Bad Stuff the Market Worried About Is Starting to Happen; Tastytrade, Peak6 invest $10 million in new exchange

Jan 4, 2019

First Read

Hits & Takes
JLN Staff

ICE posted another record volume year in 2018, with fourth quarter volumes up 20 percent and open interest increasing 10 percent from a year earlier. Average daily volume records for the year included: gasoil up 10 percent; Title Transfer Facility gas up 23 percent, West Texas Intermediate crude up 5 percent and interest rates up 14 percent. Emissions posted a record year and record Q4, up 72 percent and 72 percent, respectively~SR

Eurex volumes rose 23 percent in December, largely on equity index trading, which jumped 38 percent to 96 million contracts for the month, up from 142.4 million a year earlier.~JK

STAC is hosting a women’s breakfast and speaker event during its annual conference. The event takes place on Thursday January 17th from 9-10:30 am at the Chicago Hilton and Towers, 720 S. Michigan Ave. at the Williford Room, 3rd floor. The featured speaker is Wendie Lloyd and the topic is Living Fearless. For more information and to register, go here. ~SR

Donnie Roberts is president and CEO of the new retail futures exchange that is pending regulatory approval, the Small Exchange, founded by tastytrade’s Tom Sosnoff and Peak6 founders Matt Hulsizer and Jenny Just.~JK

CNBC reports U.S. mortgage applications have collapsed at a 94 percent annual rate to the lowest level since 2000, just ahead of that recession.~JJL

The U.S. Treasury Department says that the national debt has increased by $2 trillion ($2,000,000,000,000) since President Trump took office on Jan. 20, 2017.~JJL

Another thought about the IRS not issuing tax refunds because of the ongoing government shutdown in the US. This will be a drag on economic growth in the first part of the year and take some investment funds away from the market, which is used to a infusion after the April 15 tax deadline. Add that to the tariffs, which act like a tax, and you have the makings of slower economic growth.~JJL

New York Governor Andrew Cuomo said that not fully closing the L train subway line between Manhattan and Brooklyn for repairs would be a “phenomenal benefit to the people of New York City.” Is something not being as awful as it could be a “phenomenal benefit”?~SD

In the middle of widespread risk-off sentiment yesterday, Brazil’s Ibovespa index hit a record high of 91,564. ~SD

Happy 10th birthday to the Bitcoin network.~JJL

Radio and TV agricultural reporter Max Armstrong posted on Twitter: A UNFORGETTABLE DAY…January 4, 1980. It was a Friday. Then President Carter embargoed grain sales to the Soviet Union to punish them….38 years before President Trump slapped punitive tariffs on China. Both events sent shockwaves through the U-S agriculture community.~JJL

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US warns citizens about travel to China; Advisory comes amid heightened tensions after Huawei executive’s arrest
Aime Williams – The Financial Times
Americans visiting China could be prevented from leaving the country by “coercive” exit bans, the US State Department has warned, advising citizens to exercise increased caution in a sign of rising tensions between Beijing and Washington.
/goo.gl/Y2vnd8

***** Think again about that China trip.~JJL

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People News – December 2018; Appointments, promotions and other people news in the derivatives industry
MarketVoice Staff
Robert T. Cox, a vice president at the Federal Reserve Bank of Chicago and a longtime industry leader who was a member of FIA’s board, passed away Dec. 7 at age 65.
/jlne.ws/2Rus5Cj

***** FIA catches up with all the people news in MarketVoice.~JJL

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Financial advice books make money only for their authors; For 300 years they’ve been peddling the same old lines ó but still we buy them
Merryn Somerset Webb – FT
New year, new financial you. If you have spent the past few days determined to improve yourself with a good book on financial advice, you are clearly not alone. You also wouldn’t have been alone at almost any point in the past 300 years.
/jlne.ws/2RuR9sN

***** We know this, but we ignore this.~JJL

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Yale’s beloved happiness class is now on the internet for free
Amy X. Wang – Quartz
Happiness, they say, is infectious. Perhaps that is why the most popular course ever to be taught at Yale Universityóthis semester enrolling 1,200 students, or a quarter of the undergraduate student bodyóis one titled “Psychology and the Good Life.”
/jlne.ws/2Rtoh4l

***** I had to take this class three times before I received “mildly satisfied” grade.~JJL

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Thursday’s Top Three
Our top stories of the day on Thursday had us livin’ in the 80s. CNBC’s Chicago traders in their ’80s heyday had a crazy move called the ‘O’Hare Play’ was the top read story of the day. Trading can be what you want it to be. Not sure if there were any Narita International Airport trades yesterday in Japan, but Bloomberg captured the second spot with Yen Surge, Algos Set Off `Flash-Crash’ Moves in Currency Market. Third was the interview with Deutsche Boerse’s CEO Theodore Weimer in Handelsblatt’s Deutsche Bˆrse’s straight-talking boss

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Lead Stories

The Bad Stuff That the Stock Market Worried About Is Starting to Happen
Sarah Ponczek and Vildana Hajric – Bloomberg
From Apple’s sales warnings to an ISM miss, it’s piling up; ‘Fundamentals are strong’ has been rallying cry against rout
All of a sudden, the fundamentals aren’t looking as strong. First it was Apple Inc.’s $5 billion revenue miss, hints of which lopped 30 percent from its stock over three months. Now it’s a closely watched gauge of U.S. factory activity, which dropped to a two-year low and missed every estimate in a Bloomberg survey.
/jlne.ws/2COejm0

Tastytrade, Peak6 invest $10 million in new exchange
Lynne Marek – Crain’s Chicago Business
Tastytrade and Peak6 are investing $10 million in a new Chicago enterprise called the Small Exchange, which aspires to be a futures and foreign exchange trading platform for retail traders.
/jlne.ws/2COP42T

The Twilight Trading Hour Strikes Currency Markets Again; When U.S. traders are heading home but Asia hubs aren’t fully up and running, normally stable currencies can suddenly go haywire
Saumya Vaishampayan and Mike Bird – WSJ
There is a fragile spot in the $5.1 trillion currency market: early morning in Asia. This one- to two-hour period when U.S. traders are heading homeóbut market hubs in Singapore and Hong Kong aren’t yet fully up and runningóhas become known to traders as the twilight hour, a time when normally stable currencies can suddenly go haywire.
/jlne.ws/2RwxRn5

Oslo Bors invites bids to rival Euronext’s EUR625m offer
Philip Stafford – FT
Oslo Bors has invited rival bidders to compete with an offer from Euronext, which says it has secured majority ownership of Norway’s largest markets operator.
/jlne.ws/2Rr5k2g

Democrats Take a Big Step Toward Protecting the Markets from Trump; The House is resurrecting a rule that would prevent a debt-ceiling breach.
Joshua Green – Bloomberg
With a new session of Congress comes a new set of congressional rules. One in particular, on its way to being implemented in the House, should cheer investors exhausted by market chaos and leery of President Trump’s unpredictability: Democrats are reimposing an arcane measure called the “Gephardt Rule,” which reduces the likelihood that debt-ceiling brinkmanship will tank markets, as it did in 2011 and 2013, when Republican threatened to force a default to extract policy concessions.
/jlne.ws/2RB8bWA

AQR founder says blaming quants for market turmoil is ‘insane’
Robin Wigglesworth – Financial Times
AQR, one of the world’s biggest hedge fund groups, has suffered its worst year since the financial crisis, but its founder Clifford Asness says investors who blame the recent market turmoil on quantitative strategies are “insane”.
The Greenwich-based investment group, which manages $226bn, has climbed to the top of the hedge fund industry thanks to its systematic “quant” approach, which uses financial research and algorithms to systematically exploit durable market signals.
/jlne.ws/2F8z9Or

Investors pile into money market funds amid market turmoil; Nine straight weeks of inflows is longest streak since depths of financial crisis
Joe Rennison – FT
Investors fled into money market funds in an attempt to shelter from the turmoil that has sent prices on bonds, loans and equities plummeting in recent weeks.
/jlne.ws/2RD0BuB

Window-dressing on Wall Street shines spotlight on repo; Distress signals emerge from little-watched corner of the US money markets
Robin Wigglesworth – FT
House buyers always carefully study the kitchen fittings and measure up the airy living room, but often neglect to check whether the pipes are up to scratch. Investors act similarly, often forgetting that dodgy market plumbing can lead to a smelly catastrophe.
/jlne.ws/2RyFMjG

What Happens When Bond Markets Get Weird; Bondholders think the Fed is about to make a mistake on rates, but history shows the bond market is prone to error
James Mackintosh – WSJ
Strange things are afoot in the bond market. Traders are placing bets on whether the Federal Reserve will soon be forced into reverse by a slowing economy and swooning stock market. That has led to a lot of weirdness.
/jlne.ws/2RuVCf3

FDIC chair says no concerns about U.S. bank health amid market turmoil
Pete Schroeder – Reuters
A top U.S. bank regulator said on Thursday she had no concerns that volatility in the equities and futures markets posed a threat to the banking system, telling Reuters the country’s lenders have plenty of capital to weather further market swings.
/jlne.ws/2F7CzRA

Yen’s surge is a red flag for world markets
Saikat Chatterjee, Karin Strohecker – Reuters
A gradual rise by the Japanese yen in recent weeks culminated in a dramatic overnight surge ó firing a warning shot for world markets and the global economy in 2019.
Historically, outsized yen gains in short periods, such as the Russian default in 1998 and the global market meltdown in 2008, are a harbinger of stress for global markets. Market watchers say the yen’s latest ascent is a sign that the global economy is set for a rocky ride ahead.
/goo.gl/Bdpfme

Next ECB boss will matter less than his sidekick
Swaha Pattanaik – Reuters Breakingviews
Mario Draghi’s successor may not be the most important appointment at the European Central Bank in the year ahead. Most of those in the running to replace the Italian as president lack his creativity in tackling existential problems, such as a breakup of the euro. Others will have more scope to sway the debate. Ireland’s Philip Lane, who is in pole position to take over as chief economist from Peter Praet, is the sort of freethinker who would have outsized influence, especially in the next economic downturn.
/jlne.ws/2F3vNfL

The Bank Merger Germany Really Needs; The consolidation of the Landesbanken is as pressing as a Deutsche Bank-Commerzbank tie-up.
Elisa Martinuzzi – Bloomberg
For all the chatter about a tie-up between Deutsche Bank AG and its ailing rival Commerzbank AG, there’s another banking merger Germany needs just as much. Trouble is, it isn’t happening either.
/jlne.ws/2RrCteh

Opinion: Why the ‘mania’ for index funds won’t derail the stock market
Michael Edesess – MarketWatch
In a recent exchange on CNBC with Halftime Report’s host Scott Wapner, mutual-fund manager Jeffrey Gundlach of DoubleLine ó famed as the “Bond King,” as well as for many accurate predictions ó said that “passive investing … has reached mania status.”
/jlne.ws/2RtoXXs

Why there is no need to panic about fake news; The phrase has long since ceased to be useful but is deployed as a political cudgel
Tim Harford – FT
A new year’s resolution for us all: stop talking about fake news. Perhaps we should have stopped talking about it at the same time as we started. That, according to Google Trends, was the week after Donald Trump won the US presidential election in 2016, which suggests the interest was driven by astonished people looking for an explanation. Fake news was not the only scapegoat but it was, and still is, a popular one. It was even named the Word of the Year in 2017 by Collins Dictionary. Yet the phrase has long since ceased to be useful, and here are five reasons why.
/jlne.ws/2RD5Ieh

Exchanges, OTC and Clearing

Intercontinental Exchange – Intercontinental Exchange Reports Record Futures & Options Volumes in 2018; 4Q’18 ADV +20% y/y
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported December, fourth quarter and full year 2018 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
/jlne.ws/2RtRyvS

Oslo Bors lures rival bids amid Euronext’s EUR625m offer for acquisition; Oslo Bors has invited bids for its acquisition with a new offer process due to take place this month.
Hayley McDowell – The Trade
Norwegian exchange operator Oslo Bors VPS has invited rival bids following news of Euronext’s plans to offer EUR625 million to acquire the company.
/jlne.ws/2RD8mkd

Satisfying development in December: Eurex Exchange up 23 percent
Eurex
December has been a successful month for Eurex, Europe’s largest derivatives exchange and part of Deutsche Bˆrse Group. The number of traded contracts reached 174.6 million traded contracts compared to 142.4 million in 2017. This is an increase of 23 percent in total.
/jlne.ws/2CM7lxI

End of Consultation on amendments to the Clearing Conditions and related documents
Eurex
As announced in Eurex Clearing circular 102/18, Eurex Clearing proposed a revision of its rulebook and related documents to further reduce the complexity of the legal framework and to serve Clearing Members and their clients with an increased flexibility in functional set-ups accompanied with a facilitated onboarding process.
/jlne.ws/2RtRts4

The NYSE Welcomes 2019 as the Global Leader in Listings
ICE
The New York Stock Exchange (NYSE), a wholly owned subsidiary of Intercontinental Exchange (NYSE:ICE), extended its leadership as the premier venue for capital raising, finishing the year with $125 billion in proceeds raised from 356 transactions. In a year marked by elevated volatility in U.S. equity markets, NYSE issuers raised $30 billion in proceeds from 73 IPOs. The New York Stock Exchange was also the listing partner of choice for issuers seeking innovative ways to access the public markets without an IPO capital raise, including Spotify (NYSE:SPOT) and Dell Technologies (NYSE:DELL).
/jlne.ws/2LONKQl

OCC Continues to Fulfill its Role as a SIFMU
John Davidson, OCC
Throughout 2018, OCC operated in a robust and resilient manner, clearing over 20 million contracts a day for our highest ever annual cleared volume, while providing the U.S. equity options and futures markets with unparalleled financial integrity.
/jlne.ws/2RrCvTr

SIX Trading Key Figures: Year 2018
SIX
The 2018 financial year on the Swiss stock exchange was characterized by numerous listings. Twelve companies completed this step in total, the highest number reached since 2001. The good global environment for IPOs and the high level of listing activity by companies in the past year was therefore also reflected on the Swiss stock exchange. SIX carried out Europe’s third-largest IPO in 2018, the IPO of SIG Combibloc with a transaction volume of CHF 1.7 billion. In the previous year SIX recorded a total IPO transaction volume of CHF 3.9 billion, ranking it fourth in Europe behind Deutsche Bˆrse, London Stock Exchange and Euronext. The latter was just slightly ahead of SIX in third place.
/goo.gl/YAFLnJ

EEX hires former Nasdaq commodities sales director
Global Investor Group
The European Energy Exchange has hired Claudia Gerotto from Nasdaq to grow its freight business
/jlne.ws/2F98t0e

Exchange Data Offers Clue to Solve ‘Flash Crash’ Mystery
Masaki Kondo – Bloomberg
Japanese retail accounts sold most lira contracts since August; They boosted net dollar long positions, exchange data show
Retail investors in Japan cut their net long positions in the Turkish lira on Thursday, according to data from a trading platform, offering a clue to the mystery behind the flash crash that sent the yen soaring against every currency in the world.
/jlne.ws/2RtsaWZ

SGX welcomes Yuanta Futures (HK) as Derivatives Trading Member
Press Release via Mondovisione
Singapore Exchange (SGX) today welcomed Yuanta Futures (HK) Co. Limited as a Trading Member of its derivatives market. Yuanta Futures (HK), established in 2012, is a wholly owned subsidiary of Taiwan’s Yuanta Financial Holdings Co. Limited.
/goo.gl/CnzZu9

ASX Monthly Activity Report – December 2018
ASX
/jlne.ws/2RuDNgb

SGX welcomes Yuanta Futures (HK) as Derivatives Trading Member
SGX
Singapore Exchange (SGX) today welcomed Yuanta Futures (HK) Co. Limited as a Trading Member of its derivatives market.
/jlne.ws/2RtfVKa

New year’s Message from Group CEO Kiyota
JPX
Here’s wishing you a happy new year. As JPX Group CEO, I would like to wish everyone health and success in 2019.
/jlne.ws/2RvD926

Fintech

Will Machine Learning Transform Finance?
Yale Insights
The virtual assistant on your smart speaker and smartphone draws on artificial intelligence; so do every Google search and every Netflix recommendation. And while the bulk of the investment in AI and machine learningóthe subset of AI in which computers look for patterns in large data setsóis coming from the tech sector, it is spilling into other areas. Deloitte points to growing use in manufacturing quality control, cybersecurity, customer service, risk management, and sales optimization.
/jlne.ws/2F9baim

Former Cinnober deputy CEO sets up consultancy
Louisa Chender – Global Investor Group
Per-Anders Bedman establishes Stockholm-based consultancy after 17 years at Cinnober
/jlne.ws/2F8bAoX

Design “blindspot” hampering innovation, says ex-Citi head of design
bobsguide
Financial services are struggling with a customer blind spot that’s hampering innovation, says Steven Gates, head of design transformation at InVision, the company behind the design function of airbnb, Uber and Netflix.
“Innovation has become very happenstance and bogged down, because there’s not a real connection back to what your consumer wants,” says Gates, who was previously the global design lead at Citi, the first position of its kind in the bank’s 206 year history.
/jlne.ws/2F6hK93

AWS News – December Round Up
Rhythmic Technologies Blog
With the endless flood of new products, features and changes from AWS and its surrounding ecosystem, it can be easy to miss an update. Our monthly round up highlights major announcements, product updates and behind the scenes changes we think are most relevant.
/jlne.ws/2F6F5rh

Cryptocurrencies

PwC crypto lead expects “many more” big banks to enter market in 2019; PwC Hong Kong crypto lead expects more participants in the cryptocurrency space this year despite ongoing bear market and widespread regulatory concerns.
Jonathan Watkins – The Trade
The FinTech and crypto lead at PwC Hong Kong believes many more ‘big banks’ will enter the digital asset space in 2019, despite the continuing bear market and widespread regulatory concerns.
/jlne.ws/2Rwz3H5

Nearly 4 in 5 individual investors are still bullish on bitcoin
Aaron Hankin – Marketwatch
Battered and bruised, bitcoin investors aren’t throwing in the towel just yet.
That is according to data from DailyFX that shows nearly 80% of individual investors remain net invested, or long, in bitcoin ó the highest level since November 2018. All this despite the best-known cryptocurrency trading near its 16-month low below $4,000.
/goo.gl/RS6UAE

Paying Taxes in Bitcoin: Retailer Overstock Says It Will Pay Ohio Using Digital Money
Jeff John Roberts – Fortune
Once upon a time, people used livestock or bushels of wheat to pay their taxes. Today, we use checks, credit cards, online money andóstarting this year in OhioóBitcoin.
/jlne.ws/2Rtp0CB

Binance will have ‘at least one new token launch every month’ on its redesigned token platform
Larry Cermak – The Block Crypto
Binance, the largest cryptocurrency exchange, is relaunching its token sale platform Launchpad, the firm announced Thursday.
/jlne.ws/2Rtnf8u

The First Cryptocurrency to Use Mimblewimble Privacy Tech Is Now Live
Christine Kim – Coindesk
Today marks the debut of a new cryptocurrency, called Beam – one of two highly-anticipated privacy coins implemented with the so-called “mimblewimble” protocol.
/jlne.ws/2RB9tk2

Falling Crypto Prices Aren’t Stopping Real Blockchain Progress
Paul Brody – Coindesk
Plunging cryptocurrency values in 2018 and the collapse of the money-for-nothing white paper market in initial coin offerings (ICOs) took much of the focus last year for many people when it came to blockchain mindshare.
/jlne.ws/2RoOv8f

Politics

US national debt reaches a new high under Trump
Lydia DePillis – CNN Business
The US national debt stood at $21.974 trillion at the end of 2018, more than $2 trillion higher than when President Donald Trump took office, according to numbers released Thursday by the Treasury Department.
/jlne.ws/2RyWShe

The IRS might be closed, but your taxes are still due
Beth Pinsker – Reuters
The U.S. Internal Revenue Services is closed, thanks to the government shutdown, but your taxes are still due on April 15 and that is why individuals need to proceed through tax season as if nothing is amiss, experts say.
/jlne.ws/2RutKYz

German politicians targeted in cyber attack; Hack involving MPs from most parties described as one of country’s worst data leaks
Guy Chazan – FT
Hackers have leaked the personal data of hundreds of German politicians in what is being described as one of the country’s worst ever cyber attacks.
/jlne.ws/2RtorZv

The Courts Run Out of Cash Next Friday. Here’s What Happens Then
Erik Larson – Bloomberg
If U.S. government shutdown drags on, judges have to do triage; Businesses in system face uncertainty; Qualcomm goes to trial
Companies that turn to the federal courts to resolve fights with rivals and customers may find themselves in limbo if the government shutdown continues beyond next week.
/jlne.ws/2RxHEJx

Nancy Pelosi Elected Speaker as Democrats Take Control of House
Julie Hirschfeld Davis – NY Times
‘Ebullient Democrats assumed control of the House on Thursday and elected Representative Nancy Pelosi of California speaker, returning her to a historic distinction as the first woman to hold the post. They then moved to defy President Trump and passed bills that would open government agencies shuttered by an impasse over his insistence on funding for a border wall. Both measures are almost certain to die in the Senate.
/jlne.ws/2RtmrAu

Why Is Trump Spouting Russian Propaganda?; The president’s endorsement of the U.S.S.R.’s invasion of Afghanistan echoes a narrative promoted by Vladimir Putin
David Frum – The Atlantic
It was only one moment in a 90-minute stream of madness.
/jlne.ws/2Rx6c5n

Regulation

A balancing act: the case for macroprudential margin requirements
Cian O’Neill and Nicholas Vause – Bank Underground Blog
Certain policy actions require a high level of precision to be successful. In a recent paper, we find that using margins on derivative trades as a macroprudential tool would require such precision. Such a policy could force derivative users to hold more liquid assets. This would help them to meet larger margin calls and avoid fire-selling their derivatives, which could affect other market participants by moving prices. We find that perfect calibration of such a policy would completely eliminate this fire-sale externality and achieve the best possible outcome, while simple rules are almost as effective. However, calibration errors in any rule could amplify fire-sales and leave the financial system worse off than if there had been no policy at all.
/jlne.ws/2F4Wj8y

Ex-Credit Suisse bankers charged over $2bn Mozambique ‘tuna bond’ scandal; Country’s one-time finance minister also arrested in connection with indictment
Joseph Cotterill, Laura Noonan and Kadhim Shubber – FT
Three former Credit Suisse bankers have been charged by US prosecutors with alleged fraud and receiving kickbacks in connection with Mozambique’s $2bn “tuna bonds” hidden loans scandal.
/jlne.ws/2RxDbGG

One year on and none the wiser
Christian Vogt – Fidessa
MiFID has achieved the rare feat of becoming a genericized trademark. In the same way that Xerox stands for copy machines in general, MiFID has turned into a synonym for all financial markets regulation. With the scorecard for its first birthday due, whether MiFID II really is ground-breaking, or deserving remains debatable. However, there is no doubt about its voluminous size. And it is because of this unusual size that even one year on, we are none the wiser.
/jlne.ws/2RuxJ7y

ESMA updates its Q&As on MiFID II and MiFIR commodity derivatives topics
ESMA
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers on MiFID II and MiFIR commodity derivatives topics. These Q&As provide clarification on issues related to the MiFID II/MiFIR regime for commodity derivatives, including on position limits, position reporting and ancillary activity.
/jlne.ws/2RD9yUJ

ESMA updates its Q&As on MiFID II and MiFIR transparency topics
ESMA
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers regarding transparency issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).
/jlne.ws/2RxOBdB

Securities ArbitrationóShould You Hire an Attorney?
FINRA STAFF and PIABA Foundation
The vast majority of interactions between investors and investment professionals are positive. However, sometimes the relationship doesn’t go as planned, and the situation can’t be resolved by communicating directly with your firm or broker. In such a situation, you may find yourself considering arbitration or mediation.
/jlne.ws/2RA1lQQ

Investing and Trading

Odds of Fed rate cut in 2019 jump as growth outlook dims
Robin Wigglesworth – Financial Times
Investors are now pricing in a greater probability that the Federal Reserve will cut rates than raise them in 2019, highlighting the rising fears that the economic slowdown could deepen into an outright recession.
/jlne.ws/2FaIWU2

Factor strategies beyond a market peak
Marlies van Boven and Philip Lawlor – FTSE Russell Blog
After a stormy Q4 in 2018, investors are pondering fundamental questions about global markets.
As our global markets research team has previously noted, there are concerns that we are at, or past, the peak of the economic cycle. Investors are also questioning the impact of tightening US financial conditions on the financial system and are worried about potentially optimistic EPS valuations at this point in the cycle.
/jlne.ws/2FbgyS7

Here’s How Powell Regains Control of the Fed’s Narrative; He must re-establish the central bank as a source of market stability, not volatility.
Mohamed A. El-Erian – Bloomberg
Using words to influence people’s behavior ó technically known as policy guidance ó is key to the Federal Reserve’s ability to deliver on its dual mandate of maximum employment and stable prices. Yet the effectiveness of the central bank’s communications strategy has taken a hit in the last few weeks. Chair Jerome Powell has a golden opportunity on Friday to advance the process of regaining the narrative.
/jlne.ws/2RBbw7I

The Market’s Obstacles Are Both Macro and Micro; A double whammy leads market commentary.
Robert Burgess – Bloomberg
When Apple Inc. dropped a bomb after the official close of trading Wednesday that its revenue would fall short of estimates because of softness in China, many cynics snickered. Everyone knew China’s economy was slowing, so blaming the Asian nation for a setback was just a convenient excuse to mask a deteriorating business, like when retailers blame the weather for a slump in sales. Now, 24 hours later, Apple’s explanation looks a little more plausible in a distressing sign for equities, with the S&P 500 Index tumbling 2.48 percent Thursday.
/jlne.ws/2RBbtc2

Investors Punish U.S. Companies Vulnerable to China Slowdown
Esha Dey – Bloomberg
Apple warning on sales abroad not limited to iPhone maker; Auto parts supplier, chipmakers and multinationals suffer
In the wake of Apple Inc.’s revenue warning, investors are finding that exposure to China is not all it’s cracked up to be.
/jlne.ws/2RyarxI

Aggressive Change in Market’s Fed Outlook Drives Inversions in Yield Curve
Emily Barrett – Bloomberg
Spread between 3-month and 5-year yields turns negative; Inversion between these maturities is first since 2008
The bond market’s aggressive overhaul of its outlook for Federal Reserve policy is creating kinks in the front end of the Treasury yield curve.
/jlne.ws/2RuC0Yv

Jerome Powell Pledged Allegiance to Data and Some of It Looks Grim
Jeanna Smialek – Bloomberg
Fed Chair to make first public remarks Friday since Dec. 19l; Some real economy and market metrics have soured in past weeks
Jerome Powell gave the U.S. economy a thumbs-up review last month. Since then, the Federal Reserve chairman has received several reasons to temper his assessment.
/jlne.ws/2RrBvPb

Last Month, Investors Seemed Too Pessimistic. Now, They Seem Prescient.
Peter Eavis and Binyamin Appelbaum – NY Times
Maybe the markets were not overreacting. With the United States economy posting solid numbers last year, the alarming signals coming out of stock and bond markets seemed out of whack with the real world. President Trump’s bellicose trade actions were a concern, but hiring was strong and corporate earnings were surging.
/jlne.ws/2RrzhiN

Institutions

Audits reveal Deutsche Bank’s links to tax trade scandal
John O’Donnell, Tom Sims – Reuters
There are “lots of indications” that some managers discussed “the reputational risks” of Deutsche Bank’s involvement in a share-trading scheme that is the subject of Germany’s biggest post-war fraud investigation, according to a conclusion in one of five internal audits seen by Reuters.
/goo.gl/fwnXze

Lehman spinout profits from buying into buyout groups
Dyal Capital is leading name in new field of investing in other private equity groups
Javier Espinoza – FT
Following the collapse of Lehman Brothers a decade ago Michael Rees and Sean Ward, former executives at the defunct investment bank, wondered what to do next.
/jlne.ws/2RqJP1B

Former Barclays bosses face London trial over Qatari cash call
Kirstin Ridley – Reuters
The most senior bankers to face criminal charges in Britain over conduct during the financial crisis will appear before a London jury next week in a trial that will test the mettle of the Serious Fraud Office.
/jlne.ws/2RzXoM0

How This Fidelity Fund Earned Healthy Returns in an Ailing Market; The Fidelity Select Medical Technology and Devices Portfolio bested its peers in 2018 with returns of 16 percent.
Matthew A. Winkler – Bloomberg
As 2018 came to an end, most investors were recoiling from the worst stock market in 10 years, with every benchmark bleeding losses and confusing even the most stalwart money managers. Except Eddie Yoon.
/jlne.ws/2RutMzK

Hedge-Fund Bear Crispin Odey Gains 53% in a Bleak Year for Rivals
Nishant Kumar – Bloomberg
Hedge-fund contrarian Crispin Odey’s bearish bets finally paid off as the stock-market selloff he had long predicted kicked in.
/jlne.ws/2RuSEap

Lehman spinout profits from buying into buyout groups; Dyal Capital is leading name in new field of investing in other private equity groups
Javier Espinoza – FT
Following the collapse of Lehman Brothers a decade ago Michael Rees and Sean Ward, former executives at the defunct investment bank, wondered what to do next.
/jlne.ws/2RqJP1B

Regions

China says will cut banks’ reserve requirements, taxes, as bad news piles up
Reuters
China will cut banks’ reserve requirement ratios (RRRs), taxes and fees, Premier Li Keqiang said on Friday, as the world’s second-largest economy shows further signs of cooling.
/goo.gl/KJMbTh

China Is Hunting for Foreign Buyers for Its Sovereign Debt
Tian Chen and Chris Anstey – Bloomberg
Spooked by a massive exodus of Chinese capital in 2015, the country’s policymakers hit on a plan to alleviate pressures on their currency. They could attract foreign cashóand boost demand for the yuanóby opening the doors to fixed income investors. Big overseas funds are always looking for ways to diversify and would likely want some exposure to China’s bond market, the third-largest in the world.
/jlne.ws/2F7uI6D

Renewables overtake coal as Germany’s main energy source
Reuters
Renewables overtook coal as Germany’s main source of energy for the first time last year, accounting for just over 40 percent of electricity production, research showed on Thursday.
/jlne.ws/2RtdPdg

Yen flash crash: what happened and why; Sudden move in Japanese currency has left traders and investors baffled and alarmed
Eva Szalay – FT
With 2019 barely begun, investors and traders in the $5.1tn-a-day foreign exchange market are trying to decipher a sudden and violent move in a series of currencies that unfolded early on Thursday in Asian trading.
/jlne.ws/2RyBXek

Didi Chuxing moves into financial services; Chinese ride-hailing app will use location data to determine credit-worthiness
Yuan Yang – FT
Didi Chuxing, the Chinese ride-hailing app, has branched out into financial services as new regulations threaten to cut the number of its drivers.
/jlne.ws/2RuKxux

PBOC Tweaks Liquidity Tap Again as China Growth Jitters Persist
Bloomberg News
RRR to drop 1 percentage point in two-step reduction; To release net 800 billion yuan ($116 billion) of liqudity
China’s central bank took a further step to secure liquidity to the slowing economy, amid investor jitters over the outlook and expectations that more easing moves are in the pipeline.
/jlne.ws/2Rto7tM

Italy Can’t Live Without Its ‘Naughty’ Bankers; The populists promised to stop giving money to banks and protect investors. But the plight of Carige shows this is pretty much impossible.
Ferdinando Giugliano – Bloomberg
Italy’s populist administration ended 2018 with a remarkable U-turn in its debut budget. The New Year has presented another awkward choice to the governing League and Five Star parties – this time on banks.
/jlne.ws/2RuJXgl

Europe suffers from the sorry state of its banks; The knot of sovereign and banking risk has yet to be cut while a unified sector remains a dream
Josef Ackermann – FT
Europe’s banking industry is in decline. This must be arrested and then reversed if the EU wants to remain a force to be reckoned with on the world stage amid unprecedented geopolitical volatility. To do so, it must become truly independent ó and a strong banking sector, particularly in the eurozone, is central to that ambition.
/jlne.ws/2RuDh1J

Brexit

U.K. Economy Under Pressure as Brexit Deadline Approaches
Jill Ward – Bloomberg
Reports show housing, lending and businesses all under strain; Government has yet to secure a deal on exiting the EU
The first week of the new year brought a slew of bleak reports for the U.K. economy, highlighting the scale of the challenges to come as Britain prepares to leave the European Union.
/jlne.ws/2RuT40t

Brexit threat to European sovereign bond sales; UK leaving EU without deal would jeopardise governments’ access to London banks
Kate Allen and Philip Stafford – FT
European governments risk a Brexit blow to their finances if the UK crashes out of the EU without a deal, an outcome that would jeopardise their access to the London-based banks that help sell their bonds.
/jlne.ws/2RyVFGI

Dublin says will not accept making Brexit backstop ineffective; ‘We need to know what UK wants,’ says Varadkar after brainstorming call with Merkel
Arthur Beesley and George Parker – FT
German chancellor Angela Merkel and Irish prime minister Leo Varadkar have held talks to “brainstorm” how they might help Theresa May pass her disputed Brexit treaty, although there is no sign of a breakthrough on the issue.
/jlne.ws/2RzVXx6

Miscellaneous

The quiet power of reading with your coworkers
Jessica Yuen – Quartz
The tech accelerator Y Combinator is known for producing forward-thinking companies like Airbnb and Dropbox, so when I sat down with a small group of successful startup founders at a panel the organization hosted last year, I was pleasantly surprised to learn that this innovative group all agreed on a classic learning tool: books.
/jlne.ws/2RuugG4

John Lothian Newsletter

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Past Newsletters

Cboe Exchange Puts Brakes on Bitcoin Futures Listing

Get a FREE 90 day trial of John Lothian Newsletter First ReadPardon our dust: Crypto markets still have some building to doJim Kharouf, JLNThe institutionalization of the crypto market is going to take some time - be patient.Panelists on the...

Bad Stuff the Market Worried About Is Starting to Happen; Tastytrade, Peak6 invest $10 million in new exchange

Jan 4, 2019

First Read

Hits & TakesBy JLN StaffOne takeaway from the CME’s second quarter earnings report yesterday: Average daily volume at the exchange through the first half of the year was 20.2 million. In 2000, ADV was just over 2.5 million.~JKB3, formerly BM&F Bovespa, posted a volume increase of 52 percent on 1.3 billion contracts for the first half of 2018. FOW noted that it topped the Intercontinental Exchange‘s volume, moving B3 into third in terms of volume behind top exchange, CME Group up 20 percent with 2.5 billion contracts and the National Stock Exchange of India, up 43 percent to 1.6 billion contracts.~JKDo you know who invented the “Ring The Bell” marketing event at the stock exchange? Equities.com points to a man named Enzo Villani, now a board member of a new crypto markets infrastructure firm called Alt 5 Sigma.~JKHere is a video of Blythe Masters and her CTO about the partnership between Google and Digital Asset from the Google Next ’18.~JJLThis July, NFA partnered with Six Flags Great America to offer staff discounted admission for the month. NFA auditors will be double checking for fake hand stamps and making sure rider harnesses are nice and tight.~JJL~JK++++Global Blockchain Company AlphaPoint Adds Industry Veteran Kristin Boggiano as Chief Legal Officer to Executive TeamAlphaPointAlphaPoint, a leading blockchain company focused on enabling institutions to launch, scale, and operate digital asset networks and exchanges all over the world, today announced the appointment of Kristin Boggiano as its Chief Legal Officer. In this role, Boggiano will oversee the company’s legal, regulatory, and government relations functions as well as contribute as a member of AlphaPoint’s executive team./jlne.ws/2LrzdNR**Kristin spoke at our MarketsWiki Education event in New York in 2016 about her trek through the jungles of Ecuador.~JK++++Kudlow says US GDP figure will be ‘big’; Top economic adviser says he has no specific knowledge but wanted to ‘help’Mamta Badkar – FTUS President Trump’s top economic adviser on Thursday told Fox Business that he expected Friday’s US GDP figure to be “big” but denied knowing the specifics, less than two months after Mr Trump’s tweet in advance of a jobs report drew fire./jlne.ws/2JZMcR2***** This is irresponsible.~JJL++++Trump Predicts Data Will Show U.S. Economy in ‘Terrific’ ShapeGreg Sullivan and Toluse Olorunnipa – BloombergBloomberg survey points to 4.2% expansion in second quarter; Data to be released at 8:30 a.m. in Washington on FridayPresident Donald Trump predicted data on Friday will show the U.S. economy is in “terrific” shape amid forecasts that growth topped 4 percent in the second quarter, the fastest since 2014./jlne.ws/2JXaZFj***** And so is this.~JJL++++Fake news of Napoleon’s death cited in guidance to help tradersHuw Jones – ReutersFake news that Napoleon had died is cited in new analysis aimed at helping commodity, bond and forex traders to stop fraud, an industry body said on Friday./jlne.ws/2mLvZWr***** Seems fake news, which we once called rumors, has been around a while.~JJL++++The Girl Scouts have gone from baking and sewing to cybersecurity and financial literacyMyelle Lansat and Richard Feloni – Business InsiderThe Girl Scouts is much more than selling cookies; it’s an organization that provides a foundation for young women to take leadership roles in society. And since Sylvia Acevedo was named CEO of Girl Scouts in 2017, it’s also teaching its members about STEM (science, technology, engineering, and math) — shifting the sole focus away from traditionally female tasks, like baking and sewing./goo.gl/kwHCjs***** In the name of fairness, some Girl Scout news.~JJL++++Thursday’s Top ThreeYesterday’s top stories were led by Bloomberg’s How Traders Have Changed Since the Massive Selloff Earlier This Year. Second was Equities.com’s From Exchanges Old To Exchanges New: Chicago Mercantile Exchange and Alt 5 Sigma about new crypto trading systems. Third went to Financefeeds’ FCA approves ION-Fidessa deal++++MarketsWiki Stats130,088,709 pages viewed; 23,215 pages; 214,399 editsMarketsWiki Statistics++++

Lead Stories

Up to Two-Thirds of Bitcoin Transactions Have No Economic ValueOlga Kharif – BloombergServices developing tools to add clarity to blockchain data; Value of activity about half of what appears, researcher saysOn any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency./jlne.ws/2K5LOAMBitcoin Drops as U.S. Rejects Winklevoss ETF for Cboe TradingTodd White – BloombergTechnical indicator also moves into bearish territory; Digital currency has declined after more than 30% July rallyBitcoin fell for a third day, slipping below $8,000, after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss./jlne.ws/2K14LEnFacebook’s $119 Billion One-Day Rout Makes U.S. HistorySophie Caronello – BloombergIt’s official. Facebook Inc. just had the biggest stock-market wipeout in American history. Shares tumbled 19 percent on Thursday to close at $176.26 after sales and user growth disappointed investors. The drop translates to a $119.4 billion decline in market capitalization, the largest-ever loss of value in one day for a U.S. traded company./jlne.ws/2JWxavvFINRA Announces Enforcement Structure, Senior Leadership Team; Integration of Enforcement Functions Complete; Unified Enforcement Program Key Outcome of FINRA360FINRAFINRA announced today the Department of Enforcement’s new structure and senior leadership team. This marks the completion of the final phase of the integration of FINRA’s enforcement functions—a process that began with the July 2017 promotion of Susan Schroeder to FINRA’s Head of Enforcement to create a unified enforcement function./jlne.ws/2K02VDGTwitter Shares Plunge 17% as Monthly Users DeclineSelina Wang – BloombergCompany reports 1 million fewer visitors from previous quarter; Revenue climbs to $711 million, topping analyst’ projectionsTwitter Inc. said monthly users dropped by 1 million in the second quarter, and predicted that number will decline further as the company continues to fight against spam, fake accounts and malicious rhetoric on its social network. The shares plunged 17 percent in early trading./jlne.ws/2JWSiBOHedge Fund Titans Who Bet Big on India Now Say They Were ScammedOlivia Carville, Anto Antony, and Jeanette Rodrigues – BloombergAxon Capital, CIFF say they are victims of a massive fraud; Dispute is playing out in courts in India and MauritiusThe $1.5 billion India wager that went horribly wrong for some of the world’s biggest hedge funds began with a tantalizing offer./jlne.ws/2K0v9hOJuncker’s Trade Pitch to Trump: ‘I Can Be Stupid, as Well’; How bravado, flip cards and a White House ally helped European official sell U.S. president on trade detenteValentina Pop and Vivian Salama – WSJWhen Jean-Claude Juncker arrived at the White House on Wednesday, he had no idea how the meeting with President Donald Trump would end./jlne.ws/2K01wNFHigh speed trader Virtu’s profits miss the markNicole Bullock – FTVirtu Financial, the high speed trader, reported adjusted net income of $59.6m in the second quarter below Wall Street expectations amid a “markedly worse” operating environment, the company said./jlne.ws/2LunLRp‘F’ Is For? This ETF Is Named After FANGs and Holds No FacebookCarolina Wilson and Sarah Frier – BloombergFund, known by ticker FNG, sold out of Facebook during scandal; Earlier, ETF had dumped Apple holdings ahead of earnings boost. What’s in a name? When hearing the acronym FANG, four technology stocks come to mind: Facebook Inc., Amazon.com. Inc., Netflix Inc., and Alphabet Inc.’s Google./jlne.ws/2JXeQ5fSeveral banks dismissed from U.S. metals price-fixing lawsuitsJonathan Stempel – ReutersA U.S. judge has dismissed five large banks from two antitrust lawsuits by investors alleging multi-year conspiracies to rig prices for hundreds of billions of dollars of transactions in the global silver and gold markets./jlne.ws/2JWBVFnFyre Festival Promoter Pleads Guilty to Ticket-Scam ChargesBob Van Voris – BloombergBilly McFarland, the architect of the failed 2017 Fyre Festival, pleaded guilty to new charges that he ran a fraudulent ticket business while on bail facing earlier fraud charges connected to the disastrous luxury concert series in the Bahamas./jlne.ws/2K0AoOwFannie Mae Debt Sale Sets Milestone For New Borrowing Benchmark; New index taking aim at scandal-ridden Libor passes $6 billion test.Vipal Monga and Daniel Kruger – WSJA benchmark lending rate that regulators and investors hope can replace the scandal-plagued Libor as the foundation for trillions of dollars of debt from credit cards to business loans easily passed a key test./jlne.ws/2JYY9GR

Exchanges, OTC and Clearing

CME to launch six gasoline futures contractsReuters StaffCME Group says it plans to launch six gasoline futures contracts effective on Aug. 26 and for trading from Aug. 27/jlne.ws/2K0xN7eCME Group Achieves International Average Daily Volume of 4.2 Million Contracts in Q2 2018, Up 13 Percent from Q2 2017CME GroupCME Group, the world’s leading and most diverse derivatives marketplace, today announced that it achieved quarterly international (defined as outside of the US) average daily volume (ADV) of 4.2 million contracts during the second quarter of 2018, up 13 percent over the same period last year./jlne.ws/2K07pdJCME profits miss despite bump in trading volumes; Concerns around global protectionism sparked higher trade, particularly in agricultural productsJoe Rennison – FTCME Group, the world’s largest futures exchange, today reported mixed earnings, tempered by trade concerns fuelling volumes as investors sought to protect against price fluctuations./jlne.ws/2K1xgSmCME quarterly earnings boosted by volumes, market dataJohn McCrank – ReutersCME Group Inc (CME.O), the world’s largest futures exchange operator, said on Thursday its second-quarter earnings rose on the back of higher trading volumes and market data fees, as it works toward the close of its $5.5 billion acquisition of NEX Group (NXGN.L)./jlne.ws/2K5ifiuMGEX Reports 25th Best Electronic Volume DayMGEXMGEX, a Designated Contract Market (DCM) and DerivativesClearing Organization (DCO), reports July 25th as the fourth July date on the Daily Electronic Volume’s top 25 records list. Coming in at 19,396 contracts and beating out the previous title holder by 160 contracts, yesterday’s electronic volume now occupies the 25th-best overall spot./jlne.ws/2K0yeP4While the ECB holds on to its monetary policy, why not visit the home of the euro yield curve?EurexThe European Central Bank has decided to keep its monetary policy unchanged and freeze its benchmark interest rate on the deposit facility at -0.40 per cent. This is again a good opportunity to take a closer look at what Eurex interest rate derivatives have to offer./jlne.ws/2LqwSCwExchange Publishes CG Code Consultation Conclusions and Guidance for Boards and DirectorsHKEXProposed changes to CG Code and related Listing Rules receive strong support; Amendments to CG Code and related Listing Rules to take effect 1 January 2019; Exchange publishes “Guidance for Boards and Directors” to help directors to be more effectiveThe Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), published today (Friday) conclusions from its consultation on its Corporate Governance Code (CG Code) and related Listing Rules (Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules, or Consultation Conclusions)1 along with “Guidance for Boards and Directors”./jlne.ws/2LuV7iW

Fintech

FIA Announces Partnership With Rise New York, Created By Barclays, To Promote Innovators PavilionPress ReleaseFIA today announced that Rise New York, created by Barclays, has joined the FIA Innovators Pavilion as a community partner. Rise New York will help FIA promote the Innovators Pavilion, FIA’s annual fintech showcase. Now in its fourth year, the Innovators Pavilion is part of FIA Expo, the world’s largest gathering of professionals in the derivatives markets. This year’s FIA Expo will take place in Chicago on Oct. 16-18.bit.ly/2vbiG5HGoodbye HipChat: Slack and Atlassian Team Up on Chat Software; Stewart Butterfield’s startup will subsume Atlassian’s corporate chat tools to take on Microsoft.Dina Bass and Ellen Huet – BloombergAtlassian Corp. is selling its corporate chat software to rival Slack Technologies Inc. and taking a small stake in the startup, as they face greater competition from Microsoft Corp./jlne.ws/2JYY3isFortnite Mania Fuels Epic Growth to $8.5 Billion; Epic Games’ profits on the game have made “legendary character” Tim Sweeney a billionaire.Devon Pendleton, Christopher Palmeri – BloombergTim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: He gave it away. That strategy has made him a billionaire. In an industry chock-a-block with monster hits, such as Candy Crush and Pokemon Go, Fortnite’s popularity isn’t surprising. Its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people./jlne.ws/2LoVcF5Schroders CEO: fintech is the ‘greatest opportunity we face’Mark Cobley – Financial NewsPeter Harrison, the boss of one of the UK’s largest asset managers, has said innovations in financial technology are the “single biggest opportunity” for his industry right now — as his firm Schroders steps up its efforts to build links with fintech entrepreneurs.Speaking as the fund manager reported its first-half results on July 26, Harrison told Financial News the “really interesting step-change for our industry will come from technological innovation”. He added: “We are working with 25 or 26 fintechs across the business, across a whole range of different things — I see this as the single biggest opportunity we face.”bit.ly/2v5pTnECySEC to Establish FinTech Innovation Hub with Focus on BlockchainDavid Kimberley – Finance MagnatesRegulatory financial technology (FinTech) initiatives have been springing up across the globe over the past few years. This Friday, the main Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC), announced that it would also be creating an innovation hub.bit.ly/2vaVB2ZAlexa, What’s Wall Street Saying About Amazon’s Earnings Beat?Joe Easton and Jeran Wittenstein – BloombergShares up 4 percent pre-market amid cloud, advertising boost; Goldman Sachs, others raise price targets for the stockAmazon.com Inc.’s record second-quarter profit drew a flurry of price target boosts on Wall Street. Analysts say strength in the cloud and advertising business, as well as operational improvements, have positioned the company for long-term growth. The shares rose 4 percent in pre-market trading in New York and are on track to open at a record high./jlne.ws/2K1e4nNThomson Reuters unit to be renamed Refinitiv after Blackstone dealReuters StaffThomson Reuters Corp’s (TRI.TO) Financial and Risk unit, in which U.S. private equity firm Blackstone Group (BX.N) is buying a majority stake, will be renamed Refinitiv once the deal closes, the company said in a statement on Friday./jlne.ws/2LptpnM

Cryptocurrencies

The Winklevoss Twins Want To Sell You A Bitcoin Fund; The Winklevoss twins filed a form with the SEC that’s the first step to selling shares in a fund that would track the price of Bitcoin. A look at the next move for the Facebook-suing twins.Matthew Zeitlin – BuzzFeed NewsTyler and Cameron Winklevoss, impossibly strong-jawed and broad-shouldered rowers, tech entrepreneurs, and famous litigators of Mark Zuckerberg, are now two of the biggest and most famous players in Bitcoin, the cryptographic, digital currency whose wild price gyrations and security issues captivated the business press for a few weeks in March and April of this year. In April, the twins revealed to The New York Times that they owned some $11 million worth of Bitcoin./jlne.ws/2K14a5XWinklevoss-Backed Bid for Bitcoin-ETF Rejected by RegulatorsBenjamin Bain – BloombergCryptocurrency declines after SEC announces its decision; Agency raises concern about oversight of Bitcoin’s spot marketBitcoin fell after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss, showing the regulator remains skeptical that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses./jlne.ws/2K1syEaBrock Pierce: The Hippie King of CryptocurrencyNeil Strauss – Rolling StoneTwenty-six men and women are seated along four folding tables laid end to end in the ballroom of a former Masonic lodge in Old San Juan, Puerto Rico. An eclectic mix, ranging from local charity workers to Silicon Valley investors to cryptocurrency early adopters, they all believe that they’re about to make history. Specifically, they are here to help Brock Pierce – a child actor turned video-game entrepreneur turned crypto titan – give away a billion dollars to charity. Not in a will after his death, but now, in the prime of his life and the peak of his career, at age 37./rol.st/2v8YBwBBitcoin $500,000 Creates a Buzz, But Technicals Point to RallyOlivia Schaber – BloombergHedge fund manager predicts correction, then massive rally; Directional index shows biggest divergence since last year=Comments from Morgan Creek Capital Management hedge fund manager Mark Yusko that Bitcoin could reach $500,000 in six years are heartening battered crypto bulls. They may be better served taking a look at some underlying technicals in the meantime./jlne.ws/2K5gIJgCrypto Futures Expansion Won’t Happen Soon, CME’s Duffy SaysBrian Louis – BloombergExchange head reiterates cautious approach to other contracts; Rival Cboe has hinted at wanting to expand crypto derivatives=CME Group Inc. Chief Executive Officer Terry Duffy said that in his nearly four decades in trading, Bitcoin futures “might have been the most controversial launch of a product” and he reiterated the company’s not in a hurry to list more cryptocurrency-related contracts./jlne.ws/2K1Qdo9The World’s Dominant Crypto-Mining Company Wants to Own AI; In a rare interview, Bitmain’s Jihan Wu talks about his plans to take on Nvidia, Intel, and AMD.Max Chafkin and David Ramli – BloombergEven by the standards of Bitcoin, things are crazy in China. As the boom in cryptocurrencies has become the biggest speculative bubble in recorded history, a single company in Beijing’s Haidian District has been selling the chips that generate as much as 80 percent of the world’s cryptocoins. “We feel lucky,” says Jihan Wu, the co-chief executive of Bitmain Technologies Ltd., which was more or less unknown two years ago and, according to Wu, booked revenue of $3.5 billion in 2017. (On June 4, a Bitmain spokesman said Wu misspoke and the actual figure was $2.5 billion.)/jlne.ws/2K1LT8jCrypto Coin Tether Defies Logic on Kraken’s Market, Raising Red FlagsMatthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – BloombergIn the traditional world of securities exchanges, it would be akin to defying gravity. But at Kraken, one of the most popular venues for trading cryptocurrencies, a coin called Tether does it again and again./jlne.ws/2KjhdViSelf-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action byDelegated Authority and Disapproving a Proposed Rule Change, as Modified by AmendmentsNo. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin TrustSEC/jlne.ws/2K1BbP9As Crypto Meets Prediction Markets, Regulators Take NoticeMatthew Leising – BloombergThe next confrontation between government regulators and a blockchain startup appears set to ensnare a prediction market platform that goes by the name Augur./jlne.ws/2K0zFNiMike Novogratz’s Crypto Firm Lost $134 Million in the First QuarterDoug Alexander – BloombergCrypto-focused merchant bank releases first financial results; Quarterly losses led by trading digital assets, investmentsGalaxy Digital LP, the crypto-focused merchant bank founded by Mike Novogratz, posted a $134 million loss in its first quarter, when the value of Bitcoin and other cryptocurrencies plunged./jlne.ws/2K0dYwN

Politics

Butina Sought a Secret Kremlin Line to the U.S. A Rockefeller May Have HelpedPolly Mosendz , Greg Farrell , and Ilya Arkhipov – BloombergO’Neill hosted 2017 dinner for prayer-breakfast delegates; A Russian-language guide to Rohrabacher and other guestsA scion of the Rockefeller clan, George D. O’Neill Jr., was one of the U.S. conservatives who allegedly helped Mariia Butina’s efforts to build a secret line of communication back to the Kremlin, judging by details in recent U.S. filings./jlne.ws/2JZwAgDMueller Examining Trump’s Tweets in Wide-Ranging Obstruction InquiryMichael S. Schmidt and Maggie Haberman – NY TimesFor years, President Trump has used Twitter as his go-to public relations weapon, mounting a barrage of attacks on celebrities and then political rivals even after advisers warned he could be creating legal problems for himself./jlne.ws/2K07PRfSteve Bannon’s plot for the downfall of old Europe; The next EU parliament elections are a chance to defeat the far-rightFTAs an architect of Donald Trump’s 2016 presidential election victory, Steve Bannon knows a thing or two about unconventional political warfare. Now the godfather of the US alt-right is gearing for combat in Europe. His arena is the campaign for the next European Parliament elections, scheduled for May 23-26 2019. His chosen weapons, as in the US, are set to be the stoking of social tensions, economic nationalism, incitement of public anger at elites, systematic attempts to discredit reasoned argument and the spread of misinformation./jlne.ws/2K5jAWy

Regulation

U.S. regulator stands by decision to block Winklevoss bitcoin ETFTrevor Hunnicutt, Michelle Price – ReutersThe U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation./jlne.ws/2K06iuzFinTech Regulation Bridges Silicon Valley and Washington D.C.Stephanie MacConnell – ForbesThe FinTech community is closely watching the latest developments within the Consumer Financial Protection Bureau (CFPB). Recently, Kathy Kraninger was nominated as Director of the CFPB and, if confirmed, she will succeed acting Director Mike Mulvaney, who previously attacked the Bureau’s very existence and has worked to change policies and cut budget since taking the helm in November 2017./jlne.ws/2JZzO3JThe regulator is looking at platforms and so should youTaha Lokhandwala – InvestorsChronicleThe Financial Conduct Authority (FCA), the financial services regulator, is investigating whether investment platforms are competitive and work in the interests of investors. It has recently published an interim report on its Investment Platforms Market Study, which has highlighted a number of areas of concern, including the difficulties in switching platforms and the poor rates of interest they offer on cash./jlne.ws/2K0xM3kCFTC Chairman Giancarlo To Keynote The West Texas LegislativeCFTC/jlne.ws/2K1aXMDPodcast: CFTC Talks EP053: MARK YALLOP FMSB Part TwoCFTCThis week on CFTC Talks, we speak with Mark Yallop, chair of the Fixed Income, Currencies and Commodities Markets Standards Board. We cover the enormous cost to the world financial system of bad behavior, how to historically break down market misconduct into 7 categories and why trust is the heart of the financial markets./jlne.ws/2K1qLz8Nordic Credit Rating AS registered as Credit Rating AgencyESMAThe EFTA Surveillance Authority (EFTA SA) has registered today the Nordic Credit Rating AS (NCR) as a credit rating agency under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (the CRA Regulation), as incorporated into the Agreement on the European Economic Area (EEA Agreement). This decision comes into effect on 3 August 2018. NCR is based in Oslo, Norway, with a branch in Stockholm, Sweden. NRC intends to issue corporate ratings./jlne.ws/2mMeNQzFCA proposes changes to rules for crowdfunding platformsFCAFollowing a post-implementation review of its crowdfunding rules, the Financial Conduct Authority (FCA) is opening a consultation on new rules for loan-based crowdfunding platforms./jlne.ws/2mSFeo5

Investing and Trading

Is the Key to Beating the Market Written in the Stars?; Henry Weingarten invests his clients’ money by charting the movement of heavenly bodies.Simon van Zuylen-Wood – BloombergIt’s 11 a.m. at the Princeton Club in Midtown Manhattan. A number of financial professionals have gathered here for the “AFund June 2018 Natural Resources Investment Symposium.” Our first speaker is HSBC’s chief precious metals analyst, the aptly named James Steel, who promotes gold as a hedge against populist upheaval. After Steel, there are slideshows from several mining companies seeking investors. After that, lunch. A generic networking event, by all appearances./jlne.ws/2K1DDVRECB Keeps to Policy Path to End Bond PurchasesCarolynn Look – BloombergMario Draghi holds media briefing at 2:30 p.m. in Frankfurt; President will be quizzed on economic risks as QE exit nearsThe European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid./jlne.ws/2K0B2LOU.S. domestic stock funds report more demand than peers abroad: LipperJames Thorne – ReutersInvestors in U.S. funds traded international equities for domestic stocks during the latest week as earnings beat expectations while trade tensions simmered, Lipper data showed on Thursday./jlne.ws/2K1vfFMWall Street faces up to “bombshell guidance” at FacebookJamie PowellFacebook’s second-quarter results — which prompted the company’s shares to plunge as much as 24 per cent (!!) overnight — was the first time the surveillance-capitalism machine’s revenue growth had missed expectations since 2015./jlne.ws/2K5QE0UIt’s All About Social Media Contagion, Not FAANGs: Taking StockArie Shapira – BloombergStock futures are holding on to their slight gains thanks to Amazon decoupling from most of its FAANG peers, though momentum gets hit from another whiff from a social media bellwether as Twitter plunges ~16% on weak monthly active user numbers./jlne.ws/2K5lDKe

Institutions

What Does a Bank Meltdown Cost? Not Much, Actually; Sabadell hasn’t suffered enough from the fiasco at Britain’s TSB.Edward Evans – BloombergIt was a spectacular fiasco, made even worse by the clumsy way in which it was handled. TSB Banking Group Plc’s attempt in April to transfer the records of its 5 million customers to a new IT system left about a million of them unable to access their accounts and vulnerable to fraud. At first, TSB said things were running smoothly. It makes you wonder what their idea of chaos is./jlne.ws/2JWQvN6A $14 Billion Fund Manager Feels ‘Vindicated’ by Facebook PlungeOlivia Carville and Emily Chasan – BloombergJohn Streur, an investor who sold his fund’s Facebook Inc. holding after the Cambridge Analytica privacy scandal, said he felt “vindicated” watching the social media giant’s free-fall Thursday./jlne.ws/2JWSUaAHere’s How ETFs With Biggest Facebook Exposure Traded TodayElena Popina , Sarah Ponczek , and Carolina Wilson – BloombergA six-week old Communication Services Select Sector SPDR Fund just had its worst day ever. A rout in Facebook Inc. is to blame for that./jlne.ws/2K5PBy0UBS to review misconduct policies after rape claim; Woman alleged she was assaulted by a more senior bank employeeLaura Noonan in New York – FTUBS is reviewing how it handles sexual misconduct allegations after an employee who claimed she was raped by a colleague contacted the head of its investment bank, Andrea Orcel, to complain about how the bank dealt with her case./jlne.ws/2JZQGHmUBS Is Cutting Dozens of Staff in Wealth-Management RevampEmily Chasan and Sonali Basak – Bloomberg16.18CHF+0.18+1.16%UBS Group AG is laying off dozens of staff at its wealth-management division as it revamps the unit’s leadership team, according to people briefed on the matter./jlne.ws/2K1BjhwThe $5 Trillion Question: How Did the Firm That Pioneered ETFs Lose Its Lead?; State Street developed a hit investment product 25 years ago. Then more-focused rivals came along with better marketing and lower costs. Now the trust bank is No. 3 in the market it started.Asjylyn Loder – WSJFor State Street Corp. STT -0.32% , the company that pioneered the $5 trillion exchange-traded fund industry, it’s been a long way down./jlne.ws/2JZIqr5

Regions

Why Is China’s Currency Falling?; Worries about competitive devaluation are almost certainly misplaced.Christopher Balding – BloombergSince April, the yuan has fallen by almost 8 percent against the U.S. dollar. This has led many analysts and politicians to speculate that China is intentionally trying to devalue its currency to offset the effect of President Donald Trump’s tariffs. It almost certainly isn’t./jlne.ws/2K1K2QZHey Buddy, Can You Spare 2 Million for Coffee?Vivianne Rodrigues – BloombergONE. MILLION. PERCENT. That’s how high inflation will climb in Venezuela by year’s end, according to the latest forecast by the International Monetary Fund./jlne.ws/2JYUKryChina should really start to worry about Trump; As Europe wins a reprieve over trade the portents for Beijing have commensurately darkenedEdward Luce- FTIt was Wednesday so Europe went from being a “foe” of America to a “great friend”. Next Monday might be different. Perhaps Europe will still be in Donald Trump’s good books. The only person who can say for sure is Mr Trump. Even he probably has little idea. But my hunch is that the ceasefire he struck with Jean-Claude Juncker, president of the European Commission, will hold. Mr Trump loves applause and the last-minute trade agreement with Brussels earned a transatlantic ovation. Europe has won a reprieve. The portents for China have commensurately darkened./jlne.ws/2K5RWZOMizuho Eyes $11 Trillion Held by Japan’s Rich ElderlyGareth Allan and Yuki Hagiwara – BloombergBank began offering tailor-made trusts for wealthy retirees; Also expanding consulting for Japan pension funds, CEO saysMizuho Financial Group Inc.’s trust banking arm has its sights set on exactly where the wealth is in Japan: the $11 trillion held by the nation’s elderly./jlne.ws/2JZS8tiRussia Extends Rate Pause as Risks to Inflation Halt EasingOlga Tanas and Anna Andrianova – BloombergBenchmark kept at 7.25% for third meeting, in line with survey; Central bank stays just a step short of level deemed ‘neutral’Russia’s central bank kept interest rates unchanged for a third consecutive meeting and warned that external risks and the highest inflation expectations in almost a year mean monetary easing probably won’t resume until 2019./jlne.ws/2K1O0cf

Brexit

U.K.’s Brexit Options Narrow as Perilous Choices Loom for MayTim Ros , Emma Ross-Thomas, and Jess Shankleman – BloombergBarnier rejects compromise at heart of May’s Brexit strategy; Chances of no-deal exit, another election creep higherThe U.K.’s Brexit options are narrowing, and most of the choices are hazardous for Prime Minister Theresa May./jlne.ws/2K0YwR5Major French Tech Company’s CEO Fears Effects of Hard BrexitGiles Turner and Mark Barton – BloombergCapgemini SE Chief Executive Officer Paul Hermelin is predicting a hard Brexit will cause a knock-on effect to its British clients, potentially weakening demand./jlne.ws/2JYXmpn

Miscellaneous

‘Disappeared’ U.S. Records on Detained Migrant Kids Sparks ProbeErik Larson – ReutersClaims by a U.S. ethics watchdog that the Department of Homeland Security and other agencies may have lost or destroyed files relating to the separation of migrant children at the border have triggered a government probe into the proper retention of records./jlne.ws/2K01vJm*****Unforgivable.~JJL

John Lothian Newsletter

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Past Newsletters

Cboe Exchange Puts Brakes on Bitcoin Futures Listing

Get a FREE 90 day trial of John Lothian Newsletter First ReadPardon our dust: Crypto markets still have some building to doJim Kharouf, JLNThe institutionalization of the crypto market is going to take some time - be patient.Panelists on the...

Bad Stuff the Market Worried About Is Starting to Happen; Tastytrade, Peak6 invest $10 million in new exchange

Jan 4, 2019

First Read

Hits & Takes
By JLN StaffOne takeaway from the CME’s second quarter earnings report yesterday: Average daily volume at the exchange through the first half of the year was 20.2 million. In 2000, ADV was just over 2.5 million.~JKB3, formerly BM&F Bovespa, posted a volume increase of 52 percent on 1.3 billion contracts for the first half of 2018. FOW noted that it topped the Intercontinental Exchange‘s volume, moving B3 into third in terms of volume behind top exchange, CME Group up 20 percent with 2.5 billion contracts and the National Stock Exchange of India, up 43 percent to 1.6 billion contracts.~JKDo you know who invented the “Ring The Bell” marketing event at the stock exchange? Equities.com points to a man named Enzo Villani, now a board member of a new crypto markets infrastructure firm called Alt 5 Sigma.~JKHere is a video of Blythe Masters and her CTO about the partnership between Google and Digital Asset from the Google Next ’18.~JJLThis July, NFA partnered with Six Flags Great America to offer staff discounted admission for the month. NFA auditors will be double checking for fake hand stamps and making sure rider harnesses are nice and tight.~JJL~JK++++Global Blockchain Company AlphaPoint Adds Industry Veteran Kristin Boggiano as Chief Legal Officer to Executive Team
AlphaPoint
AlphaPoint, a leading blockchain company focused on enabling institutions to launch, scale, and operate digital asset networks and exchanges all over the world, today announced the appointment of Kristin Boggiano as its Chief Legal Officer. In this role, Boggiano will oversee the company’s legal, regulatory, and government relations functions as well as contribute as a member of AlphaPoint’s executive team.
/jlne.ws/2LrzdNR**Kristin spoke at our MarketsWiki Education event in New York in 2016 about her trek through the jungles of Ecuador.~JK++++Kudlow says US GDP figure will be ‘big’; Top economic adviser says he has no specific knowledge but wanted to ‘help’
Mamta Badkar – FT
US President Trump’s top economic adviser on Thursday told Fox Business that he expected Friday’s US GDP figure to be “big” but denied knowing the specifics, less than two months after Mr Trump’s tweet in advance of a jobs report drew fire.
/jlne.ws/2JZMcR2***** This is irresponsible.~JJL++++Trump Predicts Data Will Show U.S. Economy in ‘Terrific’ Shape
Greg Sullivan and Toluse Olorunnipa – Bloomberg
Bloomberg survey points to 4.2% expansion in second quarter; Data to be released at 8:30 a.m. in Washington on Friday
President Donald Trump predicted data on Friday will show the U.S. economy is in “terrific” shape amid forecasts that growth topped 4 percent in the second quarter, the fastest since 2014.
/jlne.ws/2JXaZFj***** And so is this.~JJL++++Fake news of Napoleon’s death cited in guidance to help traders
Huw Jones – Reuters
Fake news that Napoleon had died is cited in new analysis aimed at helping commodity, bond and forex traders to stop fraud, an industry body said on Friday.
/jlne.ws/2mLvZWr***** Seems fake news, which we once called rumors, has been around a while.~JJL++++The Girl Scouts have gone from baking and sewing to cybersecurity and financial literacy
Myelle Lansat and Richard Feloni – Business Insider
The Girl Scouts is much more than selling cookies; it’s an organization that provides a foundation for young women to take leadership roles in society. And since Sylvia Acevedo was named CEO of Girl Scouts in 2017, it’s also teaching its members about STEM (science, technology, engineering, and math) — shifting the sole focus away from traditionally female tasks, like baking and sewing.
/goo.gl/kwHCjs***** In the name of fairness, some Girl Scout news.~JJL++++Thursday’s Top Three
Yesterday’s top stories were led by Bloomberg’s How Traders Have Changed Since the Massive Selloff Earlier This Year. Second was Equities.com’s From Exchanges Old To Exchanges New: Chicago Mercantile Exchange and Alt 5 Sigma about new crypto trading systems. Third went to Financefeeds’ FCA approves ION-Fidessa deal++++MarketsWiki Stats
130,088,709 pages viewed; 23,215 pages; 214,399 edits
MarketsWiki Statistics++++

Lead Stories

Up to Two-Thirds of Bitcoin Transactions Have No Economic Value
Olga Kharif – Bloomberg
Services developing tools to add clarity to blockchain data; Value of activity about half of what appears, researcher says
On any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency.
/jlne.ws/2K5LOAMBitcoin Drops as U.S. Rejects Winklevoss ETF for Cboe Trading
Todd White – Bloomberg
Technical indicator also moves into bearish territory; Digital currency has declined after more than 30% July rally
Bitcoin fell for a third day, slipping below $8,000, after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss.
/jlne.ws/2K14LEnFacebook’s $119 Billion One-Day Rout Makes U.S. History
Sophie Caronello – Bloomberg
It’s official. Facebook Inc. just had the biggest stock-market wipeout in American history. Shares tumbled 19 percent on Thursday to close at $176.26 after sales and user growth disappointed investors. The drop translates to a $119.4 billion decline in market capitalization, the largest-ever loss of value in one day for a U.S. traded company.
/jlne.ws/2JWxavvFINRA Announces Enforcement Structure, Senior Leadership Team; Integration of Enforcement Functions Complete; Unified Enforcement Program Key Outcome of FINRA360
FINRA
FINRA announced today the Department of Enforcement’s new structure and senior leadership team. This marks the completion of the final phase of the integration of FINRA’s enforcement functions—a process that began with the July 2017 promotion of Susan Schroeder to FINRA’s Head of Enforcement to create a unified enforcement function.
/jlne.ws/2K02VDGTwitter Shares Plunge 17% as Monthly Users Decline
Selina Wang – Bloomberg
Company reports 1 million fewer visitors from previous quarter; Revenue climbs to $711 million, topping analyst’ projections
Twitter Inc. said monthly users dropped by 1 million in the second quarter, and predicted that number will decline further as the company continues to fight against spam, fake accounts and malicious rhetoric on its social network. The shares plunged 17 percent in early trading.
/jlne.ws/2JWSiBOHedge Fund Titans Who Bet Big on India Now Say They Were Scammed
Olivia Carville, Anto Antony, and Jeanette Rodrigues – Bloomberg
Axon Capital, CIFF say they are victims of a massive fraud; Dispute is playing out in courts in India and Mauritius
The $1.5 billion India wager that went horribly wrong for some of the world’s biggest hedge funds began with a tantalizing offer.
/jlne.ws/2K0v9hOJuncker’s Trade Pitch to Trump: ‘I Can Be Stupid, as Well’; How bravado, flip cards and a White House ally helped European official sell U.S. president on trade detente
Valentina Pop and Vivian Salama – WSJ
When Jean-Claude Juncker arrived at the White House on Wednesday, he had no idea how the meeting with President Donald Trump would end.
/jlne.ws/2K01wNFHigh speed trader Virtu’s profits miss the mark
Nicole Bullock – FT
Virtu Financial, the high speed trader, reported adjusted net income of $59.6m in the second quarter below Wall Street expectations amid a “markedly worse” operating environment, the company said.
/jlne.ws/2LunLRp‘F’ Is For? This ETF Is Named After FANGs and Holds No Facebook
Carolina Wilson and Sarah Frier – Bloomberg
Fund, known by ticker FNG, sold out of Facebook during scandal; Earlier, ETF had dumped Apple holdings ahead of earnings boost. What’s in a name? When hearing the acronym FANG, four technology stocks come to mind: Facebook Inc., Amazon.com. Inc., Netflix Inc., and Alphabet Inc.’s Google.
/jlne.ws/2JXeQ5fSeveral banks dismissed from U.S. metals price-fixing lawsuits
Jonathan Stempel – Reuters
A U.S. judge has dismissed five large banks from two antitrust lawsuits by investors alleging multi-year conspiracies to rig prices for hundreds of billions of dollars of transactions in the global silver and gold markets.
/jlne.ws/2JWBVFnFyre Festival Promoter Pleads Guilty to Ticket-Scam Charges
Bob Van Voris – Bloomberg
Billy McFarland, the architect of the failed 2017 Fyre Festival, pleaded guilty to new charges that he ran a fraudulent ticket business while on bail facing earlier fraud charges connected to the disastrous luxury concert series in the Bahamas.
/jlne.ws/2K0AoOwFannie Mae Debt Sale Sets Milestone For New Borrowing Benchmark; New index taking aim at scandal-ridden Libor passes $6 billion test.
Vipal Monga and Daniel Kruger – WSJ
A benchmark lending rate that regulators and investors hope can replace the scandal-plagued Libor as the foundation for trillions of dollars of debt from credit cards to business loans easily passed a key test.
/jlne.ws/2JYY9GR

Exchanges, OTC and Clearing

CME to launch six gasoline futures contracts
Reuters Staff
CME Group says it plans to launch six gasoline futures contracts effective on Aug. 26 and for trading from Aug. 27
/jlne.ws/2K0xN7eCME Group Achieves International Average Daily Volume of 4.2 Million Contracts in Q2 2018, Up 13 Percent from Q2 2017
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it achieved quarterly international (defined as outside of the US) average daily volume (ADV) of 4.2 million contracts during the second quarter of 2018, up 13 percent over the same period last year.
/jlne.ws/2K07pdJCME profits miss despite bump in trading volumes; Concerns around global protectionism sparked higher trade, particularly in agricultural products
Joe Rennison – FT
CME Group, the world’s largest futures exchange, today reported mixed earnings, tempered by trade concerns fuelling volumes as investors sought to protect against price fluctuations.
/jlne.ws/2K1xgSmCME quarterly earnings boosted by volumes, market data
John McCrank – Reuters
CME Group Inc (CME.O), the world’s largest futures exchange operator, said on Thursday its second-quarter earnings rose on the back of higher trading volumes and market data fees, as it works toward the close of its $5.5 billion acquisition of NEX Group (NXGN.L).
/jlne.ws/2K5ifiuMGEX Reports 25th Best Electronic Volume Day
MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives
Clearing Organization (DCO), reports July 25th as the fourth July date on the Daily Electronic Volume’s top 25 records list. Coming in at 19,396 contracts and beating out the previous title holder by 160 contracts, yesterday’s electronic volume now occupies the 25th-best overall spot.
/jlne.ws/2K0yeP4While the ECB holds on to its monetary policy, why not visit the home of the euro yield curve?
Eurex
The European Central Bank has decided to keep its monetary policy unchanged and freeze its benchmark interest rate on the deposit facility at -0.40 per cent. This is again a good opportunity to take a closer look at what Eurex interest rate derivatives have to offer.
/jlne.ws/2LqwSCwExchange Publishes CG Code Consultation Conclusions and Guidance for Boards and Directors
HKEX
Proposed changes to CG Code and related Listing Rules receive strong support; Amendments to CG Code and related Listing Rules to take effect 1 January 2019; Exchange publishes “Guidance for Boards and Directors” to help directors to be more effective
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), published today (Friday) conclusions from its consultation on its Corporate Governance Code (CG Code) and related Listing Rules (Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules, or Consultation Conclusions)1 along with “Guidance for Boards and Directors”.
/jlne.ws/2LuV7iW

Fintech

FIA Announces Partnership With Rise New York, Created By Barclays, To Promote Innovators Pavilion
Press Release
FIA today announced that Rise New York, created by Barclays, has joined the FIA Innovators Pavilion as a community partner. Rise New York will help FIA promote the Innovators Pavilion, FIA’s annual fintech showcase. Now in its fourth year, the Innovators Pavilion is part of FIA Expo, the world’s largest gathering of professionals in the derivatives markets. This year’s FIA Expo will take place in Chicago on Oct. 16-18.
bit.ly/2vbiG5HGoodbye HipChat: Slack and Atlassian Team Up on Chat Software; Stewart Butterfield’s startup will subsume Atlassian’s corporate chat tools to take on Microsoft.
Dina Bass and Ellen Huet – Bloomberg
Atlassian Corp. is selling its corporate chat software to rival Slack Technologies Inc. and taking a small stake in the startup, as they face greater competition from Microsoft Corp.
/jlne.ws/2JYY3isFortnite Mania Fuels Epic Growth to $8.5 Billion; Epic Games’ profits on the game have made “legendary character” Tim Sweeney a billionaire.
Devon Pendleton, Christopher Palmeri – Bloomberg
Tim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: He gave it away. That strategy has made him a billionaire. In an industry chock-a-block with monster hits, such as Candy Crush and Pokemon Go, Fortnite’s popularity isn’t surprising. Its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people.
/jlne.ws/2LoVcF5Schroders CEO: fintech is the ‘greatest opportunity we face’
Mark Cobley – Financial News
Peter Harrison, the boss of one of the UK’s largest asset managers, has said innovations in financial technology are the “single biggest opportunity” for his industry right now — as his firm Schroders steps up its efforts to build links with fintech entrepreneurs.
Speaking as the fund manager reported its first-half results on July 26, Harrison told Financial News the “really interesting step-change for our industry will come from technological innovation”. He added: “We are working with 25 or 26 fintechs across the business, across a whole range of different things — I see this as the single biggest opportunity we face.”
bit.ly/2v5pTnECySEC to Establish FinTech Innovation Hub with Focus on Blockchain
David Kimberley – Finance Magnates
Regulatory financial technology (FinTech) initiatives have been springing up across the globe over the past few years. This Friday, the main Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC), announced that it would also be creating an innovation hub.
bit.ly/2vaVB2ZAlexa, What’s Wall Street Saying About Amazon’s Earnings Beat?
Joe Easton and Jeran Wittenstein – Bloomberg
Shares up 4 percent pre-market amid cloud, advertising boost; Goldman Sachs, others raise price targets for the stock
Amazon.com Inc.’s record second-quarter profit drew a flurry of price target boosts on Wall Street. Analysts say strength in the cloud and advertising business, as well as operational improvements, have positioned the company for long-term growth. The shares rose 4 percent in pre-market trading in New York and are on track to open at a record high.
/jlne.ws/2K1e4nNThomson Reuters unit to be renamed Refinitiv after Blackstone deal
Reuters Staff
Thomson Reuters Corp’s (TRI.TO) Financial and Risk unit, in which U.S. private equity firm Blackstone Group (BX.N) is buying a majority stake, will be renamed Refinitiv once the deal closes, the company said in a statement on Friday.
/jlne.ws/2LptpnM

Cryptocurrencies

The Winklevoss Twins Want To Sell You A Bitcoin Fund; The Winklevoss twins filed a form with the SEC that’s the first step to selling shares in a fund that would track the price of Bitcoin. A look at the next move for the Facebook-suing twins.
Matthew Zeitlin – BuzzFeed News
Tyler and Cameron Winklevoss, impossibly strong-jawed and broad-shouldered rowers, tech entrepreneurs, and famous litigators of Mark Zuckerberg, are now two of the biggest and most famous players in Bitcoin, the cryptographic, digital currency whose wild price gyrations and security issues captivated the business press for a few weeks in March and April of this year. In April, the twins revealed to The New York Times that they owned some $11 million worth of Bitcoin.
/jlne.ws/2K14a5XWinklevoss-Backed Bid for Bitcoin-ETF Rejected by Regulators
Benjamin Bain – Bloomberg
Cryptocurrency declines after SEC announces its decision; Agency raises concern about oversight of Bitcoin’s spot market
Bitcoin fell after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss, showing the regulator remains skeptical that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses.
/jlne.ws/2K1syEaBrock Pierce: The Hippie King of Cryptocurrency
Neil Strauss – Rolling Stone
Twenty-six men and women are seated along four folding tables laid end to end in the ballroom of a former Masonic lodge in Old San Juan, Puerto Rico. An eclectic mix, ranging from local charity workers to Silicon Valley investors to cryptocurrency early adopters, they all believe that they’re about to make history. Specifically, they are here to help Brock Pierce – a child actor turned video-game entrepreneur turned crypto titan – give away a billion dollars to charity. Not in a will after his death, but now, in the prime of his life and the peak of his career, at age 37.
/rol.st/2v8YBwBBitcoin $500,000 Creates a Buzz, But Technicals Point to Rally
Olivia Schaber – Bloomberg
Hedge fund manager predicts correction, then massive rally; Directional index shows biggest divergence since last year=
Comments from Morgan Creek Capital Management hedge fund manager Mark Yusko that Bitcoin could reach $500,000 in six years are heartening battered crypto bulls. They may be better served taking a look at some underlying technicals in the meantime.
/jlne.ws/2K5gIJgCrypto Futures Expansion Won’t Happen Soon, CME’s Duffy Says
Brian Louis – Bloomberg
Exchange head reiterates cautious approach to other contracts; Rival Cboe has hinted at wanting to expand crypto derivatives=
CME Group Inc. Chief Executive Officer Terry Duffy said that in his nearly four decades in trading, Bitcoin futures “might have been the most controversial launch of a product” and he reiterated the company’s not in a hurry to list more cryptocurrency-related contracts.
/jlne.ws/2K1Qdo9The World’s Dominant Crypto-Mining Company Wants to Own AI; In a rare interview, Bitmain’s Jihan Wu talks about his plans to take on Nvidia, Intel, and AMD.
Max Chafkin and David Ramli – Bloomberg
Even by the standards of Bitcoin, things are crazy in China. As the boom in cryptocurrencies has become the biggest speculative bubble in recorded history, a single company in Beijing’s Haidian District has been selling the chips that generate as much as 80 percent of the world’s cryptocoins. “We feel lucky,” says Jihan Wu, the co-chief executive of Bitmain Technologies Ltd., which was more or less unknown two years ago and, according to Wu, booked revenue of $3.5 billion in 2017. (On June 4, a Bitmain spokesman said Wu misspoke and the actual figure was $2.5 billion.)
/jlne.ws/2K1LT8jCrypto Coin Tether Defies Logic on Kraken’s Market, Raising Red Flags
Matthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – Bloomberg
In the traditional world of securities exchanges, it would be akin to defying gravity. But at Kraken, one of the most popular venues for trading cryptocurrencies, a coin called Tether does it again and again.
/jlne.ws/2KjhdViSelf-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action by
Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments
No. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin Trust
SEC
/jlne.ws/2K1BbP9As Crypto Meets Prediction Markets, Regulators Take Notice
Matthew Leising – Bloomberg
The next confrontation between government regulators and a blockchain startup appears set to ensnare a prediction market platform that goes by the name Augur.
/jlne.ws/2K0zFNiMike Novogratz’s Crypto Firm Lost $134 Million in the First Quarter
Doug Alexander – Bloomberg
Crypto-focused merchant bank releases first financial results; Quarterly losses led by trading digital assets, investments
Galaxy Digital LP, the crypto-focused merchant bank founded by Mike Novogratz, posted a $134 million loss in its first quarter, when the value of Bitcoin and other cryptocurrencies plunged.
/jlne.ws/2K0dYwN

Politics

Butina Sought a Secret Kremlin Line to the U.S. A Rockefeller May Have Helped
Polly Mosendz , Greg Farrell , and Ilya Arkhipov – Bloomberg
O’Neill hosted 2017 dinner for prayer-breakfast delegates; A Russian-language guide to Rohrabacher and other guests
A scion of the Rockefeller clan, George D. O’Neill Jr., was one of the U.S. conservatives who allegedly helped Mariia Butina’s efforts to build a secret line of communication back to the Kremlin, judging by details in recent U.S. filings.
/jlne.ws/2JZwAgDMueller Examining Trump’s Tweets in Wide-Ranging Obstruction Inquiry
Michael S. Schmidt and Maggie Haberman – NY Times
For years, President Trump has used Twitter as his go-to public relations weapon, mounting a barrage of attacks on celebrities and then political rivals even after advisers warned he could be creating legal problems for himself.
/jlne.ws/2K07PRfSteve Bannon’s plot for the downfall of old Europe; The next EU parliament elections are a chance to defeat the far-right
FT
As an architect of Donald Trump’s 2016 presidential election victory, Steve Bannon knows a thing or two about unconventional political warfare. Now the godfather of the US alt-right is gearing for combat in Europe. His arena is the campaign for the next European Parliament elections, scheduled for May 23-26 2019. His chosen weapons, as in the US, are set to be the stoking of social tensions, economic nationalism, incitement of public anger at elites, systematic attempts to discredit reasoned argument and the spread of misinformation.
/jlne.ws/2K5jAWy

Regulation

U.S. regulator stands by decision to block Winklevoss bitcoin ETF
Trevor Hunnicutt, Michelle Price – Reuters
The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.
/jlne.ws/2K06iuzFinTech Regulation Bridges Silicon Valley and Washington D.C.
Stephanie MacConnell – Forbes
The FinTech community is closely watching the latest developments within the Consumer Financial Protection Bureau (CFPB). Recently, Kathy Kraninger was nominated as Director of the CFPB and, if confirmed, she will succeed acting Director Mike Mulvaney, who previously attacked the Bureau’s very existence and has worked to change policies and cut budget since taking the helm in November 2017.
/jlne.ws/2JZzO3JThe regulator is looking at platforms and so should you
Taha Lokhandwala – InvestorsChronicle
The Financial Conduct Authority (FCA), the financial services regulator, is investigating whether investment platforms are competitive and work in the interests of investors. It has recently published an interim report on its Investment Platforms Market Study, which has highlighted a number of areas of concern, including the difficulties in switching platforms and the poor rates of interest they offer on cash.
/jlne.ws/2K0xM3kCFTC Chairman Giancarlo To Keynote The West Texas Legislative
CFTC
/jlne.ws/2K1aXMDPodcast: CFTC Talks EP053: MARK YALLOP FMSB Part Two
CFTC
This week on CFTC Talks, we speak with Mark Yallop, chair of the Fixed Income, Currencies and Commodities Markets Standards Board. We cover the enormous cost to the world financial system of bad behavior, how to historically break down market misconduct into 7 categories and why trust is the heart of the financial markets.
/jlne.ws/2K1qLz8Nordic Credit Rating AS registered as Credit Rating Agency
ESMA
The EFTA Surveillance Authority (EFTA SA) has registered today the Nordic Credit Rating AS (NCR) as a credit rating agency under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (the CRA Regulation), as incorporated into the Agreement on the European Economic Area (EEA Agreement). This decision comes into effect on 3 August 2018. NCR is based in Oslo, Norway, with a branch in Stockholm, Sweden. NRC intends to issue corporate ratings.
/jlne.ws/2mMeNQzFCA proposes changes to rules for crowdfunding platforms
FCA
Following a post-implementation review of its crowdfunding rules, the Financial Conduct Authority (FCA) is opening a consultation on new rules for loan-based crowdfunding platforms.
/jlne.ws/2mSFeo5

Investing and Trading

Is the Key to Beating the Market Written in the Stars?; Henry Weingarten invests his clients’ money by charting the movement of heavenly bodies.
Simon van Zuylen-Wood – Bloomberg
It’s 11 a.m. at the Princeton Club in Midtown Manhattan. A number of financial professionals have gathered here for the “AFund June 2018 Natural Resources Investment Symposium.” Our first speaker is HSBC’s chief precious metals analyst, the aptly named James Steel, who promotes gold as a hedge against populist upheaval. After Steel, there are slideshows from several mining companies seeking investors. After that, lunch. A generic networking event, by all appearances.
/jlne.ws/2K1DDVRECB Keeps to Policy Path to End Bond Purchases
Carolynn Look – Bloomberg
Mario Draghi holds media briefing at 2:30 p.m. in Frankfurt; President will be quizzed on economic risks as QE exit nears
The European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid.
/jlne.ws/2K0B2LOU.S. domestic stock funds report more demand than peers abroad: Lipper
James Thorne – Reuters
Investors in U.S. funds traded international equities for domestic stocks during the latest week as earnings beat expectations while trade tensions simmered, Lipper data showed on Thursday.
/jlne.ws/2K1vfFMWall Street faces up to “bombshell guidance” at Facebook
Jamie Powell
Facebook’s second-quarter results — which prompted the company’s shares to plunge as much as 24 per cent (!!) overnight — was the first time the surveillance-capitalism machine’s revenue growth had missed expectations since 2015.
/jlne.ws/2K5QE0UIt’s All About Social Media Contagion, Not FAANGs: Taking Stock
Arie Shapira – Bloomberg
Stock futures are holding on to their slight gains thanks to Amazon decoupling from most of its FAANG peers, though momentum gets hit from another whiff from a social media bellwether as Twitter plunges ~16% on weak monthly active user numbers.
/jlne.ws/2K5lDKe

Institutions

What Does a Bank Meltdown Cost? Not Much, Actually; Sabadell hasn’t suffered enough from the fiasco at Britain’s TSB.
Edward Evans – Bloomberg
It was a spectacular fiasco, made even worse by the clumsy way in which it was handled. TSB Banking Group Plc’s attempt in April to transfer the records of its 5 million customers to a new IT system left about a million of them unable to access their accounts and vulnerable to fraud. At first, TSB said things were running smoothly. It makes you wonder what their idea of chaos is.
/jlne.ws/2JWQvN6A $14 Billion Fund Manager Feels ‘Vindicated’ by Facebook Plunge
Olivia Carville and Emily Chasan – Bloomberg
John Streur, an investor who sold his fund’s Facebook Inc. holding after the Cambridge Analytica privacy scandal, said he felt “vindicated” watching the social media giant’s free-fall Thursday.
/jlne.ws/2JWSUaAHere’s How ETFs With Biggest Facebook Exposure Traded Today
Elena Popina , Sarah Ponczek , and Carolina Wilson – Bloomberg
A six-week old Communication Services Select Sector SPDR Fund just had its worst day ever. A rout in Facebook Inc. is to blame for that.
/jlne.ws/2K5PBy0UBS to review misconduct policies after rape claim; Woman alleged she was assaulted by a more senior bank employee
Laura Noonan in New York – FT
UBS is reviewing how it handles sexual misconduct allegations after an employee who claimed she was raped by a colleague contacted the head of its investment bank, Andrea Orcel, to complain about how the bank dealt with her case.
/jlne.ws/2JZQGHmUBS Is Cutting Dozens of Staff in Wealth-Management Revamp
Emily Chasan and Sonali Basak – Bloomberg
16.18CHF+0.18+1.16%
UBS Group AG is laying off dozens of staff at its wealth-management division as it revamps the unit’s leadership team, according to people briefed on the matter.
/jlne.ws/2K1BjhwThe $5 Trillion Question: How Did the Firm That Pioneered ETFs Lose Its Lead?; State Street developed a hit investment product 25 years ago. Then more-focused rivals came along with better marketing and lower costs. Now the trust bank is No. 3 in the market it started.
Asjylyn Loder – WSJ
For State Street Corp. STT -0.32% , the company that pioneered the $5 trillion exchange-traded fund industry, it’s been a long way down.
/jlne.ws/2JZIqr5

Regions

Why Is China’s Currency Falling?; Worries about competitive devaluation are almost certainly misplaced.
Christopher Balding – Bloomberg
Since April, the yuan has fallen by almost 8 percent against the U.S. dollar. This has led many analysts and politicians to speculate that China is intentionally trying to devalue its currency to offset the effect of President Donald Trump’s tariffs. It almost certainly isn’t.
/jlne.ws/2K1K2QZHey Buddy, Can You Spare 2 Million for Coffee?
Vivianne Rodrigues – Bloomberg
ONE. MILLION. PERCENT. That’s how high inflation will climb in Venezuela by year’s end, according to the latest forecast by the International Monetary Fund.
/jlne.ws/2JYUKryChina should really start to worry about Trump; As Europe wins a reprieve over trade the portents for Beijing have commensurately darkened
Edward Luce- FT
It was Wednesday so Europe went from being a “foe” of America to a “great friend”. Next Monday might be different. Perhaps Europe will still be in Donald Trump’s good books. The only person who can say for sure is Mr Trump. Even he probably has little idea. But my hunch is that the ceasefire he struck with Jean-Claude Juncker, president of the European Commission, will hold. Mr Trump loves applause and the last-minute trade agreement with Brussels earned a transatlantic ovation. Europe has won a reprieve. The portents for China have commensurately darkened.
/jlne.ws/2K5RWZOMizuho Eyes $11 Trillion Held by Japan’s Rich Elderly
Gareth Allan and Yuki Hagiwara – Bloomberg
Bank began offering tailor-made trusts for wealthy retirees; Also expanding consulting for Japan pension funds, CEO says
Mizuho Financial Group Inc.’s trust banking arm has its sights set on exactly where the wealth is in Japan: the $11 trillion held by the nation’s elderly.
/jlne.ws/2JZS8tiRussia Extends Rate Pause as Risks to Inflation Halt Easing
Olga Tanas and Anna Andrianova – Bloomberg
Benchmark kept at 7.25% for third meeting, in line with survey; Central bank stays just a step short of level deemed ‘neutral’
Russia’s central bank kept interest rates unchanged for a third consecutive meeting and warned that external risks and the highest inflation expectations in almost a year mean monetary easing probably won’t resume until 2019.
/jlne.ws/2K1O0cf

Brexit

U.K.’s Brexit Options Narrow as Perilous Choices Loom for May
Tim Ros , Emma Ross-Thomas, and Jess Shankleman – Bloomberg
Barnier rejects compromise at heart of May’s Brexit strategy; Chances of no-deal exit, another election creep higher
The U.K.’s Brexit options are narrowing, and most of the choices are hazardous for Prime Minister Theresa May.
/jlne.ws/2K0YwR5Major French Tech Company’s CEO Fears Effects of Hard Brexit
Giles Turner and Mark Barton – Bloomberg
Capgemini SE Chief Executive Officer Paul Hermelin is predicting a hard Brexit will cause a knock-on effect to its British clients, potentially weakening demand.
/jlne.ws/2JYXmpn

Miscellaneous

‘Disappeared’ U.S. Records on Detained Migrant Kids Sparks Probe
Erik Larson – Reuters
Claims by a U.S. ethics watchdog that the Department of Homeland Security and other agencies may have lost or destroyed files relating to the separation of migrant children at the border have triggered a government probe into the proper retention of records.
/jlne.ws/2K01vJm*****Unforgivable.~JJL

John Lothian Newsletter

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Past Newsletters

Cboe Exchange Puts Brakes on Bitcoin Futures Listing

Get a FREE 90 day trial of John Lothian Newsletter First ReadPardon our dust: Crypto markets still have some building to doJim Kharouf, JLNThe institutionalization of the crypto market is going to take some time - be patient.Panelists on the...

Bad Stuff the Market Worried About Is Starting to Happen; Tastytrade, Peak6 invest $10 million in new exchange

Jan 4, 2019

First Read

Hits & TakesBy JLN StaffOne takeaway from the CME’s second quarter earnings report yesterday: Average daily volume at the exchange through the first half of the year was 20.2 million. In 2000, ADV was just over 2.5 million.~JKB3, formerly BM&F Bovespa, posted a volume increase of 52 percent on 1.3 billion contracts for the first half of 2018. FOW noted that it topped the Intercontinental Exchange‘s volume, moving B3 into third in terms of volume behind top exchange, CME Group up 20 percent with 2.5 billion contracts and the National Stock Exchange of India, up 43 percent to 1.6 billion contracts.~JKDo you know who invented the “Ring The Bell” marketing event at the stock exchange? Equities.com points to a man named Enzo Villani, now a board member of a new crypto markets infrastructure firm called Alt 5 Sigma.~JKHere is a video of Blythe Masters and her CTO about the partnership between Google and Digital Asset from the Google Next ’18.~JJLThis July, NFA partnered with Six Flags Great America to offer staff discounted admission for the month. NFA auditors will be double checking for fake hand stamps and making sure rider harnesses are nice and tight.~JJL~JK++++Global Blockchain Company AlphaPoint Adds Industry Veteran Kristin Boggiano as Chief Legal Officer to Executive TeamAlphaPointAlphaPoint, a leading blockchain company focused on enabling institutions to launch, scale, and operate digital asset networks and exchanges all over the world, today announced the appointment of Kristin Boggiano as its Chief Legal Officer. In this role, Boggiano will oversee the company’s legal, regulatory, and government relations functions as well as contribute as a member of AlphaPoint’s executive team./jlne.ws/2LrzdNR**Kristin spoke at our MarketsWiki Education event in New York in 2016 about her trek through the jungles of Ecuador.~JK++++Kudlow says US GDP figure will be ‘big’; Top economic adviser says he has no specific knowledge but wanted to ‘help’Mamta Badkar – FTUS President Trump’s top economic adviser on Thursday told Fox Business that he expected Friday’s US GDP figure to be “big” but denied knowing the specifics, less than two months after Mr Trump’s tweet in advance of a jobs report drew fire./jlne.ws/2JZMcR2***** This is irresponsible.~JJL++++Trump Predicts Data Will Show U.S. Economy in ‘Terrific’ ShapeGreg Sullivan and Toluse Olorunnipa – BloombergBloomberg survey points to 4.2% expansion in second quarter; Data to be released at 8:30 a.m. in Washington on FridayPresident Donald Trump predicted data on Friday will show the U.S. economy is in “terrific” shape amid forecasts that growth topped 4 percent in the second quarter, the fastest since 2014./jlne.ws/2JXaZFj***** And so is this.~JJL++++Fake news of Napoleon’s death cited in guidance to help tradersHuw Jones – ReutersFake news that Napoleon had died is cited in new analysis aimed at helping commodity, bond and forex traders to stop fraud, an industry body said on Friday./jlne.ws/2mLvZWr***** Seems fake news, which we once called rumors, has been around a while.~JJL++++The Girl Scouts have gone from baking and sewing to cybersecurity and financial literacyMyelle Lansat and Richard Feloni – Business InsiderThe Girl Scouts is much more than selling cookies; it’s an organization that provides a foundation for young women to take leadership roles in society. And since Sylvia Acevedo was named CEO of Girl Scouts in 2017, it’s also teaching its members about STEM (science, technology, engineering, and math) — shifting the sole focus away from traditionally female tasks, like baking and sewing./goo.gl/kwHCjs***** In the name of fairness, some Girl Scout news.~JJL++++Thursday’s Top ThreeYesterday’s top stories were led by Bloomberg’s How Traders Have Changed Since the Massive Selloff Earlier This Year. Second was Equities.com’s From Exchanges Old To Exchanges New: Chicago Mercantile Exchange and Alt 5 Sigma about new crypto trading systems. Third went to Financefeeds’ FCA approves ION-Fidessa deal++++MarketsWiki Stats130,088,709 pages viewed; 23,215 pages; 214,399 editsMarketsWiki Statistics++++

Lead Stories

Up to Two-Thirds of Bitcoin Transactions Have No Economic ValueOlga Kharif – BloombergServices developing tools to add clarity to blockchain data; Value of activity about half of what appears, researcher saysOn any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency./jlne.ws/2K5LOAMBitcoin Drops as U.S. Rejects Winklevoss ETF for Cboe TradingTodd White – BloombergTechnical indicator also moves into bearish territory; Digital currency has declined after more than 30% July rallyBitcoin fell for a third day, slipping below $8,000, after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss./jlne.ws/2K14LEnFacebook’s $119 Billion One-Day Rout Makes U.S. HistorySophie Caronello – BloombergIt’s official. Facebook Inc. just had the biggest stock-market wipeout in American history. Shares tumbled 19 percent on Thursday to close at $176.26 after sales and user growth disappointed investors. The drop translates to a $119.4 billion decline in market capitalization, the largest-ever loss of value in one day for a U.S. traded company./jlne.ws/2JWxavvFINRA Announces Enforcement Structure, Senior Leadership Team; Integration of Enforcement Functions Complete; Unified Enforcement Program Key Outcome of FINRA360FINRAFINRA announced today the Department of Enforcement’s new structure and senior leadership team. This marks the completion of the final phase of the integration of FINRA’s enforcement functions—a process that began with the July 2017 promotion of Susan Schroeder to FINRA’s Head of Enforcement to create a unified enforcement function./jlne.ws/2K02VDGTwitter Shares Plunge 17% as Monthly Users DeclineSelina Wang – BloombergCompany reports 1 million fewer visitors from previous quarter; Revenue climbs to $711 million, topping analyst’ projectionsTwitter Inc. said monthly users dropped by 1 million in the second quarter, and predicted that number will decline further as the company continues to fight against spam, fake accounts and malicious rhetoric on its social network. The shares plunged 17 percent in early trading./jlne.ws/2JWSiBOHedge Fund Titans Who Bet Big on India Now Say They Were ScammedOlivia Carville, Anto Antony, and Jeanette Rodrigues – BloombergAxon Capital, CIFF say they are victims of a massive fraud; Dispute is playing out in courts in India and MauritiusThe $1.5 billion India wager that went horribly wrong for some of the world’s biggest hedge funds began with a tantalizing offer./jlne.ws/2K0v9hOJuncker’s Trade Pitch to Trump: ‘I Can Be Stupid, as Well’; How bravado, flip cards and a White House ally helped European official sell U.S. president on trade detenteValentina Pop and Vivian Salama – WSJWhen Jean-Claude Juncker arrived at the White House on Wednesday, he had no idea how the meeting with President Donald Trump would end./jlne.ws/2K01wNFHigh speed trader Virtu’s profits miss the markNicole Bullock – FTVirtu Financial, the high speed trader, reported adjusted net income of $59.6m in the second quarter below Wall Street expectations amid a “markedly worse” operating environment, the company said./jlne.ws/2LunLRp‘F’ Is For? This ETF Is Named After FANGs and Holds No FacebookCarolina Wilson and Sarah Frier – BloombergFund, known by ticker FNG, sold out of Facebook during scandal; Earlier, ETF had dumped Apple holdings ahead of earnings boost. What’s in a name? When hearing the acronym FANG, four technology stocks come to mind: Facebook Inc., Amazon.com. Inc., Netflix Inc., and Alphabet Inc.’s Google./jlne.ws/2JXeQ5fSeveral banks dismissed from U.S. metals price-fixing lawsuitsJonathan Stempel – ReutersA U.S. judge has dismissed five large banks from two antitrust lawsuits by investors alleging multi-year conspiracies to rig prices for hundreds of billions of dollars of transactions in the global silver and gold markets./jlne.ws/2JWBVFnFyre Festival Promoter Pleads Guilty to Ticket-Scam ChargesBob Van Voris – BloombergBilly McFarland, the architect of the failed 2017 Fyre Festival, pleaded guilty to new charges that he ran a fraudulent ticket business while on bail facing earlier fraud charges connected to the disastrous luxury concert series in the Bahamas./jlne.ws/2K0AoOwFannie Mae Debt Sale Sets Milestone For New Borrowing Benchmark; New index taking aim at scandal-ridden Libor passes $6 billion test.Vipal Monga and Daniel Kruger – WSJA benchmark lending rate that regulators and investors hope can replace the scandal-plagued Libor as the foundation for trillions of dollars of debt from credit cards to business loans easily passed a key test./jlne.ws/2JYY9GR

Exchanges, OTC and Clearing

CME to launch six gasoline futures contractsReuters StaffCME Group says it plans to launch six gasoline futures contracts effective on Aug. 26 and for trading from Aug. 27/jlne.ws/2K0xN7eCME Group Achieves International Average Daily Volume of 4.2 Million Contracts in Q2 2018, Up 13 Percent from Q2 2017CME GroupCME Group, the world’s leading and most diverse derivatives marketplace, today announced that it achieved quarterly international (defined as outside of the US) average daily volume (ADV) of 4.2 million contracts during the second quarter of 2018, up 13 percent over the same period last year./jlne.ws/2K07pdJCME profits miss despite bump in trading volumes; Concerns around global protectionism sparked higher trade, particularly in agricultural productsJoe Rennison – FTCME Group, the world’s largest futures exchange, today reported mixed earnings, tempered by trade concerns fuelling volumes as investors sought to protect against price fluctuations./jlne.ws/2K1xgSmCME quarterly earnings boosted by volumes, market dataJohn McCrank – ReutersCME Group Inc (CME.O), the world’s largest futures exchange operator, said on Thursday its second-quarter earnings rose on the back of higher trading volumes and market data fees, as it works toward the close of its $5.5 billion acquisition of NEX Group (NXGN.L)./jlne.ws/2K5ifiuMGEX Reports 25th Best Electronic Volume DayMGEXMGEX, a Designated Contract Market (DCM) and DerivativesClearing Organization (DCO), reports July 25th as the fourth July date on the Daily Electronic Volume’s top 25 records list. Coming in at 19,396 contracts and beating out the previous title holder by 160 contracts, yesterday’s electronic volume now occupies the 25th-best overall spot./jlne.ws/2K0yeP4While the ECB holds on to its monetary policy, why not visit the home of the euro yield curve?EurexThe European Central Bank has decided to keep its monetary policy unchanged and freeze its benchmark interest rate on the deposit facility at -0.40 per cent. This is again a good opportunity to take a closer look at what Eurex interest rate derivatives have to offer./jlne.ws/2LqwSCwExchange Publishes CG Code Consultation Conclusions and Guidance for Boards and DirectorsHKEXProposed changes to CG Code and related Listing Rules receive strong support; Amendments to CG Code and related Listing Rules to take effect 1 January 2019; Exchange publishes “Guidance for Boards and Directors” to help directors to be more effectiveThe Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), published today (Friday) conclusions from its consultation on its Corporate Governance Code (CG Code) and related Listing Rules (Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules, or Consultation Conclusions)1 along with “Guidance for Boards and Directors”./jlne.ws/2LuV7iW

Fintech

FIA Announces Partnership With Rise New York, Created By Barclays, To Promote Innovators PavilionPress ReleaseFIA today announced that Rise New York, created by Barclays, has joined the FIA Innovators Pavilion as a community partner. Rise New York will help FIA promote the Innovators Pavilion, FIA’s annual fintech showcase. Now in its fourth year, the Innovators Pavilion is part of FIA Expo, the world’s largest gathering of professionals in the derivatives markets. This year’s FIA Expo will take place in Chicago on Oct. 16-18.bit.ly/2vbiG5HGoodbye HipChat: Slack and Atlassian Team Up on Chat Software; Stewart Butterfield’s startup will subsume Atlassian’s corporate chat tools to take on Microsoft.Dina Bass and Ellen Huet – BloombergAtlassian Corp. is selling its corporate chat software to rival Slack Technologies Inc. and taking a small stake in the startup, as they face greater competition from Microsoft Corp./jlne.ws/2JYY3isFortnite Mania Fuels Epic Growth to $8.5 Billion; Epic Games’ profits on the game have made “legendary character” Tim Sweeney a billionaire.Devon Pendleton, Christopher Palmeri – BloombergTim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: He gave it away. That strategy has made him a billionaire. In an industry chock-a-block with monster hits, such as Candy Crush and Pokemon Go, Fortnite’s popularity isn’t surprising. Its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people./jlne.ws/2LoVcF5Schroders CEO: fintech is the ‘greatest opportunity we face’Mark Cobley – Financial NewsPeter Harrison, the boss of one of the UK’s largest asset managers, has said innovations in financial technology are the “single biggest opportunity” for his industry right now — as his firm Schroders steps up its efforts to build links with fintech entrepreneurs.Speaking as the fund manager reported its first-half results on July 26, Harrison told Financial News the “really interesting step-change for our industry will come from technological innovation”. He added: “We are working with 25 or 26 fintechs across the business, across a whole range of different things — I see this as the single biggest opportunity we face.”bit.ly/2v5pTnECySEC to Establish FinTech Innovation Hub with Focus on BlockchainDavid Kimberley – Finance MagnatesRegulatory financial technology (FinTech) initiatives have been springing up across the globe over the past few years. This Friday, the main Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC), announced that it would also be creating an innovation hub.bit.ly/2vaVB2ZAlexa, What’s Wall Street Saying About Amazon’s Earnings Beat?Joe Easton and Jeran Wittenstein – BloombergShares up 4 percent pre-market amid cloud, advertising boost; Goldman Sachs, others raise price targets for the stockAmazon.com Inc.’s record second-quarter profit drew a flurry of price target boosts on Wall Street. Analysts say strength in the cloud and advertising business, as well as operational improvements, have positioned the company for long-term growth. The shares rose 4 percent in pre-market trading in New York and are on track to open at a record high./jlne.ws/2K1e4nNThomson Reuters unit to be renamed Refinitiv after Blackstone dealReuters StaffThomson Reuters Corp’s (TRI.TO) Financial and Risk unit, in which U.S. private equity firm Blackstone Group (BX.N) is buying a majority stake, will be renamed Refinitiv once the deal closes, the company said in a statement on Friday./jlne.ws/2LptpnM

Cryptocurrencies

The Winklevoss Twins Want To Sell You A Bitcoin Fund; The Winklevoss twins filed a form with the SEC that’s the first step to selling shares in a fund that would track the price of Bitcoin. A look at the next move for the Facebook-suing twins.Matthew Zeitlin – BuzzFeed NewsTyler and Cameron Winklevoss, impossibly strong-jawed and broad-shouldered rowers, tech entrepreneurs, and famous litigators of Mark Zuckerberg, are now two of the biggest and most famous players in Bitcoin, the cryptographic, digital currency whose wild price gyrations and security issues captivated the business press for a few weeks in March and April of this year. In April, the twins revealed to The New York Times that they owned some $11 million worth of Bitcoin./jlne.ws/2K14a5XWinklevoss-Backed Bid for Bitcoin-ETF Rejected by RegulatorsBenjamin Bain – BloombergCryptocurrency declines after SEC announces its decision; Agency raises concern about oversight of Bitcoin’s spot marketBitcoin fell after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss, showing the regulator remains skeptical that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses./jlne.ws/2K1syEaBrock Pierce: The Hippie King of CryptocurrencyNeil Strauss – Rolling StoneTwenty-six men and women are seated along four folding tables laid end to end in the ballroom of a former Masonic lodge in Old San Juan, Puerto Rico. An eclectic mix, ranging from local charity workers to Silicon Valley investors to cryptocurrency early adopters, they all believe that they’re about to make history. Specifically, they are here to help Brock Pierce – a child actor turned video-game entrepreneur turned crypto titan – give away a billion dollars to charity. Not in a will after his death, but now, in the prime of his life and the peak of his career, at age 37./rol.st/2v8YBwBBitcoin $500,000 Creates a Buzz, But Technicals Point to RallyOlivia Schaber – BloombergHedge fund manager predicts correction, then massive rally; Directional index shows biggest divergence since last year=Comments from Morgan Creek Capital Management hedge fund manager Mark Yusko that Bitcoin could reach $500,000 in six years are heartening battered crypto bulls. They may be better served taking a look at some underlying technicals in the meantime./jlne.ws/2K5gIJgCrypto Futures Expansion Won’t Happen Soon, CME’s Duffy SaysBrian Louis – BloombergExchange head reiterates cautious approach to other contracts; Rival Cboe has hinted at wanting to expand crypto derivatives=CME Group Inc. Chief Executive Officer Terry Duffy said that in his nearly four decades in trading, Bitcoin futures “might have been the most controversial launch of a product” and he reiterated the company’s not in a hurry to list more cryptocurrency-related contracts./jlne.ws/2K1Qdo9The World’s Dominant Crypto-Mining Company Wants to Own AI; In a rare interview, Bitmain’s Jihan Wu talks about his plans to take on Nvidia, Intel, and AMD.Max Chafkin and David Ramli – BloombergEven by the standards of Bitcoin, things are crazy in China. As the boom in cryptocurrencies has become the biggest speculative bubble in recorded history, a single company in Beijing’s Haidian District has been selling the chips that generate as much as 80 percent of the world’s cryptocoins. “We feel lucky,” says Jihan Wu, the co-chief executive of Bitmain Technologies Ltd., which was more or less unknown two years ago and, according to Wu, booked revenue of $3.5 billion in 2017. (On June 4, a Bitmain spokesman said Wu misspoke and the actual figure was $2.5 billion.)/jlne.ws/2K1LT8jCrypto Coin Tether Defies Logic on Kraken’s Market, Raising Red FlagsMatthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – BloombergIn the traditional world of securities exchanges, it would be akin to defying gravity. But at Kraken, one of the most popular venues for trading cryptocurrencies, a coin called Tether does it again and again./jlne.ws/2KjhdViSelf-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action byDelegated Authority and Disapproving a Proposed Rule Change, as Modified by AmendmentsNo. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin TrustSEC/jlne.ws/2K1BbP9As Crypto Meets Prediction Markets, Regulators Take NoticeMatthew Leising – BloombergThe next confrontation between government regulators and a blockchain startup appears set to ensnare a prediction market platform that goes by the name Augur./jlne.ws/2K0zFNiMike Novogratz’s Crypto Firm Lost $134 Million in the First QuarterDoug Alexander – BloombergCrypto-focused merchant bank releases first financial results; Quarterly losses led by trading digital assets, investmentsGalaxy Digital LP, the crypto-focused merchant bank founded by Mike Novogratz, posted a $134 million loss in its first quarter, when the value of Bitcoin and other cryptocurrencies plunged./jlne.ws/2K0dYwN

Politics

Butina Sought a Secret Kremlin Line to the U.S. A Rockefeller May Have HelpedPolly Mosendz , Greg Farrell , and Ilya Arkhipov – BloombergO’Neill hosted 2017 dinner for prayer-breakfast delegates; A Russian-language guide to Rohrabacher and other guestsA scion of the Rockefeller clan, George D. O’Neill Jr., was one of the U.S. conservatives who allegedly helped Mariia Butina’s efforts to build a secret line of communication back to the Kremlin, judging by details in recent U.S. filings./jlne.ws/2JZwAgDMueller Examining Trump’s Tweets in Wide-Ranging Obstruction InquiryMichael S. Schmidt and Maggie Haberman – NY TimesFor years, President Trump has used Twitter as his go-to public relations weapon, mounting a barrage of attacks on celebrities and then political rivals even after advisers warned he could be creating legal problems for himself./jlne.ws/2K07PRfSteve Bannon’s plot for the downfall of old Europe; The next EU parliament elections are a chance to defeat the far-rightFTAs an architect of Donald Trump’s 2016 presidential election victory, Steve Bannon knows a thing or two about unconventional political warfare. Now the godfather of the US alt-right is gearing for combat in Europe. His arena is the campaign for the next European Parliament elections, scheduled for May 23-26 2019. His chosen weapons, as in the US, are set to be the stoking of social tensions, economic nationalism, incitement of public anger at elites, systematic attempts to discredit reasoned argument and the spread of misinformation./jlne.ws/2K5jAWy

Regulation

U.S. regulator stands by decision to block Winklevoss bitcoin ETFTrevor Hunnicutt, Michelle Price – ReutersThe U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation./jlne.ws/2K06iuzFinTech Regulation Bridges Silicon Valley and Washington D.C.Stephanie MacConnell – ForbesThe FinTech community is closely watching the latest developments within the Consumer Financial Protection Bureau (CFPB). Recently, Kathy Kraninger was nominated as Director of the CFPB and, if confirmed, she will succeed acting Director Mike Mulvaney, who previously attacked the Bureau’s very existence and has worked to change policies and cut budget since taking the helm in November 2017./jlne.ws/2JZzO3JThe regulator is looking at platforms and so should youTaha Lokhandwala – InvestorsChronicleThe Financial Conduct Authority (FCA), the financial services regulator, is investigating whether investment platforms are competitive and work in the interests of investors. It has recently published an interim report on its Investment Platforms Market Study, which has highlighted a number of areas of concern, including the difficulties in switching platforms and the poor rates of interest they offer on cash./jlne.ws/2K0xM3kCFTC Chairman Giancarlo To Keynote The West Texas LegislativeCFTC/jlne.ws/2K1aXMDPodcast: CFTC Talks EP053: MARK YALLOP FMSB Part TwoCFTCThis week on CFTC Talks, we speak with Mark Yallop, chair of the Fixed Income, Currencies and Commodities Markets Standards Board. We cover the enormous cost to the world financial system of bad behavior, how to historically break down market misconduct into 7 categories and why trust is the heart of the financial markets./jlne.ws/2K1qLz8Nordic Credit Rating AS registered as Credit Rating AgencyESMAThe EFTA Surveillance Authority (EFTA SA) has registered today the Nordic Credit Rating AS (NCR) as a credit rating agency under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (the CRA Regulation), as incorporated into the Agreement on the European Economic Area (EEA Agreement). This decision comes into effect on 3 August 2018. NCR is based in Oslo, Norway, with a branch in Stockholm, Sweden. NRC intends to issue corporate ratings./jlne.ws/2mMeNQzFCA proposes changes to rules for crowdfunding platformsFCAFollowing a post-implementation review of its crowdfunding rules, the Financial Conduct Authority (FCA) is opening a consultation on new rules for loan-based crowdfunding platforms./jlne.ws/2mSFeo5

Investing and Trading

Is the Key to Beating the Market Written in the Stars?; Henry Weingarten invests his clients’ money by charting the movement of heavenly bodies.Simon van Zuylen-Wood – BloombergIt’s 11 a.m. at the Princeton Club in Midtown Manhattan. A number of financial professionals have gathered here for the “AFund June 2018 Natural Resources Investment Symposium.” Our first speaker is HSBC’s chief precious metals analyst, the aptly named James Steel, who promotes gold as a hedge against populist upheaval. After Steel, there are slideshows from several mining companies seeking investors. After that, lunch. A generic networking event, by all appearances./jlne.ws/2K1DDVRECB Keeps to Policy Path to End Bond PurchasesCarolynn Look – BloombergMario Draghi holds media briefing at 2:30 p.m. in Frankfurt; President will be quizzed on economic risks as QE exit nearsThe European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid./jlne.ws/2K0B2LOU.S. domestic stock funds report more demand than peers abroad: LipperJames Thorne – ReutersInvestors in U.S. funds traded international equities for domestic stocks during the latest week as earnings beat expectations while trade tensions simmered, Lipper data showed on Thursday./jlne.ws/2K1vfFMWall Street faces up to “bombshell guidance” at FacebookJamie PowellFacebook’s second-quarter results — which prompted the company’s shares to plunge as much as 24 per cent (!!) overnight — was the first time the surveillance-capitalism machine’s revenue growth had missed expectations since 2015./jlne.ws/2K5QE0UIt’s All About Social Media Contagion, Not FAANGs: Taking StockArie Shapira – BloombergStock futures are holding on to their slight gains thanks to Amazon decoupling from most of its FAANG peers, though momentum gets hit from another whiff from a social media bellwether as Twitter plunges ~16% on weak monthly active user numbers./jlne.ws/2K5lDKe

Institutions

What Does a Bank Meltdown Cost? Not Much, Actually; Sabadell hasn’t suffered enough from the fiasco at Britain’s TSB.Edward Evans – BloombergIt was a spectacular fiasco, made even worse by the clumsy way in which it was handled. TSB Banking Group Plc’s attempt in April to transfer the records of its 5 million customers to a new IT system left about a million of them unable to access their accounts and vulnerable to fraud. At first, TSB said things were running smoothly. It makes you wonder what their idea of chaos is./jlne.ws/2JWQvN6A $14 Billion Fund Manager Feels ‘Vindicated’ by Facebook PlungeOlivia Carville and Emily Chasan – BloombergJohn Streur, an investor who sold his fund’s Facebook Inc. holding after the Cambridge Analytica privacy scandal, said he felt “vindicated” watching the social media giant’s free-fall Thursday./jlne.ws/2JWSUaAHere’s How ETFs With Biggest Facebook Exposure Traded TodayElena Popina , Sarah Ponczek , and Carolina Wilson – BloombergA six-week old Communication Services Select Sector SPDR Fund just had its worst day ever. A rout in Facebook Inc. is to blame for that./jlne.ws/2K5PBy0UBS to review misconduct policies after rape claim; Woman alleged she was assaulted by a more senior bank employeeLaura Noonan in New York – FTUBS is reviewing how it handles sexual misconduct allegations after an employee who claimed she was raped by a colleague contacted the head of its investment bank, Andrea Orcel, to complain about how the bank dealt with her case./jlne.ws/2JZQGHmUBS Is Cutting Dozens of Staff in Wealth-Management RevampEmily Chasan and Sonali Basak – Bloomberg16.18CHF+0.18+1.16%UBS Group AG is laying off dozens of staff at its wealth-management division as it revamps the unit’s leadership team, according to people briefed on the matter./jlne.ws/2K1BjhwThe $5 Trillion Question: How Did the Firm That Pioneered ETFs Lose Its Lead?; State Street developed a hit investment product 25 years ago. Then more-focused rivals came along with better marketing and lower costs. Now the trust bank is No. 3 in the market it started.Asjylyn Loder – WSJFor State Street Corp. STT -0.32% , the company that pioneered the $5 trillion exchange-traded fund industry, it’s been a long way down./jlne.ws/2JZIqr5

Regions

Why Is China’s Currency Falling?; Worries about competitive devaluation are almost certainly misplaced.Christopher Balding – BloombergSince April, the yuan has fallen by almost 8 percent against the U.S. dollar. This has led many analysts and politicians to speculate that China is intentionally trying to devalue its currency to offset the effect of President Donald Trump’s tariffs. It almost certainly isn’t./jlne.ws/2K1K2QZHey Buddy, Can You Spare 2 Million for Coffee?Vivianne Rodrigues – BloombergONE. MILLION. PERCENT. That’s how high inflation will climb in Venezuela by year’s end, according to the latest forecast by the International Monetary Fund./jlne.ws/2JYUKryChina should really start to worry about Trump; As Europe wins a reprieve over trade the portents for Beijing have commensurately darkenedEdward Luce- FTIt was Wednesday so Europe went from being a “foe” of America to a “great friend”. Next Monday might be different. Perhaps Europe will still be in Donald Trump’s good books. The only person who can say for sure is Mr Trump. Even he probably has little idea. But my hunch is that the ceasefire he struck with Jean-Claude Juncker, president of the European Commission, will hold. Mr Trump loves applause and the last-minute trade agreement with Brussels earned a transatlantic ovation. Europe has won a reprieve. The portents for China have commensurately darkened./jlne.ws/2K5RWZOMizuho Eyes $11 Trillion Held by Japan’s Rich ElderlyGareth Allan and Yuki Hagiwara – BloombergBank began offering tailor-made trusts for wealthy retirees; Also expanding consulting for Japan pension funds, CEO saysMizuho Financial Group Inc.’s trust banking arm has its sights set on exactly where the wealth is in Japan: the $11 trillion held by the nation’s elderly./jlne.ws/2JZS8tiRussia Extends Rate Pause as Risks to Inflation Halt EasingOlga Tanas and Anna Andrianova – BloombergBenchmark kept at 7.25% for third meeting, in line with survey; Central bank stays just a step short of level deemed ‘neutral’Russia’s central bank kept interest rates unchanged for a third consecutive meeting and warned that external risks and the highest inflation expectations in almost a year mean monetary easing probably won’t resume until 2019./jlne.ws/2K1O0cf

Brexit

U.K.’s Brexit Options Narrow as Perilous Choices Loom for MayTim Ros , Emma Ross-Thomas, and Jess Shankleman – BloombergBarnier rejects compromise at heart of May’s Brexit strategy; Chances of no-deal exit, another election creep higherThe U.K.’s Brexit options are narrowing, and most of the choices are hazardous for Prime Minister Theresa May./jlne.ws/2K0YwR5Major French Tech Company’s CEO Fears Effects of Hard BrexitGiles Turner and Mark Barton – BloombergCapgemini SE Chief Executive Officer Paul Hermelin is predicting a hard Brexit will cause a knock-on effect to its British clients, potentially weakening demand./jlne.ws/2JYXmpn

Miscellaneous

‘Disappeared’ U.S. Records on Detained Migrant Kids Sparks ProbeErik Larson – ReutersClaims by a U.S. ethics watchdog that the Department of Homeland Security and other agencies may have lost or destroyed files relating to the separation of migrant children at the border have triggered a government probe into the proper retention of records./jlne.ws/2K01vJm*****Unforgivable.~JJL

John Lothian Newsletter

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Past Newsletters

Cboe Exchange Puts Brakes on Bitcoin Futures Listing

Get a FREE 90 day trial of John Lothian Newsletter First ReadPardon our dust: Crypto markets still have some building to doJim Kharouf, JLNThe institutionalization of the crypto market is going to take some time - be patient.Panelists on the...

New York Stock Exchange

Bad Stuff the Market Worried About Is Starting to Happen; Tastytrade, Peak6 invest $10 million in new exchange

Jan 4, 2019

First Read

Hits & Takes
By JLN StaffOne takeaway from the CME’s second quarter earnings report yesterday: Average daily volume at the exchange through the first half of the year was 20.2 million. In 2000, ADV was just over 2.5 million.~JKB3, formerly BM&F Bovespa, posted a volume increase of 52 percent on 1.3 billion contracts for the first half of 2018. FOW noted that it topped the Intercontinental Exchange‘s volume, moving B3 into third in terms of volume behind top exchange, CME Group up 20 percent with 2.5 billion contracts and the National Stock Exchange of India, up 43 percent to 1.6 billion contracts.~JKDo you know who invented the “Ring The Bell” marketing event at the stock exchange? Equities.com points to a man named Enzo Villani, now a board member of a new crypto markets infrastructure firm called Alt 5 Sigma.~JKHere is a video of Blythe Masters and her CTO about the partnership between Google and Digital Asset from the Google Next ’18.~JJLThis July, NFA partnered with Six Flags Great America to offer staff discounted admission for the month. NFA auditors will be double checking for fake hand stamps and making sure rider harnesses are nice and tight.~JJL~JK++++Global Blockchain Company AlphaPoint Adds Industry Veteran Kristin Boggiano as Chief Legal Officer to Executive Team
AlphaPoint
AlphaPoint, a leading blockchain company focused on enabling institutions to launch, scale, and operate digital asset networks and exchanges all over the world, today announced the appointment of Kristin Boggiano as its Chief Legal Officer. In this role, Boggiano will oversee the company’s legal, regulatory, and government relations functions as well as contribute as a member of AlphaPoint’s executive team.
/jlne.ws/2LrzdNR**Kristin spoke at our MarketsWiki Education event in New York in 2016 about her trek through the jungles of Ecuador.~JK++++Kudlow says US GDP figure will be ‘big’; Top economic adviser says he has no specific knowledge but wanted to ‘help’
Mamta Badkar – FT
US President Trump’s top economic adviser on Thursday told Fox Business that he expected Friday’s US GDP figure to be “big” but denied knowing the specifics, less than two months after Mr Trump’s tweet in advance of a jobs report drew fire.
/jlne.ws/2JZMcR2***** This is irresponsible.~JJL++++Trump Predicts Data Will Show U.S. Economy in ‘Terrific’ Shape
Greg Sullivan and Toluse Olorunnipa – Bloomberg
Bloomberg survey points to 4.2% expansion in second quarter; Data to be released at 8:30 a.m. in Washington on Friday
President Donald Trump predicted data on Friday will show the U.S. economy is in “terrific” shape amid forecasts that growth topped 4 percent in the second quarter, the fastest since 2014.
/jlne.ws/2JXaZFj***** And so is this.~JJL++++Fake news of Napoleon’s death cited in guidance to help traders
Huw Jones – Reuters
Fake news that Napoleon had died is cited in new analysis aimed at helping commodity, bond and forex traders to stop fraud, an industry body said on Friday.
/jlne.ws/2mLvZWr***** Seems fake news, which we once called rumors, has been around a while.~JJL++++The Girl Scouts have gone from baking and sewing to cybersecurity and financial literacy
Myelle Lansat and Richard Feloni – Business Insider
The Girl Scouts is much more than selling cookies; it’s an organization that provides a foundation for young women to take leadership roles in society. And since Sylvia Acevedo was named CEO of Girl Scouts in 2017, it’s also teaching its members about STEM (science, technology, engineering, and math) — shifting the sole focus away from traditionally female tasks, like baking and sewing.
/goo.gl/kwHCjs***** In the name of fairness, some Girl Scout news.~JJL++++Thursday’s Top Three
Yesterday’s top stories were led by Bloomberg’s How Traders Have Changed Since the Massive Selloff Earlier This Year. Second was Equities.com’s From Exchanges Old To Exchanges New: Chicago Mercantile Exchange and Alt 5 Sigma about new crypto trading systems. Third went to Financefeeds’ FCA approves ION-Fidessa deal++++MarketsWiki Stats
130,088,709 pages viewed; 23,215 pages; 214,399 edits
MarketsWiki Statistics++++

Lead Stories

Up to Two-Thirds of Bitcoin Transactions Have No Economic Value
Olga Kharif – Bloomberg
Services developing tools to add clarity to blockchain data; Value of activity about half of what appears, researcher says
On any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency.
/jlne.ws/2K5LOAMBitcoin Drops as U.S. Rejects Winklevoss ETF for Cboe Trading
Todd White – Bloomberg
Technical indicator also moves into bearish territory; Digital currency has declined after more than 30% July rally
Bitcoin fell for a third day, slipping below $8,000, after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss.
/jlne.ws/2K14LEnFacebook’s $119 Billion One-Day Rout Makes U.S. History
Sophie Caronello – Bloomberg
It’s official. Facebook Inc. just had the biggest stock-market wipeout in American history. Shares tumbled 19 percent on Thursday to close at $176.26 after sales and user growth disappointed investors. The drop translates to a $119.4 billion decline in market capitalization, the largest-ever loss of value in one day for a U.S. traded company.
/jlne.ws/2JWxavvFINRA Announces Enforcement Structure, Senior Leadership Team; Integration of Enforcement Functions Complete; Unified Enforcement Program Key Outcome of FINRA360
FINRA
FINRA announced today the Department of Enforcement’s new structure and senior leadership team. This marks the completion of the final phase of the integration of FINRA’s enforcement functions—a process that began with the July 2017 promotion of Susan Schroeder to FINRA’s Head of Enforcement to create a unified enforcement function.
/jlne.ws/2K02VDGTwitter Shares Plunge 17% as Monthly Users Decline
Selina Wang – Bloomberg
Company reports 1 million fewer visitors from previous quarter; Revenue climbs to $711 million, topping analyst’ projections
Twitter Inc. said monthly users dropped by 1 million in the second quarter, and predicted that number will decline further as the company continues to fight against spam, fake accounts and malicious rhetoric on its social network. The shares plunged 17 percent in early trading.
/jlne.ws/2JWSiBOHedge Fund Titans Who Bet Big on India Now Say They Were Scammed
Olivia Carville, Anto Antony, and Jeanette Rodrigues – Bloomberg
Axon Capital, CIFF say they are victims of a massive fraud; Dispute is playing out in courts in India and Mauritius
The $1.5 billion India wager that went horribly wrong for some of the world’s biggest hedge funds began with a tantalizing offer.
/jlne.ws/2K0v9hOJuncker’s Trade Pitch to Trump: ‘I Can Be Stupid, as Well’; How bravado, flip cards and a White House ally helped European official sell U.S. president on trade detente
Valentina Pop and Vivian Salama – WSJ
When Jean-Claude Juncker arrived at the White House on Wednesday, he had no idea how the meeting with President Donald Trump would end.
/jlne.ws/2K01wNFHigh speed trader Virtu’s profits miss the mark
Nicole Bullock – FT
Virtu Financial, the high speed trader, reported adjusted net income of $59.6m in the second quarter below Wall Street expectations amid a “markedly worse” operating environment, the company said.
/jlne.ws/2LunLRp‘F’ Is For? This ETF Is Named After FANGs and Holds No Facebook
Carolina Wilson and Sarah Frier – Bloomberg
Fund, known by ticker FNG, sold out of Facebook during scandal; Earlier, ETF had dumped Apple holdings ahead of earnings boost. What’s in a name? When hearing the acronym FANG, four technology stocks come to mind: Facebook Inc., Amazon.com. Inc., Netflix Inc., and Alphabet Inc.’s Google.
/jlne.ws/2JXeQ5fSeveral banks dismissed from U.S. metals price-fixing lawsuits
Jonathan Stempel – Reuters
A U.S. judge has dismissed five large banks from two antitrust lawsuits by investors alleging multi-year conspiracies to rig prices for hundreds of billions of dollars of transactions in the global silver and gold markets.
/jlne.ws/2JWBVFnFyre Festival Promoter Pleads Guilty to Ticket-Scam Charges
Bob Van Voris – Bloomberg
Billy McFarland, the architect of the failed 2017 Fyre Festival, pleaded guilty to new charges that he ran a fraudulent ticket business while on bail facing earlier fraud charges connected to the disastrous luxury concert series in the Bahamas.
/jlne.ws/2K0AoOwFannie Mae Debt Sale Sets Milestone For New Borrowing Benchmark; New index taking aim at scandal-ridden Libor passes $6 billion test.
Vipal Monga and Daniel Kruger – WSJ
A benchmark lending rate that regulators and investors hope can replace the scandal-plagued Libor as the foundation for trillions of dollars of debt from credit cards to business loans easily passed a key test.
/jlne.ws/2JYY9GR

Exchanges, OTC and Clearing

CME to launch six gasoline futures contracts
Reuters Staff
CME Group says it plans to launch six gasoline futures contracts effective on Aug. 26 and for trading from Aug. 27
/jlne.ws/2K0xN7eCME Group Achieves International Average Daily Volume of 4.2 Million Contracts in Q2 2018, Up 13 Percent from Q2 2017
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it achieved quarterly international (defined as outside of the US) average daily volume (ADV) of 4.2 million contracts during the second quarter of 2018, up 13 percent over the same period last year.
/jlne.ws/2K07pdJCME profits miss despite bump in trading volumes; Concerns around global protectionism sparked higher trade, particularly in agricultural products
Joe Rennison – FT
CME Group, the world’s largest futures exchange, today reported mixed earnings, tempered by trade concerns fuelling volumes as investors sought to protect against price fluctuations.
/jlne.ws/2K1xgSmCME quarterly earnings boosted by volumes, market data
John McCrank – Reuters
CME Group Inc (CME.O), the world’s largest futures exchange operator, said on Thursday its second-quarter earnings rose on the back of higher trading volumes and market data fees, as it works toward the close of its $5.5 billion acquisition of NEX Group (NXGN.L).
/jlne.ws/2K5ifiuMGEX Reports 25th Best Electronic Volume Day
MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives
Clearing Organization (DCO), reports July 25th as the fourth July date on the Daily Electronic Volume’s top 25 records list. Coming in at 19,396 contracts and beating out the previous title holder by 160 contracts, yesterday’s electronic volume now occupies the 25th-best overall spot.
/jlne.ws/2K0yeP4While the ECB holds on to its monetary policy, why not visit the home of the euro yield curve?
Eurex
The European Central Bank has decided to keep its monetary policy unchanged and freeze its benchmark interest rate on the deposit facility at -0.40 per cent. This is again a good opportunity to take a closer look at what Eurex interest rate derivatives have to offer.
/jlne.ws/2LqwSCwExchange Publishes CG Code Consultation Conclusions and Guidance for Boards and Directors
HKEX
Proposed changes to CG Code and related Listing Rules receive strong support; Amendments to CG Code and related Listing Rules to take effect 1 January 2019; Exchange publishes “Guidance for Boards and Directors” to help directors to be more effective
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), published today (Friday) conclusions from its consultation on its Corporate Governance Code (CG Code) and related Listing Rules (Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules, or Consultation Conclusions)1 along with “Guidance for Boards and Directors”.
/jlne.ws/2LuV7iW

Fintech

FIA Announces Partnership With Rise New York, Created By Barclays, To Promote Innovators Pavilion
Press Release
FIA today announced that Rise New York, created by Barclays, has joined the FIA Innovators Pavilion as a community partner. Rise New York will help FIA promote the Innovators Pavilion, FIA’s annual fintech showcase. Now in its fourth year, the Innovators Pavilion is part of FIA Expo, the world’s largest gathering of professionals in the derivatives markets. This year’s FIA Expo will take place in Chicago on Oct. 16-18.
bit.ly/2vbiG5HGoodbye HipChat: Slack and Atlassian Team Up on Chat Software; Stewart Butterfield’s startup will subsume Atlassian’s corporate chat tools to take on Microsoft.
Dina Bass and Ellen Huet – Bloomberg
Atlassian Corp. is selling its corporate chat software to rival Slack Technologies Inc. and taking a small stake in the startup, as they face greater competition from Microsoft Corp.
/jlne.ws/2JYY3isFortnite Mania Fuels Epic Growth to $8.5 Billion; Epic Games’ profits on the game have made “legendary character” Tim Sweeney a billionaire.
Devon Pendleton, Christopher Palmeri – Bloomberg
Tim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: He gave it away. That strategy has made him a billionaire. In an industry chock-a-block with monster hits, such as Candy Crush and Pokemon Go, Fortnite’s popularity isn’t surprising. Its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people.
/jlne.ws/2LoVcF5Schroders CEO: fintech is the ‘greatest opportunity we face’
Mark Cobley – Financial News
Peter Harrison, the boss of one of the UK’s largest asset managers, has said innovations in financial technology are the “single biggest opportunity” for his industry right now — as his firm Schroders steps up its efforts to build links with fintech entrepreneurs.
Speaking as the fund manager reported its first-half results on July 26, Harrison told Financial News the “really interesting step-change for our industry will come from technological innovation”. He added: “We are working with 25 or 26 fintechs across the business, across a whole range of different things — I see this as the single biggest opportunity we face.”
bit.ly/2v5pTnECySEC to Establish FinTech Innovation Hub with Focus on Blockchain
David Kimberley – Finance Magnates
Regulatory financial technology (FinTech) initiatives have been springing up across the globe over the past few years. This Friday, the main Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC), announced that it would also be creating an innovation hub.
bit.ly/2vaVB2ZAlexa, What’s Wall Street Saying About Amazon’s Earnings Beat?
Joe Easton and Jeran Wittenstein – Bloomberg
Shares up 4 percent pre-market amid cloud, advertising boost; Goldman Sachs, others raise price targets for the stock
Amazon.com Inc.’s record second-quarter profit drew a flurry of price target boosts on Wall Street. Analysts say strength in the cloud and advertising business, as well as operational improvements, have positioned the company for long-term growth. The shares rose 4 percent in pre-market trading in New York and are on track to open at a record high.
/jlne.ws/2K1e4nNThomson Reuters unit to be renamed Refinitiv after Blackstone deal
Reuters Staff
Thomson Reuters Corp’s (TRI.TO) Financial and Risk unit, in which U.S. private equity firm Blackstone Group (BX.N) is buying a majority stake, will be renamed Refinitiv once the deal closes, the company said in a statement on Friday.
/jlne.ws/2LptpnM

Cryptocurrencies

The Winklevoss Twins Want To Sell You A Bitcoin Fund; The Winklevoss twins filed a form with the SEC that’s the first step to selling shares in a fund that would track the price of Bitcoin. A look at the next move for the Facebook-suing twins.
Matthew Zeitlin – BuzzFeed News
Tyler and Cameron Winklevoss, impossibly strong-jawed and broad-shouldered rowers, tech entrepreneurs, and famous litigators of Mark Zuckerberg, are now two of the biggest and most famous players in Bitcoin, the cryptographic, digital currency whose wild price gyrations and security issues captivated the business press for a few weeks in March and April of this year. In April, the twins revealed to The New York Times that they owned some $11 million worth of Bitcoin.
/jlne.ws/2K14a5XWinklevoss-Backed Bid for Bitcoin-ETF Rejected by Regulators
Benjamin Bain – Bloomberg
Cryptocurrency declines after SEC announces its decision; Agency raises concern about oversight of Bitcoin’s spot market
Bitcoin fell after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss, showing the regulator remains skeptical that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses.
/jlne.ws/2K1syEaBrock Pierce: The Hippie King of Cryptocurrency
Neil Strauss – Rolling Stone
Twenty-six men and women are seated along four folding tables laid end to end in the ballroom of a former Masonic lodge in Old San Juan, Puerto Rico. An eclectic mix, ranging from local charity workers to Silicon Valley investors to cryptocurrency early adopters, they all believe that they’re about to make history. Specifically, they are here to help Brock Pierce – a child actor turned video-game entrepreneur turned crypto titan – give away a billion dollars to charity. Not in a will after his death, but now, in the prime of his life and the peak of his career, at age 37.
/rol.st/2v8YBwBBitcoin $500,000 Creates a Buzz, But Technicals Point to Rally
Olivia Schaber – Bloomberg
Hedge fund manager predicts correction, then massive rally; Directional index shows biggest divergence since last year=
Comments from Morgan Creek Capital Management hedge fund manager Mark Yusko that Bitcoin could reach $500,000 in six years are heartening battered crypto bulls. They may be better served taking a look at some underlying technicals in the meantime.
/jlne.ws/2K5gIJgCrypto Futures Expansion Won’t Happen Soon, CME’s Duffy Says
Brian Louis – Bloomberg
Exchange head reiterates cautious approach to other contracts; Rival Cboe has hinted at wanting to expand crypto derivatives=
CME Group Inc. Chief Executive Officer Terry Duffy said that in his nearly four decades in trading, Bitcoin futures “might have been the most controversial launch of a product” and he reiterated the company’s not in a hurry to list more cryptocurrency-related contracts.
/jlne.ws/2K1Qdo9The World’s Dominant Crypto-Mining Company Wants to Own AI; In a rare interview, Bitmain’s Jihan Wu talks about his plans to take on Nvidia, Intel, and AMD.
Max Chafkin and David Ramli – Bloomberg
Even by the standards of Bitcoin, things are crazy in China. As the boom in cryptocurrencies has become the biggest speculative bubble in recorded history, a single company in Beijing’s Haidian District has been selling the chips that generate as much as 80 percent of the world’s cryptocoins. “We feel lucky,” says Jihan Wu, the co-chief executive of Bitmain Technologies Ltd., which was more or less unknown two years ago and, according to Wu, booked revenue of $3.5 billion in 2017. (On June 4, a Bitmain spokesman said Wu misspoke and the actual figure was $2.5 billion.)
/jlne.ws/2K1LT8jCrypto Coin Tether Defies Logic on Kraken’s Market, Raising Red Flags
Matthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – Bloomberg
In the traditional world of securities exchanges, it would be akin to defying gravity. But at Kraken, one of the most popular venues for trading cryptocurrencies, a coin called Tether does it again and again.
/jlne.ws/2KjhdViSelf-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action by
Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments
No. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin Trust
SEC
/jlne.ws/2K1BbP9As Crypto Meets Prediction Markets, Regulators Take Notice
Matthew Leising – Bloomberg
The next confrontation between government regulators and a blockchain startup appears set to ensnare a prediction market platform that goes by the name Augur.
/jlne.ws/2K0zFNiMike Novogratz’s Crypto Firm Lost $134 Million in the First Quarter
Doug Alexander – Bloomberg
Crypto-focused merchant bank releases first financial results; Quarterly losses led by trading digital assets, investments
Galaxy Digital LP, the crypto-focused merchant bank founded by Mike Novogratz, posted a $134 million loss in its first quarter, when the value of Bitcoin and other cryptocurrencies plunged.
/jlne.ws/2K0dYwN

Politics

Butina Sought a Secret Kremlin Line to the U.S. A Rockefeller May Have Helped
Polly Mosendz , Greg Farrell , and Ilya Arkhipov – Bloomberg
O’Neill hosted 2017 dinner for prayer-breakfast delegates; A Russian-language guide to Rohrabacher and other guests
A scion of the Rockefeller clan, George D. O’Neill Jr., was one of the U.S. conservatives who allegedly helped Mariia Butina’s efforts to build a secret line of communication back to the Kremlin, judging by details in recent U.S. filings.
/jlne.ws/2JZwAgDMueller Examining Trump’s Tweets in Wide-Ranging Obstruction Inquiry
Michael S. Schmidt and Maggie Haberman – NY Times
For years, President Trump has used Twitter as his go-to public relations weapon, mounting a barrage of attacks on celebrities and then political rivals even after advisers warned he could be creating legal problems for himself.
/jlne.ws/2K07PRfSteve Bannon’s plot for the downfall of old Europe; The next EU parliament elections are a chance to defeat the far-right
FT
As an architect of Donald Trump’s 2016 presidential election victory, Steve Bannon knows a thing or two about unconventional political warfare. Now the godfather of the US alt-right is gearing for combat in Europe. His arena is the campaign for the next European Parliament elections, scheduled for May 23-26 2019. His chosen weapons, as in the US, are set to be the stoking of social tensions, economic nationalism, incitement of public anger at elites, systematic attempts to discredit reasoned argument and the spread of misinformation.
/jlne.ws/2K5jAWy

Regulation

U.S. regulator stands by decision to block Winklevoss bitcoin ETF
Trevor Hunnicutt, Michelle Price – Reuters
The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.
/jlne.ws/2K06iuzFinTech Regulation Bridges Silicon Valley and Washington D.C.
Stephanie MacConnell – Forbes
The FinTech community is closely watching the latest developments within the Consumer Financial Protection Bureau (CFPB). Recently, Kathy Kraninger was nominated as Director of the CFPB and, if confirmed, she will succeed acting Director Mike Mulvaney, who previously attacked the Bureau’s very existence and has worked to change policies and cut budget since taking the helm in November 2017.
/jlne.ws/2JZzO3JThe regulator is looking at platforms and so should you
Taha Lokhandwala – InvestorsChronicle
The Financial Conduct Authority (FCA), the financial services regulator, is investigating whether investment platforms are competitive and work in the interests of investors. It has recently published an interim report on its Investment Platforms Market Study, which has highlighted a number of areas of concern, including the difficulties in switching platforms and the poor rates of interest they offer on cash.
/jlne.ws/2K0xM3kCFTC Chairman Giancarlo To Keynote The West Texas Legislative
CFTC
/jlne.ws/2K1aXMDPodcast: CFTC Talks EP053: MARK YALLOP FMSB Part Two
CFTC
This week on CFTC Talks, we speak with Mark Yallop, chair of the Fixed Income, Currencies and Commodities Markets Standards Board. We cover the enormous cost to the world financial system of bad behavior, how to historically break down market misconduct into 7 categories and why trust is the heart of the financial markets.
/jlne.ws/2K1qLz8Nordic Credit Rating AS registered as Credit Rating Agency
ESMA
The EFTA Surveillance Authority (EFTA SA) has registered today the Nordic Credit Rating AS (NCR) as a credit rating agency under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (the CRA Regulation), as incorporated into the Agreement on the European Economic Area (EEA Agreement). This decision comes into effect on 3 August 2018. NCR is based in Oslo, Norway, with a branch in Stockholm, Sweden. NRC intends to issue corporate ratings.
/jlne.ws/2mMeNQzFCA proposes changes to rules for crowdfunding platforms
FCA
Following a post-implementation review of its crowdfunding rules, the Financial Conduct Authority (FCA) is opening a consultation on new rules for loan-based crowdfunding platforms.
/jlne.ws/2mSFeo5

Investing and Trading

Is the Key to Beating the Market Written in the Stars?; Henry Weingarten invests his clients’ money by charting the movement of heavenly bodies.
Simon van Zuylen-Wood – Bloomberg
It’s 11 a.m. at the Princeton Club in Midtown Manhattan. A number of financial professionals have gathered here for the “AFund June 2018 Natural Resources Investment Symposium.” Our first speaker is HSBC’s chief precious metals analyst, the aptly named James Steel, who promotes gold as a hedge against populist upheaval. After Steel, there are slideshows from several mining companies seeking investors. After that, lunch. A generic networking event, by all appearances.
/jlne.ws/2K1DDVRECB Keeps to Policy Path to End Bond Purchases
Carolynn Look – Bloomberg
Mario Draghi holds media briefing at 2:30 p.m. in Frankfurt; President will be quizzed on economic risks as QE exit nears
The European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid.
/jlne.ws/2K0B2LOU.S. domestic stock funds report more demand than peers abroad: Lipper
James Thorne – Reuters
Investors in U.S. funds traded international equities for domestic stocks during the latest week as earnings beat expectations while trade tensions simmered, Lipper data showed on Thursday.
/jlne.ws/2K1vfFMWall Street faces up to “bombshell guidance” at Facebook
Jamie Powell
Facebook’s second-quarter results — which prompted the company’s shares to plunge as much as 24 per cent (!!) overnight — was the first time the surveillance-capitalism machine’s revenue growth had missed expectations since 2015.
/jlne.ws/2K5QE0UIt’s All About Social Media Contagion, Not FAANGs: Taking Stock
Arie Shapira – Bloomberg
Stock futures are holding on to their slight gains thanks to Amazon decoupling from most of its FAANG peers, though momentum gets hit from another whiff from a social media bellwether as Twitter plunges ~16% on weak monthly active user numbers.
/jlne.ws/2K5lDKe

Institutions

What Does a Bank Meltdown Cost? Not Much, Actually; Sabadell hasn’t suffered enough from the fiasco at Britain’s TSB.
Edward Evans – Bloomberg
It was a spectacular fiasco, made even worse by the clumsy way in which it was handled. TSB Banking Group Plc’s attempt in April to transfer the records of its 5 million customers to a new IT system left about a million of them unable to access their accounts and vulnerable to fraud. At first, TSB said things were running smoothly. It makes you wonder what their idea of chaos is.
/jlne.ws/2JWQvN6A $14 Billion Fund Manager Feels ‘Vindicated’ by Facebook Plunge
Olivia Carville and Emily Chasan – Bloomberg
John Streur, an investor who sold his fund’s Facebook Inc. holding after the Cambridge Analytica privacy scandal, said he felt “vindicated” watching the social media giant’s free-fall Thursday.
/jlne.ws/2JWSUaAHere’s How ETFs With Biggest Facebook Exposure Traded Today
Elena Popina , Sarah Ponczek , and Carolina Wilson – Bloomberg
A six-week old Communication Services Select Sector SPDR Fund just had its worst day ever. A rout in Facebook Inc. is to blame for that.
/jlne.ws/2K5PBy0UBS to review misconduct policies after rape claim; Woman alleged she was assaulted by a more senior bank employee
Laura Noonan in New York – FT
UBS is reviewing how it handles sexual misconduct allegations after an employee who claimed she was raped by a colleague contacted the head of its investment bank, Andrea Orcel, to complain about how the bank dealt with her case.
/jlne.ws/2JZQGHmUBS Is Cutting Dozens of Staff in Wealth-Management Revamp
Emily Chasan and Sonali Basak – Bloomberg
16.18CHF+0.18+1.16%
UBS Group AG is laying off dozens of staff at its wealth-management division as it revamps the unit’s leadership team, according to people briefed on the matter.
/jlne.ws/2K1BjhwThe $5 Trillion Question: How Did the Firm That Pioneered ETFs Lose Its Lead?; State Street developed a hit investment product 25 years ago. Then more-focused rivals came along with better marketing and lower costs. Now the trust bank is No. 3 in the market it started.
Asjylyn Loder – WSJ
For State Street Corp. STT -0.32% , the company that pioneered the $5 trillion exchange-traded fund industry, it’s been a long way down.
/jlne.ws/2JZIqr5

Regions

Why Is China’s Currency Falling?; Worries about competitive devaluation are almost certainly misplaced.
Christopher Balding – Bloomberg
Since April, the yuan has fallen by almost 8 percent against the U.S. dollar. This has led many analysts and politicians to speculate that China is intentionally trying to devalue its currency to offset the effect of President Donald Trump’s tariffs. It almost certainly isn’t.
/jlne.ws/2K1K2QZHey Buddy, Can You Spare 2 Million for Coffee?
Vivianne Rodrigues – Bloomberg
ONE. MILLION. PERCENT. That’s how high inflation will climb in Venezuela by year’s end, according to the latest forecast by the International Monetary Fund.
/jlne.ws/2JYUKryChina should really start to worry about Trump; As Europe wins a reprieve over trade the portents for Beijing have commensurately darkened
Edward Luce- FT
It was Wednesday so Europe went from being a “foe” of America to a “great friend”. Next Monday might be different. Perhaps Europe will still be in Donald Trump’s good books. The only person who can say for sure is Mr Trump. Even he probably has little idea. But my hunch is that the ceasefire he struck with Jean-Claude Juncker, president of the European Commission, will hold. Mr Trump loves applause and the last-minute trade agreement with Brussels earned a transatlantic ovation. Europe has won a reprieve. The portents for China have commensurately darkened.
/jlne.ws/2K5RWZOMizuho Eyes $11 Trillion Held by Japan’s Rich Elderly
Gareth Allan and Yuki Hagiwara – Bloomberg
Bank began offering tailor-made trusts for wealthy retirees; Also expanding consulting for Japan pension funds, CEO says
Mizuho Financial Group Inc.’s trust banking arm has its sights set on exactly where the wealth is in Japan: the $11 trillion held by the nation’s elderly.
/jlne.ws/2JZS8tiRussia Extends Rate Pause as Risks to Inflation Halt Easing
Olga Tanas and Anna Andrianova – Bloomberg
Benchmark kept at 7.25% for third meeting, in line with survey; Central bank stays just a step short of level deemed ‘neutral’
Russia’s central bank kept interest rates unchanged for a third consecutive meeting and warned that external risks and the highest inflation expectations in almost a year mean monetary easing probably won’t resume until 2019.
/jlne.ws/2K1O0cf

Brexit

U.K.’s Brexit Options Narrow as Perilous Choices Loom for May
Tim Ros , Emma Ross-Thomas, and Jess Shankleman – Bloomberg
Barnier rejects compromise at heart of May’s Brexit strategy; Chances of no-deal exit, another election creep higher
The U.K.’s Brexit options are narrowing, and most of the choices are hazardous for Prime Minister Theresa May.
/jlne.ws/2K0YwR5Major French Tech Company’s CEO Fears Effects of Hard Brexit
Giles Turner and Mark Barton – Bloomberg
Capgemini SE Chief Executive Officer Paul Hermelin is predicting a hard Brexit will cause a knock-on effect to its British clients, potentially weakening demand.
/jlne.ws/2JYXmpn

Miscellaneous

‘Disappeared’ U.S. Records on Detained Migrant Kids Sparks Probe
Erik Larson – Reuters
Claims by a U.S. ethics watchdog that the Department of Homeland Security and other agencies may have lost or destroyed files relating to the separation of migrant children at the border have triggered a government probe into the proper retention of records.
/jlne.ws/2K01vJm*****Unforgivable.~JJL

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