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Just over one in three (35%) of chief financial officers think now is a good time to take on greater risk, down from nearly half of CFOs (47%) in the first quarter, marking the second lowest level of risk appetite since Deloitte began measuring it in 2015.The low (26.92%) was hit in the second quarter of 2020 when COVID-19 concerns gripped companies early in the pandemic, according to a quarterly Deloitte survey. Steve Gallucci, Deloitte’s global and U.S. CFO Program leader, said in an interview that the pullback from risk is in line with the increasingly dour economic outlook held by many of the survey respondents. “The more variables we enter into the equation, [the more] CFOs tend to be a little more risk averse. This really speaks to the general concern about the economic situation, certainly geopolitically, certainly from an inflation perspective,” he said. Finance chiefs in technology, financial services, and manufacturing indicated they were the least inclined to take on more risk while those in the retail/wholesale, energy/resources, and services sectors were more open to it.

 

CFO Dive

The largest U.S. law firms have been mostly quiet on the Supreme Court's reversal of Roe v. Wade, according to a request by Reuters on Friday for comments on the ruling from more than 30 U.S. law firms, including the 20 largest by total number of lawyers. The vast majority had not responded by Saturday afternoon. Only two, Ropes & Gray and Morrison & Foerster, said they would cover travel costs for employees seeking an abortion. Only Morrison & Foerster, with nearly 1,000 attorneys, had issued a public statement by Saturday afternoon. The firm's chair, Larren Nashelsky, said Morrison & Foerster would "redouble our efforts to protect abortion and other reproductive rights." Kent Zimmermann, a law firm consultant with the Zeughauser Group, observed: “This is a tightrope to walk for firms . . . They have a diversity of views among their talent and clients.” Robert Kamins, a consultant with Vertex Advisors, said law firms will need to be "very cautious" about assuming early positions on the court's decision. “They have to make sure that they are being thoughtful about it . . . What is the business impact? What is the client impact? What is the recruiting impact? There are lots of things to think about.”

 

Reuters

Walt Disney, Facebook parent Meta and JP Morgan are among U.S. companies that have said they will cover employees' expenses if they have to travel for abortion services after the U.S. Supreme Court overturned Roe v Wade, the landmark 1973 ruling that recognized a woman's constitutional right to an abortion. Many states are expected to further restrict or ban abortions following the ruling, making it difficult for female employees to terminate pregnancies unless they travel to states where the procedure is allowed. Legal experts have said employers could face claims that their policies violate state laws banning, facilitating or aiding and abetting abortions. Ride hailing company Lyft has said it would legally shield drivers in abortion cases, and would expand a recent policy as new state laws were passed. "No driver should have to ask a rider where they are going and why," a Lyft spokesperson said. Meanwhile, Reuters notes that Meta has acted to limit internal discussion of the court's ruling. Moderators on the company’s forum Workplace deleted posts mentioning abortion, citing a "respectful communications" policy that prohibits staff discussions of political topics, according to a LinkedIn post by a Meta staffer in Seattle.

 

Reuters

Yelp, the online review and reservation company, is closing three U.S. offices - in New York, Chicago and Washington, D.C., - as part of a commitment to remote work. In an interview with The Washington Post, Yelp co-founder and CEO Jeremy Stoppelman called hybrid offices “the worst of both worlds” and said it had become increasingly clear since the pandemic that workers want to do their jobs remotely and the company benefits from meeting the demand. He acknowledged the increasing popularity of hybrid working but called it “the hell of half measures.” In a company blog post, Stoppelman said Yelp also plans to downsize its office in Phoenix. "Combined, the three offices we're closing saw a weekly average utilization of less than 2% of the available workspaces," Stoppelman wrote. The San Francisco-based company announced a remote-first work model in February 2021. Stoppelman said Yelp has proven it can be successful with a remote workforce, observing that the company achieved record revenue of just over $1bn in 2021. "Yelp continues to experience the benefits of a remote workplace and it's the clear path forward for us," Stoppelman said.

 

U.S. News

Washington Post

Hackers have stolen $100m in cryptocurrency from Horizon, a so-called blockchain bridge, in the latest major heist in the world of decentralized finance (DeFi). Blockchain bridges play a key role in the DeFi space, offering users a way of transferring their assets from one blockchain to another. In Horizon’s case, users can send tokens from the Ethereum network to Binance Smart Chain. Harmony, the developers behind Horizon, said the attack did not affect a separate bridge for Bitcoin. As cryptocurrency’s popularity has grown, it has increasingly been targeted by criminals. Crypto crime hit a fresh all-time high of $14bn last year according to research from Chainalysis, up from $7.8bn in 2020. 

 

CNBC	Washington Post

New York's Department of Financial Services has fined cruise line operator Carnival $5m for "significant" cybersecurity violations. Four security breaches from 2019 to 2021 were found to have exposed substantial amounts of sensitive customer data. The regulator said Carnival violated state cybersecurity rules by not using multi-factor authentication that would make it more difficult for wrongdoers to access its internal network, also that the company failed to report one breach and conduct adequate cybersecurity awareness training for staff.

 

Reuters

The Bank for International Settlements (BIS) says the world’s leading central banks should not be shy of inflicting short-term pain or even recessions to prevent a shift into a persistently high-inflation world. “The global economy could be set for a period of stagflation, involving both low growth, if not an outright recession, and high inflation,” it said. Agustin Carstens, general manager of the Switzerland-based BIS, explained: “The key for central banks is to act quickly and decisively before inflation becomes entrenched. If it does, the costs of bringing it back under control will be higher. The longer term benefits of preserving stability outweigh any short-term costs.” Claudio Borio, head of the BIS’s monetary and economic department, told the Times that shadow banks faced a liquidity crunch that could trigger a chain of corporate bankruptcies as central banks raised borrowing costs to fight inflation. “There is a hidden liquidity mismatch which erupted in March 2020 and we cannot rule out further possibilities of strain in the shadow banking sector,” Borio said.

 

Financial Times

Reuters

The Times

The S&P 500 has gotten crushed in a widespread sell-off this month, and the benchmark index is likely to tumble even lower if the economy falls into a recession, according to Morgan Stanley analysts. In a recent analyst note, Morgan Stanley strategists led by Mike Wilson said the risks of a downturn have climbed considerably, and that stocks could tumble another 20% if economic growth stalls out. "At this point, a recession is no longer just a tail risk given the Fed's predicament with inflation," Wilson wrote in the analyst note. He predicted a 35% chance of a downturn over the next year, up sharply from his previous estimate of 20%. If the U.S. economy does indeed begin shrinking, the S&P 500 will likely drop sharply to about 3,000 – down about 20% from current levels, according to Wilson.  Even if the economy manages to escape a recession, Wilson sees more downsides for equities: The S&P benchmark is still likely to fall another 7% to 10% as markets digest what are likely to be lackluster corporate earnings.

 

Fox Business

U.S. consumer sentiment soured in June, falling to a record low amid high inflation and recession fears, a survey showed on Friday. The University of Michigan said its final consumer sentiment index reading for the month fell to 50.0 from a preliminary reading of 50.2, in line with the predictions of economists polled by Reuters.  “Inflation continued to be of paramount concern to consumers; 47% of consumers blamed inflation for eroding their living standards, just one point shy of the all-time high last reached during the Great Recession,” wrote Joanne Hsu, director of the survey.

 

Market Watch

Reuters

The Financial Accounting Standards Board (FASB) has agreed with a staff recommendation calling for a refresh of existing rules on how software should be treated in financial reports. The move came during a meeting in which the U.S. standard-setter’s staff urged the board to update and prioritize the accounting for and disclosure related to software costs, saying the current standards have led to varied interpretations and left the treatment open to manipulation. At present, there are different methods for treating software depending on whether it is internally developed by a company or acquired, with one being expensed as incurred and the other being capitalized at fair value, according to the handout. Part of the challenge for the board in taking up the issue will be to address those disparities, several board members said. “I’d hate to see fundamental differences in the accounting depending upon whether a company internally developed a payroll processing system or hired a third party,” said board member Jim Kroeker. Another challenge will be to improve the accounting so that it provides more useful information to investors and analysts. FASB member Christine Botosan noted that staff research pointed to deficiencies related to how the accounting is currently represented in reports.

 

CFO Dive

Russian e-commerce firm Ozon is selling goods on its platform through a parallel imports mechanism. Russia has legalized so-called parallel imports, which allow retailers to import products from abroad without the trademark owner's permission, to try to limit the impact of Western sanctions. "Goods imported with the help of parallel imports are available on Ozon," the company told Reuters, adding "We have already started selling popular electronics brands on Ozon, including smartphones and their components." Ozon rival Wildberries has previously described the parallel imports mechanism as an effective support measure, with importance for small and medium-sized businesses and for the import of socially-significant products. Meanwhile, electronics retailer Svyaznoy has extended its range to sell games consoles and smartphones from the likes of Apple and Samsung, the Kommersant daily has reported. Svyaznoy told Reuters it was not an importer of appliances and electronics, but replenishes stocks available inside Russia.

 

Reuters

Destiny USA, the 2.4 million sq ft shopping center in Syracuse that is New York’s biggest mall, has agreed a deal with lenders to avoid a default after its value sank 80% to just $147m following the pandemic and years of retail turmoil amid a shift to e-commerce. Destiny owed $430m on two mortgage-backed securities that missed a June 6th repayment deadline. Pyramid Management Group, the mall’s owner, said Thursday that it got a five-year extension for its loans, with flexibility to keep investing in the property. Destiny faces other difficulties, notes Bloomberg, including a series of incidents involving guns in recent months.

 

Bloomberg