Date: August 27, 2019
Wall Street Prepares for the End of a Crucial Benchmark
“Libor is dying, warn global regulators, and there’s nothing banks can do to stop it. Their only choice is to prepare for the end. That’s where Jason Granet comes in. Plucked from Goldman Sachs Group Inc.’s asset-management unit last year, he now leads a group of bankers and lawyers working day in and day out to ready the lender for the fateful day — still more than two years away — when the world’s most important reference rate is set to be phased out. The major Wall Street banks — not to mention insurers, money managers, law firms and advisory businesses — are all mobilizing employees around the globe in anticipation of Libor’s demise. The benchmark’s key role in financial markets — at last count it underpins more than $350 trillion of mortgages, loans and derivatives across various currencies — means they’re being pulled from all corners of the industry. For Granet, the objective is clear: ensure that what many say is one of the most significant and complex transitions in the history of modern finance goes off without a hitch at Goldman Sachs. “My job completely changed,” said Granet, who now reports to Beth Hammack in treasury operations after spending the bulk of his almost 20-year career at the bank overseeing money-market funds. “It’s an international, complex intellectual challenge.” ”
U.K. Sees Room for Maneuver on Brexit After Merkel, Macron Talks
“The U.K. government sees an opportunity to restart Brexit negotiations with the European Union after Prime Minister Boris Johnson’s meetings last week with German Chancellor Angela Merkel and French President Emmanuel Macron. The two leaders appeared to relax their language on the Brexit withdrawal agreement and the need to retain the so-called backstop provision for the Irish border, a U.K. official said on condition of anonymity. Johnson has demanded the EU drop the backstop, a fallback mechanism that is meant to keep the frontier free of checks after Brexit but which is despised by Brexiteers who argue it will keep the U.K. tied to the bloc. Both Merkel and Macron seemed willing to engage in talks on Johnson’s concerns and suggestions for alternative technology-based solutions, including trusted trader programs, the official said. That could pave the way for the EU to agree to reopen the deal negotiated by Johnson’s predecessor Theresa May, the official said. Johnson has repeatedly said he wants a new deal but has also been clear that he’ll take the U.K. out of the EU regardless on Oct. 31. Following talks in Berlin and Paris last week, and with European Council President Donald Tusk on the sidelines of the Group of Seven summit in France over the weekend, the focus is on trying to create space for negotiations, the official said. Later on Tuesday, Johnson will speak by phone to outgoing EU Commission President Jean Claude Juncker to press his position, and next month he’s due to visit Irish prime minister Leo Varadkar in Dublin. The trip to Ireland will be crucial to any compromise with the EU over the backstop, which the EU regards as necessary to both protect its single market and ensure the peace process in Northern Ireland isn’t jeopardized by Brexit. Following a call with Johnson on Tuesday, Dutch Prime Minister Mark Rutte said on Twitter the EU is open to any “concrete proposals” from the U.K. as long as they’re consistent with those aims. But even if Johnson is successful in removing the backstop from the deal, he still faces a fight at home from both sides of the Brexit argument.”
Wary of Trump’s Flip-Flops, China Prepares for Worst on Trade
“Perhaps nobody was more surprised to hear that China had called President Donald Trump’s administration to restart trade talks than the government in Beijing itself. After a weekend of confusing signals, Trump’s credibility has become a key obstacle for China to reach a lasting deal with the U.S., according to Chinese officials familiar with the talks who asked not to be identified. Only a few negotiators in Beijing see a deal as actually possible ahead of the 2020 U.S. election, they said, in part because it’s dangerous for any official to advise President Xi Jinping to sign a deal that Trump may eventually break. In off-the-cuff remarks to reporters at the Group of Seven summit in France on Monday, Trump claimed that Chinese officials called “our top trade people” and said “let’s get back to the table.” In subsequent appearances he portrayed the outreach as evidence China was desperate to make a deal: “They’ve been hurt very badly, but they understand this is the right thing to do.” It all made for splashy headlines and momentarily boosted stocks, but nobody in Beijing officialdom appeared to know what he was talking about. Even worse, his efforts to depict China as caving in negotiations actually confirmed some of their worst fears about Trump: that he can’t be trusted to cut a deal. “Trump’s flip flop has further enlarged the distrust,” said Tao Dong, vice chairman for Greater China at Credit Suisse Private Banking in Hong Kong. “This makes a quick resolution nearly impossible.” ”
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.