Good morning everyone,

Today we’re talking about big banks doing “big bank” (read: illegal) things and Walmart coming for Amazon’s crown.

Enjoy the next 4 minutes and 2 seconds.

Keep raging,
Jeff & Jason


THE HEADLINES

“Taking out the filth”

Image result for aol instant messenger gif

The EU just handed down $1.2B in fines aimed at 5 banks involved in a forex rigging scandal almost a decade in the making. JPMorgan, Citigroup, Barclays, RBS and MUFG were the banks dealt the wrist slap and a stern talking to *re-reads list looking for Deutsche Bank*.

But wait, didn’t UBS employees participate in the collusion as well?

Why, yes they did. But UBS was spared a 285M Euro penalty for being a Boy Scout alerting the EU about the shenanigans. Apparently the Swiss don’t live by the G-code.

How did it all go down?

In Bloomberg terminal chat rooms, of course *Michael Lewis’ ears perk up*. You see, traders across firms exchanged tips and coordinated activities in the chats thus making money … and manipulating the currency market that trades, on average, some $5T per day.

And since bankers will be bankers, there was no hiding the disregard for the law. Chatrooms were named things like “The Bandits’ Club” and tactics like “front running,” “banging the close,” “painting the screen” and “taking out the filth” were put to use.

Sound familiar? Welp, that’s because in 2015 JPMorgan, Citi, Barclays, and RBS settled a similar case with the US for $2.5B.

Bottom line: “TBH, UBS would have been better off just getting hit with the fine than being a snitch. That’s the last time they get invited to Bloomberg back-alley dealings.” – Jason


Bentonville boyz

What a time to be a Walton. Walmart’s Q1 earnings report beat analysts expectations and put it in a “good position,” to achieve its full-year goals. Earnings per share came in at $1.13 compared to estimates of $1.02. Revenue was $123.93B, below expected $125.03 but still good enough for a 3% share price jump.

Big investments made to fight the battle against Bezos (read: e-comm) are starting to bear fruit for the world’s largest retailer. US e-commerce sales were up 37% in Q1 thanks to growth in online grocery, home, and fashion sales. Who knew the ability to get bacon, bed sheets, and bathing suits in one fell swoop was the online customers dream?

The grocery store in particular has been a big boon for Walmart. Rather than upcharge customers like competitor, InstaCart, Walmart shoppers can order groceries online at the same price they would pay in store and pick the goods up curbside within a few hours. The Bentonville boys also announced earlier this week a roll out of next day delivery service to stores in Phoenix, Las Vegas, and Southern California.

Bottom line: “Walmart is not-so-quietly becoming a real threat to compete with Amazon. And just think, one day e-commerce might even be profitable.” – Jeff


IN OTHER NEWS

  • Cut it out. China sold off around $20.5B worth of US bonds as the world’s #1 holder of US debt tries to send a message about trade wars. The thought is that if the US is not going to negotiate with China that the country can weaken the US by selling some of the bonds it holds. This is the kind of move that doesn’t impact the economy outright, as tariffs do, but it could shake up the bond market. China still owns $1.12T of US debt so $20.5B doesn’t seem like so much but considering that selling bonds is the “nuclear option,” let’s hope a deal gets worked out soon.
  • Goldman Sachs is buying boutique wealth-management firm United Capital Financial Advisers for $750M. The purchase helps the bank as it shifts into smaller investment opportunities and away from Wall Street. UCFA manages $25B in assets that will help Goldman diversify and expand into an asset-manager, not just a bank.
  • All you can eat Buffett. The Oracle of Omaha is joining forces with Jeffrey Commerce and we should all be very, very afraid. We knew that Buffett’s Berkshire Hathaway recently took a stake in Amazon, but not for how much. That is, until now. Apparently, Buffett likes what he sees, having invested $900M in the online retailer.

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