Eurex Clearing Gains Repo Ground; Worst Time to Make Money in Markets Since 1972

Dec 6, 2018

First Read

Hits & Takes
JLN Staff

A scan of recent CME notices showed that three individuals were the subject of disciplinary actions yesterday. First, one Mihir Salla was fined $60k and banned for life from CME platforms for disruptive trading activity (read: spoofing-related) in gold, silver and copper futures over a period of two months in 2015. He also let employees use his Tag 50 ID for trading. Next up, Ge Shuai was also fined $60k and banned for life for disruptive trade practices in gold and silver futures. He entered orders using another person’s Tag 50 ID. Last up is Xiaobao Huang, who got dinged for $45k and a lifetime ban for disruptive practices in copper and crude oil futures. Huang also misused a TAG 50 ID.~SD

Yesterday’s newsletter included the Reuters story “Glencore, Trafigura, Vitol bribed Petrobras staff – Brazil prosecutors.” That story’s first paragraph was updated after our newsletter went out, adding that the “scheme… may still be going on.”~SD

MarketsWiki’s busiest day in 2018 was May 22 when Stacey Cunningham’s appointment as NYSE president was the news of the day.~JJL

In today’s “Odd Press Release Corner” we have a California law firm warning Orange County homeowners about the forthcoming “next leg of the financial crisis that started in 2008.” I don’t recall a forecast like this being the subject of a press release before. See Orange County Real Estate Firm Signals Next Leg of Financial Crisis~SD

John Damgard, former president of the FIA, has been named to the board of Interactive Brokers.~JJL

Will Turner, not to be confused with the pirate, has joined the blockchain practice in Chicago of Steptoe & Johnson LLP.~JJL

It looks as though we’re long past bitcoin’s “dead cat bounce.” Now, what we’re seeing is more like a dead cat’s slow, sad slide down an icy hill.~MR

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Market Outlook with Cboe’s Ed Tilly: Regs, Crypto and Liquidity
JohnLothianNews.com

In this video, Cboe Chairman and CEO Ed Tilly addresses the SEC’s commentary on market data offerings, what’s next for crypto products, and the need to alter regulations that are hindering index options liquidity.

Watch the video »

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Trading in US stock futures had to be halted after violent moves, and markets are spooked
Sam Jacobs – Business Insider
The world’s largest futures exchange, CME Group, had to repeatedly halt trading in US stock futures for brief periods this morning because of violent price moves, in an unusual intervention that has stunned traders.
/jlne.ws/2QC4HlP

****** Get out the rule book and check “Look Out Below!!!”~JJL

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Special report: CFTC Meeting Focuses on Clearinghouse Risks
FIA
The U.S. Commodity Futures Trading Commission held a public meeting of its Market Risk Advisory Committee on Dec. 4 in Washington, D.C. The MRAC discussed, among other issues, clearinghouse risk management, governance and clearing incentives, and explored the challenges of balancing the interests of clearinghouses, their members and end-users. Rostin Behnam, the CFTC Commissioner who oversees this committee, also announced the launch of a subcommittee on interest rate benchmark reform and released a list of the subcommittee members.
/jlne.ws/2L4uaQ1

****”MRAC!” could double as an onomatopoeia worthy of a Batman punch.~SD

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Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up
Asawin Suebsaeng and Lachlan Markay – The Daily Beast
Since the 2016 presidential campaign, Donald Trump’s aides and advisers have tried to convince him of the importance of tackling the national debt.
Sources close to the president say he has repeatedly shrugged it off, implying that he doesn’t have to worry about the money owed to America’s creditorsócurrently about $21 trillionóbecause he won’t be around to shoulder the blame when it becomes even more untenable.
/jlne.ws/2zJ0Hq6

******There is some good news there.~JJL

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NYC Mayor’s Ex-Goldmanites Blast Ice-Out of Wall Street Women
Katia Porzecanski and Gillian Tan – Bloomberg
Senior officials at the New York City Mayor’s office have some thoughts for those Wall Streeters unsure of how to behave around colleagues in the wake of the #MeToo movement.
Alicia Glen, the deputy mayor for housing and economic development, spent a dozen years at Goldman Sachs Group Inc. before joining the De Blasio administration. In response to a Bloomberg report that some men in finance have taken to avoiding their female counterparts at any cost, Glen and three colleagues — also former Goldmanites — wrote a letter to the editor describing the behavior as “ironic and sickening.”
/jlne.ws/2RDO5Yu

***** A Pence for your thoughts.~JJL

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Wednesday’s Top Three
Our number one story on Tuesday was a Bloomberg opinion piece on DRW Trading’s victory over the CFTC, in Trying to Buy Stuff You Want Is Not Manipulation. Second was Sarah Rudolph’s story, Murphy & McGonigle Launches New Commodities & Futures Division To Help Firms Deal With Regulatory Challenges. And in third was our lead story, London’s stockbrokers fight for survival

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Lead Stories

Eurex Clearing gains ground with profit scheme for repo; Major investment banks including Citigroup and JP Morgan sign up to use the Eurex clearing profit scheme for repo as Brexit looms.
Hayley McDowell – The Trade
Deutsche Boerse’s Eurex has said that 24 market participants from the UK, US and Europe have registered for its repo partnership program after extending the scheme to additional instruments.
/jlne.ws/2QBw0gg

It’s the Worst Time to Make Money in Markets Since 1972
Elena Popina – Bloomberg
Not a single of 8 main asset classes is up at least 5% in 2018; There was bull market somewhere in 2008, 1974 routs, NDR says
Market statisticians are falling over each other in 2018 to describe the pain being felt across asset classes. One venerable shop frames it this way: Things haven’t been this bad since Richard Nixon’s presidency.
/jlne.ws/2QwsnID

Oslo Bors and LSEDM end linked derivatives order book partnership; The linked derivatives order book partnership between LSEDM and Oslo Bors has been in effect since 2009.
Hayley McDowell – The Trade
Norway’s Oslo Bors and the London Stock Exchange Derivatives Markets (LSEDM) have decided to end their linked derivatives order book partnership after almost 10 years in operation.
/jlne.ws/2QEzXAT

Greenhouse Gas Emissions Accelerate Like a ‘Speeding Freight Train’ in 2018
Kendra Pierre-Louis – NY Times
Greenhouse gas emissions worldwide are growing at an accelerating pace this year, researchers said Wednesday, putting the world on track to face some of the most severe consequences of global warming sooner than expected.
/jlne.ws/2QzWYVI

Highly Anticipated Moderna Listing Is Seen As Test of New IPOs; Critics worry about a high cash-burn rate and still unproven programs amid recent choppiness in the stock market
Corrie Driebusch and Jonathan D. Rockoff – WSJ
The initial public offering market faces a major year-end test, as Moderna Inc. attempts to stage one of the biggest stock-market debuts for a biotechnology company at a time of heightened investor jitters.
/jlne.ws/2QG4NZG

Brexit uncertainty makes pound ‘impossible’ to trade; Cost of insuring against future price swings in the currency soars
Eva Szalay and Philip Stafford – FT
Nervous investors are shying away from making big bets on the pound because of uncertainty around Brexit, sending the cost of insuring against future price swings in the currency soaring to its highest levels since the UK voted to leave the EU.
/jlne.ws/2QCOXz8

LIBOR Basis Swaps
Chris Barnes – Clarus FT
For the first time, basis trading reported to the SDRs has topped $1trn in a single month. Similarly, global basis trading has now topped $2trn cleared at LCH SwapClear in a single month. We see that average maturity of basis trades varies according to the indices being traded. Activity in 30y and 50y basis trading has recently increased at LCH.
/goo.gl/8TywFG

Tariff effects broaden across U.S., wage growth higher: Fed
Reuters
Tariff-driven price increases have spread more broadly through the U.S. economy, though on balance inflation has risen at a modest pace in most parts of the country, the Federal Reserve said on Wednesday in its latest report on the economy.
/jlne.ws/2EgnQnY

Setting a good example
Anne Plested – Fidessa
Meanwhile in another part of Europe, time is running out for Swiss equivalence. The one year period previously granted in December 2017 is set to expire on 31st December. Switzerland needs equivalent third-country status in order to preserve the status quo and allow EU trading participants bound by MIFID to continue accessing the Swiss market locally in the EU.
/jlne.ws/2E4FJoA

Dash to Acquire eRoom Securities; eRoom Securities will be rebranded as Dash Prime, bringing unmatched scale, technology and service to the professional trading community.
Dash Financial Technologies
Dash Financial Technologies, the industry’s leading capital markets technology and execution provider, today announced it has signed a definitive agreement to acquire eRoom Securities, LLC.
/jlne.ws/2E3DlhT

Vela to facilitate electronic access to Eurex EnLight
Eurex
Eurex, Europe’s largest derivatives exchange, and Vela, a global leader in trading and market access technology, have teamed up to facilitate electronic access to Eurex EnLight, the new selective request-for-quote (RfQ) platform, via Vela’s Metro Trading Platform.
/jlne.ws/2QBwEuc

The Trouble With Huawei Will Spread
Jacky Wong – WSJ
Just when investors were hoping to take a breather following the weekend’s trade truce between the U.S. and China, the arrest of Chinese telecom-equipment company Huawei’s chief financial officer at the behest of the American authorities has served a warning that they shouldn’t get too complacent.
/jlne.ws/2QzWT4l

Top Huawei executive arrested on U.S. request, clouding China trade truce
Julie Gordon, Christian Shepherd – Reuters
The daughter of Huawei’s founder, a top executive at the Chinese technology giant, was arrested in Canada and faces extradition to the United States, roiling global stock markets as it threatened to inflame Sino-U.S. trade tensions afresh.
/jlne.ws/2QB2es1

Bank of England urges investors to adopt FX code
Eva Szalay – FT
The Bank of England has called for investors to sign up to the voluntary principles of good practice in currencies markets, stressing to asset managers that from the end of next year, adhering to the standards will help to demonstrate the standards of the Senior Managers Regime.
/jlne.ws/2E49rdt

Judge Sullivan Channels SWP, and Vindicates Don Wilson and DRW
Streetwise Professor
After two years of waiting after a trial, and five years since the filing of a complaint accusing them of manipulation, Don Wilson and his firm DRW have been smashingly vindicated by the decision of Judge Richard J. Sullivan (now on the 2nd Circuit Court of Appeals).
/jlne.ws/2E4Qes0

Exchanges, OTC and Clearing

Great interest in the Eurex partnership program for the repo segment
Deutsche Boerse Group
In addition to expanding the cleared repo business for pension funds and asset managers, the program aims in particular to expand the repo business in the interbank market in European government bonds at Eurex. Repos are secured money market instruments by which banks cover their short-term liquidity needs by depositing securities. The repo market is thus an important element in the money market cycle between banks, central banks and investors.
/jlne.ws/2QAx7ge

Intercontinental Exchange Announces Record Trading in TTF Natural Gas and JKM LNG (Platts) Futures Contracts
ICE
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced record trading in the TTF Natural Gas and JKM LNG (Platts) futures contracts.
/jlne.ws/2QFf2xx

SGX welcomes HGNH International as Derivatives Trading and Clearing Member
SGX
Singapore Exchange (SGX) today welcomed HGNH International Financial (Singapore) Pte Ltd. as a Trading and Clearing Member of its derivatives market.
/jlne.ws/2E41VPN

Joint Statement by Singapore Police Force, Monetary Authority of Singapore and Singapore Exchange Regulation
SGX
The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX Regco) have decided not to allow Noble Group Limited (NGL) to transfer its listing status to New Noble as part of NGL’s proposed restructuring. This follows a careful review of the findings to-date from the ongoing investigations into NGL and Noble Resources International Pte Ltd (NRI) by MAS, the Commercial Affairs Department (CAD) of the Singapore Police Force, and the Accounting and Corporate Regulatory Authority (ACRA).
/jlne.ws/2E3cd2E

Straits Times Index (STI) quarterly review – December 2018; No changes to the constituents of the STI
SGX
FTSE Russell announces that there will be no changes to the constituents of the Straits Times Index (STI), following the December quarterly review.
/jlne.ws/2E5lAi8

Pensions: “savers should acquire financial and stock exchange knowledge”; Deutsche Bˆrse Launches Seminar Series on Exchange Knowledge / Evening Seminars “Your Path to the Stock Market” will take place from January to May 2019 in Eschborn
Deutsche Bˆrse Group
From 28th January 2019, Deutsche Bˆrse is organizing evening seminars for private investors at its corporate headquarters in Eschborn near Frankfurt through its Academy, the Capital Markets Academy.
/jlne.ws/2rjYkpb

Impacts of German Investment Tax Act 2018 on the clearing of securities lending and repo transactions
Eurex
On 15 May 2018, the German Federal Ministry of Finance (Bundesministerium f¸r Finanzen, BMF) published a circular on the application of the German Investment Tax Act 2018 (“Investmentsteuergesetz; InvStG”). This BMF circular provided further clarification on withholding tax obligations in securities lending and repo transactions with German equity underlyings, in case one of the counterparties is an investment fund in meaning of the InvStG.
/jlne.ws/2QFiFng

CME Group Inc. Declares Annual Variable Dividend
CME Group
CME Group Inc. (NASDAQ: CME) today declared its annual variable dividend, amounting to $1.75 per share. The dividend is payable January 16, 2019, to shareholders of record on December 28, 2018. When CME Group adopted its annual variable dividend structure in February 2012, the intention was to determine the excess cash available at the end of each year, with the level to increase or decrease from year to year based on operating results, potential investment activity and other forms of capital return.
/jlne.ws/2QCO7T0

CME says it intervened to prevent ‘even harder’ falls on equity futures; CME experienced multiple Velocity Logic events from the open in Equity futures today
Forexlive.com
The pauses allow participants to enter the market preventing even harder moves
If you are following the ES there were large lot sizes going through, drove price down hard indeed. According t0 the CME statement (they are the exchange for the ES) it could have been worse.
/jlne.ws/2QK7RV3

Euronext announces volumes for November 2018
Euronext
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for November 2018.
Cash trading – In November 2018, the average daily transaction value on the Euronext cash order book stood at EUR7,474.9 million, down -10.4% compared to November 2017 and down -15.7% from the previous month.
Derivatives trading – In November 2018, the overall average daily volume on derivatives reached 560,143 contracts, down -11.1% compared to November 2017 and down -7.0% compared to the previous month.
/jlne.ws/2QBYBSv

NZX Operating Dashboard
NZX
These shareholder metrics represent the key operations of NZX’s business.
/jlne.ws/2EgoHVl

Fintech

How AWS Has Turned Into An Unstoppable Juggernaut
Janakiram MSV – Forbes
AWS re:Invent, Amazon’s annual user conference hosted at Las Vegas concluded last week. As expected, Amazon launched a slew of new services ranging from a robotic automation tool to an on-premises hardware appliance.
/jlne.ws/2EcC8FS

Mark Mobius’ emerging market fund selects Northern Trust for asset servicing and outsourced trading; Northern Trust will provide custody, depository, fund accounting and FX services to the investment trust, and fund administration to Mobius Emerging Markets Fund vehicle.
Joe Parsons – The Trade
Mobius Capital Partners, the emerging and frontier markets fund set up by Mark Mobius, has selected Northern Trust to provide a range of asset servicing and integrating trading solutions.
/jlne.ws/2QwtS9J

Podcast: Wall Street Wants Your Data
Barron’s
For decades, corporations and investors have been fighting a battle over data. Shareholders push for transparency, while companies do the bare minimum to comply. Just last month, Apple said it would no longer provide details on its iPhone sales. But investors are a resourceful bunch and there’s a booming world of alternative data that’s helping to fill in the gaps.
/jlne.ws/2QAvrmW

Cryptocurrencies

Bitcoin Derivatives That Cost $1 Million Will Soon Be Worthless
Gregor Stuart Hunter – Bloomberg
The biggest-ever bet on Bitcoin options is about to expire worthless. Purchased for almost $1 million on LedgerX’s trading platform just days after Bitcoin peaked a year ago, the call options have a strike price of $50,000 and an expiry date of Dec. 28, 2018. For the contracts to retain any value at expiry, Bitcoin would need to rally more than 1,200 percent.
/jlne.ws/2QC5yDj

A Crypto-Friendly Congressman Seeks to Regulate ICOs
Simon Golstein – Finance Magnates
Warren Davidson, a Republican politician from Ohio, is continuing with his quest to get cryptocurrency recognised by law, announcing a plan to create regulation for initial coin offerings.
/jlne.ws/2zJe2Ps

Machine learning identifies cryptocurrency scams before they happen
MIT Technology Review
The emergence of cryptocurrencies in the last few years has been a roller coaster ride. During 2017, Bitcoin rose in value from $900 to almost $20,000 before collapsing dramatically. Today, at the beginning of December 2018, a single bitcoin is worth just under $4,000. All this has encouraged the rapid development of other cryptocurrenciesówell over 1,000 of them by most estimates. The dream is that these could reproduce Bitcoin’s success. But the reality is that few are traded in large volume or are worth anything at all.
/jlne.ws/2QiBBZF

R3’s New Corda App Supports Payments in XRP Cryptocurrency
Ian Allison – Coindesk
Distributed ledger technology provider R3 has launched the Corda Settler, an application aimed to facilitate global cryptocurrency payments within enterprise blockchains – and it’s starting with XRP. R3 said XRP is the first globally recognized cryptocurrency to be supported by Settler, bringing the Corda and XRP ecosystems into closer alignment – something of a rapprochement considering Ripple and R3 were previously locked in a legal dispute.
/jlne.ws/2zM07b6

As Cryptocurrency Losses Exceed $706 Billion, Chinese Investors Are Losing Faith In Blockchain
Nina Xiang – Forbes
The global cryptocurrency market has already seen more than $706 billion of its total market capitalization evaporate since hitting a peak in early January, according to research site CoinMarketCap, and those losses appear to be triggering a shakeout in the wider blockchain community in China. Many startups there are finding it increasingly difficult to gain access to capital as investors grow skeptical of the fundamental claims around digital currencies and the blockchain technology that underpins them.
/jlne.ws/2Uqaiem

Thought you got burned by bitcoin in 2018? Just wait till next year
Vildana Hajric – The LA Times
Bitcoin is turning negative again. And the technicals aren’t looking too good either going into 2019. The largest cryptocurrency slumped as much as 5.9% to $3,668.09 on Wednesday, approaching the more than one-year low of $3,522.58 reached on Nov. 26. After a few days of relative stability, volatility has increased again in the wake of November’s plunge, which was the biggest monthly drop in over seven years.
/jlne.ws/2rlTDv9

Why bitcoin ó by design ó won’t become worthless, according to this crypto heavyweight
Aaron Hankin – MarketWatch
As bitcoin flounders to its lowest level in 14 months, concerns over mining profitability have some wondering if the best-known cryptocurrency is headed for a hard landing as those solving the complicated puzzles hit the off-switch on their energy-guzzling mining equipment.
/jlne.ws/2AX1RhF

Crypto fund manager Bitwise has launched two new funds to address client demand
Frank Chaparro – The Block Crypto
Bitwise has launched two new funds for crypto; It’s a move that appears to put them up against Grayscale, one of the largest investors in the digital asset market
California-based Bitwise Asset Management on Wednesday announced the launch of two new crypto funds, a move that could put the firm up against one of the largest investors in the market for digital currencies.
/jlne.ws/2Qws8xd

Politics

From Nixon to Trump: Here’s how stocks performed under each U.S. president
Jared Blikre – Yahoo Finance
U.S. presidents, for better or worse, get too much credit for the economy and stock market performance. The Federal Reserve, in its quest for the elusive soft landing, exerts more direct control over the nation’s economic levers.
/jlne.ws/2QC6ZBr

Trump Is Even Worse at Enforcing White-Collar Crimes Than George W. Bush Was
Terri Gerstein – Slate.com
Last month, when our government blasted tear gas at women and children seeking refuge at our Southern border, ostensibly in service of law and order, a very different picture emerged of other parts of the Trump administration. Even leaving aside the regular revelations about criminal activity by top Trump associates, the administration itself has shown its law and order mantra to be completely hollow in another crucial area: enforcement of white-collar laws.
/jlne.ws/2QzCjB2

Hong Kong Fears Trump Will End Special Trading Status
David Tweed – Bloomberg
U.S. president has unilateral right to change city’s status; Beijing moves have spurred questions about Hong Kong autonomy
Hong Kong business groups are starting to worry the Trump administration will open the door to ending the financial hub’s preferential trade status, rendering it “just another Chinese city” as its government gets closer to Beijing.
/jlne.ws/2QBu6ME

America is paying an awful price for Trump
Frida Ghitis – CNN
After a “wonderful and very warm dinner” with China’s President Xi Jinping, last weekend, President Donald Trump launched a barrage of tweets extolling his great accomplishments. The Chinese, he said, had agreed to remove a 40% tariff on American car imports; they would soon start buying US agricultural products; they had apparently made major concessions as part of a 90-day pause in raising tariffs. The stock markets revved up for a big jump, believing Trump’s damaging trade war was coming to an end.
/jlne.ws/2QFfSKH

Trump fears political price from oil spike, market turmoil
Stephen Collinson, CNN
President Donald Trump is fretting about two rising global challenges that threaten a political gut punch as he gears up for his 2020 election bid — a possible oil price hike and market shocks triggered by his trade wars.
/jlne.ws/2QG3Dxi

Michael Bloomberg heads to Iowa: ‘I have a lot of experience which would be useful if I was president’
Megan Keller – The Hill
Former New York Mayor Michael Bloomberg on Tuesday during a visit to Iowa said he has “a lot of experience” that would come in handy if he was elected president.
/jlne.ws/2QFfmfQ

Regulation

May pledges Treasury action on rogue advisers
Maria Espadinha – FT Adviser
Prime minister Theresa May has vowed to ensure that HM Treasury and the Financial Conduct Authority (FCA) will work together to crack down on rogue financial advisers.
/jlne.ws/2EenY7j

FCA publishes findings on long-term mortgage arrears
UK FCA
Today the Financial Conduct Authority (FCA) published findings on how mortgage lenders treat customers who have long-term mortgage arrears and provide forbearance to affected customers.
/jlne.ws/2E6fWN3

ASIC reports on decisions to cut red tape – April 2018 to September 2018
ASIC
ASIC has released its latest report outlining decisions on relief applications, highlighting ASIC’s efforts to reduce red-tape and achieve a practical, positive outcome for companies seeking regulatory flexibility.
/jlne.ws/2E5CzBa

U.S. Prosecutors Charge Four People in Panama Papers Probe; Unsealed indictment includes charges of wire and tax fraud and money laundering
Sadie Gurman – WSJ
Federal prosecutors in New York have charged four people with ties to Mossack Fonseca & Co., the now-defunct law firm at the center of the so-called Panama Papers tax-evasion scandal, according to an indictment unsealed Tuesday.
/jlne.ws/2L3UZUt

$100 million fraud settlement for buyout firm co-founded by Steve Young
Josh Kosman – MarketWatch
A buyout firm that was co-founded by Pro Football Hall of Fame quarterback Steve Young has settled a high-profile lawsuit that accused it of a massive fraud cover-up, The Post has learned.
/jlne.ws/2QImlEU

Soros Family Office Fined by Hong Kong Watchdog for Naked Short Selling
Bei Hu – Bloomberg
Securities and Futures Commission fined company HK$1.5 million; Sanction was for October 2015 trade involving Great Wall Motor
Soros Fund Management, the about $25 billion family office of billionaire George Soros, was fined by Hong Kong’s securities regulator for naked short selling.
/jlne.ws/2QExwOL

Send Noncompete Agreements Back to the Middle Ages; The free flow of employees and ideas encourages innovation. Just ask Silicon Valley.
Stephen Mihm – Bloomberg
Noncompete agreements, once restricted to tech workers and high-level executives, have become commonplace among ordinary workers, including security guards, home health aides or hair stylists. If history is any guide, the spread of these contracts could have far-reaching negative implications for the U.S. economy.
/jlne.ws/2Qyq3AP

World’s biggest oil traders paid bribes in Brazil scandal -prosecutors
Pedro Fonseca, Marcelo Rochabrun – REuters
Leading global oil traders Vitol, Trafigura and Glencore paid more than $30 million in bribes to employees at state-owned Brazilian company Petrobras in a scheme that may still be going on, prosecutors said on Wednesday.
/jlne.ws/2QIjvzK

National Futures Association: Proposed Amendments to NFA’s Interpretive Notice: NFA Compliance Rules 2-9, 2-36 and 2-49: Information Systems Security Programs
NFA
/jlne.ws/2KXLGVQ

U.S. Prosecutors Charge Four People in Panama Papers Probe; Unsealed indictment includes charges of wire and tax fraud and money laundering
Sadie Gurman – WSJ
Federal prosecutors in New York have charged four people with ties to Mossack Fonseca & Co., the now-defunct law firm at the center of the so-called Panama Papers tax-evasion scandal, according to an indictment unsealed Tuesday.
/jlne.ws/2L3UZUt

Investing and Trading

What the Market Reaction to The G-20 Taught Us about 2019 Expectations
Blu Putnam – CME Group OpenMarkets
The recent G-20 meeting was full of interesting developments and the market reactions were equally fascinating.
First, the U.S.-China Trade War ceasefire ignited a relief rally in equities lasting all of one day, then returning to up/down volatility without any real trends.
The problem preventing follow through in the equity rally was that the United States and China have different stories on what deal was cut.
/jlne.ws/2Eh18vQ

Miners bear brunt of risk aversion as investors take fright
Clara Denina, Barbara Lewis – Reuters
A two-year recovery in the mining industry has faltered, as trade tensions between China and the United States and concerns about economic growth weaken commodity prices and deter investment.
/jlne.ws/2RBPvlY

Lies, damned lies and ESG rating methodologies
Kate Allen
Environmental, social and governance criteria are becoming an increasingly popular way of assessing companies’ performance across a bunch of non-financial factors.
/jlne.ws/2QCP4e2

Carry Trade Regains Oomph With Emerging Markets Dodging Fed Squeeze
Paul Wallace – Bloomberg
Central bankers have juiced up carry returns through hikes; Emerging-market currencies bolstered by high reserve buffers
The hunt for higher yields is all set to return to emerging markets in 2019 as central banks zealously guard their interest-rate advantage over the Federal Reserve.
/jlne.ws/2QAvYFs

AIG hit with $750 million to $800 million in fourth-quarter catastrophe losses: CEO
Suzanne Barlyn – Reuters
American International Group (AIG.N) Inc has racked up an estimated $750 million to $800 million in catastrophe losses so far during the 2018 fourth quarter, its chief executive officer said on Wednesday.
/jlne.ws/2QB25ET

European Stocks Look Cheap, and for Good Reason; There’s just too many risks facing the region to be sucked in by relatively low P/E ratios. Also, Italians are phlegmatic.
John Authers – Bloomberg
It would be easy to overlook Europe as the unfolding U.S.-China trade dispute captures global investors’ attention, but that would be a mistake. The exceptional calm of financial markets in 2017 owed much to the surprise resurgence of the European economy, while this year’s turbulence can, in part, be tied to deep disappointment with Europe’s faltering economy.
/jlne.ws/2QyrFun

The Yield Curve Is Trying to Tell Us Something; An inversion means it’s time to start the recession clock – the only question is how long to wait.
Mark Gongloff – Bloomberg
Brace yourselves everybody, a recession is coming! Sometime in the next, uh, two years. Or less. Or more.
/jlne.ws/2QwsbZV

Stocks Slump, Treasuries Gain as Sell-Off Resumes: Markets Wrap
Samuel Potter – Bloomberg
10-year Treasury yield falls to 2.89% as investors seek safety; Arrest of Huawei CFO among catalysts as equity rout continues
U.S. equity futures tumbled alongside stocks in Europe and Asia as concern resurfaced that trade tensions between the world’s two largest economies are far from resolved. Oil slid as OPEC ministers met in Vienna.
/jlne.ws/2QAuMls

Apollo’s Leon Black Says Credit Markets Are In ‘Bubble Status’
Sabrina Willmer – Bloomberg
‘A thirst for yield” is creating excesses, Black says; C-Corp switch remains an issue Apollo is examining, he says
The credit markets are facing excesses as investors chase yield, Apollo Global Management LLC co-founder Leon Black said.
/jlne.ws/2QwrCiL

Institutions

Citi CFO forecasts lower markets revenue for fourth quarter
Reuters
Citigroup Inc (C.N) Chief Financial Officer John Gerspach said the bank expects market revenue in the current quarter to be slightly lower than last year.
/jlne.ws/2EeQQw9

Investors Aren’t Buying Bank Chiefs’ Optimism; The heads of America’s biggest three banks all spoke positively about the economy Tuesday as their share prices fell sharply
Aaron Back – WSJ
Bankers are often criticized for being out of touch with the real world. Often that is unfair, but on Tuesday, as the leaders of the nation’s three biggest banks told investors that the economy was great, investors were acting like the boom was over.
/jlne.ws/2QImCYs

$2.15 Trillion is Right to Snub Hedge Funds; European pension fund managers have little appetite for allocating hard-earned retirement money to these underperformers. Why should they?
Mark Gilbert – Bloomberg
With global investment banks predicting a lackluster 2019 for financial market returns, you might expect the guardians of pension assets to chase performance either by seeking the alpha promised by hedge funds or warming to Brexit-beaten U.K. stocks. You’d be wrong on both counts.
/jlne.ws/2QIcK0u

Citi says it will fall short on efficiency target; Company blames shortfall on lower revenues from bond trading and investment banking
Laura Noonan – FT
Resurgent market volatility has forced Citigroup to admit it will miss the 2018 efficiency target it reaffirmed just two months ago, putting the bank in the line of fire of analysts and investors wearied by previous disappointments.
/jlne.ws/2QB2pUd

Interactive Brokers Names John Damgard as New Director
Finance Magnates
Damgard joins the firm to fill the vacancy left by Kenneth Winston, whose resignation is effective from December 31, 2018.
Interactive Brokers Group, a securities firms with over $6 billion in equity capital, announced on Monday via a regulatory filing that it has appointed John Damgard to serve as a director of the firm, effective from the beginning of this month.
/jlne.ws/2KZexsW

Regions

‘Shocking’ Huawei Arrest Threatens to Upend Trump-Xi Trade Truce
David Tweed and Peter Martin – Bloomberg
U.S. seeking extradition of daughter of Huawei’s founder; Move stokes fears U.S. seeking to deny China key technology
On the same day Donald Trump and Xi Jinping struck a trade war truce in Argentina, some 7,000 miles away Canadian authorities made an arrest that now threatens to make the U.S.-China conflict much worse.
/jlne.ws/2QIdbrE

The Price of a Cup of Coffee in Venezuela Is Up 285,614% in a Year
Fabiola Zerpa – Bloomberg
Instead of celebrating minimum wage hikes in hyperinflation-pummeled Venezuela, consumers now run as fast as they can to buy goods before the inevitable price increases. In other words, higher wages are as much bad news as good news as they simply mean the printing press will run faster at the central bank and businesses will react accordingly.
/jlne.ws/2ATrZKn

This Swiss Village Bet on Hedge Funds and Lost; After shifting away from finance as an engine of the economy, Pfaeffikon is finding prosperity again.
Patrick Winters – Bloomberg
As the clock ticks down toward Brexit, cities across Europe are scrambling to win jobs fleeing the City of London. In the Swiss village of Pfaeffikonóonce one of the biggest global centers for hedge fund moneyóa potential influx of investing professionals is being met with a decided lack of enthusiasm.
/jlne.ws/2QGlswk

Brexit

The London Banker Fighting to Keep Executives Behind Brexit Deal; As the prime minister’s business envoy, William Vereker has his work cut out as the drama plays out in parliament.
Suzi Ring, David Hellier and Alex Morales – Bloomberg
Less than 24 hours after U.K. Prime Minister Theresa May returned from getting her Brexit agreement signed off in Brussels last week, more than 120 company executives gathered in No. 10 Downing Street. With the help of her business envoy, William Vereker, she implored them to support her deal and lobby lawmakers to do the same.
/jlne.ws/2QGAfHi

UK PM May urges lawmakers to back her Brexit deal but rebels remain unconvinced
Kylie MacLellan – Reuters
British Prime Minister Theresa May on Thursday urged lawmakers to back her agreement to leave the European Union, but made little headway with a bid to coax rebellious members of her party into supporting her deal.
/jlne.ws/2QGktw8

Brexit: A Test for Humanity; How the U.K. and the EU resolve their differences has profound consequences for the wider world.
Tyler Cowen – Bloomberg
I am here to tell you that you should give a damn about Brexit. Yes, you probably already do if you live in the U.K., or perhaps Ireland, which now faces a possible hard border with Northern Ireland. But most Europeans seem to have moved on, and, except for some rabid populists, most Americans were never caught up in the struggle to begin with.
/jlne.ws/2QK9GkR

London’s Stock Traders Get a Brexit Warning From Switzerland
Silla Brush – Bloomberg
Europe’s equities markets not immune from nationalism; EU-Swiss talks on equivalence is ‘depressing’ precedent
The City of London is getting a warning from Switzerland about just how fraught its dealings with the European Union could become after Brexit.
/jlne.ws/2QBtsPe

Miscellaneous

Widow of investor duped by Madoff sues shrink over suicide
Julia Marsh – NY Post
Her husband killed himself after losing millions to Bernie Madoff ó but now his wife is blaming the shrink. The widow of a hedge-fund executive Charles Murphy, 56, whose fund at Fairfield Greenwich lost $50 million in the epic Ponzi scheme revealed in December 2008, filed suit in Manhattan Supreme Court Wednesday against NYU Langone Professor Aaron Metrikin.
/jlne.ws/2QC7Dz7

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