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    Nomura had a 'stellar financial year' before it warned of potential $2 billion losses, analyst says

    In this articleVIACPDISCA9888-HK700-HK8604.T-JPCSG.N-CHThe warning by Japanese investment bank Nomura that it could incur billions of dollars in losses at a U.S. subsidiary was “pretty unfortunate,” an analyst said on Tuesday.Nomura on Monday flagged a potential $2 billion loss resulting from transactions with a client stateside. The bank’s shares in Japan plunged following that announcement, declining more than 16% on Monday. Those losses extended into Tuesday, with shares declining 0.66% on the day.”It’s pretty unfortunate for Nomura,” Pramod Shenoi, head of Asia-Pacific financials research at research firm CreditSights, told CNBC’s “Street Signs Asia.”Shenoi said “$2 billion dollars … is a lot of money and what that does is pretty much wipe out any kind of earnings for the second half of the year.”While Nomura did not name the U.S. client, the Japanese firm’s announcement followed a $20 billion blowup at family office Archegos Capital Management. Archegos was forced to liquidate its positions in stocks including media companies ViacomCBS and Discovery, as well as several Chinese internet ADRs such as Baidu and Tencent.Credit Suisse on Monday also warned of a potentially “significant” hit to its first quarter results after exiting positions with an unnamed firm.Until the Monday announcement, Nomura was having a strong financial year, said Shenoi. He also described the timing as “interesting,” given that it was made just days away from the closing of the financial year on March 31.”Nomura has actually had a stellar financial year so far,” said Shenoi.He explained that the bank’s reorganization in April 2019 has helped its Japan retail business — one of Nomura’s “core franchises” — and the international wholesale business.The analyst warned that in the medium term, regulators and rating agencies would keep a close eye on how Nomura manages risk and the amount of capital it holds.— CNBC’s Elliot Smith contributed to this report. More

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    Vaccine passports could prove to be a privacy minefield for regulators

    In this articleAAPLGOOGLSingapore Airlines crew members and travelers at the transit hall of Changi Airport in Singapore on Jan. 14, 2021.Roslan Rahman | AFP | Getty ImagesWhen the EU announced its plans for a “digital green certificate” this month, the tourism industry breathed a sigh of relief that maybe summer could be salvaged. Since the onset of the coronavirus pandemic, the concept of a “vaccine passport” has been floated regularly. Once inoculated against Covid-19, a person could carry proof of vaccination that would allow them to travel or access services that are otherwise shut under lockdown.The EU’s certificate, which avoids using the term “passport,” would create a common digital system for Europe, likely in the form of a smartphone app, to prove vaccination, a negative test or that they have recovered from the virus.EU Justice Commissioner Didier Reynders said a common EU-wide approach to such a certificate would “gradually restore free movement” in the region.”It is also a chance to influence global standards and lead by example based on our European values like data protection,” he said earlier this month.Different industries around the world have been tinkering with these passes for months.IBM is working with New York State on a digital health pass that uses blockchain technology to verify a person’s test or vaccine credentials and Walmart, which is carrying out shots in its stores, recently backed calls for vaccine certificates.Apple and Google previously collaborated on creating standards for contact tracing in smartphones. The EU has suggested that the tech giants might collaborate again on these efforts with the World Health Organization, but the WHO has since denied this.Now as vaccine rollouts gather pace, the prospect of these digital passports or certificates have caught the eye of many different industries.Data privacyThe aviation and tourism industries — both brutalized over the last year — have been the keenest to pursue this technology to re-open global travel.The International Air Transport Association introduced its “travel pass” late last year and launched a trial with Singapore Airlines this month.Initially created to show proof of a negative test, the app will be expanded to show proof of vaccination as well, according to Katherine Kaczynska, assistant director of corporate communications at IATA.Kaczynska added that IATA is not in favor of mandating vaccines for travel, but the industry group instead views the app as one way to help open up international travel.Ultimately the system will be integrated into an airline’s own app but there needs to be cohesion in how various vaccine passport proposals are launched and operated, Kaczynska told CNBC.Vaccine passports electronically store medical information displayed as a QR code.da-kuk | E+ | Getty Images”We’re working closely with governments because we need to make sure things are interoperable,” she said.”It’s the governments that need to come out with a standard for digital vaccine certificates and then we need to make sure that works with the IATA Travel Pass and with other apps out there. Ours is specifically focused on aviation but for it to work there will obviously need to be interoperability between different standards.” Given the sensitive health-related data at play, launching any digital service raises questions around privacy and data protection. IATA is working with Evernym, a blockchain firm that’s worked on various projects for digital decentralized identities, including a project with the Red Cross.”The main thing with the IATA Travel Pass is that it’s decentralized technology, which basically means that all the data is not stored on a central database in any way at all. All the data is stored on the passenger’s phone,” Kaczynska said.According to the European Commission, the EU’s executive arm, its proposed system will only require “essential information.” This includes vaccine or test data and a unique identifier for the certificate.Ethics Nicole Hassoun, a professor at Binghamton University specializing in ethics in public health, said deploying any kind of vaccine passport on a mass scale needs careful thought.As vaccines are distributed in a patchwork of demographics, passports or certificates need to consider exemptions to avoid any discrimination for people that are not yet vaccinated or have health reasons for not being vaccinated, she said.”Maybe you would allow some kind of passport system but then there have to be health exceptions. There have to be welfare exceptions for people who really have good reasons that they need to access these services (such as travel),” Hassoun told CNBC.This is partly why the EU proposal doesn’t focus solely on vaccination and includes negative tests.One particular concern is that vaccines are still very new. While data coming out of countries like Israel shows promise, more data is needed to verify just how effective the various vaccines are at reducing transmission and what long-term immunity will look like, Hassoun added.”We need more data about what the effects on transmission are for people that are vaccinated or people who might have natural immunity, how long will that last? What happens when there are new strains?” she said.”We need to pay attention to what the private sector is doing as well as what governments are doing and make sure that we regulate if we have to and make sure that they’re fair to everybody.”She warned that the provision of passports and certificates need to be equitable as currently the rollout of vaccines themselves is not. While Western nations like the U.K. and U.S. forge ahead, others are left behind, such as Brazil, which has suffered some of the world’s worst outbreaks and is struggling with its rollout.For the EU, which is facing its own supply issues amid disputes with AstraZeneca, the clock is ticking to have the digital green certificate ready for the summer season. The framework will require speedy perusal and adoption by the European Parliament and Council if Europe and its tourism sector is to avoid a second lost summer.  More

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    Stock futures are flat after Dow closes at record

    U.S. stock index futures were flat during overnight trading on Monday after the Dow Jones Industrial Average closed at a record high.Futures contracts tied to the Dow declined 4 points. S&P 500 futures were 0.05% higher, while Nasdaq 100 futures added 0.08%.During regular trading, the Dow erased a 160-point loss to close 98 points higher. The S&P 500 and Nasdaq finished in the red, however, dipping 0.09% and 0.6%, respectively. The moves came amid the continued fallout after a hedge fund was forced to liquidate its position in several media stocks.ViacomCBS and Discovery both slid on Monday after registering heavy losses last week prompted by Archegos Capital Management selling large blocks of stock late last week, as reported by CNBC and other outlets.Bank stocks also declined on Monday, with Credit Suisse and Nomura posting heavy losses after warning of “significant” hits to first-quarter results following the hedge fund’s selling.Still, despite the recent volatility, the Dow and S&P 500 are firmly higher for the month, gaining 7.2% and 4.2%, respectively.”The significant tailwinds propelling equities higher and the forces that have driven equities into, during, and now out of the pandemic remain,” analysts at Evercore ISI wrote in a note to clients.”Investors seem to understand that faster growth, rising earnings growth expectations, still historically low corporate borrowing costs, and pent up consumer demand will fuel further market gains,” the firm added.Evercore envisions the pace of gains slowing, however, with equities already pricing in a reacceleration of growth.Small cap stocks have been a beneficiary of the reopening trade in recent months as investors rotated into some of the hardest hit areas of the market. The Russell 2000 has gained 43% over the last six months, more than doubling the return of the Dow and S&P.Jim Lacamp, senior vice president at Morgan Stanley Wealth Management, believes this trade may now have run its course.”These plays that have really ramped up from the lows — especially from the September lows — like the small caps and the lower-quality stocks are going to take a backstage,” he said Monday on CNBC’s “Closing Bell.””The markets are already moving fast mentally from the early stage recovery plays into the mid stage recovery plays, and it might mean the averages have trouble continuing to hit new highs,” he added.Traders are bracing for heightened volatility during this holiday-shortened week with quarter-end rebalancing among pension funds and other big investors. The recent swift advance in bond yields could set up money managers for big adjustments in their portfolios. More

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    How Goldman and Morgan Stanley avoided losses after fund meltdown burned Nomura, Credit Suisse

    In this articleMSGS8604.T-JPCSG.N-CHVIACPPeople are seen on Wall St. outside the New York Stock Exchange (NYSE) in New York City, March 19, 2021.Brendan McDermid | ReutersWhen investors are stampeding for the exits, it pays to be first out the door.That’s what happened when falling shares in ViacomCBS last week ignited a $20 billion wave of forced selling at the Wall Street banks that cater to Archegos Capital Management, the family office founded by former Tiger Management analyst Bill Hwang.By the time Credit Suisse and Nomura, two prime brokers of Archegos, announced early Monday that they faced losses that could be “highly significant” to the banks, rival firms Goldman Sachs and Morgan Stanley had already finished unloading their positions, according to people with knowledge of the matter.Goldman managed to sell most of the stock related to its Archegos margin calls on Friday, helping the firm avoid any losses in the episode, according to one of the people. Morgan Stanley sold $15 billion in shares over a few days, avoiding significant losses, CNBC’s Leslie Picker reported.Investors punished the two non-U.S. banks. Nomura ended Monday down 14%, while Credit Suisse slid 11.5% when the market closed. Meanwhile, Morgan Stanley dropped 2.6% and Goldman shares dipped a modest 0.5%.”In this environment, where information flows quickly and you have to move quickly, this demonstrates a significant weakness on the part of Nomura’s risk management,” said Mark Williams, a Boston University finance lecturer and former Federal Reserve examiner. “Did they not understand the risks they entered into, or did they ignore them because they wanted to grow?”Besides not acting quickly enough to stave off losses — Nomura and Credit Suisse each indicated that they were still unwinding positions as of Monday – the two firms may not have been as disciplined with Hwang’s fund as their big American rivals, according to industry observers.Nomura estimated that as of Friday’s market prices, the firm faced a $2 billion loss, while Credit Suisse said that the shortfall could be “highly significant and material” to the bank’s first quarter results. Calls to Credit Suisse and Nomura weren’t immediately returned.Morgan Stanley, Goldman and JPMorgan Chase are the biggest prime brokers in the world, according to sources who track the industry’s revenue. Credit Suisse is ranked seventh, while Nomura is outside the top ten.Smaller firms will sometimes accept less collateral or offer cheaper financing terms to win clients in the hyper-competitive prime brokerage world, the sources said. That works when markets are rising, but can lead to pain when stocks go south and leveraged bets implode.Nomura and Credit Suisse also have smaller trading operations in the U.S., which may have limited their ability to quickly offload large blocks of stock after it became clear what was happening. Meanwhile, on March 26, Goldman sold $10.5 billion in shares of firms including Baidu Inc., Tencent Music Entertainment Group, ViacomCBS and Discovery, according to a client email reported on by Bloomberg.The blowup at Archegos, a relatively obscure entity before its spectacular meltdown last week, calls into question what other risks are lurking among the client books of major investment banks.”Should they even be in the business of taking bets where they can lose $2 billion in a week?” Williams said. “It seems like they were swinging for the fences if they can lose that much.” More

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    Bank and cyclical stocks should be bought on the dip, Jim Cramer says

    In this articleFBNCLHDRICLXPGDISBAThe weakness seen Monday in banks and cyclical stocks will be short-lived, and investors should buy them on the dip, CNBC’s Jim Cramer said. “When you look at the stocks that got hit today, I don’t think they’re going to stay down,” the “Mad Money” host said, noting the “countertrend rally” into stay-at-home names seen during Monday’s session “will not have legs.”Darden Restaurants and Norwegian Cruise Lines — names that were hit hard by Covid-related restrictions — dropped 3.5% and 2.3%, respectively. Bank stocks such as JPMorgan Chase and Citigroup each fell more than 1%. Meanwhile, shares of Clorox and Procter & Gamble — two companies that outperformed early in the pandemic — rose 2.6% and 1.6%, respectively. “The most important lesson today is that this market is fickle, so don’t dump … [these] stocks when they’re going down,” Cramer said. Cramer said he expects more upside on the bank and cyclical stocks that pulled back during the session. He also recommended investors look into buying shares of Disney and Boeing, two companies associated with travel and the reopening of the economy.Cramer added investors can use days like this to trim holdings in lockdown plays and rotate into stocks that can benefit from an economic recovery.”Sooner or later the rotation will change directions, meaning money will flow back to the great reopening stocks — the banks and the cyclicals — so you want to use days like today, and perhaps tomorrow,” Cramer said, “to buy them into weakness while you trim your positions in the lockdown stocks.”Disclosure: Cramer’s charitable trust owns shares of Disney and Boeing.DisclaimerQuestions for Cramer? Call Cramer: 1-800-743-CNBCWant to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – InstagramQuestions, comments, suggestions for the “Mad Money” website? [email protected] More

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    VW accidentally leaks new name for its U.S. operations: Voltswagen

    In this articleVOW3-DEVolkswagen’s ID Buzz vehicle.AevaVolkswagen accidentally posted a press release on its website a month early on Monday announcing a new name for its U.S. operations, Voltswagen of America, emphasizing the German automaker’s electric vehicle efforts.A spokesman for the company declined to comment on the release, which was dated April 29 and has since been taken down.A person familiar with the company’s plans confirmed the authenticity of the release to CNBC. They asked to remain anonymous because the plans were not meant to be public yet.The release said the name change is expected to take effect in May and called the change a “public declaration of the company’s future-forward investment in e-mobility.” It said Voltswagen will be placed as an exterior badge on all EV models with gas vehicles having the company’s iconic VW emblem only.To “preserve elements of Volkswagen’s heritage,” the release said the company planned to retain the dark blue color of the VW logo for gas-powered vehicles and use light blue to differentiate “the new, EV-centric branding.”The release said Voltswagen of America would remain an operating unit of Volkswagen Group of America and a subsidiary of Volkswagen AG, with headquarters in Herndon, Virginia.Volts are the derived units for electric potential, also known as electromotive force, between two points. General Motors previously used Volt for a plug-in hybrid electric vehicle between 2010 and 2019.The VW press release was incomplete, citing the need for an additional quote and photography from the automaker’s plant in Chattanooga, Tennessee.A name change would be the latest EV news from Volkswagen, which earlier this month held a “Power Day” to discuss its EV technologies. It also announced goals of significantly increasing sales of EVs through the end of the decade. It expects more than 70% of its Volkswagen brand’s European sales will be EVs by 2030, up from a previous target of 35%. In the U.S. and China, it expects half of its sales to be EVs by that time frame.GM earlier this year didn’t go as far as changing its name but announced a new logo and ad campaign focused on EVs. The Detroit automaker’s new logo features its gm initials in lowercase letters with the “m” underlined as a nod to its Ultium battery cell platform that will underpin its new EVs The blue letters are inside a rounded box of the same color. It replaced a white GM underlined within a darker blue block. More

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    Online payments company Paysafe going public in SPAC merger Tuesday, Bill Foley says

    In this articleWPF^BFT^NDAQFNFBXLondon-based online payments company Paysafe is set to begin trading on U.S. public markets after merging with blank-check company Foley Trasimene Acquisition II Corp, billionaire business and sports executive Bill Foley told CNBC Monday.Foley, who set up the special purpose acquisition company, or SPAC, announced in December that it was targeting Paysafe in a deal valuing the firm at about $9 billion, including debt.”Paysafe … is ubiquitous. It’s just everywhere in terms of the gaming world and digital wallets, e-cash solutions,” he said in a “Mad Money” interview. “We’ll actually go public tomorrow as we start trading on the New York Stock Exchange.”Foley is the chairman of Fidelity National Financial and the majority owner of the Vegas Golden Knights.Paysafe, which includes brands such as Income Access, Paysafecard, Skrill and Neteller, is backed by Blackstone and CVC. Companies use Paysafe products to handle credit card, cash and direct-debit transactions digitally. Prepaid cards and digital wallets are other offerings.Foley, whose SPAC in August raised $1.47 billion, said the company is making plans to penetrate the domestic gaming market, including brick-and-mortar businesses and helping casinos go cashless. Paysafe’s business is primarily done internationally, he said.The North American gaming market also presents an opportunity as the company hopes to become the “preeminent i-gaming leader” on the continent.”I’m excited about Paysafe. It’s really a great company,” Foley said. “We’re pretty far along with a couple of different ideas that we’ve been working on concurrently with taking Paysafe public.”Shares of Foley Trasimene Acquisition Corp. II moved 5.77% higher Monday to $15.39, giving it a valuation of roughly $2.8 billion at the close.Questions for Cramer? Call Cramer: 1-800-743-CNBCWant to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – InstagramQuestions, comments, suggestions for the “Mad Money” website? [email protected] More

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    Market could be in trouble thanks to massive stock glut, Jim Cramer says

    In this articleSPCXLMNDCNBC’s Jim Cramer warned investors that the market could be in trouble in the near term as it faces a massive supply of stock and a shortage in demand from buyers.”Between the IPOs and the big SPAC attack and the big secondaries, we’re being flooded with stock right now, so the market’s going to struggle until Wall Street turns off the spigot,” the “Mad Money” host said Monday. “Unfortunately, there’s no sign of that happening yet, so you have to keep being careful.”With more than 100 initial public offerings so far this year, first-quarter fundraising in U.S. markets has reached a record, Cramer said. Several new IPOs are in the pipeline this week. High-profile companies such as cryptocurrency exchange Coinbase and trading app Robinhood also plan to go public soon.The market has also seen rising interest in companies choosing to go public through special purpose acquisition companies, widely known as SPACs. This year has seen more SPAC offerings executed than in all of 2020, Cramer noted.”You can tell that there’s too much supply because many of these deals have started to fizzle,” Cramer said. “These special purpose acquisition companies just keep coming, even though the whole SPAC ecosystem’s falling apart.”Cramer also warned about the new supply of stock through secondary offerings. He noted home-insurance provider Lemonade, decking company Azek and media conglomerate ViacomCBS have issued billions of new shares in recent months.This has created a supply demand imbalance in the market. There aren’t enough buyers putting money to work and scooping up the slate of new shares being traded, Cramer noted. “With all this new supply, it’s no wonder the fast-growing tech stocks can’t find a bottom,” he said. “We need to digest … all of the excess shares [and] that takes time.”The market is being flooded with a supply of stocks and the issue is not getting the attention it deserves on Wall Street, CNBC’s Jim Cramer said Monday.The stock glut, driven by multiple factors, is the most important market story right now and is another condition stunting stocks from gaining traction, he said on “Mad Money.”Questions for Cramer? Call Cramer: 1-800-743-CNBCWant to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – InstagramQuestions, comments, suggestions for the “Mad Money” website? [email protected] More