China, US reportedly form draft deal to lift ZTE ban | Parties back law professor to be Italian prime minister | Asian-Pacific markets mixed; traders barely influenced by US gains
22 May 2018
CFA Institute: Financial NewsBrief
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US high court: Firms can use arbitration to avoid class actions
Companies can harness arbitration agreements to prevent employees from pursuing class actions in labor disputes, the US Supreme Court has ruled. The court's more conservative justices accounted for the majority in the 5-4 decision.
USA Today (21 May.),  The New York Times (tiered subscription model) (21 May.) 
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China, US reportedly form draft deal to lift ZTE ban
Chinese and US negotiators have agreed on an outline of a compromise under which the US lifts a ban on domestic companies' sales to Chinese telecommunication firm ZTE, sources say. As an alternative, ZTE reportedly must revamp management and might have to pay large fines.
MarketWatch (22 May.) 
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Parties back law professor to be Italian prime minister
The two political parties putting together a coalition government for Italy have nominated Giuseppe Conte, a law professor who has had little involvement in politics, to serve as prime minister. A government official said Italian President Sergio Mattarella will probably wait until Wednesday to say whether he accepts the nomination.
Politico (22 May.),  ANSA (Italy) (21 May.),  The Washington Post (tiered subscription model) (21 May.) 
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Market Activity
Asian-Pacific markets mixed; traders barely influenced by US gains
Asian-Pacific markets were mixed Tuesday as investors paid little attention to a strong close on Wall Street. Japan's Nikkei 225 declined 0.2%; Hong Kong's Hang Seng Index gained 0.6%; Australia's S&P/ASX 200 dropped 0.7%; China's Shanghai Composite was flat; South Korea's Kospi rose 0.2%; and India's Sensex was up 0.1%.
CNBC (22 May.),  The Economic Times (India) (22 May.) 
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Sell-off hits corporate bonds as returns decline
A sell-off in corporate bonds has led to the third-worst 100-day returns since 2000 for US corporate debt, according to JPMorgan Chase data. However, JPMorgan strategists say results at year-end will not be as poor as those of the past 100 days because demand from pension funds and foreign investors for long-dated notes remains strong.
BloombergQuint (India) (21 May.) 
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Cunningham to be NYSE's first female president
Cunningham to be NYSE's first female president
Cunningham (Jewel Samad/AFP/Getty Images)
Stacey Cunningham will replace Thomas Farley as president of the New York Stock Exchange on Friday, a spokeswoman said. Cunningham, who serves as chief operating officer, will be the exchange's first female president.
Reuters (22 May.),  The Wall Street Journal (tiered subscription model) (21 May.),  Financial Times (subscription required) (22 May.) 
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Lawsuit aims to block Indian derivatives by SGX
National Stock Exchange of India has filed a lawsuit to prevent Singapore Exchange from introducing derivatives that supplant Nifty 50 futures contracts. SGX is planning a June launch of its own Indian derivatives.
BloombergQuint (India) (22 May.) 
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Sony subsidiary to pay $1.9B for 60.2% stake in EMI
Sony subsidiary to pay $1.9B for 60.2% stake in EMI
(David Becker/Getty Images)
Sony says subsidiary Sony Corporation of America has agreed to pay $1.9 billion for a 60.2% stake in EMI Music Publishing held by a consortium led by Abu Dhabi's Mubadala Investment. Sony also expects to pay $400 million to other entities with interests in EMI, giving Sony an indirect equity interest of approximately 90% if the transaction is finalized.
CNBC (21 May.) 
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Blackstone, Goldman to sell Ipreo for $1.86B to IHS Markit
IHS Markit has agreed to buy data provider Ipreo from Blackstone and Goldman Sachs for $1.86 billion. Blackstone and Goldman bought Ipreo in 2014 for roughly $975 million.
Reuters (21 May.) 
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Adobe to pay $1.68B for Magento Commerce
Adobe to pay $1.68B for Magento Commerce
(Justin Sullivan/Getty Images)
Adobe Systems has said it will acquire Magento Commerce, a provider of e-commerce services, from private equity investor Permira in a $1.68 billion cash transaction. Adobe said Magento will strengthen its Experience Cloud offerings.
Reuters (21 May.) 
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Political uncertainty prompts sell-off of Italian bonds
Investors are selling off Italian bonds amid concerns about the political landscape, as two populist parties develop a government, and about a potential request to write down debt. The two-year yield is the highest in almost three years at 0.28%, and the 10-year yield was 20 basis points higher Monday compared with Friday.
Bloomberg (tiered subscription model) (21 May.),  Financial Times (subscription required) (21 May.) 
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Economics
German economy picking up momentum
The German economy is making a strong comeback, marked by a high level of industrial orders, despite a slowdown in the first quarter, the Finance Ministry said in a monthly report. Rising wages, low unemployment, modest inflation and an increase in pension payments are reinforcing consumer spending, the report said.
Reuters (21 May.) 
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Geopolitical/Regulatory
US states bring wave of enforcement actions against ICOs
The North American Securities Administrators Association has completed a sweep of enforcement actions directed at initial coin offerings and other cryptocurrency transactions. "Operation Cryptosweep" included 35 ongoing or completed enforcement actions, as well as investigations and inquiries, the association says.
ThinkAdvisor (free registration) (21 May.),  InvestmentNews (tiered subscription model) (21 May.) 
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Cook: SEC best-interest rule would include FINRA role
Examinations by the Financial Industry Regulatory Authority will look at compliance if the Securities and Exchange Commission adopts a best-interest rule for broker-dealers, FINRA President and CEO Robert Cook says. "That said, it's not our rule, so exactly what the rule means and how it gets overseen is something we'll be working closely with the SEC on just as we do for other rules that we monitor for compliance," he says.
ThinkAdvisor (free registration) (21 May.),  InvestmentNews (tiered subscription model) (21 May.) 
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2 lawmakers criticize Fed capital-reduction proposal
US Sens. Sherrod Brown and Elizabeth Warren have criticized Randal Quarles, vice chairman for supervision at the Federal Reserve, for backing a proposal to relax the supplementary leverage ratio for the eight largest banks. Fed Governor Lael Brainard cast the sole vote against the proposal.
MLex (subscription required) (21 May.) 
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Senate panel aide Roisman eyed to replace SEC's Piwowar
Elad Roisman, chief counsel to the US Senate banking committee, is being considered by the White House as the replacement for Michael Piwowar on the Securities and Exchange Commission, sources say. Roisman's LinkedIn profile says that he was an aide to former SEC member Daniel Gallagher and that he has worked at the New York Stock Exchange.
The Wall Street Journal (tiered subscription model) (21 May.) 
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Financial Products
Vanguard readies ETF focused on global bond market
Vanguard has filed paperwork for an exchange-traded fund giving investors exposure to the global bond market by tracking the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index. The Vanguard Total World Bond ETF buys shares of the Vanguard Total Bond Market ETF and the Vanguard Total International Bond ETF.
ETF (21 May.),  ThinkAdvisor (free registration) (21 May.) 
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Editor's Note
Correction
A summary in Monday's edition of CFA Institute Financial NewsBrief mischaracterizes a deal between General Electric and Wabtec. General Electric reportedly was close to completing negotiations to merge its transportation unit with rail-equipment supplier Wabtec, and this venture was expected to be worth more than $20 billion. SmartBrief regrets the error.
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