Dairy farmers are in crisis — and it could change Wisconsin forever

Feb 22, 2019

First Read

Blockchain Litigation, 2018: Murphy & McGonigle Reports
Thom Thompson – JLN

Earlier this month Murphy & McGonigle (M&M), an East Coast law firm with a prominent securities and financial services practice, released its Blockchain Litigation: 2018 Year in Review Report. According to the firm, the report is based on data from its Blockchain Litigation Database, which the firm’s FinTech and Blockchain Practice launched to track litigation trends in the United States. The report is available for download here.

Even casual observers of the blockchain industry were likely struck by the notable increase in legal actions involving the industry last year. Until 2016, the annual number of blockchain cases filed in the United States was a dozen or fewer. As the report notes, as the number of cryptocurrency wallets in use took off in 2017 and ’18, so did blockchain litigation.

To read the rest of this commentary, go here.

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Hits & Takes
JLN Staff

News today that Intermarket, the New York-based communications firm, has been sold to London-based Lansons is a surprise but not a shock. In today’s broader communications/media space, the world has changed dramatically over the past decade or more. Traditional public relations now encompasses a broad array of services that include: social media, video as well as print, strategic content and strategic deployment of information and yes, relationships. Intermarket’s Co-founder, Managing Partner and Chairman, Martin Mosbacher sees the evolution of communications as similar to the financial market’s transition from open outcry to electronic trading, and from traditional commodities to cryptocurrencies – more products and services with more channels than ever. So it is a testament to Mosbacher, Co-founder and CEO Matt Zachowski and their team, that Intermarket has thrived in the markets and technology sectors as a communications boutique firm since 1986. Since then, it has represented nearly every major exchange in some capacity and any number of global banks, brokers and tech firms. It still does. Mosbacher, who serves on the John J. Lothian & Co. advisory board, will continue on as executive vice chairman and Zachowski will continue as CEO. Lansons has established itself in an equally competitive market in London. Now, it will have a strong footing in New York as well. Signing and retaining clients in this space and scaling up the business is always challenging. Lansons is now in a better position to do so.~JK

Nancy Ashburn, our director of finance and administration, and her husband Doug will be moving to North Carolina in April. Nancy will continue as an employee of John J. Lothian & Company, Inc., but work remotely. Doug Ashburn, a former JJLCO employee, and Nancy are empty nesters who are looking for warmer climates and a nearby airport hub, so Charlotte area here they come.~JJL

Who knew being an empty nester means you move south. I thought it meant you bought another dog. I still might have to buy another, just to name it Brexit.~JJL

Eurex has announced dates for their DerivativesForum2019. They are April 11 in Frankfurt, June 13 in Amsterdam, June 25 in Paris, September 4 in the Nordics and November 7 in London.~JJL

Charlie Lee, the creator of Litecoin, recently posted on Twitter that he met with Matthias von Hauff, CEO of Germany’s WEG Bank. According to Lee, Hauff flew out to meet Lee for a one-day meeting to discuss new products to be released by TokenPay, a cryptocurrency-based payment platform to be released in March 2019. TokenPay is a known partner of the Litecoin Foundation and WEG Bank.~MR

Cboe has announced the keynote speakers and agenda for its 35th Annual Cboe Risk Management Conference U.S. 2019. They include Yukon Huang, a senior fellow in the Carnegie Endowment Asia Program in Washington, D.C., who will address the topic, “U.S. – China Economic Tensions, Impact and Implications.”~SR

Did you know that if your firm is an Enterprise level paid subscriber to the John Lothian Newsletter you get one free Special Report during the year? Contact me for details.~JJL

Did you know that if you are a paid subscriber to the John Lothian Newsletter you get editing privileges to MarketsWiki? Contact me for details.~JJL

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Lansons To Acquire New York Based Intermarket In First International Acquisition
Lanssons-Intermarket
Leading independent reputation management consultancy Lansons today announces the acquisition of Intermarket, the specialist strategic communications consultancy based in New York and founded by Matt Zachowski and Martin Mosbacher in 1986. The transaction represents the continued expansion of Lansons’ global strategic communications capabilities, building on its prominent role in leading international agency networks Public Relations Organisations (PROI) Worldwide and Global Communications Partners (GCP) and deepening the service it can provide clients in this strategically important market.
bit.ly/2En0J9O

******This is not the first time that Martin Mosbacher has been part of a European-US public relations firm deal. I guess it is time to try it again.~JJL

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Examining the CFTC’s Examination Priorities for 2019
Travis Schwab
Three Takeaways for the Year Ahead
Under Chairman Chris Giancarlo, the CFTC has pursued policies that are a balance of accommodation and enforcement. While the agency has endeavored to be open and transparent in an effort to support healthy growth they have, at the same time, been resolute in holding market participants to the highest standards of behavior. Eventus Systems, Inc. recently published a 3-part blog series that examines the CFTC’s enforcement activity in 2018 and this past week, the CFTC published details on their examination and enforcement priorities for 2019.
/goo.gl/b2cTA4

*****Staying operational, i.e. the government is funded, should be there somewhere.~JJL

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Goldman tech chief: ‘Where have all the women gone?’; Technology careers have become more off-putting to women in the past 15 years, executive says
Samuel Agini – Financial News
The Goldman Sachs partner responsible for technology in Europe has lamented the lack of women in the field, and stressed the importance of having role models for young women to look up to.
bit.ly/2TaS2rx

*****It is a good question.~JJL

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CryptoMarketsWiki Coin of the Week: Bitcoin
CryptoMarketsWiki
Despite the crypto bear market – the “longest ever,” according to Coindesk earlier this month – bitcoin prices exceeded $4,000 this week for the first time since November 2018.
/bit.ly/2tvvXW8

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Thursday’s Top Three
Our top read stories from Thursday were led by Business Insider’s IEX commercial mocks the high cost of exchange fees. Second was the FT’s piece Finance v physics: even ‘flash boys’ can’t go faster than light. Third was The Block Crypto’s piece CME’s bitcoin futures are off to a record-breaking start this year

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MarketsWiki Stats
144,865,127 pages viewed; 23,414 pages; 216,845 edits
MarketsWiki Statistics

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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.

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Lead Stories

Dairy farmers are in crisis — and it could change Wisconsin forever; Farmers cling to a dream that, for some, has become a nightmare.
Rick Barrett, Milwaukee Journal Sentinel
There was a time when the soft glow of barn lights dotted Wisconsin’s rural landscape like stars in a constellation, connecting families who labored into the night milking cows, feeding calves and finishing chores. Hundreds of those barns are dark now, the cows gone, the hum of milking machines silenced.
bit.ly/2Ita83L

*****”A 55-cow dairy farm would receive a one-time payment of $725 from the bailout but stood to lose between $36,000 and $48,000 in income last year from low milk prices, according to the Wisconsin Farmers Union.”
*****This could have major implications for the 2020 US Presidential election as Wisconsin was a key state in President Trump’s surprise victory.
***** I remember in the 1980s when dairy farmers dumped milk in front of the CBOT Building to protest low prices. I remember thinking, milk is traded at the CME, you have the wrong exchange.~JJL

Expect mischief as algorithms proliferate; When computers start conspiring against us, regulators will have to be nimble
Tim Harford – FT
If you do not like the price you’re being offered when you shop, do not take it personally: many of the prices we see online are being set by algorithms that respond to demand and may also try to guess your personal willingness to pay.
/on.ft.com/2IsvdLP

SocGen Weighs Thousands of Job Cuts at Investment Bank
Fabio Benedetti Valentini – Bloomberg
Restructuring plan could also bring in partner for cash equity; Cost pressures and an ugly fourth quarter prompting changes
Societe Generale SA is drawing up plans to cut jobs at its investment bank and find a partner for its cash-equity business in a bid to offset increasing cost pressure from regulation, people familiar with the matter said.
/bloom.bg/2IIvt9N

How UBS Miscalculated and Wound Up With a $5 Billion Fine in France
Gaspard Sebag – Bloomberg
UBS pushed France to add settlements to enforcement toolbox; Its $204 million settlement offer is fraction of its fine
In January 2017, UBS Group AG General Counsel Markus Diethelm bragged to a journalist that the Swiss bank’s tax case may mark France’s entry into the big league of financial crimes enforcement.
/bloom.bg/2Ivw7Hx

US official paints gloomy picture for soyabean farmers; Record-high stocks should drag on prices
Gregory Meyer – FT
The chief US agricultural economist laid out a gloomy picture for the country’s soyabean farmers on Thursday, saying record-high stocks should weigh on prices even if the Trump administration resolves its trade dispute with China.
/on.ft.com/2BHFjCv

Graystone Asset Management Partners with Trading Technologies to Utilize TT’s New Infrastructure-as-a-Service (IaaS) Solution for Low-Latency Connectivity to Global Exchanges
Trading Technologies
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, today announced that Graystone Asset Management Ltd, an investment management and advisory firm, has contracted with Trading Technologies to secure ultra-low-latency connectivity to leading exchanges through TT’s new Infrastructure-as-a-Service (IaaS) solution. With this offering, Graystone Asset Management will leverage TT’s existing colocation facilities and deterministic fiber network to participate in international derivatives and cryptocurrency markets.
bit.ly/2STiWVq

Derivatives trading costs could double in times of market stress; Initial margin could surge by up to 94% for some derivatives portfolios during periods of high volatility, research from OpenGamma finds.
Hayley McDowell – The Trade
Initial margin requirements in times of market volatility could see the costs of trading derivatives almost double for some firms, according to OpenGamma.
bit.ly/2ItK9ZX

China Trade Offer: $30 Billion More U.S. Agriculture Imports
Bloomberg
China is proposing that it could buy an additional $30 billion a year of U.S. agricultural products including soybeans, corn and wheat as part of a possible trade deal being negotiated by the two countries, according to people with knowledge of the plan.
/bloom.bg/2DWegUk

Former Goldman Sachs FX Traders Leave to Set Up SportStack
Celeste Skinner – Finance Magnates
Goldman Sachs has lost two senior professionals within its foreign exchange (forex) trading unit, with Nick Smith and Kristian Brauten-Smith leaving the firm to create SportStack, a sports spread-betting company, Finance Magnates has learned.
bit.ly/2SQ2fKI

Philadelphia sues JPMorgan, Citigroup, Goldman Sachs, others for overcharges on city borrowing
Joseph N. DiStefano and Erin Arvedlund – Philly.com
Philadelphia has sued seven of the largest Wall Street investment banks, alleging conspiracy to force the city and other local-government and nonprofit borrowers to pay “billions of dollars in inflated interest rates” on variable-rate municipal bonds from 2008 to 2016.
bit.ly/2SSiy9y

Palladium price bubble forces critics to admit they were wrong; Rules around car emissions push the price of the noble metal over $1,400 an ounce
John Dizard – FT
Gold was said to be the metal that drove the conquistadors mad. Palladium is now having the same effect on metals market savants. The metals experts have not yet formed themselves into marauding bands to seize South America but they have had to do something almost as challenging: admit they were wrong.
/on.ft.com/2IqKBIu

Modern Monetary Theory Is Not a Recipe for Doom; There are no inherent tradeoffs between fiscal and monetary policy.
Stephanie Kelton – Bloomberg
Paul Krugman first wrote about modern monetary theory on March 25, 2011. He last wrote about MMT in a two-part series on February 12-13, 2019. Although he’s had almost a decade to come to terms with the approach, he is still getting some of the basic ideas wrong.
/bloom.bg/2IElFh0

Mysterious 8,500% Stock Gain Attracts Big Funds (And Big Questions)
Bloomberg News
China Ding Yi Feng is the world’s top-performing big-cap stock; BlackRock, Vanguard index funds are among recent buyers
Perched below the Ritz-Carlton in Hong Kong, inside the city’s tallest skyscraper, is one of the biggest mysteries of the investing world.
/bloom.bg/2It55AA

Why Wells Fargo’s CEO Is Harder to Replace Than Elizabeth Warren Suggests
Hannah Levitt – Bloomberg
Rivals like JPMorgan could provide a successor, recruiters say; But shifts in pay practices and other issues pose hurdles
Wells Fargo & Co.’s top critic makes it sound so easy. Senator Elizabeth Warren has made her view clear — again and again — that the bank can’t resolve its scandals until it names an untainted replacement for Chief Executive Officer Tim Sloan. Her fellow Democrats in the House plan to turn up the pressure with hearings in coming months.
/bloom.bg/2IrkEZd

London swaps boss: Why would the EU throw us off a cliff?; The European Commission will want to avoid another ‘cliff edge’ scenario for London clearing houses in 12 months’ time, says Michael Davie
Samuel Agini – Financial News
The head of the London Stock Exchange’s $1 quadrillion swaps clearing business expects that EU regulators will avoid imposing a “cliff edge” on the City’s derivatives markets, even after a 12-month Brexit grace period ends.
bit.ly/2T5teBe

Exchanges, OTC and Clearing

Candidates for Directors and Executive Officers, etc.
JPX
We hereby announce that Japan Exchange Group, Inc. (JPX) decided on candidates for directors and executive officers, etc. effective from April 1, 2019 as follows.
bit.ly/2ItfD2z

TSX Venture Exchange Announces the 2019 TSX Venture 50; Market open ceremony to be held on February 22 to celebrate TSXV’s top performing companies
TMX
TSX Venture Exchange (TSXV) is pleased to announce the 2019 TSX Venture 50 – an annual showcase of top performing companies from five industry sectors: Clean Technology and Life Sciences, Diversified Industries, Energy, Mining, and Technology. Representatives of the TSX Venture 50 companies will join TMX Group executives at a market open ceremony on Friday, February 22, at 9:30 a.m. EST to celebrate their achievement.
bit.ly/2IuG7Re

Fintech

Bloomberg is diving in to the booming alternative-data field with a new product that’ll help the market become mainstream
Bradley Saacks and Dan DeFrancesco – Business Insider Prime
Alternative data is about to be normalized.
Bloomberg LP is the latest mainstream financial company to wade in to the once obscure alternative-data field with a new product that will give clients access to data from more than 20 niche firms. The datasets will be immediately available, according to a release expected later Thursday from Bloomberg, and will include data such as stats on drug approvals, retail foot traffic tracked through cellphones, and construction permits.
/goo.gl/TcEbVK

****Included is info from Predata, Hazem Dawani’s new firm. We caught up with Hazem at FIA Expo – here’s that video. ~SD

Euronext Partners With Trendrating For Alt Data
MarketsMedia
Trendrating, an expert in momentum trend capture, in partnership with Euronext, the leading pan-European exchange in the Eurozone, announces the launch of Momentum Risk Monitor, a powerful price trend analysis product that allows clients to enhance their risk monitoring process.
bit.ly/2STkdvA

Temenos acquires Indian big data firm; Temenos has signed an agreement to acquire hTrunk, a big data and analytics FinTech firm based in Bangalore India.
Hayley McDowell – The Trade
Swiss Software specialist Temenos has signed an agreement to acquire hTrunk, a big data and analytics FinTech firm based in India.
bit.ly/2IukaSj

Nomura invests in Brevan Howard AI trading platform; Brevan Howard developed the AIM² platform three years ago using artificial intelligence, machine learning and data science.
Hayley McDowell – The Trade
Asian investment bank Nomura has invested in an artificial intelligence (AI) trading venture established by Brevan Howard in 2015.
bit.ly/2IFmkhQ

It Started With a Jolt: How New York Became a Tech Town
Steve Lohr – NY Times
Euan Robertson started his job with New York City’s economic development team at an ominous moment. It was Monday, Sept. 15, 2008, the day Lehman Brothers filed for bankruptcy and ignited the financial crisis.
/nyti.ms/2ItJVSB

Banking apps use behavioral economics to change our money habits
Spencer Tierney – MarketWatch
Every time Olivia Robinson shops at Nordstrom JWN, -1.13% , $10 moves from her checking account to savings. She set up this automatic transfer, or “rule,” in the savings app Qapital.
/on.mktw.net/2IFpAtA

Firms Carve Rosetta Stones for Non-English AI Surveillance; Development of machine learning and natural-language processing is now turning to languages other than English to keep a better eye on traders and the market. But how easy is it to teach a machine a new tongue?
Emilia David, Wei-Shen Wong – Waters Technology
English has long been considered the lingua franca of international business. But as geopolitical, industrial and human trends veer away from an Anglo-centric perspective and become more globalized, the importance of other languages—and the need for fluency in them—rises in turn.
bit.ly/2Tbt0bE

Cryptocurrencies

A price war is heating up in the crypto market, and 2 exchanges are leading the charge
Frank Chaparro – The Block Crypto
We are at the precipice of an exchange price war in the market for digital currencies and two little-known exchanges are driving the charge. Seed CX, a digital asset exchange aimed at institutional investors, boasts some of the lowest costs to execute a trade in the nascent market. The firm, which operates a spot bitcoin market, said on Thursday that clients using its exchanges are getting a better deal trading on its venue compared to rival venues. Analysis for certain trade types reviewed by The Block confirms this assertion.
bit.ly/2SQag25

Brazil’s BTG Pactual Is Latest Bank to Embrace Crypto Assets
Felipe Marques – Bloomberg
Banco BTG Pactual SA, Latin America’s biggest standalone investment bank, is joining the world of crypto assets with its own security token.
/bloom.bg/2IuhpAr

Crypto Exchange Risks Running Out of Money During Restructuring
Doug Alexander – Bloomberg
Bank drafts totaling $23.5 million could help Quadriga plan; Funds must be deposited ‘in timely manner,’ monitor says
Quadriga Fintech Solutions Corp. is in danger of running out of cash to cover the cost of its restructuring unless the Vancouver-based crypto exchange can retrieve money from banks and payments processors, according to the firm overseeing the process.
/bloom.bg/2Iye6bs

Andreas M. Antonopoulos Warns Against Ethereum Community In-Fighting
Christine Kim – Coindesk
The author of two widely acclaimed books on cryptocurrency offered advice to developers building ethereum, the world’s second-largest blockchain, this weekend, arguing they should be careful to avoid fragmenting their technical community through infighting.
bit.ly/2IvUK6V

JP Morgan: Crypto’s Biggest Detractor Has A Change Of Heart
Dante Disparte – Forbes
In the world of cryptocurrencies, after Nouriel Roubini, an economist of repute for calling market failures and pouring cold water on crypto, Jamie Dimon, JP Morgan’s chairman and CEO, may be public enemy number 2. His well-known and contrarian positions on bitcoin, where he famously said he would fire any JP Morgan employee who traded in cryptocurrencies, is now the subject of an about face at the systemically important bank. JP Morgan, along with other institutional investors, is now wading into the cryptocurrency market, not with the safe bet of trading digital assets as Fidelity is doing later this year, but in launching its own cryptocurrency, the JPM Coin. The battle for so-called stablecoins countering the price volatility of free-floating decentralized digital assets, like bitcoin, has now gained a very serious player.
bit.ly/2Iyi5oq

FBI Seeking Potential Victims of BitConnect to Assist Investigation
Yogita Khatri – Coindesk
If you invested in the proprietary token offered by the now-defunct crypto exchange BitConnect, the FBI wants to hear from you. In a notice on its website Wednesday, the federal law enforcement agency said those who invested in the BitConnect coin (BCC) token can voluntarily reach out to the agency by filling out a questionnaire.
bit.ly/2Iwjrjo

Cryptocurrency companies use ‘backdoor’ listings to ease into mainstream
Alun John, Anna Irrera 7 – Reuters
HONG KONG – Several cryptocurrency exchanges have moved closer to mainstream markets by buying listed companies, looking to raise funds and present themselves as embedded in the traditional financial services world they once spurned. In the most recent deal, U.S. crypto broker-dealer Voyager Digital on Feb. 11 achieved a “backdoor” listing on Toronto’s Venture Exchange after it bought control of mineral exploration firm UC Resources.
/reut.rs/2Sjf76H

So You Want To Build A Career In Blockchain?
Lawrence Wintermeyer – Forbes
We started 2019 with a clear message for emerging tech – put the human back in technology – a message coming out of the World Economic Forum in January that I had first encountered at the World Government Summit (WGS) in February 2018 – a messaged echoed strongly last week at this year’s WGS in Dubai.
bit.ly/2IsEpzP

QuadrigaCX Hands Over Chunk of Cryptocurrency Holdings to EY
David Kimberley – FinanceMagnates
The ongoing saga surrounding cryptocurrency exchange QuadrigaCX took another, rather dull, turn this Thursday as the company transferred its cryptocurrency assets to consultancy firm EY. One of ‘the big four’ consultancy firms, EY has now taken control of a sizeable portion of the cryptocurrency exchange’s assets.
/bit.ly/2U1J5Ou

JPMorgan Chase’s Cryptocurrency: Is It A Gimmick Or The Real Deal?
Tanzeel Akhtar – Investing.com
The announcement last week by JPMorgan Chase & Co, that it plans to launch its own digital token, JPM Coin, caused ripples throughout the blockchain and cryptocurrency space. It’s an unexpected development from an unlikely issuer. It’s also the first cryptocurrency to be launched by a major global bank. The bank is characterizing the introduction of this alt-currency as a pilot project aimed at institutional clients. According to JPMorgan, it will enable “instant” fund transfers and will allow both clients and the lender to settle payments over a blockchain network.
/bit.ly/2SjYW9a

***It may not be bitcoin, and it may not be “Satoshi’s vision,” but it may be a sensible improvement to banking. There’s room enough for things like JPMcoin in this space.~MR

Seed CX Reports Digital Asset Trade Execution Costs Among the Lowest in the Industry Within First Quarter of Launch
Seed CX
Seed CX, the only digital asset exchange built exclusively for institutional investors, reported today that trade execution costs on the Seed Digital Commodities Market (“SCXM”), a subsidiary of Seed CX, are among the lowest of all digital asset execution venues globally. Spot trading on SCXM officially launched at the beginning of this year.
bit.ly/2TaQL3J

Politics

US banks made $28 billion in extra profits thanks to GOP tax bill
Sylvan Lane – The HIll
Federally insured U.S. banks made more than $28 billion in additional profits in 2018 thanks to the Republican tax-cut law enacted at the start of the year, according to data released Thursday.
bit.ly/2Ivvxtl

U.S. Is a Rich Country With Symptoms of a Developing Nation; The country is backsliding based on a host of troubling metrics.
Noah Smith – Bloomberg
The other day I was late to dinner, but it wasn’t my fault. Traffic was backed up throughout the city of San Francisco, because chunks of concrete had started falling from the upper deck of the Richmond-San Rafael Bridge. Unfortunately, this wasn’t a particularly unusual occurrence — in 2016, the Bay Bridge was shut after concrete chunks began to fall from the walls of a tunnel. Nor are such issues limited to bridges — the $2.2 billion Transbay Transit Center was closed in late 2018 when cracks were discovered in the beams.
/bloom.bg/2IEkE8G

Opinion: Sorry Bernie, stock buybacks aren’t to blame for America’s rising income inequality
Ed Yardeni – MarketWatch
Sen. Bernie Sanders (I-VT) advocates limiting corporate stock buybacks.
Should stock buybacks be regulated? Senators Chuck Schumer (D-NY) and Bernie Sanders (I-VT), who is running for president as a socialist, evidently think so. They believe that our nation’s glory days can be restored by limiting corporate stock buybacks.
/on.mktw.net/2It3Xg8

Brexit and Trump Put American-British Influence At Risk; A partnership that dominated the world for decades is suddenly in decline.
Mark Gongloff – Bloomberg
One predictable thing about empires is that they eventually fall. We may be watching one fall right now.
/bloom.bg/2TaIkFw

“Extend and Pretend”: Are Deutsche Bank and Trump Playing Chicken Over a $340 Million Loan?; If Trump defaulted and Deutsche Bank did nothing, that might be viewed as a big gift to a sitting president of the United States. On the other hand, if Deutsche moved to collect the loan, Trump might have various levers to exact his own retribution. Who’ll blink?
William D. Cohan – Vanity Fair
Donald Trump may like to hire Cabinet members from Goldman Sachs, but it’s unlikely that any of them, in their right minds, would have ever conducted business with the guy. For the past two decades, Trump’s lender of choice has largely been Deutsche Bank. In 1998, when Trump was radioactive on Wall Street following a series of corporate bankruptcies, the big German bank agreed to lend the Trump Organization $125 million.
bit.ly/2TdfKTW

Forget Socialism Versus Capitalism. Here’s the Real Debate We Should Be Having.
Bill Taylor – Barron’s
A specter is haunting business—the specter of millennial socialism. No I’m not channeling Karl Marx, Friedrich Engels, and the opening line of their Communist Manifesto, which appeared 170 years ago. I am channeling a cover story in The Economist, which appeared last week!
/bit.ly/2ItoBwB

Regulation

U.S. CFTC official warns of ‘cliff edge’ effect in ‘no-deal’ Brexit; encouraged by clearing deal
Henry Engler, Thomson Reuters – TABB Forum
The lack of a negotiated exit of the UK from the European Union could lead to a so-called “cliff edge” effect in over-the-counter (OTC) derivatives markets, given the legal uncertainty that would emerge over contractual obligations between counterparties, a regulator warned. Meanwhile, recent steps taken by European authorities to ensure continuity in cleared transactions was a positive sign, Eric Pan, director of international affairs at the Commodity Futures Trading Commission (CFTC), told Thomson Reuters Regulatory Intelligence.
bit.ly/2SPgS0A

Remarks of Chairman J. Christopher Giancarlo at the U.S. Department of Agriculture (USDA) 95th Annual Outlook Forum
CFTC
Secretary Perdue, Deputy Secretary Censky, USDA Chief Economist Rob Johanssen, USDA staff, my CFTC colleagues and other distinguished guests: thank you for the opportunity to speak to you tonight at United States Department of Agriculture’s 95th Outlook Forum.
bit.ly/2IEs4c2

Federal Court Imposes $15.7 Million Civil Penalty and Lifetime Trading Ban against Precious Metals Dealer and his Company in CFTC Anti-Fraud Action; In 2015, the CFTC Charged California Resident Hannes Tulving, Jr. and His Firm with Misappropriation and Fraudulent Solicitation in a Precious Metals Scheme that Defrauded at Least 381 Customers Nationwide
CFTC
The Commodity Futures Trading Commission (CFTC) announced today that Judge Robert J. Conrad Jr. of the U.S. District Court for the Western District of North Carolina entered a Supplemental Consent Order (Supplemental Order) against Defendants Hannes Tulving, Jr. (Tulving) of Newport Beach, California, and his company The Tulving Company, Inc., finding that they fraudulently solicited customers in connection with precious metals transactions, misappropriated customer funds, and concealed their fraud with false statements that the customer accounts were profitable.
bit.ly/2It9Biw

FCA statement on onshoring ESMA’s temporary intervention measures on retail CFD and binary options products
UK FCA
The European Securities and Markets Authority’s (ESMA) temporary intervention measures prohibiting binary options and restricting contract for difference products (CFDs) sold to retail clients will become part of UK domestic law on exit day as part of the EU (Withdrawal) Act. UK firms are required to comply with ESMA’s measures until they expire in April 2019.
bit.ly/2IEshfk

ASIC commences civil penalty proceedings against GetSwift Limited and its directors Bane Hunter and Joel Macdonald
ASIC
ASIC has today commenced proceedings in the Federal Court of Australia in Melbourne against GetSwift Limited (GetSwift) and its directors Mr Bane Hunter and Mr Joel Macdonald.
bit.ly/2IFnx8S

SEC Joins List of Authorities Probing Money Laundering at Danske Bank; The lender is also under investigation in Estonia, Denmark, the U.K. and France for allegedly facilitating the laundering of about $230 billion
Dominic Chopping and Samuel Rubenfeld – WSJ
U.S. securities regulators have joined a long list of authorities investigating Danish lender Danske Bank AS DNKEY -5.06% over a massive money-laundering scandal at its Estonian branch.
/on.wsj.com/2DXSL5I

Kraft Heinz Divulges SEC Investigation, Swings to Loss; Food maker also cuts dividend as merger savings dry up
Annie Gasparro – WSJ
Kraft Heinz Co. KHC -0.17% on Thursday wrote down the value of its Kraft and Oscar Mayer brands by $15.4 billion, disclosed an investigation by federal securities regulators and slashed its dividend, sending its stock down more than 20% in after-hours trading.
/on.wsj.com/2IszYFb

SEC opens investigation into Kraft Heinz accounting; Shares drop in after-hours trading as company discloses subpoena
Alistair Gray – FT
Kraft Heinz has received an accounting subpoena from the US Securities and Exchange Commission and announced an impairment charge and dividend cut, sending shares in the food company falling in after-hours trading.
/on.ft.com/2Iwhofc

Jeffrey Skilling released after 12 years in prison for role in Enron scandal
L.M. Sixel – Houston Chronicle
Jeffrey K. Skilling, the former Enron CEO who spent the past 12 years in prison for his role in masterminding one of most notorious corporate fraud cases in history, was released from federal custody on Thursday, the Bureau of Prisons said.
bit.ly/2IudQKz

Regulator fines two asset managers over IPO price collusion; FCA uses powers for first time over breach of competition law
Siobhan Riding – FT
The UK financial watchdog has used its powers for the first time to find three investment groups guilty of breaching competition law, imposing fines of £414,900 at the end of an three-year investigation into price collusion in the initial public offering market.
/on.ft.com/2E2AaW1

CFTC Commissioner Behnam to Participate in a Panel at the Structured Finance Industry Group (SFIG) Vegas 2019 Conference
CFTC
bit.ly/2DZvgt4

Investing and Trading

Treasury Inflation Bond Auction Sees Strong Demand; Response shows some investors see potential for consumer prices to rise
Daniel Kruger – WSJ
The Treasury’s auction of $8 billion in 30-year inflation-protected bonds Thursday met with strong demand, a sign that some investors see potential for consumer prices to rise.
/on.wsj.com/2ItIX8U

The ‘witching hour’ sickness stalking currencies; Banks and central banks must discuss how to avoid unnecessary flash crashes
Katie Martin – FT
A sickness is stalking the currencies market.Most recently, it hit the Swiss franc. Weeks beforehand, it was the yen. A year-and-a-half ago, the pound caught a terrible dose of it that alarmed even seasoned market participants.
/on.ft.com/2IEp3se

Leveraged Debt Markets Wait for Private Equity’s $1.2 Trillion
Lisa Lee – Bloomberg
Junk bond, leveraged loan sales have fallen amid M&A slowdown; Buyout firms’ record for raised money could fuel issuance
There are 1.2 trillion reasons for U.S. junk bond and leveraged loan issuance to stay relatively strong this year.
/bloom.bg/2It7dIA

Nowotny Says ECB Has Until Summer to Make Call on Bank Funding
Carolynn Look and Alexander Weber – Bloomberg
Officials to make interim assessment in March, Austrian says; Sees chance TLTROs not needed if one-offs are driving slowdown
European Central Bank Governing Council member Ewald Nowotny said a decision on new loans for banks could wait until the summer — and there’s even a chance they might not be needed at all if the euro-area slowdown proves temporary.
/bloom.bg/2ItGRG4

Markets Finally Start Acknowledging Reality; A synchronized global slowdown leads financial commentary.
Robert Burgess – Bloomberg
Maybe it’s a case of “buy on the rumor and sell on the news,” but the fact that the MSCI All-Country World Index of stocks was at one point down the most in two weeks on Thursday after news of advances in U.S-China trade talks is a bit concerning.
/bloom.bg/2Ixuj0v

Look Who’s Betting on Climate Change
Matthew C. Klein – Barron’s
Not all readers appreciated last week’s column on the financial and economic implications of climate change, which was based on the National Climate Assessment published in November. Critics disputed the U.S. government’s claim that emissions of carbon dioxide, methane, and other greenhouse gases into the atmosphere are causing the world’s temperatures to increase.
bit.ly/2NjIJjv

****”Fortunately, skeptical readers have an easy way to make money from their anticonsensus views: They can bet on futures and options at the Chicago Mercantile Exchange that track the weather.”

U.S. farm exports expected to fall $1.9 billion in 2019, led by China: USDA
Reuters
The U.S. Department of Agriculture expects the value of U.S. farm exports to drop by $1.9 billion to $141.5 billion in fiscal 2019 from a year earlier, led by a steep decline in shipments to China due to an ongoing trade dispute, a department official said on Thursday.
/reut.rs/2IvkRLc

Forget FANGs, Lay Off Drugs. Industrials Are the New Big Trade
Lu Wang – Bloomberg
That’s what RBC decides after studying hedge fund filings; Bets paying off as industrial stocks rebound most from 4Q rout
Never mind the FANG block of internet giants. Never mind drugmakers or biotechs. The smart money’s new obsession is the old economy: industrial stocks.
/bloom.bg/2IxAstB

Buyout firms abandon debt-laden ways for pricey deals
Carl O’Donnell, Joshua Franklin – Reuters
Some private equity firms that are keen to put their swelling cash piles to work are paying for expensive acquisitions of fast-growing companies mostly out of their own pockets and trimming back their reliance on debt.
/reut.rs/2IqQF3I

A Fed pivot, born of volatility, missteps, and new economic reality
Howard Schneider, Jonathan Spicer – Reuters
The Federal Reserve’s promise in January to be “patient” about further interest rate hikes, putting a three-year-old process of policy tightening on hold, calmed markets after weeks of turmoil that wiped out trillions of dollars of household wealth.
/reut.rs/2It2XIU

Insurance not enough to offset financial risks of climate change, analysts say
Laurie Goering – Reuters
From homeowners facing higher flood insurance premiums to investors putting money into coal-fired power plants, financial risks related to climate change are growing, analysts say.
/reut.rs/2TgqeCh

NY Fed-FX swaps with foreign central banks total $68 million in latest week
Reuters
The Federal Reserve provided $68 million of liquidity to foreign central banks in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.
/reut.rs/2T5B0uX

Institutions

SoFi Now Offering No-Fee Brokerage for Stock and ETF Trades
Bernice Napach – ThinkAdvisor
SoFi, which began life in 2011 offering refinancing for student loans, then expanded into personal loans and mortgages and robo-advisory services, has now moved into the brokerage business.
SoFi, short for Social Finance, is now offering stock and ETF trading with no fees.
/goo.gl/HwmHF6

European banks wield axe after bleak fourth quarter; Clients pulled money as markets were roiled by trade wars, growth concerns and Brexit
Stephen Morris and David Crow – FT
One of the most brutal trading quarters in memory has sparked another round of soul-searching at Europe’s few remaining investment banks, with some concluding the only option is to wield the axe again.
/on.ft.com/2ItdnZ9

UBS CEO Says Protecting Dividend Is Priority Following Fine
Patrick Winters – Bloomberg
UBS Group AG Chief Executive Officer Sergio Ermotti said the bank will prioritize protecting its dividends if it can’t get out of paying a massive fine imposed in a French tax evasion case.
/bloom.bg/2IwfxXM

Deutsche Bank Lost Some Money Sometime; Also collars, Theranos and connectivity fees.
Matt Levine – Bloomberg
What is going on in this Wall Street Journal story about how “Deutsche Bank AG racked up a loss of $1.6 billion over nearly a decade on a complex municipal-bond investment”? The basic plot seems to be:
/bloom.bg/2IvR0SV

Now Even Goldman Sachs Is Challenging U.S. Debt Dogma
Alexandra Scaggs – Barron’s
Goldman Sachs economists are wading into the deficit debate, and they don’t seem to be sounding any alarm bells about U.S. federal debt.
bit.ly/2IvQ8h7

JPMorgan trades banker offices for shared desks
Elizabeth Dilts – Reuters
JPMorgan Chase & Co is tearing down walls and moving its San Francisco investment bankers onto “hot desks,” a space-saving layout that has long been a fixture at tech companies, while redesigning offices in Dallas and other cities.
/reut.rs/2IxBmX1

Regions

Hong Kong opens banking market to online competition; Digital banking licences set to be issued to 6 companies including Tencent, Ant Financial and Xiaomi
Don Weinland – FT
Some of the world’s biggest banks are about to go head to head with China’s top technology and payments companies for the first time when Hong Kong opens its market to online competitors.
/on.ft.com/2IwVGI5

Why investors in India are still spooked by the shadows; Non-bank funding crunch has significant consequences for the world’s sixth-largest economy
Simon Mundy- FT
When Harshil Mehta took the helm of Dewan Housing Finance in January 2015, he seemed to have landed in the right place at the right time.
/on.ft.com/2Itf7kZ

This Man’s About to Get Elected After a $1 Billion Bank Fraud; The scandal in Moldova redrew the country’s political map and will test again its fragile grip on democracy in a vote this weekend.
Marc Champion – Bloomberg
Ilan Shor makes an unlikely champion of the poor, even by the colorful standards of former communist Europe.
/bloom.bg/2Iwgpvw

Russia Seeks 20 Years for Cyber-Cops in U.S.-Linked Treason Case
Stepan Kravchenko – Bloomberg
Security service alleges U.S. intelligence has ties to accused; Kremlin denies case connected to alleged U.S. election hacking
Prosecutors in the treason trial of a top former Russian cybersecurity officer who was allegedly compromised by U.S. intelligence are seeking a 20-year prison term.
/bloom.bg/2Ivx2aU

Italian Bonds Face Up to Risk of Ratings Downgrade by Fitch
John Ainger – Bloomberg
Market may be pricing in 30% probability of rating cut: SocGen; A downgrade will worsen sentiment amid recession: Commerzbank
Italian bond investors are bracing for the risk of the second sovereign-rating downgrade in as many quarters as a recession threatens the government’s plan to rein in the budget deficit.
/bloom.bg/2IvyZEj

Japan launches 100 mln euro fund to invest in Nordic, Baltic tech companies
Reuters
The Japanese government along with several companies has established a 100 million euro ($113 million) fund to invest in Nordic and Baltic technology firms.
/reut.rs/2IFr6Mi

Singapore Banks Flag Risks After Disappointing Earnings Season
Chanyaporn Chanjaroen , Melissa Cheok , and Pooja Thakur Mahrotri – Bloomberg
Shares fall as OCBC profit drops, while UOB misses estimates; Global ‘uncertainties’ will weigh on sentiment, UOB CEO says
After being stung by the market turmoil at the end of last year, Singapore’s banks are bracing for fresh challenges from China-U.S. trade tensions and a slowing world economy.
/bloom.bg/2IuKFag

Venezuela’s Maduro Orders Closure Of Brazilian Border
Matthew S. Schwartz – NPR
Venezuelan President Nicolás Maduro, who is facing international pressure to step down after elections widely seen as rigged, ordered the country’s vast border with Brazil to be closed. The move will make it harder for aid groups to get emergency food and medicine into the country. The U.S. and some other countries have recognized Juan Guaidó, the parliamentary opposition leader, as the legitimate president of Venezuela. Guaidó is embracing the support, and has promised to bring in emergency aid to help the poor country.
/n.pr/2SVOydd

Brexit

‘Taking back control’ of UK agriculture clearly includes the right to be stupid; British farm policy should not prioritise protecting agriculture over cheap food
Martin Wolf – FT
Assume Brexit occurs on March 29, without a withdrawal agreement with the EU. Suddenly, the UK will, to quote the Brexiters, “take back control”. Michael Gove was an enthusiastic adopter of that phrase. So what does the secretary of state for environment, food and rural affairs plan to do with the control he would gain? The details are unknown. But, as he said this week, “it will not be the case that we will have zero-rate tariffs for food products”. On the contrary, “there will be protections for sensitive sectors of agriculture and food production”. This decision confirms the view that the UK will use its control to be stupid.
/on.ft.com/2Iuj5Kf

No-deal Brexit risks Eurostar chaos at St Pancras, says report; Queues of up to 15,000 people could stretch for a mile in worst-case scenario
James Blitz – FT
Queues for Eurostar train services at London’s St Pancras International could reach up to 15,000 passengers each day in the event of a no-deal Brexit, according to a confidential report drawn up by the British government.
/on.ft.com/2Ivi8S2

Firing Bankers in Germany Is About to Get Easier in Brexit Era
Iain Rogers and Steven Arons – Bloomberg
To woo Brexit business from U.K., a labor-law tweak was needed; Job protection for banks’ ‘risk takers’ to be loosened
Germany is making it easier for lenders such as Deutsche Bank AG and JPMorgan Chase & Co. to fire top earners, adding flexibility for Frankfurt to lure financial companies unsettled by Brexit.
/bloom.bg/2IvwqSH

Deal or No Deal, the Damage Has Already Been Done for the Pound
Charlotte Ryan – Bloomberg
Brexit is already damaging economy, to weigh on sterling: SEB; Aberdeen Standard favors keeping short-pound positions for now
Whether Theresa May gets her Brexit agreement or not, the pound’s troubles look far from over.
/bloom.bg/2IwTLTT

Zimbabwe’s banks begin trading in new currency – source
Reuters
Zimbabwe’s banks on Friday started trading a new currency with corporate clients and individuals, although interbank trading won’t begin until Monday, a banking source said.
/reut.rs/2IvFerJ

Bank of Ireland launches 2 billion euro Brexit Fund
Reuters
The Bank of Ireland said on Friday it will earmark 2 billion euros (£1.74 billion) for lending to small and medium businesses that need capital to adapt to the challenges of Britain’s departure from the European Union.
/reut.rs/2T581rb

Brexit: Irish government hopes no-deal plan ‘sits on shelf’
Shane Harrison – BBC News
The Irish deputy prime minister has said he hopes that major legislation his government has prepared to manage a no-deal Brexit will never be used. Simon Coveney unveiled the wide-ranging bill on Friday, bringing together work by nine government departments. He said a “disorderly” Brexit would be a “lose, lose, lose” for the UK, the EU and the Republic of Ireland. His aim for the emergency proposals is to ensure a smooth transition should the UK leave the EU without a deal.
/bbc.in/2T5FRMH

Miscellaneous

Black market will thrive if NJ puts $42-an-ounce tax on legal weed
John Crudele – NY Post
The people who smoke dope aren’t necessarily dopes. I hate to poop on New Jersey’s pot party, but I have a question: Why would anyone buy legal marijuana when the state is planning to place a $42-an-ounce tax on the stuff?
/nyp.st/2IIyK95

Everybody Makes Podcasts. Can Anyone Make Them Profitable?
The industry generates a lot of enthusiasm and little revenue, but that could be changing.
Gerry Smith – Bloomberg
About a decade ago, Hank and John Green, fraternal YouTube stars, founded VidCon, an annual convention in Anaheim, Calif., that celebrates online video auteurs and their screaming teenage fans. As YouTube’s cultural impact deepened, so did VidCon’s. A constellation of amateur creators grew into an industry, with VidCon providing a stage for them to promote themselves IRL. Walt Disney Co. and DreamWorks Animation LLC bought up pieces of the YouTube ecosystem, confident they could transform fandom into fortune.
/bloom.bg/2Itc50f

What Is Financial Literacy and Why Does It Matter to Me?; Being financially literate can lead directly to a more secure financial future. So why aren’t more Americans getting educated on money management?
Brian O’Connell – TheStreet
Financial literacy is a hot-button issue as memories still linger over the Great Recession and as millions of baby boomers hit retirement age, and as a legion of younger Americans battle skyrocketing student loan debt.
bit.ly/2IFqkim

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