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The more pressing concern for shareholders is how the divorce could affect Jeff Bezos’ control of the company.

The experts who CNBC interviewed could not think of another situation where a founder of such an influential company divorced a spouse who had been with them since the company’s founding. The only one who came to mind was Rupert Murdoch, whose second wife Anna was with him for more than 30 years as he built his media empire before divorcing in 1999, but they reportedly had a prenuptial agreement.

It may be difficult for the Bezoses to split up their wealth without dipping significantly into their Amazon shares, said Jordan Neyland, an assistant professor of law at George Mason University who has written on the topic of CEO divorces.

“A lot of the prior CEO divorces have been more career professionals that have built up other wealth before becoming CEO,” Neyland said. “So I think that’s what makes this one a little different, being a founder getting divorced while in office.”

Typically, CEOs could avoid splitting up their shares by leaving other assets to their spouses, such as real estate and other property. But for the Bezoses, Neyland said, “all the wealth is going to be tied up in Amazon. In this case, I don’t know, of course, what to think of something of this magnitude, but I imagine his spouse is going to get some amount of stock in Amazon. So this is going to change the ownership in Amazon.”

This could mean Amazon may need to find a new structure to ensure that Jeff Bezos still owns enough voting power with his shares, Neyland said, like creating different classes of shares with varied amounts of voting power.

“This would be some creative lawyering that would have to happen,” Neyland said. “I don’t know if there’s been any sort of precedent for this.”

But Starks speculated that the couple probably came to an agreement on that point well before making their public announcement Wednesday.

“I have to imagine that some of the longest conversations and most legal mind power went into how to fashion a settlement that retained Jeff Bezos’ ability to remain a controlling shareholder in Amazon,” Starks said. In order for this to happen, Starks said, MacKenzie Bezos could have elected to give up claim to the stock or give up her voting rights to her shares.

Some of the terms of the settlement may come to light in Amazon SEC filings. Amazon declined to comment

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Hong Kong protesters demand top official quit

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JUNE 15: Carrie Lam, Hong Kong’s chief executive, speaks during a news conference at Central Government Complex on June 15, 2019 in Hong Kong China.

Anthony Kwan | Getty Images News | Getty Images

Crowds of Hong Kong protesters took to the streets Sunday to demand the city’s top official resign a day after she suspended — but did not withdraw — contentious legislation to allow extraditions to China that opponents say must be scrapped entirely.

Citizens, many dressed in black, packed subway carriages as they made their way to participate in the march beginning in the late afternoon in hot, muggy weather and that followed a similar one last Sunday that drew hundreds of thousands. Crowds also lined up to take ferries across famed Victoria Harbor to join the demonstration.

Immediate estimates were not available but huge throngs similar to the week before were seen packing the main protest route and spilling over into adjacent streets. People held signs including ones demanding Chief Executive Carrie Lam resign and denouncing the extradition proposal and alleged police brutality. “Stop killing us,” read one.

Lam had vowed to press ahead with amendments to Hong Kong law to allow extraditions to places with which it has no such arrangements — including mainland China.

But citing injuries to police and protesters in demonstrations that turned violent Wednesday and what Lam called divisions in society engendered by the plan, she announced Saturday that she was putting the legislation on indefinite hold.

Many in the Asian trade and finance center of 7.4 million people opposed the plan as they fear their legal system and freedoms – legacies of the territory’s history as a British colony – would be compromised by closer judicial ties with China.

Hong Kong was guaranteed a high degree of control over its own affairs for at least 50 years under a “one country, two systems” arrangement when Britain ceded sovereignty to China on July 1, 1997. But local unease over increasing mainland influence has steadily grown since.

Foreign business groups and governments, including the United States, also opposed the extradition plan, stressing concerns that any erosion to Hong Kong’s legal system could make it a less attractive place for banks and companies to operate.

The mood on Sunday was one of anger at Lam but also sorrow after the death of a protester on Saturday after he reportedly fell from the top of a shopping mall where he had unfurled a banner demanding the plan be withdrawn.

Ahead of the protest, hundreds pf people paid their respects at a makeshift memorial set up outside the shopping mall, offering flowers, prayers and incense.

‘Express our voice’

Kelly Wong, who thinks Hong Kong is completely under China’s control, said she felt “angry” at Lam for saying she would listen more to the opinions of citizens but with the aim of eventually passing the bill.

“So I think we should come out and express our voice,” she told CNBC.

Sunday’s demonstration marks a week of anti-government protests that included scenes of violence — especially on Wednesday – that are rare in Hong Kong.

On that day crowds estimated by police at more than 10,000 people surrounded the local legislature to stop debate on the bill.

It was peaceful for most of the day but police later repeatedly fired tear gas and rubber bullets into crowds and some protesters clashed with officers and threw objects at them. Many were angry at the response of law enforcement, though Hong Kong’s police commissioner told reporters that it was appropriate.

Lam had called the scenes an “organized riot,” words that angered many.

“There was no riot,” read a sign carried on Sunday.

The Civil Human Rights Front, the pro-democracy political advocacy group that organized last Sunday’s protest as well as the latest one, called Saturday for the rally to go ahead after Lam’s announcement.

“Postponement is not withdrawal,” the group said on its Facebook page Saturday,.

It said that last Sunday’s protest drew just over a million people, though police put the figure at about 240,000.

— CNBC’s Vivian Kam and Yolande Chee contributed to this report.

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This chart shows why everyone on Wall Street is so worried about the yield curve

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Wall Street’s top rated economist Ed Hyman just called the yield-curve inversion “the number one” market risk, and this chart shows why.

Going back to 1986, when the yield curve turned flatter drastically and eventually inverted, the S&P 500 tends to go into a downward spiral within the next 12 months, according to The Leuthold Group.

Take 2004 when the yield spread started falling from its highs. The flattening didn’t get the market’s attention until about 2006 when the curve inverted, and the recession hit exactly a year later.

There’s “a positive relationship between the yield curve and the S&P 500’s next 12-month returns,” said Chun Wang, Leuthold’s senior analyst and portfolio manager, in a note. “Recession or not, a flatter curve generally bodes ill for future stock market performance. The current trend in the yield curve is likely to cap the upside for stocks in the next 12 months.”

Keep in mind that Wang tested the spread between the 10-year and 2-year Treasury yields, not the 3-month and 10-year yield curve that’s currently inverted. Yield-curve inversion has been a reliable recession signal closely watched by experts and the Federal Reserve.

The shape of the curve is exuding a bad omen for the stock market if history is any guide. The yield on the 10-year Treasury hit a 20-month low last week as the escalated trade battles triggered a broad flight to safety. The low benchmark rate has flattened the 2-year/10-year yield curve to only about 23 basis points on Friday. In December, the spread hit the lowest level since the financial crisis during a massive sell-off. Yet despite the flattening, the S&P 500 is still up 15% this year.

Troublesome banks

The other overlooked element of the yield curve is that it’s now the dominant driver for an important group of stocks: banks, the analyst pointed out.

Bank stocks have significantly lagged the overall market regardless of interest rates’ ebbs and flows since the start of 2018 and they moved almost in tandem with the flattening yield curve, Wang said.

“The market is much more worried about the curve than the rate level…bank stocks are basically a proxy for whatever equity investors are most worried about in the bond market,” Wang said. If the spread between 10-year and 2-year yield dips into negative territory, “the implication for bank stocks is quite troubling,” he added.

Bank stocks have underperformed recently as the chance of rate cuts soared amid fears of an economic slowdown and ongoing trade war. Lower interest rates could wreck large-cap bank earnings by as much as 10%. The SPDR S&P Bank ETF has fallen 2.8% in the past month and 4.8% in the last three months, while the S&P 500 gained 1.7% and 2.6% in those periods.

“An escalation of trade war without offsetting rate cuts, a much stronger dollar, and flatter foreign-yield curves could all provide the final push into full inversion. We recommend watching bank stocks closely, given the special role they take right now,” Wang said.

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Three reasons why the Fed won’t cut rates at its June meeting

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Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019.

Leah Millis | Reuters

With pretty much everyone convinced that the Fed is going to be cutting interest rates at some point this year, the central bank faces one rather pressing question: Why wait?

After all, the market already is pricing in at least reductions this year and probably three. Though the Federal Open Market Committee meets next week, there is little expectation of a move then.

Not moving next week essentially comes down to three factors, according to Fed watchers: The looming G-20 summit at which the U.S. and China, at least theoretically, could reach a trade agreement; a desire not to be seen as overly influenced by the financial markets and President Donald Trump’s hectoring; and the desire to avoid making December’s rate hike look like a policy mistake.

“They don’t want to be seen as cowing to any sort of pressure, be it political from the White House or from the market,” said Lindsey Piegza, chief economist at Stifel. “The Fed is going to look at the data, they’re going to look at what their models say. To them, it doesn’t matter what the markets say.”

‘No cuts this year is hard to believe’

Wall Street, though, is clamoring for a cut.

Futures pricing Friday afternoon in the fed funds market showed a 21% chance of a move at the June 18-19 meeting, down from 30% earlier in the day on some stronger-than-expected economic data. The chance of a July cut remained at 85%, while the market was figuring a 61% probability for three moves in total by the end of the year.

As things stand currently among Chairman Jerome Powell and his fellow Fed officials, no moves are indicated. That is likely to change when FOMC members submit their economic projections at the June 18-19 meeting, which include the “dot plot” of individual members’ expectations of where rates are headed over the next few years.

“I can’t imagine what they are going to do with the dots,” Jeffrey Gundlach, founder of DoubleLine Capital, said in a webcast Thursday. He noted the “big divergence” between the market and Fed projections and said, “No cuts this year is hard to believe.”

In May, Gundlach recommended a straddle options trade that benefited from wide fluctuations in interest rates. The trade recently had netted a 22% gain.

Fed officials have been under intense pressure from more than the markets. Trump has been a continuous nemesis to the central bank, most recently repeating his demand for lower rates and saying he’s “not happy with what [Powell has] done” as Fed chair.

Along the same lines, the Fed has its credibility to worry about.

Trump and a growing number of market participants view the December rate hike — the fourth of the year — as a policy mistake that came amid several pivots and missteps that caused Powell and other officials to change their public statements to assuage investors’ nerves.

‘A verbal intervention’

From October to March, the Fed went from being “a long way from neutral” on rates and with a balance sheet reduction on “autopilot,” both in Powell’s words, to adopting a “patient” stance on policy and finally laying out a timetable to end the balance sheet program by September. Officials also cut the forecast level of rate hikes from two to zero, and now are in the position of having to convey a likelihood of cuts, if that is the way the FOMC members see things unfolding.

“It’s a difficult transition for the Fed now from two rate hikes this year to the pause and now moving closer and closer to rate cuts,” said Quincy Krosby, chief market strategist at Prudential Financial.

Krosby points to two pivotal events recently that signaled yet another change in policy — remarks from Powell and Vice Chairman Richard Clarida earlier in June that set the groundwork for potential cuts. In Powell’s case, it was a pledge to “act as appropriate to sustain the expansion” while for Clarida it was a vow to adapt policy to keep the economy “in a good place.”

“You can’t dismiss the comments from Powell and Clarida. That was orchestrated. They were laying the groundwork. That’s what the Fed does,” Krosby said. “It came across as verbal intervention and they didn’t even have to do anything. The market reacted.”

Indeed, stocks have been on a solid run lately, with the Dow Jones Industrial Average up more than 5% in June after a brutal May. That equity strength gives the Fed another pillar to rest on if it chooses not to cut this month, though that hasn’t always been enough to stop easing in the past.

But if the market strength holds up and the U.S. and China come to a trade agreement, it at least could lower the level of expectations for cuts.

Tom Porcelli, chief U.S. economist at RBC, said a client survey showed that if a trade deal gets one, 85% of clients “would not react negatively to the Fed taking a pass” on a July rate cut.

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