Feb.16 -- Myanmar protests have continued as the military files another charge against ousted leader Aung San Suu Kyi. Bloomberg’s Philip Heijmans reports on “Bloomberg Daybreak: Asia.”
Feb.16 -- Myanmar protests have continued as the military files another charge against ousted leader Aung San Suu Kyi. Bloomberg’s Philip Heijmans reports on “Bloomberg Daybreak: Asia.”
(Bloomberg) -- The Federal Reserve is intensifying its scrutiny of banks’ efforts to shed their reliance on the London interbank offered rate, and has begun compiling more detailed evidence on their progress, according to multiple people with knowledge of the matter.Banks are being asked for specifics on their Libor exposure, their plans for amending contracts tied to the benchmark, and the fallback provisions being utilized to facilitate the shift to alternative rates, said the people, who requested not to be named given the sensitivity of the inquiries. The move is viewed partly as way for the Fed to telegraph the urgency of the transition, but also as a prelude to concrete supervisory action in the months ahead.Banks have less than a year before the Fed has indicated it will stop allowing them to enter into new contracts pegged to Libor, a bedrock of the financial system being phased out by global policy makers due to a lack of underlying trading and following a high-profile rigging scandal. Still, the rate -- which underpins trillions of dollar of assets -- has proven difficult to dislodge. Officials last year indicated they would delay the end of certain tenors by 18 months amid concerns over financial stability stemming in part from the industry’s lack of preparation.A spokesperson for the Fed declined to comment, while banks are prevented from discussing confidential supervisory communications.“We can expect the regulators to be identifying gaps in banks’ programs,” said Graham Broyd, founder of consultancy Broyd Partners LLC and a former member of the Alternative Reference Rates Committee, the Fed-backed body guiding the U.S. Libor transition. “Banks will need to have clear plans and actions for delivery later in the year, without which there are expected to be regulatory consequences.”Banks have received questions and requests for data in recent months both in writing and via meetings with Fed representatives, according to some of the people familiar. The inquires are targeted toward Wall Street and regional lenders, rather than smaller community banks.One banking executive said broad-brush reports on transition progress don’t cut it anymore, and officials are asking for more information with every inquiry. An executive at another bank downplayed the significance of the shift, saying global regulators have been asking about Libor exposures for a while.While the scope of the requests is new, the magnitude of the challenge facing the financial sector has long been anticipated.Speaking in 2018 about the broader industry’s efforts, Beth Hammack, global treasurer at Goldman Sachs Group Inc., noted that “it’s going to be a really painful transition to get there as there are so many people and so many products that are referencing this rate -- it’s a such a foundational part of our market.” She added that “the impact is going to be hopefully an improvement in safety and soundness.”Officials are also asking banks for details on when their Libor-based contracts mature, some of the people said.Only a fraction of the $200 trillion derivatives market has shifted to the Secured Overnight Financing Rate, dollar Libor’s anointed successor, while hundreds of billions of dollars of the most troublesome floating-rate notes and securitizations may be unable to transition at all.The probing comes after the Fed warned banks in November that entering into new Libor-linked deals after 2021 would pose significant risks, and that it would examine their practices accordingly. Policy makers also said that a failure to prepare for Libor’s end could undermine financial stability.“Regulators have periodically asked for information on the Libor transition plans for major banks, but requests for data on particular types of Libor exposures are taking on greater specificity,” said Mark Chorazak, a partner at law firm Shearman & Sterling LLP in New York. “The Federal Reserve is becoming keenly interested in quarter-to-quarter progress at particular institutions.”The Fed could potentially issue MRAs or MRIAs -- matters requiring attention or matters requiring immediate attention -- depending on the responses to its inquiries. These generally require a board-level reply including a timeline for corrective action. Investigations or enforcement action follow if the Fed isn’t satisfied.Wake-Up CallThe Federal Financial Institutions Examination Council, an interagency group of regulators, had previously said that supervisory efforts around Libor would increase in 2020 and 2021, particularly for firms with significant exposures or less developed transition processes.Still, the inquiries may serve as a wake-up call for banks, particularly some regional lenders, after what was viewed as a major concession by the Fed to delay the planned phase out of certain dollar Libor maturities until mid-2023 to allow firms to address tough legacy contracts.“The enhanced regulatory oversight can pose real challenges to smaller banks,” said Bradley Ziff, an operating partner at management consultancy Sia Partners. “For institutions which have not yet made meaningful efforts towards the transition, the need to upgrade systems, consolidate contracts or collect data can be difficult at this point.”A representative for the ARRC, which counts banks, asset managers, insurers and industry trade organizations as members, declined to comment.“The transition away from Libor is a major undertaking that banks are preparing for and taking seriously,” said Ian McKendry, a spokesperson for the American Bankers Association. With trillions of dollars “in contracts outstanding that don’t have robust fallback language, it’s not surprising that regulators are asking financial institutions about their plans.”Major banks should have little issue addressing the Fed’s more pointed inquires, according to Anne Beaumont, a partner at law firm Friedman Kaplan Seiler & Adelman LLP.“Banks have been leading the charge in preparation,” Beaumont said. “They’re expending a lot of resources on this and have seen this coming for a long time. If they can’t respond in a substantial way at this point that would be a red flag.”(Updates with details on shift to SOFR in 11th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- New York’s top law enforcement officer issued a scathing statement on the cryptocurrency market, warning consumers about its susceptibility to “speculative bubbles” and abuse by criminals.“Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains,” Attorney General Letitia James said Monday in an investor alert.It’s the strongest language James, who has taken several recent enforcement actions in the sector, has used to describe the rapidly evolving industry. Her warning comes after Bitcoin, the world’s largest cryptocurrency, quadrupled last year and has been hitting new highs this year.“The recent dramatic run-up in price of virtual currencies (especially bitcoin) promises the lure of unrealistic returns and has opened the door for con artists and cheats,” James said.Read More: Bitcoin Jumps as Citi Expresses Optimism, Risk Assets ReboundBut Eric Turner, director of research at Messari, said the attorney general was overstating the concerns. Messari provides research on the cryptoeconomy to investors, regulators and the public, according to its website.James’s statements will “scare people” instead of “genuinely educating them about cryptoassets,” Turner said. He pointed to Goldman Sachs Inc.’s reopening of its crypto desk and other large institutions rolling out tools like trading and custody as evidence that James wasn’t on the right track.“The fact is crypto is becoming a multitrillion-dollar space and creating high-paying jobs around the world,” Turner said. “If New York continues to treat the industry with unreasonable hostility you’ll see all of this opportunity pass the state by.”All of the world’s cryptocurrencies have a $1.47 trillion market cap now.James said trading in virtual assets exposes investors to increased chances of market manipulation as well as conflicts of interest among trading platform operators.“Many operators of virtual currency trading platforms are themselves heavily invested in virtual currencies, and trade on their own platforms without oversight,” she said.She warned investors that cryptocurrencies can be difficult to cash out of and offered limited protection from fraud.“Virtual currency trading platforms operate from various places around the world, many of which are inaccessible to American law enforcement,” she said.Wild SwingsJames highlighted the volatility of the currencies, which she said are “easy to create” and spread.“Their underlying value is highly subjective and unpredictable,” she said. “As a result, prices can swing wildly upward and crash without warning or any change in the real economy.”James, a Democrat, issued a separate warning to brokers, dealers, salespeople and investment advisers that they could face “both civil and criminal liability” if they fail to register with the state when doing business with virtual currencies.The dual warning to investors and the industry is an effort at “leveling the playing field” amid examples of industry participants taking unnecessary risks with investors’ money, she said.Crypto exchange Bitfinex reached a settlement with James last month over allegations that it hid the loss of commingled client and corporate funds and lied about reserves. Without admitting or denying wrongdoing, the officials who control Bitfinex and the affiliated stablecoin Tether agreed to pay $18.5 million and provide the state with quarterly reports on the composition of Tether’s reserves for the next two years. The companies will end all trading activity with New Yorkers.Read More: Bitfinex Settles New York Probe Into Tether, Hiding Losses“All investors should proceed with extreme caution when investing in virtual currencies,” James said. “We will not hesitate to take action against anyone who violates the law.”(Updates with researcher’s comment in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Exxon Mobil Corp is lowering its ambitions for oil and gas output, it said Wednesday, as it focuses on cutting costs and preserving dividends to win back investors that have soured on the company after years of overspending. Exxon last year fell out of the Dow Jones index of top U.S. companies and shares fell to a two-decade low. "The priority right now is to rebuild the balance sheet," Exxon Chief Executive Darren Woods said on a media call following a virtual analysts day that emphasized the company's commitment to lower spending and reducing debt, which has ballooned to $67.6 billion from $37.8 billion two years earlier.
Compass raised $1.7 million from a cadre of cryptocurrency businesses and investors.
Rocket Companies Inc (NYSE: RKT) founder Dan Gilbert’s wealth got a $25 billion booster on Tuesday as the holding company gets the attention of retail investors on Reddit’s r/WallStreetBets, according to Bloomberg Billionaire’s Index. What Happened: Gilbert, Age 59, has moved up 19 spots to No. 16 on the index that tracks 500 of the world’s richest. A large chunk of Gilbert’s fortune, 93% to be precise, is comprised of his stake in Rocket, reported Bloomberg. See also: How to Buy Rocket Companies (RKT) Stock Why It Matters: The one-day jump in Gilbert’s wealth is the largest so far in the year, noted Bloomberg. As of press time, Detroit-based Rocket Companies with subsidiaries such as Rocket Mortgage and Quicken Loans was the most discussed company on WallStreetBets, according to SwaggyStocks data. WallStreetBets investors previously carried out short squeezes in the stocks of GameStop Corp (NYSE: GME), AMC Entertainment Holdings Inc (NYSE: AMC), Nokia Oyj (NYSE: NOK), BlackBerry Ltd (NYSE: BB), and others. Rocket reported 162% revenue growth and 350% growth in net income for the fourth quarter, which beat analyst estimates. The company’s shares have shot up since last Friday. S3 Partners data indicates the Rocket has currently $1.2 billion in short interest — making it one of the most shorted stocks in the market. Price Action: Rocket shares traded nearly 8.2% lower at $38.20 in after-hours trading on Tuesday after shooting up almost 71.2% in the regular session. Photo by Steve Jennings on Wikimedia See more from BenzingaClick here for options trades from BenzingaRocket Companies Overtakes GameStop, Palantir As WallStreetBets' Top Interest© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Bitcoin's first decade of existence was marked by scandals and wild price swings. Will the next decade be similar or is the cryptocurrency poised for bigger things?
Japanese carmaker Toyota, which has its U.S. headquarters and a factory in Texas, said it was looking into the move by Governor Greg Abbott to roll back the mask mandate, and it doesn't contemplate any immediate changes. "The early read is – no change for us," Toyota spokesman Scott Vazin said.
(Bloomberg) -- Stocks climbed as confidence returned to markets, with investors shaking off concern about the impacts of higher Treasury yields.In a broad-based rally, the S&P 500 notched its biggest advance in almost nine months, the Nasdaq Composite jumped 3% while the Russell 2000 of small caps outperformed. GameStop Corp. added to last week’s surge of over 150%, with retail investors promoting the stock on social-media platforms such as Reddit and StockTwits. After the close of regular trading, Zoom Video Communications Inc. soared as its revenue forecast topped Wall Street’s estimates.Read: Stock Bulls Have Stopped Pretending to Care About Balance SheetsLonger-dated Treasuries resumed their selloff even as intermediate maturities found support, with traders priming themselves for how Federal Reserve officials slated to speak this week might respond to the recent tumult. Investors piled back into risk assets as stocks rebounded following a rout that was triggered by concern that massive stimulus as well as progress in battling the coronavirus have left some areas of the economy at risk of possibly overheating. The S&P 500 extended a rally from its March 2020 lows to about 75%.“Equity investors are still looking at the rise in rates mostly as ‘a good thing’ and not yet as a threat, notwithstanding some shaking of the tree in high multiple stocks and other parts of the market last week,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The benefits of the vaccines versus the challenge of higher rates will be the theme this year.”Read: Investors Poured Record $86 Billion Into Equity ETFs in FebruaryBitcoin rallied after a volatile weekend session, riding a broad resurgence in risk assets and a bullish report from Citigroup Inc. The bank’s strategists laid out a case for the digital asset to play a bigger role in the global financial system, saying the cryptocurrency could become “the currency of choice for international trade” in the years ahead.There are some key events to watch this week:U.S. Federal Reserve Beige Book is due Wednesday.OPEC+ meeting on output Thursday.U.S. factory orders, initial jobless claims and durable goods orders are due Thursday.The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.These are some of the main moves in markets:StocksThe S&P 500 Index surged 2.4% as of 4 p.m. New York time.The Stoxx Europe 600 Index climbed 1.8%.The MSCI Asia Pacific Index advanced 1.8%.The MSCI Emerging Market Index rose 1.7%.CurrenciesThe Bloomberg Dollar Spot Index dipped 0.1%.The euro declined 0.2% to $1.2046.The Japanese yen depreciated 0.2% to 106.78 per dollar.BondsThe yield on 10-year Treasuries rose two basis points to 1.43%.Germany’s 10-year yield sank seven basis points to -0.33%.Britain’s 10-year yield declined six basis points to 0.759%.CommoditiesWest Texas Intermediate crude declined 1.8% to $60.40 a barrel.Gold fell 0.6% to $1,723.42 an ounce.Silver dropped 0.6% to $26.51 per ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bond traders have been saying for years that liquidity is there in the world’s biggest bond market, except when you really need it.Last week’s startling gyrations in U.S. Treasury yields may offer fresh backing for that mantra, and prompt another bout of soul-searching in a $21 trillion market that forms the bedrock of global finance. While stocks are prone to sudden swings, such episodes are supposed to be few and far between in a government-debt market that sets the benchmark risk-free rate for much of the world.Yet jarring moves occur periodically in Treasuries, forming a bit of a mystery as no two events have been the same. Some point to heightened bank regulations in the wake of the 2008 financial crisis. Scrutiny over liquidity shortfalls intensified in October 2014 when a 12-minute crash and rebound in yields happened with no apparent trigger. Panic selling during the pandemic-fueled chaos a year ago, exacerbated when hedge funds’ leveraged wagers blew up, brought the issue to the fore again.And then came last week, when the gap between bid and offer prices for 30-year bonds hit the widest since the panic of March 2020.The latest events “are a stark reminder what happens when liquidity suddenly vanishes in the deepest, largest bond market,” said Ben Emons, managing director of global macro strategy at Medley Global Advisors.At issue is whether this vast market is more vulnerable to sudden bouts of turbulence thanks to measures that have made it more difficult for banks to hold Treasuries. Some analysts say the tumult last week was magnified by questions over whether the Federal Reserve will extend an easing of bank capital requirements, which is set to end March 31. Put in place early on in the pandemic, the measure is seen as making it easier for banks to add Treasuries to their balance sheets.The 2014 episode triggered a deep dive into the market structure, and regulators have pushed through some changes -- such as increased transparency -- and speculation has grown that more steps to bolster the market’s structure may be ahead.“While the scale and speed of flows associated with the COVID shock are likely pretty far out in the tail of the probability distribution, the crisis highlighted vulnerabilities in the critically important Treasury market that warrant careful analysis,” Fed Governor Lael Brainard said Monday in prepared remarks to the Institute of International Bankers.There are plenty of potential culprits in last week’s bond-market tumble -- which has since mostly reversed -- from improving economic readings to more technical drivers. Ultra-loose Fed policy and the prospect of fresh U.S. fiscal stimulus have investors betting on quicker growth and inflation. Add to that a wave of convexity hedgers, and unwinding by big trend-following investors -- such as commodity trading advisers.Based on Bloomberg’s U.S. Government Securities Liquidity Index, a gauge of how far yields are deviating from a fair-value model, liquidity conditions worsened recently, though it was nothing like what was seen in March.For Zoltan Pozsar, a strategist at Credit Suisse, the action began in Asia with bond investors reacting to perceived hawkish signs from the central banks of Australia and New Zealand. That sentiment then carried over into the U.S. as carry trades and other levered positions in the bond market were wiped out. A disastrous auction of seven-year notes on Thursday added fuel to the unraveling.Last week’s drama “brings to mind other notable episodes in recent years in which a deterioration in the Treasury market microstructure was primarily to blame,” JPMorgan & Chase Co. strategist Henry St John wrote in a note with colleagues.One key gauge of Treasury liquidity -- market depth, or the ability to trade without substantially moving prices -- plunged in March 2020 to levels not seen since the 2008 crisis, according to data compiled by JPMorgan. That severe degree of liquidity shortfall didn’t resurface last week.The bond-market rout only briefly took a toll on share prices last week, with equities surging to start this week, following a sharp retreat in Treasury yields amid month-end buying.The Fed cut rates to nearly zero in March 2020, launched a raft of emergency lending facilities and ramped up bond buying to ensure low borrowing costs and smooth market functioning. That breakdown in functioning has sparked calls for change from regulators and market participants alike.GLOBAL INSIGHT: Recovery? Yes. Tantrum? No. Yield Driver ModelFor now, Treasuries have settled down. Pozsar notes that the jump in yields has provided an opportunity for some value investors to swoop in and pick up extra yield, effectively helping offset the impact of the leveraged investors who scrambled for the exits last week.“Some levered players were shaken out of their positions,” Pozsar said in a forthcoming episode of Bloomberg’s Odd Lots podcast. “It’s not comfortable -- especially if you’re on the wrong side of the trade -- but I don’t think that we should be going down a path where we should redesign the Treasury market.”Why Liquidity Is a Simple Idea But Hard to Nail Down: QuickTake(Updates with details on Bloomberg’s liquidity index in 10th paragraph, and a chart)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
A bill in Congress would give families up to $300 a month per child starting this summer.
The RBA is widely expected to reinforce its forward guidance for three more years of near-zero rates, while also addressing the market dislocation.
A $232 million investment has ballooned into a $5.9 billion stake.
Bitcoin passed its tenth anniversary of the release of its whitepaper, first introducing it to the world, in 2018. But assessments of the cryptocurrency's impact in the last decade or so have mostly been negative. Is bitcoin useless?
AUD/USD settled below 0.7760 and is testing the support at 0.7735.
ASML Holding NV has extended a deal to sell chip manufacturing equipment to Semiconductor Manufacturing International Corp, China's largest chipmaker, until the end of this year, the Dutch company said in a statement on Wednesday. ASML made the statement after SMIC on Wednesday disclosed a volume purchase agreement under which it has already spent $1.2 billion with the toolmaker. In a clarifying statement issued several hours later, ASML said the agreement began in 2018 and was slated to expire at the end of 2020, but the two companies agreed in February to extend the deal to the end of this year.
A former board member of Tesla Inc (NASDAQ: TSLA) said Tuesday that the company is unlikely to remain the “king of the hill” in electric vehicles forever, CNBC reported. What Happened: Steve Westly said on CNBC’s “Power Lunch” that he had been bullish on the Elon Musk-led automaker for the last 10 years and it’s “hard to imagine an auto company executing better than Tesla has.” Westly pointed to the company’s latest earnings release in January where it said it had a “multi-year horizon” and expected to achieve 50% average annual growth in vehicle deliveries. See also: How to Invest in Tesla Stock “No one else in the auto world is doing that. Having said that, Tesla is not going to be king of the hill in electric forever,” said Westly. Why It Matters: The venture capitalist noted that there have been large-scale commitments on EVs from legacy automakers such as General Motors Company (NYSE: GM) and Volkswagen AG (OTC: VWAGY). “Tesla is not just getting hit from the high end,” said Westly on the availability of EVs from Volkswagen marques such as Audi and Porsche. Tesla also faces increased competition from Chinese EV rivals, which have more affordable offerings. The analyst noted increased competition in Europe where according to him the company was “No. 1, they’re now No. 4.” See Also: Tesla's Share Of European EV Market Reduced To 3.5% “They’re getting competition from all sectors. They’re going to have to double down to compete.” Tesla’s plans to make a more affordable $25,000 vehicle have left Chinese rivals such as Xpeng Inc (NYSE: XPEV), Nio Inc (NYSE: NIO), and others unfazed. In January, a two-door $4,500 EV made by Wuling — a joint venture of GM and state-owned SAIC Motor — outsold Tesla’s Model 3 in China by nearly two-to-one. Price Action: Tesla shares closed 4.45% lower at $686.44 on Tuesday and gained 0.34% in the after-hours session. Click here to check out Benzinga’s EV Hub for the latest electric vehicles news. See more from BenzingaClick here for options trades from BenzingaNio Says Chip Shortage Will Hit EV Production In Q2Such Popularity, Much Wow! Dogecoin Now Available At 1,800 ATMs Across US© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- Prime Minister Justin Trudeau’s claims there isn’t a trade-off between Canada’s strict lockdowns and economic growth will be tested this week with the release of new output data.Analysts expect gross domestic product shrank by more than 5% last year, a middling result among advanced economies. The U.S., with far less restrictive pandemic measures last year, shrank by just 3.5%.Canada’s lagging performance is expected to continue into 2021. Economists see a stronger rebound in the U.S. this year because of its faster pace of Covid-19 vaccinations, looser virus-related curbs and President Joe Biden’s stimulus plan.“It’s pretty obvious there is a trade-off,” Doug Porter, chief economist at Bank of Montreal, said in a phone interview.The good news is investors and analysts don’t appear worried. The Canadian dollar is one of five major currencies that’s appreciated against the U.S. greenback this year. And the rise in government bond yields has been faster in Canada than the U.S., another sign of optimism about growth.Despite the underperformance, Canada’s outlook remains positive.Economists anticipate growth of 4.7% this year. That’s slower than the U.S., but also the fastest in two decades. GDP data due Tuesday from Statistics Canada are also likely to show more resilience to the latest wave of restrictions this winter, in part because of a booming housing market.A rally in commodities, meanwhile, is another major tailwind for the resource-producing economy. The Bank of Canada’s index of commodity prices -- which tracks commodities produced in Canada and sold in world markets -- has more than doubled since its lows in April to the highest levels since 2014. Excluding energy, the index is at an all-time high.What Bloomberg Economics Says...“Even a soft start to the year is set to be quickly erased in the months ahead. High-frequency data in our weekly dashboard show 1Q will end on a stronger note, with momentum accelerating in 2Q as more sectors of the economy reopen. The main risk is a frustratingly-slow vaccine roll-out.”-- Andrew Husby, economistFor the full report, click hereThe debate is switching toward upside risks to forecasts.A massive accumulation of excess savings is one wild card. While other countries have seen a similar pickup in household savings during the pandemic, the trend has been more pronounced in Canada because of its stricter lockdowns and generous government aid programs. There were fewer opportunities to spend, even as Canadian incomes surged.Many economists, including those at the Bank of Canada, have chosen to make conservative assumptions about how much of a rush Canadians will be in to draw down those extra savings.Others, including Finance Minister Chrystia Freeland, are more bullish.The reservoir of savings is so large, a bigger worry may be a rebound that is too strong, putting pressure on the central bank to raise interest rates.While there’s debate over who will hike first -- the Federal Reserve or the Bank of Canada -- markets are pricing in more aggressive increases in the policy rate north of the border amid expectations Governor Tiff Macklem will have less tolerance for price pressures.“There is a narrower inflation mandate for the Bank of Canada than the Fed,” Derek Holt, an economist at Bank of Nova Scotia, said by phone.Add rising wealth from a surging housing market and it may not require much to trigger a post-pandemic boom. Which would be great news for a Trudeau government that may face an election soon, but poses another challenge.Freeland wants to keep the spending taps open for the next few years on the grounds the economy will need continued support. That’s getting harder to argue.“With a large stock of excess household savings waiting on the sidelines, plus already highly supportive policy, governments do not need to spend much more to propel a strong economic recovery in the year ahead,” Porter said in a report to investors Friday. “An effective vaccine rollout would be the single most important contributor to growth.”(Updates with Bloomberg Economics box after 8th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Intel Corp. was told to pay VLSI Technology LLC $2.18 billion by a federal jury in Texas after losing a patent-infringement trial over technology related to chip-making, one of the largest patent-damages award in U.S. history. Intel pledged to appeal.Intel infringed two patents owned by closely held VLSI, the jury in Waco, Texas, said Tuesday. The jury found $1.5 billion for infringement of one patent and $675 million for infringement of the second. The jury rejected Intel’s denial of infringing either of the patents and its argument that one patent was invalid because it claimed to cover work done by Intel engineers.The patents had been owned by Dutch chipmaker NXP Semiconductors Inc., which would get a cut of any damage award, Intel lawyer William Lee of WilmerHale told jurors in closing arguments Monday. VLSI, founded four years ago, has no products and its only potential revenue is this lawsuit, he said.VLSI “took two patents off the shelf that hadn’t been used for 10 years and said, ‘We’d like $2 billion,”’ Lee told the jury. The “outrageous” demand by VLSI “would tax the true innovators.”He had argued that VLSI was entitled to no more than $2.2 million.“Intel strongly disagrees with today’s jury verdict,” the company said in a statement. “We intend to appeal and are confident that we will prevail.”Intel fell 2.6% to $61.24 in New York trading. The stock is up 23% since the beginning of the year.One of the patents was originally issued in 2012 to Freescale Semiconductor Inc. and the other in 2010 to SigmaTel Inc. Freescale bought SigmaTel and was in turn bought by NXP in 2015. The two patents in this case were transferred to VLSI in 2019, according to data compiled by Bloomberg Law.VLSI lawyer Morgan Chu of Irell & Manella said the patents cover inventions that increase the power and speed of processors, a key issue for competition.‘Willful Blindness’Federal law doesn’t require someone to know of a patent to be found to have infringed it, and Intel purposely didn’t look to see if it was using someone else’s inventions, he said. He accused the Santa Clara, California-based company of “willful blindness.”The jury said there was no willful infringement. A finding otherwise would have enabled District Court Judge Alan Albright to increase the award even further, to up to three times the amount set by the jury.“We are very pleased that the jury recognized the value of the innovations as reflected in the patents and are extremely happy with the jury verdict,” Michael Stolarski, chief executive of VLSI, said in an e-mailed statement.Officials with NXP couldn’t immediately be reached for comment.The damage request isn’t so high when the billions of chips sold by Intel are taken into account, Chu said. Intel paid MicroUnity Systems Engineering Corp. $300 million 2005 and in 2011 paid Nvidia Corp. $1.5 billion even though a settlement in that case involved a cross license of technology, he said.“Operating companies are going to be disturbed by not only the size of the award but also the damages theory,” said Michael Tomasulo, a Winston Strawn lawyer who attended the trial. “They more or less seemed to have bought the entire VLSI case.”The damage award is about half of Intel’s fourth-quarter profit. The company has dominated the $400 billion chip industry for most of the past 30 years, though it’s struggling to maintain that position.The verdict is smaller than the $2.5 billion verdict won by Merck & Co. over a hepatitis C treatment. It was later thrown out. Last year, Cisco Systems Inc. was told by a federal judge in Virginia to pay $1.9 billion to a small cybersecurity companies that accused it of copying a feature to steal away government contracts. Cisco has asked the judge for a new trial.The case is among the few in-person patent trials in recent months, with many courts pressing pause amid the coronavirus pandemic. It was delayed a week because of the winter storm that wreaked havoc across much of Texas.Intel had sought to postpone the case because of the pandemic, but was rejected by Albright, a former patent litigator and magistrate who was sworn in as a federal judge in 2018 and has quickly turned his courtroom into one of the most popular for patent owners to file suit.The case is VLSI Technology LLC v. Intel Corp., 21-57, U.S. District Court for the Western District of Texas (Waco).(Updates with VLSI comment in 12th paragraph. An earlier version corrected the spelling of law firm name in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Heavily shorted mortgage provider Rocket Companies saw its stock surge on Tuesday, in an eye-popping move reminiscent of the rallies that powered GameStop and other so-called meme stocks earlier in the year. Shares of Rocket, the parent company of Quicken Loans, closed up 71.2% at $41.60 after being halted several times for volatility. The outsized move puts Rocket among the stocks that have experienced wild gyrations after becoming a focus of investors on sites such as Reddit’s WallStreetBets, where mentions of the company have multiplied in recent days.
Coinbase's IPO introduces a new set of stake holders in Ethereum's governance community.