We are starting to see consumers wake up and recognize the problems that exist.”

 

Bloomberg

The International Labor Organization (ILO) has warned that the recovery from the pandemic in the global job market is set to slow this year. The UN agency has forecast that the number of hours worked globally in 2022 would be 1.8% lower than in the fourth quarter of 2019, just before the onset of the pandemic, and there would be an even bigger deficit in working hours in 2022 than it had previously estimated. The ILO’s 2022 World Employment and Social Outlook trends report projects that the decline in global working hours this year would now be the equivalent of losing 52 million full-time jobs, nearly double the 26 million it previously forecast in May 2021. Guy Ryder, ILO director-general, described this “downside readjustment [as] quite considerable.” He said the spread of new Covid variants, such as Delta and Omicron, was among reasons behind the expected slowdown in the labor market recovery, and the ILO expected the recovery to remain weak through 2023.

 

CNBC	Wall Street Journal

HSBC has split its Hong Kong team to different locations to manage quarantine risks amid what the lender sees as a threat to business continuity as the financial hub tightens its Covid policy to contain a fifth wave of infections. “The risk we now face is not merely about being infected by Covid-19, but most importantly being 1st, and 2nd level close contact and being taken to government quarantine for 14 and 4 days,” HSBC wrote in an email to staff. “We are trying to protect staff from this risk and to continually be able to support the business.” The bank has split its global markets division into three. A group of about 190 people are working at its main office on Queen’s Road Central, a team of about 65 people are at an office in Shek Mun, and a third team of about 200 are working from home. Other international banks, including Goldman Sachs and JPMorgan, have also tightened work rules at their Hong Kong offices and moved to split teams.

 

Bloomberg

Total undergraduate enrollment dropped 3.1% from the fall of 2020 to the fall of 2021, the National Student Clearinghouse Research Center has reported, bringing the total decline since the fall of 2019 to 6.6%, or 1,205m students. Tens of thousands of students, many of them low-income, were forced to delay school or drop out because of the pandemic and the economic crisis it has created. The new data showed that enrollment in community colleges was down 13.2%, or 706,000 students, compared with 2019. The number of students seeking associate degrees at four-year institutions also fell, as did the number of students aged 24 and over. “Without a dramatic re-engagement in their education, the potential loss to these students’ earnings and futures is significant, which will greatly impact the nation as a whole in years to come,” said Doug Shapiro, the executive director of the research center.

 

New York Times

McDonald's and its franchisees have cut operational hours in response to a lack of employees at a number of its U.S. locations because of coronavirus staffing shortages. Costs are going up, and the company and its franchisees are assessing how to raise menu prices without deterring customers, chief executive Chris Kempczinski said. He also observed that the pandemic showed that McDonald’s needed a more focused menu, one built around burgers, chicken and coffee. McDonald’s U.S. coffee sales benefited from its restaurants continuing to serve customers throughout the pandemic, and the chain’s chicken business has grown since the debut of new sandwiches last February, he said.

 

Fox News

Wall Street Journal

A study of nearly 20 years’ worth of leveraged buyout data from more than 800 companies in France indicates the wage gap narrows after a company is acquired by a buyout group.

 

Financial Times

Production at U.S. factories unexpectedly fell in December, pulled down by a decline in output at motor vehicle plants amid an ongoing global semiconductor shortage, and staffing shortages linked to the Omicron variant. The Federal Reserve said on Friday that manufacturing output dropped 0.3% last month, having grown 0.6% in November. Economists polled by Reuters had forecast factory production rising 0.5%. Output increased 3.5% compared to December 2020. Manufacturing production increased at a 4.9% annualized rate in the fourth quarter after rising at a 4.0% rate in the July-September quarter. Production at auto plants dropped 1.3% last month after rising 1.7% in November. Motor vehicle output is about 6% below its year-earlier level. “I suspect that some industries may have been forced to slow down activity in the second half of the month due to omicron-driven absences,” Stephen Stanley, chief economist at Amherst Pierpont Securities, commented. “In any case, manufacturers will look to get back up to full speed as soon as they can in light of robust demand for goods from consumers and businesses.”

 

Bloomberg Quint

Reuters

US President Joe Biden will on Friday announce an increase in investment on bridges as part of an infrastructure drive. His administration's plan to spend $27bn fixing thousands of U.S. bridges is the latest roll-out associated with the $1 trillion infrastructure bill. Money for bridges will be made available to 50 states, the District of Columbia, Puerto Rico and sovereign tribes over five years, the Department of Transportation said, estimating that approximately 15,000 bridges could be repaired in the wake of the investment.

 

Reuters

Bloomberg reports that Sweden, Estonia, Malta and Bulgaria are warning that the European Union's agreed timeline on the implementation of a minimum corporate tax - to put new tax structures into effect by next year - is too ambitious, according to an EU official briefed on the discussion who added that Estonia, Malta, Bulgaria, Poland and Hungary want progress conditioned to the other element of the global deal concerning taxation of digital multinational companies. “The political dynamics of the deal were always delicately balanced,” observes Bloomberg of Europe’s prioritization of the digital part of the deal, while the U.S. pushed the minimum tax.

 

Bloomberg

Financial Times

Venture capital dealmaking in the United States reached an all-time high in 2021 at nearly $330bn, buoyed by excess liquidity and an accommodative monetary policy, according to a report from PitchBook and the National Venture Capital Association. The frenetic pace of fund raising is expected to continue this year, as cash with venture capital firms remains at an all-time high, and returns outpace all other assets classes, the report added. 

 

Reuters