Hacking group targets organizations via Microsoft server software – Researcher

An unknown hacking group recently broke into organizations using a newly discovered flaw in Microsoft mail server software, a researcher said on Tuesday, in an example of how commonly used programs can be exploited to cast a wide net online.

Microsoft’s near-ubiquitous suite of products has been under scrutiny since the hack of SolarWinds, the Texas-based software firm that served as a springboard for several intrusions across government and the private sector. In other cases, hackers took advantage of the way customers had set up their Microsoft services to compromise their targets or dive further into affected networks.

Hackers who went after SolarWinds also breached Microsoft itself, accessing and downloading source code – including elements of Exchange, the company’s email and calendaring product.

Mike McLellan, director of intelligence for Dell Technologies Inc’s Secureworks, said he noticed the recent issue after a sudden spike in activity touching Exchange servers overnight on Sunday, with around 10 customers affected at his firm.

“It appears to be someone scanning and exploiting Microsoft Exchange servers in some way. We don’t know how,” he told Reuters.

Microsoft said in a statement that it would be “releasing an update and additional guidance to customers as soon as possible.” The statement said there was no relationship between the recent activity and the SolarWinds-tied hacking campaign.

McLellan said that for now, the hackers appeared focused on seeding malicious software and setting the stage for a potentially deeper intrusion rather than aggressively moving into networks right away.

“We haven’t seen any follow-on activity yet,” he said. “We’re going to find a lot of companies affected but a smaller number of companies actually exploited.”

McLellan said he had no solid indication of who might be responsible. The hackers in this case were using a strain of malware called “China Chopper,” which – despite the name – is used by a variety of digital spies.

The profile of the targets did not match any particular online threat, McLellan said. “It looks like a bit of a random mix.”

JPMorgan looks to cut office space in Manhattan – Bloomberg News

JPMorgan Chase & Co is looking to sublet big blocks of office space in Manhattan, Bloomberg News reported on Tuesday, citing people with knowledge of the matter.

The bank is looking to sublet just under 700,000 square feet at 4 New York Plaza in the Financial District and more than 100,000 square feet at 5 Manhattan West in the Hudson Yards area, the report said. (bit.ly/3bT02Vj)

Due to COVID-19 pandemic-led lockdowns and stay-at-home orders, fewer people have been going to office, which has prompted companies to reassess the need for real estate.

“It is too early to comment on specifics as we continue to learn and adapt to this current situation and how it impacts our commercial real estate needs. We are committed to New York and are planning for the next 50 years with our new headquarters here,” a spokesperson for the bank said.

Real estate broker Jone Lang LaSalle is marketing JPMorgan’s space, the report said.

In October, JPMorgan Chief Executive Officer Jamie Dimon said JPMorgan would press ahead with its plans to build a large headquarter in New York that is scheduled to open in 2024. (reut.rs/3uNyqcZ)

Texan chipmakers face slow recovery from power crisis as demand rises

Chipmakers, such as Samsung Electronics, will need a couple of weeks to resume production in Texas after shutdowns caused by severe weather, and customers could face knock-on effects in several months’ time, a representative of a trade body said.

Samsung, NXP Semiconductors and Infineon Technologies were ordered to shut factories in Texas last month after a winter storm killed at least 21 people and left millions of Texans without power.

The shutdown threatens chip supplies to customers, when the industry is scrambling to meet demand, which is rising especially from the auto sector, but also for laptops and other products as economies recover from the impact of the pandemic.

Chipmakers now have the power, water and gas they need to operate, but they need time to restart tools and clean the factories, Edward Latson, CEO of the Austin Regional Manufacturers Association, said.

He said the process was slow and “very expensive”.

The plant suspension would have an impact on automakers five months later because that is the time needed to make chips, he told Reuters.

There is also an impact now, Risto Puhakka, president of VLSIresearch, said.

“The impact is almost immediate, as the chip inventories are low and customers need them as soon as possible,” he said. “We are now looking at about one month of lost production.”

Samsung supplies chips for Tesla and other customers and NXP and Infineon are also automotive chip suppliers.

Tesla Chief Executive Officer Elon Musk said the electric vehicle company’s Fremont, California, plant shut down for two days last week, without elaborating further.

NXP, which has two factories in Austin, said in a statement on Tuesday: “We are diligently working through equipment, system and product assessments to resume our operations as soon as possible.”

Samsung had no immediate comment.

Robinhood now a go-to for young investors and short sellers

(Reuters) – Robinhood, the online brokerage used by many retail traders to pile in to heavily shorted stocks like GameStop Corp, has made an ambitious push into loaning out its clients’ shares to short sellers as it expands its business.

The broker had $1.9 billion in shares loaned out as of Dec. 31, nearly three times the $674 million a year earlier, and it was permitted to lend out $4.6 billion worth of securities under margin agreements, around five times bigger than the prior year, according to an annual regulatory filing here late on Monday.

The size of the jump highlights Robinhood’s rapid growth over the past year as the number of retail investors has soared in the work-from-home environment during the pandemic and as retail brokers have largely eliminated trading fees, a model Robinhood helped pioneer.

Menlo Park, California-based Robinhood is expected to go public this year with a valuation of more than $20 billion.

Securities lending is common among brokerages, which can earn income by lending shares to hedge funds and others, who then sell the shares back into the market, betting the share prices will drop so they can buy them back at a lower price when it is time to return them, pocketing the difference.

Shares that are in heavy demand from short sellers, like GameStop, which had 140% short interest in January here, command the biggest premium from the lender.

What makes Robinhood notable is that many of the stocks its users invest in are among the most sought-after by people who want to bet against them, said one senior financial executive involved with hedge funds.

It was unclear how great a benefit the securities lending was to Robinhood’s revenue and income, which it does not disclose.

Robinhood declined comment on the filing and did not immediately respond to a request for comment on the details of which stocks it loans out.

In January, retail investors coordinated through trading forums on social media in an attempt to punish hedge funds by buying up shares of GameStop and other heavily shorted names, like AMC Entertainment, driving up their prices and forcing short sellers to close out positions at big losses.

On Jan. 28, at the height of the retail trading mania, Robinhood, along with several other brokers, restricted the buying of GameStop and other so-called meme stocks due to a massive spike in collateral requirements needed to clear the trades, angering many of its customers.

The trading restrictions sparked congressional hearings, regulatory probes and have placed greater scrutiny on short selling.

In response, Vlad Tenev, Robinhood’s chief executive officer, called for shorter stock settlement times, which would reduce clearing collateral requirements.

He also said the idea that more shares of a stock can be shorted than there are available to trade, as was the case with GameStop, is a “pathology” that could destabilize the financial markets.

Robinhood positioned itself for growth in securities lending in October 2018 by launching its own clearing broker, which acts as a go-between with the clearinghouse that settles its trades, and allows it to hold its customers’ assets. The broker can then lend out securities its customers buy on margin.

At present, less than 3% of Robinhood’s funded accounts are margin-enabled, Tenev recently told Congress here.

U.S. ITC to probe some cellular devices made by Samsung & Motorola Mobility

The U.S. International Trade Commission on Tuesday said it was probing certain LTE-compliant cellular devices made by Samsung Electronics Co Ltd and Lenovo Group Ltd-owned Motorola Mobility following a complaint.

The agency said it was launching the investigation following a Feb. 1 complaint filed by Austin, Texas-based Evolved Wireless LLC that alleged patent infringement.

Instacart valuation more than doubles to $39 billion with latest funding round

Instacart has more than doubled its valuation in less than six months to $39 billion with a $265 million fundraising round from existing investors, as the grocery delivery company benefits from a surge in online orders during the COVID-19 pandemic.

The San Francisco start-up, whose transaction volumes surged sixfold last year as doorstep delivery boomed during lockdowns, said on Tuesday it plans to use part of the new funds to increase its corporate headcount by an estimated 50% in 2021.

The company was valued at $17.8 billion in November following the closing of a previous funding round. That same month, Reuters reported Instacart had picked Goldman Sachs Group Inc to lead its initial public offering at around a $30 billion valuation.

Its latest cash injection comes just a few months after California backed a ballot proposal that upheld the status of app-based delivery drivers as independent contractors- a major boost for the likes of Instacart and Uber Technologies Inc, which rely on people to work independently and not as employees.

The new funding round was led by Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Co and T. Rowe Price Associates.

U.S. budget airlines plot pandemic breakthrough

The COVID-19 pandemic has reshaped the global travel landscape and U.S. no-frills carriers are pouncing.

As legacy airlines shrink to contain costs, budget carriers Spirit Airlines, Allegiant Travel and privately-owned Frontier Airlines are resuming pilot hiring and expanding networks to seize turf dominated by larger rivals.

The three airlines’ combined U.S. market share, which barely topped 10% before the pandemic, could grow by 10 percentage points this year alone, said René Armas Maes of UK-based consultancy MIDAS Aviation.

“Ultra low-cost carriers want to attack head-to-head; they believe they’re in a better position to rebuild travel demand,” he said.

Las Vegas-based Allegiant has told prospective pilots whose hiring was halted as the pandemic unfolded: “We have recalled all of our furloughed pilots and are now planning for exciting growth opportunities.”

Spirit and Frontier have posted pilot job ads and are taking delivery of Airbus A320neo jets that could open longer routes, including coast-to-coast flying traditionally controlled by legacy, or full-service, carriers.

By contrast, American Airlines has gone from hiring 100 pilots a month before the pandemic to threatening 1,850 furloughs without fresh government assistance on labor costs.

Allegiant also stands to benefit if Congress approves a third round of COVID-19 payroll relief for U.S. airlines, but “would be just fine without it,” Chief Financial Officer Greg Anderson told Reuters.

“The leading indicators suggest that there is a nice growth trajectory for Allegiant,” said Anderson, citing Google searches, indices that track changes in city populations and infection and vaccination trends from the Institute for Health Metrics and Evaluation.

He said customer surveys also show an increased preference for smaller airports and non-stop flights, cornerstones of budget carriers’ business models.

TRIAL AND ERROR

Ultra low-cost carriers, or ULCCs, offer a no-frills experience at rock-bottom fares and charge heavily for extras like bags. They wage fare wars and are pervasive in Europe’s fragmented market but have lagged in the United States.

ULCCs are a tier below carriers like Southwest Airlines, which pioneered the low-cost concept in the 1970s and has grown to become the leading domestic airline. It provides free beverages and checked bags but keeps costs low in part by flying a single fleet-type of Boeing 737s.

U.S. mainline legacy carriers American, Delta Air Lines and United Airlines have diverse fleets that include expensive wide-body jets geared for the kind of business and international travel that has suffered most in the pandemic.

American’s unit costs excluding fuel, a key metric of efficiency, were $0.18 per available mile in 2020, more than double that of budget rivals like Allegiant, according to data compiled by financial services firm Raymond James.

This means Allegiant, which primarily uses second-hand planes and only flies on peak travel days like weekends, can more easily profit on discount fares.

And whereas legacy carriers use a hub-and-spoke network that shuttles people through costly big-city airports, the ULCC business model is based on point-to-point travel to smaller airports where they outsource much of their infrastructure.

Allegiant’s fixed costs account for just around a quarter of its total.

That flexibility helps budget carriers open new routes on a trial-and-error basis. During the pandemic, for example, they have pivoted toward beach and mountain destinations.

“Then if the route is not performing, they won’t hesitate to shut it down,” said George Dimitroff of consultants Ascend by Cirium.

But there are risks.

American, United and Delta have also shifted flights during the pandemic to pick up leisure demand and their market power and geographical reach remain formidable.

Competing with them can lure upstart airlines into relaxing cost discipline – a move described as a “path to hell” by budget airlines entrepreneur Bill Franke, who championed the ULCC model.

Together the three large airlines control around 60% of domestic travel and could chase away rivals on smaller routes if they choose, industry critics said.

But they are more burdened by debt than the ULCCs and continue to burn through millions of dollars every day, hampering their ability to grow, the critics said.

BUDGET SHIFT

Beyond low fares, experts said the pandemic has given budget carriers a fresh argument for previously wary customers.

Traditional airline perks like catering services have lost their luster in an era of masks, and budget airplanes feature the same hospital-grade aircraft filtration systems as others.

And they could benefit from more cost-conscious small and medium sized businesses changing travel policies to favor lower-cost airlines, albeit constrained by their more limited flying through large hubs.

“More price-sensitive travel will be the new normal for the next couple of years at least,” Armas Maes said.

Even so, today’s outsiders will face a competitive cycle.

After the last downturn, low-cost carrier JetBlue Airways grabbed market share from American on the U.S. east coast. Now it is grappling with competition from ULCCs and is teaming up with its old rival.

Last of Us 2 leads Bafta Games Awards nominations

With a record-breaking 13 nominations, The Last of Us 2 leads the field at the Bafta Games Awards.

It’s the most nominations any game has received in the awards’ history, beating last year’s record of 11 by two titles: Control and Death Stranding.

Ghost of Tsushima, an action-adventure game, also received 10 nominations, including for best game and multiplayer.

The winners will be announced on 25 March.

The awards will again be held online, a year on from being the first major awards to be held virtually.

View original tweet on Twitter

In addition to its 13 nominations, The Last of Us 2 is also up for a new award – EE Game of the Year, which is the only category to be voted for by the public.

The Bafta Games Awards has been recognising achievements in the gaming industry for more than a decade.

And while there might not be a traditional red carpet, champagne reception or live audience, organisers will be hoping to retain some of the magic of a live event.

Analysis by Steffan Powell, Newsbeat’s gaming reporter

On paper it might be a surprise that a game set in the midst of a world altering global pandemic became so successful in 2020. Not much escapism in that.

It’s less of a surprise to anyone who’s played The Last of Us Part 2.

The shock would have been if the game did not dominate the BAFTA nominations. 

It’s already won big at the 2020 Game awards and was crowned BBC Sounds podcast Press X to Continue’s game of 2020.

Despite controversies over its depiction of violence, divisive plot twists and character portrayals (dancing very carefully around spoilers here) the title had an overwhelmingly positive reaction from players and critics. 

The praise for its storytelling, diverse cast and sheer jaw-dropping emotional moments have also clearly won the BAFTA nominations panel over.

Usually a place where independent games thrive – this year the awards look like they could be dominated by PlayStation exclusives made by big studios.

Not only does The Last of Us Part 2 have the most nominations for in history, but other PS only titles like Ghost of Tsushima (10), Spiderman: Miles Morales (7) and Dreams (6) have landed a hatful of nominations too.

Bafta has announced the show will be a 90-minute online live stream, hosted by presenter and journalist Elle Osili-Wood.

Bond selloff eases but risk gauges flash orange

The recent violent selloff in the $20 trillion U.S. government bond market has eased, but it isn’t over.

Signs of stress are in fact everywhere; they imply that more such episodes of turmoil or “tantrums” as they have become known lie in wait over coming months.

Ten-year Treasury yields, the main reference rate for global borrowing costs, are now around 1.4%, having spiked last week to 1.6%, a whopping 130 basis point rise from March 2020 lows.

The brutal spillover into stock markets shaved $2 trillion last week from the value of global equities, which are trading on exalted valuations following a decade-long rally.

Volatility could return if U.S. economy continues to surpass expectations and President Joe Biden’s $1.9 trillion spending plan says Salman Ahmed, global head of macro at Fidelity International, noting “risks emanating from the impending fiscal dominance that will drive a notch-up in cyclical inflation”.

Here are some indicators that show bond market stress is by no means over:

1/ VIX TO FOLLOW THE MOVE?

The global bond slump boosted the volatility index to near April 2020 highs, but it contrasts with a similar index in the equity market which is trading half of the levels seen in April.

Graphic: MOVE index versis VIX –

Reuters Graphic

2/ WIDENING SPREADS

Signalling more stress for the bond markets is the widening bid-ask spread in U.S. Treasuries, an indicator of shrinking liquidity in the deepest bond market in the world.

Data from Tradeweb, a trading platform, showed wider spreads were a feature across the yield curve, pushing them to their highest levels since the March 2020 pandemic-fuelled selloff.

Graphic: U.S. 5-yr bonds bid-ask yield spread soars –

Reuters Graphic

Graphic: Stress Signals –

Reuters Graphic

3/ EXPLODING TREASURY ETF TURNOVER

A major reason why spreads widened as volatility jumped has been a marked change in the composition of market participants in the bond market in recent years.

Traditional participants like banks have ceded market share to algorithmic trading in major markets with some estimates putting the share of algorithmic trading in U.S. Treasuries at nearly 90% compared to 50% at the start of the decade.

And as the computer-share driven trading models have become more widespread, turnover in futures and exchange traded funds have exploded while volume in cash markets have stagnated.

Graphic: Exploding interest –

Reuters Graphic

4/ NASDAQ-UST, A DEADLY COMBO?

A 60% Nasdaq and 40% US 10 year U.S. bond portfolio showed one of the largest bi-weekly declines since the global financial crisis.

Graphic: Nasdaq and US 10Y 60-40 portfolio sees huge declines –

Reuters Graphic

Biden’s top financial regulatory picks to face scrutiny in Congress

U.S. President Joe Biden’s nominees to head two key financial watchdogs will be questioned by lawmakers on Tuesday on how they plan to tackle racial and income inequality, climate change, fintech regulation, cryptocurrencies, corporate enforcement and other issues.

Gary Gensler, the White House’s nominee to lead the Securities and Exchange Commission (SEC), and Rohit Chopra, nominated to be director of the Consumer Financial Protection Bureau (CFPB), will appear before the Democratic-led Senate Banking Committee.

Progressives see the agencies as key to advancing policy priorities on climate change and social justice and expect the pair, both experienced corporate regulators, to take a tough line on Wall Street. Republicans have criticized Biden for bowing to leftists and have warned that Gensler and Chopra will be divisive if confirmed to the positions.

“These are both going to be key officials setting financial policy for Team Biden. For Gensler, the focus will be on investor protection and how the SEC should respond to GameStop-related market volatility. For Chopra, it will be about his vision for the agency and his enforcement priorities,” said Jaret Seiberg, an analyst at Cowen Washington Research Group.

In prepared remarks posted on Monday, the two nominees vowed to be diligent stewards of the watchdogs without delving into specifics.

As head of the Commodity Futures Trading Commission, Gensler implemented new swaps trading rules created by Congress in 2010 in response to the global financial crisis, developing a reputation as a tough operator willing to stand up to powerful Wall Street interests.

He will join the agency in the wake of January’s social media-fueled trading frenzy in shares of video-game retail firm GameStop Corp and is likely to be grilled on how he will tackle issues raised by the saga. That includes the practice of betting that stocks will fall, or shorting, potential market manipulation on social media, and how retail brokers handle customer orders, analysts said.

Democrats will also likely push Gensler to commit to new corporate disclosures on climate change risks and political spending, and to complete executive compensation curbs. Whether the SEC will take a tougher line on cryptocurrency offerings and investments is also expected to be a focus for lawmakers, analysts said.

WALL STREET-FRIENDLY RULES

Currently a commissioner at the Federal Trade Commission, where he campaigned for tougher consumer privacy and enforcement penalties, Chopra helped establish the CFPB, which was formally launched in 2011.

Democrats will want to know Chopra’s plans for reviving the agency after the Trump administration weakened enforcement and several rules. Republicans are likely to query him on whether the CFPB overstepped its authority in the past.

Chopra will also likely be asked about gaps in minorities’ access to credit, exorbitant lending rates and abusive debt-collection practices, analysts said.

Progressives also want to repeal Wall Street-friendly rules introduced by former President Donald Trump’s regulators and may push Chopra to revisit payday lending and debt-collection rules that they say won’t protect Americans. Gensler may be pressed on reviewing SEC rules governing investment advisers and shareholder voting rights.

“Barring a major meltdown during this hearing, both Gensler and Chopra will be confirmed in the coming weeks and we will begin to see material changes at both the SEC and CFPB,” said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading.