Everything You Need to Know on Tuesday: TD risks 'lost decade' in U.S. money-laundering scandal, Jefferies says

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,339.90, up 0.09%.

● Oil steadies as Israel rejects cease-fire proposal for Gaza

● TD risks 'lost decade' in U.S. money-laundering scandal, Jefferies says

● Canada's Brookfield to invest $1.5 billion in private credit manager Castlelake

Today, the Canadian dollar is trading at 73.14 cents US, a slight increase from Monday.

S&P/TSX 60 Index Standard Futures are trading at 1,339.90, which is up 0.09% from the previous close.

Crude oil prices remained close to $78 per barrel amidst Israel's refusal to accept a cease-fire agreement for the Gaza Strip and its subsequent takeover of the Rafah border checkpoint. Prices for West Texas Intermediate showed little variation. Israel's war cabinet unanimously turned down a truce proposition that Hamas had accepted. Israel, with Prime Minister Benjamin Netanyahu characterizing Rafah as Hamas' final stronghold, has pledged to persist with its military actions in the area. Numerous Arab nations, alongside several European countries, have expressed concerns about an Israeli assault on Rafah, warning that it could lead to a high number of casualties.

In other news, Alexander Novak, Deputy Prime Minister of Russia, mentioned that the OPEC+ alliance is considering a potential increase in oil production among other strategies in preparation for their upcoming meeting in June.

The oil market is attempting to recover after experiencing its steepest weekly decline since February. Year-to-date, oil prices have maintained an upward trajectory, partly due to the production limitations implemented by OPEC+. Although the consortium is anticipated to sustain a tight supply, the forecast for demand is uncertain, with indicators such as diesel showing potential signs of a downturn.

According to a source who spoke to Bloomberg last week, the U.S. Department of Justice is currently conducting an investigation into the bank due to its connections with a money-laundering case in New York and New Jersey, involving approximately US$653 million tied to drug trafficking. The inquiry is centered on the use of Toronto-Dominion and other financial institutions by Chinese criminal organizations to disguise proceeds from the sale of fentanyl in the U.S., as reported by the Wall Street Journal on May 2.

Furthermore, the bank is dealing with another legal issue where an employee at one of its branches in New Jersey has been accused of taking bribes to aid in the laundering of narcotics proceeds.

In light of these allegations, Jefferies analyst John Aiken expressed concerns in a client note on Monday, stating, "Given the bank's alleged central role in a narcotics money-laundering network, the likelihood of a worst-case outcome has escalated, with TD facing the possibility of a 'lost decade.' Any prospective growth in the U.S. market is expected to be significantly hampered, and the duration for resolving these issues could be prolonged for many years."

The allure of private credit firms has been on the rise, as these entities are not subjected to the same stringent regulatory oversight as traditional banking institutions.

Craig Noble, CEO of Brookfield Credit, remarked that the expansive multi-trillion-dollar market is experiencing robust tailwinds that are poised to propel the expansion of their credit division, which currently manages $300 billion, over the forthcoming decade.

As an integral aspect of the transaction, Brookfield is set to acquire a majority interest of 51% in the fee-related earnings (FRE) of Castlelake. Fee-related earnings are a metric used to evaluate an asset manager’s proficiency in generating sustainable profits through revenues that are not only regularly measured but also consistently collected.