Aurelia Butler

TOKYO (Reuters) – Japan’s core machinery orders unexpectedly fell for a second straight month in May, government data showed on Thursday, highlighting the fragility of the economy.The volatile yet leading indicator of capital spending fell 3.2% month-on-month in May, following a 2.9% drop in April and confounding a 0.8% increase seen by analysts in a Reuters poll.The slowdown in machinery orders may be a setback for the Bank of Japan’s plans to normalise monetary policy as the BOJ has embarked on unwinding its unconventional policy. It raised rates in March for the first time since 2007 and decided in June to cut government debt buying.The Cabinet Office, which compiles the data, cut its view on machinery orders, saying there are signs that a pick-up is stalling.The core orders exclude ship buildings and repairs as well as electricity power generation, both of which tend to volatile. Orders from overseas are also not counted as such but they are categorised as external orders, or exports. External orders make up for around 40% of overall orders, while domestic core orders account for 30%.Compared with a year earlier, core orders, regarded as an indicator of capital spending in the coming six to nine months, increased 10.8% in May.A Cabinet Office survey showed core orders grew 4.4% in January-March from the previous quarter, but they were expected to fall 1.6% in the second quarter. Capital spending is one of a few bright spots in Japan due to demand for labour-saving technology, digital and green transformation to enhance labour productivity and cope with chronic labour shortages.The government is aiming for nominal domestic investment, including research and development, to top 100 trillion yen ($619.08 billion) by the fiscal year 2028.Gross domestic product (GDP) data showed earlier this month that private non-residential investment fell 0.4% quarter-on-quarter, making capital spending and consumer spending the major culprits behind a sharper than expected first-quarter economic contraction.($1 = 161.5300 yen) More

(Reuters) – The Federal Reserve is closely watching changes in the unemployment rate and would respond if it starts a quick climb, Fed Governor Lisa Cook said on Wednesday.With a 4.1% unemployment rate “the labor market is still robust,” Cook said at an event in Australia. “But we are very attentive to what is happening with the unemployment rate … The situation could change very quickly and we would be responsive.” More

(Reuters) – U.S. inflation should continue to fall without a significant further rise in the unemployment rate, Federal Reserve Governor Lisa Cook said on Wednesday.In remarks prepared for delivery to an economics conference in Australia, Cook said she felt the evidence for a U.S. “soft landing” was lining up, with the Fed’s preferred measure of inflation most recently at 2.6%, versus the central bank’s 2% target, and the unemployment rate at 4.1%.”My baseline forecast…is that inflation will continue to move toward target over time, without much further rise in unemployment,” Cook said. While soft landings have been rare in economic history, she said, the fast decline in inflation without a substantial rise yet in the unemployment rate bodes well, and puts a premium on the Fed’s getting the right timing on its decision to begin easing monetary policy.Soft landings are “more likely when policy easing began with inflation already close to target and when there was a relatively firm growth backdrop,” she said. “In the U.S., what I have seen so far appears to be consistent with a soft landing: Inflation has fallen significantly from its peak, and the labor market has gradually cooled but remains strong.” The Fed next meets on July 30-31, with investors expecting rate cuts to begin as soon as the following meeting in September. More

(Reuters) – Cathie Wood, founder and CEO of ARK Investment Management, defended the strategy of the firm’s money-losing flagship fund, telling investors in a letter released late on Wednesday that its fortunes will reverse when interest rates fall. The ARK Innovation ETF fund has taken investors on a rollercoaster ride in recent years. After a 67.6% gain in 2023, the ETF is down more than 12% so far this year. That compares to a gain of 16.9% for the S&P 500 index so far in 2024, closing above 5,600 for the first time Wednesday. ARK’s ETF, meanwhile, has seen net outflows of more than $1.8 billion in the last six months, according to data from VettaFi. In a letter posted on ARK’s website, Wood wrote she fully acknowledged “the macro environment and some stock picks have challenged our recent performance.” Nonetheless, she added, “our conviction in and commitment to investing in disruptive innovation have not wavered.”ARK’s top investments as of May 31 were Tesla (NASDAQ:TSLA), Coinbase (NASDAQ:COIN) and Roku (NASDAQ:ROKU), according to LSEG data.Wood argued many of the fund’s holdings were now in “rare, deep value territory” and poised to benefit disproportionately once interest rate cuts begin. She anticipated another blockbuster period for returns that would resemble the fund’s 152.8% gains during the initial stages of the coronavirus pandemic.”Exiting our strategies now would crystallize losses that lower interest rates and reversions to the mean should transform into meaningful profits during the next few years,” Wood wrote. “We are resolute!”ARK did not respond immediately to a request for further comment on the letter.Morningstar, the Chicago-based investment analysis company, earlier this year calculated that ARK’s losses had destroyed $14.3 billion in shareholder value in the 10 years ended December 31, 2023. ARK and Wood did not respond to requests for comment on that report.Wood believes a key to future returns will lie in artificial intelligence-related investments – but not necessarily in market darling Nvidia (NASDAQ:NVDA) and other megacaps.In the letter, she said she expected to see “a more diverse set of winners to which the current equity market concentration should give way.” More

NEW YORK (Reuters) -Archegos Capital Management founder Sung Kook “Bill” Hwang was convicted of fraud and other charges by a jury in Manhattan federal court on Wednesday at a criminal trial in which prosecutors accused him of market manipulation ahead of the 2021 collapse of his $36 billion private investment firm. The jury, which began deliberations on Tuesday, found Hwang guilty on 10 of 11 criminal counts and Patrick Halligan, his Archegos deputy and co-defendant, guilty on all three counts he faced. Hwang and Halligan sat flanked by their lawyers as the verdict was read by a soft-spoken foreperson.U.S. District Judge Alvin Hellerstein set the sentencing for Oct. 28. Both men will remain free on bail.The Archegos meltdown sent shock waves across Wall Street and drew regulatory scrutiny on three continents. Prosecutors have said Hwang and Halligan lied to banks in order to obtain billions of dollars that they used to artificially pump up the stock prices of multiple publicly traded companies. The trial began in May.Damian Williams, the U.S. attorney in Manhattan, said the verdict should send a clear message that his office will hold accountable people like Hwang and Halligan “who think they can cheat the system.”Hwang, 60, had pleaded not guilty to one count of racketeering conspiracy, three counts of fraud and seven counts of market manipulation. Hwang was acquitted on a market manipulation charge related to a Chinese online video company, iQIYI.Halligan, 47, had pleaded not guilty to one count of racketeering conspiracy and two counts of fraud. Halligan was the chief financial officer at Archegos. They now face maximum sentences of 20 years in prison on each charge for which they were convicted, though any sentence would likely be much lower and would be imposed by the judge based on a range of factors.The trial centered on the implosion of Hwang’s family office Archegos, which inflicted $10 billion in losses at global banks and, according to prosecutors, and caused more than $100 billion in shareholder losses at companies in its portfolio. Prosecutors said Hwang’s actions harmed U.S. financial markets as well as ordinary investors, causing significant losses to banks, market participants and Archegos employees. Hwang secretly amassed outsized stakes in multiple companies without actually holding their stock, according to prosecutors. Hwang lied to banks about the size of the derivative positions of Archegos in order to borrow billions of dollars that he and his deputies then used to artificially inflate the underlying stocks, prosecutors said. Halligan was accused by prosecutors of lying to banks and enabling the criminal scheme.’LIES AND MANIPULATION’During closing arguments on Tuesday, Assistant U.S. Attorney Andrew Thomas told jurors, “By 2021, the defendants’ lies and manipulation had ensnared nearly a dozen stocks and half of Wall Street in a $100 billion fraud, a fraud that came crashing down in a matter of days.”Hwang’s defense team painted the indictment as the “most aggressive open market manipulation case” ever brought by U.S. prosecutors. Hwang’s attorney Barry Berke told jurors in his closing argument that prosecutors criminalized aggressive but legal trading methods. Archegos head trader William Tomita and Chief Risk Officer Scott Becker testified as prosecution witnesses after pleading guilty to related charges and agreeing to cooperate in the case.Prosecutors said Hwang’s positions eclipsed those of the companies’ largest investors, driving up stock prices. At its peak, prosecutors said Archegos had $36 billion in assets and $160 billion of exposure to equities.When stock prices fell in March 2021, the banks demanded additional deposits, which Archegos could not make. The banks then sold the stocks backing Hwang’s swaps, wiping out an alleged $100 billion in value for shareholders and billions at the banks, including $5.5 billion for Credit Suisse, now part of UBS, and $2.9 billion for Nomura Holdings (NYSE:NMR). Nomura declined comment and UBS did not immediately reply to a request for comment. Wednesday’s conviction was the second fall from grace for Hwang. Prior to Archegos, Hwang worked at Tiger Management, billionaire Julian Robertson’s pioneering hedge fund before Hwang launching his own hedge fund business, Tiger Asia Management, in 2001.Tiger Asia grew quickly but losses and regulatory issues in Hong Kong and the United States led the firm to shut in 2012. Hwang pleaded guilty to wire fraud related to illegal trading of Chinese stocks and paid $44 million to settle U.S. insider trading charges.Hwang turned Tiger Asia into a family office, renaming it Archegos Capital Management in early 2013. Wall Street banks were initially wary of Hwang due to his regulatory issues, but eventually Japan’s Nomura gave him a second chance. More

Each of the charges against Hwang, who had pleaded not guilty, carries a potential penalty of 20 years in prison. He will be sentenced at a later date.Here is a look at prominent Wall Street figures who have been sentenced to prison time.BERNARD MADOFFMadoff pleaded guilty in 2009 to running the largest-known Ponzi scheme in history, estimated as high as $64.8 billion. For decades, Madoff presented himself as a successful and trusted Wall Street kingpin, attracting high-profile and celebrity investors while secretly engaging in fraud.Madoff died at age 82 in 2021 while serving a 150-year prison sentence. “Bernie, up until his death, lived with guilt and remorse for his crimes,” Madoff’s lawyer Brandon Sample said in a statement upon his client’s death.SAM BANKMAN-FRIEDFTX founder Bankman-Fried was sentenced in March to 25 years in prison for stealing $8 billion from customers of his cryptocurrency exchange, a dramatic downfall for the former billionaire wunderkind. While FTX, which was based in the Bahamas, was not a traditional Wall Street firm, prosecutors accused Bankman-Fried of old-fashioned financial fraud – using customer assets to purchase luxury properties, as well as to prop up his hedge fund and to make political donations. Bankman-Fried pleaded not guilty. His lawyers have argued that while Bankman-Fried overlooked risk management, he did not steal customer money. Bankman-Fried appealed his conviction and prison sentence in April. JORDAN BELFORTBelfort lived a hard-partying, hedonistic lifestyle before being arrested for defrauding investors out of as much as $200 million via his brokerage Stratton Oakmont. He pleaded guilty to securities fraud and money laundering in 1999, and spent 22 months in prison. Belfort is now a motivational speaker and media commentator, and offers sales consulting services.Oscar-winning director Martin Scorsese plumbed Belfort’s descent in the 2013 movie “The Wolf of Wall Street,” which was based on Belfort’s memoir and starred Leonardo DiCaprio.”The best lesson of everything about my story … is that it sort of represents the best of what you can do with the gifts that gods give you, and also the worst you can do, also with the frailties that gods give you,” Belfort told Reuters in 2011.IVAN BOESKYBoesky, who helped inspire the greedy Gordon Gekko character in the 1987 movie “Wall Street,” spent nearly two years in prison for his role in one of Wall Street’s biggest insider trading scandals of the 1980s.Known as “Ivan the Terrible,” Boesky speculated in takeover stocks, saying he bought stocks after formal takeover bids were announced, and his wealth was estimated at $280 million. But authorities said the man known for the “greed is good” ideology obtained tips from investment bankers about deals in the works, and used them illegally. Boesky pleaded guilty in 1987 to conspiracy charges, and won leniency for cooperating with prosecutors investigating insider trading and junk bond king Michael Milken. Boesky died in May at age 87. MICHAEL MILKEN Milken, known as the king of junk bonds, received a 10-year prison sentence in 1990 after pleading guilty to securities violations, including over his dealings with Boesky. Milken spent less than two years behind bars after a federal judge cut his sentence as a reward for cooperating with authorities. In 1991, Milken co-founded the non-profit Milken Institute, focusing on research including cancer, public health and aging. Milken himself survived advanced prostate cancer. Each year, finance titans flock to the Milken Institute Global Conference, where fund managers woo prospective investors and philanthropies seek out funding.Former U.S. President Donald Trump pardoned Milken in 2020.RAJ RAJARATNAMRajaratnam, the founder of New York-based Galleon Group, was convicted in 2011 of securities fraud and conspiracy in a sweeping U.S. government crackdown on insider trading.Prosecutors said Rajaratnam made up to $63.8 million in illegal profit from 2003 to 2009 by trading stocks including eBay (NASDAQ:EBAY), and Google (NASDAQ:GOOGL). At the time of his sentencing, his net worth was estimated at more than $1 billion. Rajaratnam was released from prison in 2019. He told Bloomberg in 2022 that he hoped for a comeback on Wall Street. He has maintained his innocence. More