Courtroom losses sting feds in futures enforcement; SEC approves new Silicon Valley stock exchange

May 13, 2019

First Read

Hits & Takes
JLN Staff

Congratulations to Pat Kenny, Chairman of The AFM, on a well run conference in Chicago. The Association of Futures Markets was treated to a smorgasbord of Chicago speakers, food and experiences. The final day was highlighted with a speech by Dr. Richard Sandor.

In his comments, Sandor twice referenced me, calling me a sandwich and a soap opera. Actually, he called me his “hero” and his “Northern Star,” which is a guiding light. The Guiding Light is a longtime TV soap opera. Thank you to Dr. Sandor for his kind words.~JJL

This is Consensus week in New York, so expect a lot of crypto and DLT news.~JJL

In building the Marketswiki page for CME Micro E-mini products, we discovered that those contracts refer only to the micro contracts (one-tenth the size of the CME’s E-mini futures) on the S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average. For those of us who were around 10 years ago, the original Micros for forex pairs and gold are are branded as CME Group E-micro FX Futures and E-Micro Gold Futures. Micro E-minis and E-micros, got it? Took me about an hour to figure out, but I’m slow that way.~JK

Breaking news this morning: China will raise tariffs on $60 billion of U.S. imports, effective June 1. ~SR

Last Friday, the SEC published a proposal to improve the efficiency of cross-border security-based swaps transactions. No, it doesn’t mention blockchain.~MR

Rob Garfield is raising money for a clean water project. My church raised $25K to give a well to a community in Africa last year. Clean water is vitally important and I support Rob’s efforts. I hope you do too.~JJL

Crain’s Chicago Business released its 20 In Their 20s list – CME Lead Software Engineer Jonathan Morley, Seed CX Risk and Settlement Manager Maurice Goodman, Bloq Business Development Manager Alexandra Prodromos, and M1 Finance Founding CEO Brian Barnes are the finance related entrants on the list.~SD

Uber’s IPO didn’t go very well – it dropped 7.6% in its Friday debut. Meanwhile, its ride sharing competitor, Lyft, is down more than 30% since its IPO on March 28. ~SD

In an attempt to recoup some of its recent losses, Bitfinex launched a private token sale last week. According to the company’s CTO, it has already raised $1 billion.~MR

My son Robby, who recently turned 18, just completed his very last high school athletic event. He was the goalie on the water polo team and York Community High School lost to Fenwick in the sectionals. And with that his athletic career is over. He played baseball, swam and played water polo at York. He had also played basketball and soccer outside of school.~JJL

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The Spread – Wake Up Call
JohnLothianNews.com
Twitter risk reared its head yet again. In this episode, we take a look at the impact President Trump’s tariff tweets have had on markets.
Watch the video and see the stories referenced here »

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The Day Traders Are Back, Now Playing With Options; Compared with buying stocks, the fees and risk for individual investors are considerably higher
Lisa Beilfuss and Gunjan Banerji – WSJ
Martin Rogers has been regularly trading options from his mobile phone since last summer, after dabbling in stocks and derivatives for years. A pharmaceutical representative based in Winter Garden, Fla., Mr. Rogers is often on the road and has been drawn to the ease of trading between meetings and the possibility of high returns.
/on.wsj.com/2VyMc57

******Mr. Rogers trades options?~JJL

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Farmers Plow Through Netflix While Plowing Fields
Jacob Bunge – The Wall Street Journal
After kissing his three children good-night this spring, Aaron Newell settled in to binge-watch the “Avengers” movies ahead of the franchise’s new theater release, “Avengers: Endgame.”
Mr. Newell’s home theater – equipped with a stereo sound system and an ergonomically designed chair – sits inside a five-by-five foot soundproofed cab above roughly 30,000 pounds of rumbling machinery, crawling over fields on massive caterpillar tracks.
/on.wsj.com/2JxgqOP

*****This is not how my uncle John plowed the fields.~JJL

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Drinking two cups of coffee a day can help you live longer, research suggests; Beverage has previously been found to reduce the risk of developing Alzheimer’s
Chelsea Ritschel – The Independent
Drinking as little as two cups of coffee a day can increase your life expectancy by up to two years, according to researchers.
/ind.pn/2Vx3DTH

***** You mean I have to stop at two?~JJL

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Bridging the Week: May 6 – 10 and May 13, 2019 (So Many Guidances by CFTC Enforcement, FinCEN and FINRA, So Little Time; The SEC and Jackson Pollock)
Gary DeWaal – Bridging the Week
Last week may not have been the best of times or the worst of times (to borrow from Charles Dickens), but it was undoubtedly a time that three United States financial services regulators issued important guidance on disparate topics. For the first time ever, the Commodity Futures Trading Commission’s Division of Enforcement issued an enforcement manual to provide insight into its policies and procedures. Separately, the Financial Crimes Enforcement Network of the US Department of Treasury released comprehensive guidance articulating when persons involved in virtual currency businesses may be acting as money transmitters and require licensing as money service businesses. Finally, the Financial Industry Regulatory Authority enumerated almost 100 different red flags potentially requiring filing of Suspicious Activity Reports by member broker-dealers with FinCEN.
bit.ly/2HiXHoQ

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Friday’s Top Three
Our top read story on Friday was Thom Thompson’s JLN piece “Regulatory Creep” – Legal Issues in U.S. v. Thakkar. Second was Bloomberg’s China Armed With Powerful Market Weapons in Duel With Trump. Third was the FT’s piece on the new CME Micro E-mini products in CME gains boost with new ‘micro’ futures contracts

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MarketsWiki Stats
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CryptoMarketsWiki Website»

CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

Recently updated pages include
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Lead Stories

Courtroom losses sting feds in futures enforcement campaign; Score three big wins for defendants in market manipulation cases.
Lynne Marek – Crain’s Chicago Business
A federal crackdown on manipulation in futures markets is losing its sting after government defeats in closely watched cases over the past year. U.S. prosecutors failed to win convictions in two criminal trials, while regulators at the Commodity Futures Trading Commission lost a major civil case against big Chicago firm DRW Trading. More recently, the CFTC quietly settled a big lawsuit against food giants Kraft Heinz and Mondelez International.
bit.ly/2VEdEid

SEC approves new Silicon Valley stock exchange backed by Marc Andreessen, other tech heavyweights
Thomas Franck – CNBC
The U.S. government on Friday approved the formation of a new Silicon Valley stock exchange following regulatory criticism late last year.
/cnb.cx/2vUjCMj

Uber’s IPO Joins Ranks of Wall Street Flops
Sonali Basak and Julie Verhage – Bloomberg
Ride-hailing stock kept falling as U.S. markets rebounded; Last private funding round valued Uber at about $76 billion
It was to usher in nothing less than a new era for Wall Street. UFAANG.
/bloom.bg/2vSb48T

Uber’s Day One Flop Shows a New Silicon Valley Stock Exchange May Have a Point
Nick Baker – Bloomberg
LTSE eyes market where startups feel more comfortable trading; Uber, in contrast, is worth billions after long avoiding IPO
Uber Technologies Inc.’s shares dropped on their first day of trading and a U.S. regulator said it would let a new kind of stock exchange open. Both things happened Friday, and they’re arguably interconnected.
/bloom.bg/2VA7CyI

Norway clears way for Euronext to secure Oslo Bors in Nasdaq battle
Sudip Kar-Gupta, Terje Solsvik – Reuters
Euronext won approval from Norway’s Ministry of Finance to buy up to 100% of Oslo Bors on Monday, effectively ending a five-month battle with Nasdaq for one of the last independent stock market operators in Europe.
/reut.rs/2VyMZDd

Wall Street Slaps Down NYC Again With AllianceBernstein’s Move to Nashville
Patrick Clark and Noah Buhayar – Bloomberg
The asset manager is shifting about 1,050 jobs to Nashville; It’s part of a trend as financial firms look to reduce costs
New York is losing more than a thousand financial-industry jobs — and Manhattan’s loss is Music City’s gain.
/bloom.bg/2VzdjwR

Nasdaq Lawsuit Over Cybersecurity ETF Fees Goes to Trial
Asjylyn Loder – The Wall Street Journal
Nasdaq Inc.’s lawsuit accusing a New Jersey company of stealing more than $1 billion in exchange-traded funds is set to come to trial Monday in New York, in a case that is drawing interest across the ETF industry. Nasdaq’s civil suit, filed in October 2017 in the U.S. District Court for the Southern District of New York, alleges that ETF Managers Group LLC illegally kept millions of dollars in management fees generated by funds including a popular cybersecurity ETF best known by its ticker HACK.
/on.wsj.com/2VzAveD

Fannie and Freddie Back More Mortgages of Those Deeply in Debt
Ben Eisen – The Wall Street Journal
The gatekeepers of the American mortgage market are increasingly backing loans to borrowers who have heavy debt loads, highlighting questions about mortgage risk as policy makers debate ways to change the system.
/on.wsj.com/2HenUoe

This $100 Million Hedge Fund Has Shorted China Stock Futures
Heejin Kim – Bloomberg
Timefolio says ‘National Team’ may not help market on Monday; Tariffs would need to be canceled to boost equities, CEO says
A $100 million hedge fund is betting that the outcome of U.S.-China trade talks won’t be positive enough to lift stocks on Monday.
/bloom.bg/2VBzW43

Volatility in Stocks Could Unravel Bets on Calm Markets; Computer-driven funds amassed big equity positions while markets were sleepy
Trading on Tranquility
Michael Wursthorn and Akane Otani – WSJ
Recent swings in the stock market are threatening to unravel multibillion-dollar bets that rely on calm markets, potentially adding to investors’ jitters over the past week.
/on.wsj.com/2VBVLAj

Crypto world descends on New York as bitcoin makes come back
Oscar Williams-Grut – Yahoo Finance UK
Cryptocurrency entrepreneurs and investors from around the world are meeting in New York this week for one of the industry’s biggest events.
/yhoo.it/2VveoWy

Bank Secrecy Rules Get a Rethink After Danske Laundering Shock
Frances Schwartzkopff – Bloomberg
European regulators seek to balance privacy and transparency; Sharing information would help prevent criminals migrating
Danske Bank A/S is turning into a case study for European regulators, legislators and bankers to rethink fundamental assumptions about how the finance industry should operate.
/bloom.bg/2Q2k0S4

Exchanges, OTC and Clearing

Euronext receives clearance from the Norwegian Ministry of Finance to acquire up to 100% of Oslo Bors VPS
Euronext
Euronext, the leading pan-European exchange, welcomes the clearance from Norway’s Ministry of Finance to acquire up to 100% of Oslo Bors VPS’s capital, as applied for. Reaching this critical milestone, Euronext confirms its intention to complete the transaction by the end of June 2019.
bit.ly/2Q2IQl0

Norwegian Ministry of Finance approves Nasdaq as a suitable owner of Oslo Bors VPS
GlobeNewswire
Nasdaq AB, an indirect subsidiary of Nasdaq, Inc., today received the ruling by the Ministry of Finance in Norway in regards to the future ownership requirements of Oslo Bors VPS Holding ASA in connection with Nasdaq AB’s offer to acquire all of the issued shares of Oslo Bors VPS made pursuant to its offer document published on February 4, 2019, as amended by the announcement made on March 4, 2019.
bit.ly/2PXZItd

CME looks to Brazil as trade war shifts global soybean flows; The derivatives exchange is working on developing potential risk management tools for the South American country’s market, said CEO Terry Duffy.
Bloomberg
The world’s largest derivatives exchange is looking to Brazil as President Donald Trump’s trade war shifts global soybean flows.
bit.ly/2vWU1CB

London Stock Exchange Group Signs MOU With Colombo Stock Exchange
LSE
Establishes framework for LSEG and CSE to enhance domestic and international debt capital markets in Sri Lanka; Follows $2.4 billion London listing of Sri Lanka’s off-shore bond
London Stock Exchange Group (LSEG) today announced the signing of a landmark Memorandum of Understanding (MoU) with the Colombo Stock Exchange (CSE) to facilitate further collaboration between the two Groups.
bit.ly/2VkPns4

Exchange-Traded Notes On Litecoin And Ripple Now Tradable At Boerse Stuttgart – Investors Can Participate In The Future Price Development Of The Cryptocurrencies Through Exchange-Traded Securities
Mondovisione
For the first time in Germany, investors can now buy and sell exchange-traded notes (ETNs) based on the cryptocurrencies Litecoin and Ripple (XRP). The four securities issued by XBT Provider in Sweden track the price of the two cryptocurrencies in relation to the euro and the Swedish krona.
bit.ly/2w4plQ1

Fintech

USAM Group Celebrates Five Years and Announces Sales Slicer a Major Innovation in Sales Forecasting
PRnewswire
USAM Group Inc. is proud to announce that today marks the 5th anniversary of the company’s founding. Over that period, USAM’s global team of enterprise sales and marketing professionals has matched hundreds of financial institutions with best-of-breed solutions from dozens of advanced information and technology vendors. USAM offers complete transparency to these vendors by tracking and reporting every activity performed, including type, duration, related contacts, and other pertinent details.
/prn.to/2HfOD2I

BSO acquires IX Reach
BSO
We have strengthened our capabilities within the wholesale telecoms, cloud and technology sectors with the acquisition of IX Reach, a global provider of network services.
bit.ly/2VBycrx

Liquidnet Expands Global Investment Network with Acquisition of RSRCHXchange
Liquidnet
Liquidnet, the global institutional investment network, today announced it has acquired RSRCHXchange, a leading marketplace and aggregator for institutional research. The acquisition supports Liquidnet’s evolution as a global investment network and enables it to embed a new level of research and analytics into the global investment process. Liquidnet will now be able to deliver relevant, actionable insights directly to investment teams through the Liquidnet platform.
/yhoo.it/2Vz9dVv

****Financial times on the deal here.

AllianceBernstein Selects OpenFin To Drive Global Digital Transformation Strategy – OpenFin To Enable Integration And Interoperability With Legacy And Third Party Applications
Mondovisione
OpenFin, the operating system (OS) of finance, today announced that AllianceBernstein, the global asset management firm, has chosen OpenFin to help accelerate their digital transformation strategy.
bit.ly/2VotHLH

ION to buy majority of Acuris from BC Partners, GIC
PE Hub
Funds advised by BC Partners (“BC Partners”) announced the sale of a majority stake in Acuris, a global provider of proprietary financial intelligence, data and analytics, to ION Investment Group (“ION”). ION will acquire a controlling stake in the company from BC Partners and GIC, Singapore’s sovereign wealth fund. BC Partners and Acuris management are reinvesting and will retain minority ownership.
bit.ly/30iHw1W

Sterling Trading Tech and Voyager Partner to Offer Digital Asset Trading Capabilities
Business Wire via AP
Sterling Trading Tech (STT), an innovative leader of professional trading technology solutions, and Voyager Digital (Canada) Ltd, through its subsidiary, Voyager Digital, LLC, a licensed crypto-asset broker that provides investors with a turnkey solution to trade crypto-assets, today announced that they have engaged in a strategic partnership to offer digital asset trading capabilities to institutional and retail traders through the STT platforms.
bit.ly/2Vn82DI

Cryptocurrencies

Crypto Exchange Set to Get First Approval to Operate in Mideast
Nour Al Ali – Bloomberg
A five-year-old cryptocurrency exchange in the Middle East is poised to become the first to receive a special license to operate in the region after getting a preliminary nod from the United Arab Emirates.
/bloom.bg/2Vyy5gp

Bitfinex CTO says the company successfully raised nearly $1 billion in a private token sale
The Block Crypto
Paolo Ardoino, the CTO of beleaguered crypto exchange Bitfinex, confirmed on Twitter that the firm has raised nearly 1 billion in USDT and USD from a private token sale. The issuance of the exchange tokens, dubbed LEO, was planned to cover the $850 million currently frozen in several accounts controlled by the payment processing company Crypto Capital, which is at the heart of a recent court order issued by the New York Attorney General’s office against the firm. The NYAG alleges that Bitfinex co-mingled client funds and borrowed money from sister company Tether to cover-up the seized funds.
bit.ly/2Vx1CXD

From Crypto Winter to DeFi: A Year of Loss and Opportunity
Michael J Casey – Coindesk
The following article originally appeared in Consensus Magazine, a custom-curated magazine delivered exclusively to Consensus 2019 attendees.
bit.ly/2VvdysS

Bitcoin jumps above $7,000 to 9-month high
Alice Woodhouse – Financial Times
Bitcoin was hovering above $7,000 on Monday after climbing to a nine-month high over the weekend. The cryptocurrency jumped to $7,585 on Sunday, its highest level since August, according to Refinitiv data based on the Bitstamp exchange. Ethereum, the second-largest digital asset by market capitalisation was down 2.6 per cent over the past 24 hours, according to Coinmarketcap.
/on.ft.com/2HiXkKY

***Forbes has this: Is This Behind The Latest $25 Billion Bitcoin And Crypto Price Rally?

GoldGram Unveils GGC GoldGramCoin – A New Asset-Backed Gold Token
Press Release
Singapore-based GoldGram Pte. Ltd. today unveiled its new asset-backed token, GGC GoldGramCoin, a digital currency inextricably backed 100% by physical 99.99% fine gold. GGC can be redeemed at any time.
/prn.to/2VvddX8

U.S. investor awarded $75 million in cryptocurrency crime case
Gertrude Chavez-Dreyfuss – Reuters
U.S. entrepreneur and cryptocurrency investor Michael Terpin won $75.8 million in a civil judgment against a 21-year-old man who Terpin said was part of a scheme that defrauded him of digital currencies, court documents showed on Friday. California Superior Court last week ordered Manhattan resident Nicholas Truglia to pay Terpin the amount in compensatory and punitive damages, one of the largest court judgments awarded to an individual in the cryptocurrency space and highlights crime in the sector.
/reut.rs/30hArPe

QuadrigaCX Has $21 Million in Assets and Owes $160 Million: EY Report
Nikhilesh De – Coindesk
QuadrigaCX, the Canadian crypto exchange that collapsed after the death of its CEO and founder late last year, has just $21 million in assets, but owes creditors $160 million, its court-appointed monitor and trustee said.
bit.ly/2vYbfPK

A multi-cryptocurrency ETF has been filed with the SEC, as two other applications remain pending
The Block
A new filing for a crypto-based exchange-traded fund (ETF) has been sent to the U.S. Securities and Exchange Commission (SEC), which is yet to approve any crypto ETFs. Commodity pool operator United States Commodity Funds LLC (USCF) will sponsor the ETF alongside Crescent Crypto, a New Jersey-based hedge-fund. The USCF Crescent Crypto Index Fund will “track the performance of a market capitalization weighted portfolio of Bitcoin and Ether,” offering investors “cryptocurrency exposure through a public vehicle.”
bit.ly/2Jhv2CD

PayPal Is Still Steadfastly ‘Blockchain Over Bitcoin’ But Cryptocurrency Pressure Is Growing
Darryn Pollock – Forbes
Before much was known about cryptocurrencies, PayPal was the go-to for any digital transferring of cash. However, as the mainstream has woken to bitcoin and its related cryptocurrency industry, the online payments giant has been forced to take note.
bit.ly/2VY8ixr

Hacked Crypto Exchange Binance to Resume Deposits and Withdrawals on Tuesday
John Biggs – Coindesk
Binance CEO Changpeng Zhao has announced that the crypto exchange plans to resume deposits and withdrawal services on Tuesday.
bit.ly/2Vz11EL

LMAX Digital completes four million trades over a year; hits $400 million peak in daily volume
The Block Crypto
Cryptocurrency exchange LMAX Digital has marked its one-year anniversary by completing its four millionth trade, the company shared in a press release. Since its launch last May, the company has attracted 175 institutional clients around the world; two-thirds of whom are based across the US and Asia.
bit.ly/2Vz0tyQ

HTC introduces a cheaper blockchain phone, opens Zion Vault SDK
Brian Heater – TechCrunch
Happy Blockchain Week to you and yours. HTC helped kick off this important national holiday by announcing the upcoming release of the HTC Exodus 1s. The latest version of the company’s intriguing blockchain phone shaves some of price off the Exodus 1 ó which eventually sold for $699 when the company made it available in more traditional currency.
/tcrn.ch/2Ji4LEk

Riot Blockchain Releases Q1/19 Financial Results
Yahoo Finance
Riot Blockchain, Inc. announced the filing of its March 31, 2019 Quarterly Report on Form 10-Q, which can be viewed on the Company’s website or at SEC.gov.
/yhoo.it/2Vh67kd

Politics

Trump ‘marveled’ at the fact one of his tweets seemed to move the stock market
Sarah Gray – Business Insider
Amid talks with with China ó which by Friday evening had failed to produce a trade deal ó Trump sent a tweet, hinting at ” future negotiations.”
bit.ly/2vWImUc

Punch-Drunk Traders Stop Guessing as Trump Runs Markets Ragged
Sarah Ponczek and Elena Popina – Bloomberg
‘I nailed that,’ is what everyone wants to say. They didn’t; Humans and robots alike are trapped in a torrent of tweets. When the first Trump tweets hit on Sunday, Paul Nolte knew the peaceful days were behind him in the stock market.
/bloom.bg/2vV6dn8

Europe’s Newest Finance Minister Wants to Keep His Country White; Estonia’s envoy to the Eurogroup meeting this week has some radical views about race more than finance.
Andrew Langley and Ott Ummelas – Bloomberg
He wants to keep his country racially pure and makes gestures used by white supremacists. And this week he will sit down with the rest of the euro region’s finance ministers.
/bloom.bg/2VA7K1c

Fed’s Kashkari Adds Inequality to Argument for Keeping Rates Low
Matthew Boesler – Bloomberg
Minneapolis Fed chief links rates to labor share in interview; Other officials downplay Fed policy’s effects on inequality
Federal Reserve officials are speaking out about rising inequality and the harm it does the U.S. economy, but most still hesitate to say monetary policy can do much to help.
/bloom.bg/2VyOzox

Trump may provoke U.S. lawmakers to impeach him: senior Democrat
Reuters
Democrats are reluctant to impeach U.S. President Donald Trump, but he may provoke such a move by continuing to obstruct Congress’ efforts to oversee his administration, a senior Democratic lawmaker said on Sunday.
/reut.rs/2VzLV22

What’s the Real Reason Trump Is Stonewalling Congress?; Maybe he wants to avoid more bad publicity. Or maybe it’s something worse.
Jonathan Bernstein – Bloomberg
If President Donald Trump thinks he’s been totally exonerated, as he says, why is he stonewalling Congress? Why wouldn’t he want special counsel Robert Mueller to testify about a report that supposedly clears him? Why not encourage all the witnesses Mueller’s team spoke with to come forward? Why is he attempting to block 20 separate investigations, if he’s done nothing wrong?
/bloom.bg/2VzKYXw

Regulation

Denmark’s former top regulator charged over money laundering; Charges relate to Henrik Ramlau-Hansen’s time as Danske Bank’s finance director
Richard Milne – FT
The former chair of Denmark’s financial regulator who had previously been finance director of Danske Bank has been charged and his house raided in connection with a EUR200bn money laundering scandal.
/on.ft.com/2vXPhMR

SEC Proposes Actions to Improve Cross-Border Application of Security-Based Swap Requirements
SEC
The Securities and Exchange Commission today proposed a package of rule amendments and interpretive guidance to improve the framework for regulating cross-border security-based swaps transactions and market participants.
bit.ly/2VkBR8a

CFTC Charges CEO of Managed Fund with Misappropriation, Fraud, and Making False Statements to NFA
CFTC
Washington, D.C. — The Commodity Futures Trading Commission (CFTC) announced today that it filed a civil enforcement action (Complaint) in the U.S. District Court for the Southern District of New York that charges defendant Fabio Bretas de Freitas with fraud and misappropriation in connection with commodity futures trading. Bretas de Freitas conducted his scheme through the registered commodity pool operator and commodity trading advisor Phy Capital Investments LLC, f/k/a Phynance Capital Management LLC (PCI) (Collectively defendants). The Complaint also charges Bretas de Freitas with making false statements to the National Futures Association.
bit.ly/2PYbhQW

How Mifid II hurts European investment banking; The EU’s financial rules are an act of regulatory self-harm
Andrea Vismara – FT
Mifid II is contributing to the slow death of European investment banking, and regulators must act.
/on.ft.com/2PXYLkD

How to guard against Mifid’s unplanned effects; EU rules should not cut off smaller companies from capital markets
The editorial board – FT
It has been in effect for a much shorter time than its ill-tempered gestation, but the EU’s second Market in Financial Instruments Directive (or Mifid II) is already shaking up equity investing throughout Europe and beyond. It is a year since one of Mifid II’s most contentious rules came into effect ó requiring stock brokers to charge investors separately for company research and securities trading.
/on.ft.com/2Q2kdVm

Investing and Trading

Morgan Stanley Says Rest of 2019 Might Turn Against U.S. Markets
Joanna Ossinger – Bloomberg
Strategists see rest of the world catching up to America; Growth reversal story ‘delayed, not derailed’: Sheets
The beginning of 2019 has been good for U.S. assets. But the back half might not be as favorable, according to Morgan Stanley.
/bloom.bg/2Vx3ijT

Commodity Risks: Describing the Unobservable
Blue Putnam, CME Group – JPMorgan Center for Commodities at the University of Colorado Denver Business School
We have observed in studying commodity markets that 100-year floods occur quite often, even multiple times a decade, so we know simple risk models can be inadequate and misleading. The challenge is that expected risk-return probability distributions cannot be directly observed. Some analysts lean heavily on examining the implied volatilities from options prices. even as policy makers weigh changes
bit.ly/2VzKZLa

Cyber governance indices identify companies at risk of data breaches; Initiative will help fund managers spot the groups that put themselves in danger
Owen Walker – FT
Asset managers have a new tool to help them avoid making investments in companies that are prone to costly cyber breaches.
/on.ft.com/2Q3CMJ1

Impact investors fail to measure negative outcomes; A ‘positive net impact’ approach would take account of inevitable unwanted effects
Adam Bendell – FT
True impact investors would never let a fossil fuel company boast about its community engagement while ignoring its high carbon emissions. Yet it is still too common for impact investors to focus only on investments’ positive outcomes. There is a double standard here and we need to correct it.
/on.ft.com/2Q0jpAA

Companies Flock to Issue Bonds on Tiny English Channel Island; Offshore haven of Guernsey, away from stricter EU disclosure regulations, attracts sellers of risky debt
By Paul J. Davies – WSJ
The European Union wrote new rules in 2016 meant to make bond markets more transparent and fair. Instead, companies selling risky debt have flocked to an offshore haven in the English Channel, causing consternation among investors.
/on.wsj.com/2Q3CS3l

Institutions

Silicon Valley Bank Pays $250,000 Per Employee, Tops in the U.S.
Shelly Hagan – Bloomberg
Tiny SVB Financial has just 3,200 workers and five branches; Big banks with larger branch networks pay less on average
Silicon Valley, better known for hot tech start-ups and venture capital firms, is also home to the highest-paying public bank in the U.S.
/bloom.bg/2vWT39o

How a Modest Hedge Fund Returned Six Times the Global Average
Bei Hu – Bloomberg
Triada Capital beat tough odds with an Asia credit focus; Monica Hsiao is one of few women who founded, lead own fund
Monica His doesn’t follow anyone’s playbook. She founded Triada Capital Ltd., a credit-focused firm in a region where equity is king and stock managers control the vast share of hedge fund assets. The straight-talking native of Guam cobbled together a modest $7 million to start the fund almost four years ago, fueled partly with savings from her parents. That’s about one-third the average amount an Asia-focused firm has started with in recent years — and paltry by credit fund standards — yet Triada has proved small can be beautiful. The fund has generated outsized returns, gaining almost 10% after fees in the first quarter.
/bloom.bg/2vTCVpf

Goldman Sachs’ glitzy new London trading floor is the size of a soccer field ó but traders worry they’ll be ‘caged in like battery hens’
Trista Kelley – Business Insider
The comment highlights the decades-old cultural divide between traders in stocks and those in fixed income.
Goldman Sachs has told its staff to “get ‘move ready’ now” for the transfer to the bank’s new 1.1-million-square-foot London headquarters, around the corner from St. Paul’s Cathedral and within the ancient Roman walls enclosing the Square Mile.
bit.ly/2vWItz6

Goldman Sachs in the running to buy top UK insurance broker for £350m; Insurance broker Aston Lark was put up for sale late last year; Sources said it is a unit of Goldman merchant banking division that is interested
Ben Harrington – Daily Mail
Wall Street investment bank Goldman Sachs is in the running to buy British insurance broker Aston Lark for up to £350 million.
/dailym.ai/2VwjTUU

The robots that beat expensive investment fund bosses by keeping it simple; Interest in exchange-traded funds is increasing among investors; Key appeal is that these investments offer a cheap way to invest
Toby Walne – Daily Mail
Interest in exchange-traded funds is increasing among investors looking for new ways to make money.
/dailym.ai/2VvfMIK

No Branch, No Problem. Citigroup Bets Big on Digital Banking; Executives are convinced many U.S. consumers are finally ready to abandon brick and mortar
Telis Demos – WSJ
In the lean years following the financial crisis, Citigroup Inc. made an unintentional bet on the future of banking, and it is starting to pay off.
/on.wsj.com/2VzLMvw

Bad governance makes banks perilous investments; BBVA and Wells Fargo have responded to regulators’ pressure to change how they are governed
Patrick Jenkins – FT
As governance changes go, BBVA’s tweak at the end of last year to give its new chief executive a bit more power and its executive chairman a bit less was hardly hold-the-front-page news. All the more so because it coincided with far more interesting rumours ó ultimately confirmed in January ó that Spanish rival Banco Santander was dramatically ditching plans to hire star banker Andrea Orcel as its new CEO.
/on.ft.com/2Q3CDoX

Regions

California May Go Dark This Summer, and Most Aren’t Ready
Mark Chediak and Brian Eckhouse – Bloomberg
PG&E plans to cut power on windy days to avoid sparking fires; ‘I’m worried,’ governor says, fearing week-long blackouts
A plan by California’s biggest utility to cut power on high-wind days during the onrushing wildfire season could plunge millions of residents into darkness. And the vast majority isn’t ready.
/bloom.bg/2VA6Vp8

China’s Latest Crackdown Target Is Liberal Economists; A Beijing think tank struggles to survive.
Matthew Campbell and Peter Martin – Bloomberg
Email
Around 10 a.m. one day last summer, a low-ranking government official visited the offices of China’s most prominent free-market think tank to lodge a complaint. The scholars of the Unirule Institute of Economics were being too loud for the neighbors, the official said, and should consider finding an alternative place of business.
/bloom.bg/2VA8Mdy

U.S. Wants China to Be a Customer, Not to Retaliate, Perdue Says
Aya Takada – Bloomberg
Agriculture Secretary says main goal is good deal with China; Washington won’t allow trade disruptions to harm farmers
Agriculture Secretary Sonny Perdue wants China to be a customer of American farm products, even after Washington hiked tariffs on more than $200 billion in Chinese goods, and said retaliation by Beijing would prompt the U.S. to boost support to its farmers.
/bloom.bg/2VyND3B

China Exporters Reel as U.S. Tariffs Imperil World’s Supply Hub
Bloomberg News
UBS downgrades estimate for 2019 growth to 6.2% from 6.4%
Citigroup says China to lose 2.1 million jobs in 2 to 3 years
/bloom.bg/2PXYw9d

Ghana’s Biggest Cocoa Buyer Seeks $100 Million Amid Bond Default
By Moses Mozart Dzawu – Bloomberg
PBC defaulted on principal bond repayment in late 2018; Company to increase Cocobod borrowing by as much as two-thirds
PBC Ltd., Ghana’s biggest cocoa buyer, seeks to raise $100 million from international banks to help pay off cedi debt that matured late December.
/bloom.bg/2Q0ifVK

Saudi Arabia says 2 oil tankers attacked near UAE
Regional tensions run high after US tightens sanctions on Iran
The Financial Times
Saudi Arabia said two of its oil tankers came under attack off the coast of the UAE on Sunday, shortly after the UAE said four of its vessels had been sabotaged amid rising tensions in the Gulf.
/on.ft.com/2JhyNrJ

Brexit

Brexit anger makes European vote ‘difficult’ for Conservatives: UK minister
Elizabeth Piper – Reuters
European elections will be difficult for Britain’s governing Conservatives, their education minister said on Sunday, after the party slumped into fourth place in an opinion poll and a new Brexit Party took top spot.
/reut.rs/2E1D5iv

Fight to replace PM May complicating Brexit talks – Labour’s McDonnell
Kate Holton, Marguerita Choy – Reuters
The battle among leading Conservatives to replace Theresa May as prime minister threatens to derail talks with the Labour Party and the bid to find a Brexit compromise, Labour’s John McDonnell said. May, who has offered to quit if MPs accept her Brexit deal, opened cross-party talks with Jeremy Corbyn’s Labour Party more than a month ago after parliament rejected her European Union withdrawal deal three times.
/reut.rs/2LGabuT

May to Resume Labour Talks as Farage Builds Lead: Brexit Update
Stuart Biggs – Bloomberg
Theresa May’s government is due to resume talks on a Brexit deal with the main opposition Labour Party this week, as pressure on the prime minister grows from her own side to abandon the strategy and step aside.
/bloom.bg/30k6xKv

Running down the clock: How British politics fell into a Brexit coma
Adam Bienkov – Business Insider
Nothing significant has changed in Britain since Theresa May agreed to delay Brexit by six months. Talks between Labour and the Conservatives are dragging on despite no real progress being made. Conservative MPs believe May is finished, but lack the political will to oust her. No Brexit legislation is being debated or voted on. Expectation is growing in Westminster that Brexit will have to be delayed for a third time.
bit.ly/2Hepbf0

France will not accept repeated Brexit delays – French official
Michel Rose, Richard Lough – Reuters
France will not tolerate repeated extensions of the Brexit deadline, a French presidential adviser said on Friday, expressing hope that European elections in Britain would jolt its political parties into reaching a deal on leaving the EU. France pushed hard for a short extension of Brexit negotiations last month, contrary to Germany’s wish to grant a longer period, arguing that pressure should be kept on London. In the end a six-month delay was agreed by European leaders.
/reut.rs/2W1W3Qy

Theresa May could set exit date this week – Sir Graham Brady
BBC News
Prime Minister Theresa May could set a date for her resignation in the coming days, the chairman of the Conservative backbench 1922 Committee has said. The PM said she will step down when her Brexit deal is ratified by Parliament – but some MPs want a fixed date. Sir Graham Brady said he expected a “clear understanding” of that timetable once she has met the committee, which she would do on Wednesday.
/bbc.in/2W1e0yw

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