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SEC urges action to prevent no-deal Brexit havoc; Nasdaq improves Cinnober acquisition offer

Dec 18, 2018

First Read

Hits & Takes
JLN Staff

Thank you to Jim Kharouf for remembering the interview we did in 2014 with the late Bob Cox as part of a project for SGX’s anniversary. If you missed the video interview, you can find it here.

Are you interested in advertising on the new John Lothian News website, or becoming a sponsor of MarketsWiki and getting your logo in this newsletter every day? Email me at johnlothian@johnlothian.com and ask for our 2019 media kit.~JJL

‘Justice’ Named Merriam-Webster’s Word Of The Year.~JJL

The Bank of England’s Bank Underground Blog has a random quiz out regarding “yuletide related aspects of central banking.” For example, “Which was the last Christmas in which Brussels sprouts were included in the basket of goods used for calculating UK inflation?” (It was X-mas 2006.) ~SD

Industry veteran Sol Waksman has sold his firm BarclayHedge, which he founded in 1985 to Backstop Solutions Group, which offers services to hedge funds and other institutional investors.~JK

2018 is the worst year on record for violence and abuse against journalists, with at least 80 killed in connection with their work, a further 348 imprisoned and 60 held hostage, according to Reporters Without Borders (RSF) (via Telegraph.co.uk).~SR

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Why one of the country’s wealthiest citizens gives; Citadel founder and billionaire Ken Griffin has donated $700 million to organizations dedicated to arts, education and health. In an exclusive interview, he talks about what motivates him to give, how he motivates others and how a nonprofit gets his charitable attention.
Lisa Bertagnoli – Crain’s Chicago Business
Ken Griffin’s maternal grandparents owned a successful fuel-oil business in Illinois. Griffin’s grandfather had customers who couldn’t quite pay their bills every winter. “He would always say, ‘You’ll get your oilówe’ll sort it out in the summer,’?” recalls Griffin, founder and CEO of Citadel, a Chicago-based hedge fund with around $30 billion in assets under management, and Citadel Securities, one of the world’s biggest market makers. “Not one customer of theirs was ever cut off from access to heating oil in the wintertime.”
bit.ly/2EBCeas

***** Here is my reason for giving: the happiest people I know are those that give the most.~JJL

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CFTC Charges Chicago-area Trader with Ongoing Forex and Commodity Fraud
CFTC
The Commodity Futures Trading Commission (CFTC) announced the filing of a civil enforcement action against Dro Kholamian of Barrington, Illinois, and his company, Blue Star Trading, LLC (Blue Star), an Illinois limited liability company with an office in Park Ridge, Illinois. The CFTC Complaint charges that the Defendants fraudulently solicited potential clients to trade leveraged off-exchange foreign currency (forex) and commodity futures contracts through accounts they would manage. The Defendants did not trade all of the clients’ funds as represented and, instead, misappropriated those funds. The CFTC Complaint also charges the Defendants with registration violations. Records indicate that Kholamian had an affinity in the Armenian community with at least some of the individuals.
bit.ly/2ErCp79

****** Blue Horseshoe does not like Blue Star Trading.~JJL

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Women Are on Track to Earn the Same as Men – In 202 Years
Krystal Chia – Bloomberg
Global report shows economic opportunity gap remains wide; Iceland keeps top spot as the U.S. drops in politics gauge
The good news: The global gender gap has improved, slightly. The reality: Differences in economic opportunity, including pay between men and women, are so vast it’ll take 202 years to fully bridge them, according to the World Economic Forum.
/bloom.bg/2EBQ9Nt

***** Well, they have that going for them.~JJL

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Monday’s Top Three
Pat Arbor still fascinates. In one of the most read stories in a single day this year in JLN, the Sun-Times’ piece ‘I’m kind of doomed,’ says ex-CBOT chairman, jailed for months in divorce fight, was the top story followed by Ex-wife on former CBOT chairman: ‘I find his behavior replicates the devil’. On a much happier note, the TT announcement Trading Technologies Appoints CEO Rick Lane as Chairman of the Board was third.

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Lead Stories

SEC chief urges action to prevent no-deal Brexit causing havoc; Jay Clayton wants to see UK and EU commitments to ensure markets will not be disrupted
Kadhim Shubber – FT
Jay Clayton, the head of the US Securities and Exchange Commission, has called on the UK and EU to take action to ensure a no-deal Brexit would not cause havoc to global markets.
/on.ft.com/2EyBliZ

Nasdaq significantly improves acquisition offer for Cinnober amid CMA probe; Initial offer of SEK 75 per share made in September increased to SEK 87 as Nasdaq seeks to tie up deal for Swedish technology provider.
John Brazier – The Trade
Nasdaq Technologies has confirmed that it has made a revised acquisition offer for Swedish technology provider Cinnober after its original bid failed to secure the required level of shareholder approval.
bit.ly/2EzFjI1

It Was Easy for New Hedge Funds to Raise Money in 2018. Making It Was Harder; Hedge-fund startups saw $28 billion of new money, but performance has been relatively flat
Rachael Levy – WSJ
Hedge funds raised record amounts of money for new launches in 2018, but they are having a harder time turning that bounty into profits.
/on.wsj.com/2EBvqtc

Crypto-Mystery Clues Suggest Tether Has the Billions It Promised
Matthew Leising – Bloomberg
Bank statements seen by Bloomberg show a large cash stockpile; One of the biggest fears in crypto is whether Tether’s a scam
As Tether grew into a multibillion-dollar engine of the cryptocurrency market, skeptics kept warning that the digital coin, whose main selling point is that it’s pegged to the dollar, wasn’t actually backed by an enormous pile of cash. Bank statements reviewed by Bloomberg News suggest those fears may be unfounded.
/bloom.bg/2EBtz7M

The stock market is on pace for its worst December since the Great Depression
Michael Sheetz – CNBC
Two benchmark U.S. stock indexes are careening toward a historically bad December.
/cnb.cx/2ED3uFg

A New Way to Spot the Next Financial Crisis; The tech revolution means better models of the financial system. This will help identify risks, but is no panacea
Paul J. Davies – WSJ
A more realistic way to model financial risk is emerging. It could help big banks and regulators spot potholes, even if it can’t stop people falling into them.
/on.wsj.com/2EABkeg

Investors Just Made Their Biggest Ever Shift To Bonds As Extreme Bearishness Approaches
Eddie van der Walt – Bloomberg
BAML survey shows allocation to bonds up 23 percentage points; More than half of investors say growth will weaken next year
Investors approaching “extreme bearishness” on the market and growth outlook and are pouring their cash into bonds, according to the latest survey from Bank of America Merrill Lynch.
/bloom.bg/2EDswV9

Why Treasuries Can’t Be a Weapon in the Trade War; There’s been a lot of fuss about China selling U.S. debt. But those fretting about higher yields should focus instead on the Fed’s pace of rate hikes into 2019.
Andy Mukherjee – Bloomberg
As far as ideas go, the notion that Beijing has bargaining power over Washington by virtue of being America’s largest creditor is an old chestnut.
/bloom.bg/2EACF4M

Pros Are Ditching the Bitcoin Market, JPMorgan Says
Gregor Stuart Hunter – Bloomberg
Cryptocurrency trading dwindles as price holds below $4,000; Falling open interest, hashrate signal market freezing over
The prolonged digital-asset slump is scaring off institutional players, according to JPMorgan Chase & Co., suggesting a fulcrum for cryptocurrency markets is giving way.
/bloom.bg/2EAYmBB

U.S. ethanol producers seek pricing reform as markets plunge, ADM sells
Jarrett Renshaw, Michael Hirtzer – Reuters
U.S. ethanol producers stung by collapsing prices are seeking changes to the way benchmark values for the biofuel are established, arguing the current system used by exchanges is vulnerable to manipulation, according to sources.
The push comes as the key farm belt industry struggles with weak demand growth, a loss of export markets due to the U.S. trade war with China, and aggressive selling by global commodities giant Archer Daniels Midland Co (ADM.N) that have pushed ethanol prices to 13-year lows.
/goo.gl/d9nZKF

Backstop Solutions Group to Acquire BarclayHedge
Backstop Solutions
Backstop Solutions Group, the leading cloud-based productivity suite provider for institutional and alternative investors, today announced the execution of a definitive agreement to acquire BarclayHedge, a leading provider of alternative investment data and indices.
/goo.gl/q8xYwG

Barclays, a Hedge Fund and Two Traders’ Hidden $400 Million Loss
Jonathan Browning and Mark Burton – Bloomberg
Hedge fund’s London lawsuit uncovers trading losses from 2011; Bank had previously denied losses, calling reports ‘nonsense’
A hedge fund’s lawsuit has unearthed some trading losses that Barclays Plc might have preferred to forget. Two metals traders at Barclays were dismissed seven years ago after racking up losses of $396 million, according to documents disclosed in a court case. The losses ó some of the biggest ever disclosed by a bank in the commodities markets ó were denied by Barclays at the time.
/goo.gl/Xia3KF

Eurekahedge Hedge Fund Index declines -2.36% as of November 2018 year-to-date
Opalesque
The Eurekahedge Hedge Fund Index declined 2.36% as of November 2018 year-to-date, in contrast to the 8.45% gain made in 2017, which turned out to be the best year for hedge funds and equity markets since 2013.
/goo.gl/UCf28h

Regulator cautions banks to prepare for Brexit amid uncertainty
John O’Donnell – Reuters
European banks should prepare themselves and their customers for the risk of an abrupt departure by Britain from the European Union, one of the bloc’s top regulators warned on Monday.
/goo.gl/QbQ5XF

The Stock Market’s Got Good Reason to Worry; It faces an aggressive Fed, struggling banks, trade wars and more.
Mark Gongloff – Bloomberg
If the stock market is going to have a Santa Claus rally this year, it must peel Santa off the pavement first. Stocks had a bad one today, and this month is on pace to be the second-worst December ever for the S&P 500. What gives? A whole bunch of stuff, but one of the biggest is the Federal Reserve taking away a punch bowl markets splashed around in for more than a decade. The Fed meets again this week and is widely expected to raise interest rates again, and people are unhappy about it, particularly one Donald J. Trump. The Fed can’t be seen as caving in to Trump’s tweets, but the market carnage suggests it should skip a rate hike this week, writes Karl W. Smith.
/bloom.bg/2EyzsCV

Exchanges, OTC and Clearing

OCC Sets New Record with 5 Billion Cleared Contracts to Date in 2018
OCC
world’s largest equity derivatives clearing organization, today said its total cleared contract volume on behalf of the U.S. equity options and futures industry has exceeded 5 billion for the year. OCC has cleared 5.01 billion total contracts and 4.91 billion options contracts year-to-date, surpassing the previous records of 4.60 billion total contracts and 4.56 billion options contracts set in 2011. The new industry volume record will be finalized at year-end, since 10 business days remain in 2018.
/goo.gl/3TQLig

Nasdaq raises offer for Sweden’s Cinnober to $220m
Philip Stafford – FT
Nasdaq, the US exchanges operator, has substantially raised its offer to secure Cinnober after failing to win over enough of the Swedish trading technology company’s shareholders with an initial bid.
/on.ft.com/2Er8r3o

Nasdaq Technology increases the offer price in its recommended public cash offer to the shareholders in Cinnober to SEK 87 for each share
GlobeNewswire
On 14 September 2018 Nasdaq Technology AB (“Nasdaq Technology”), a wholly-owned indirect subsidiary of Nasdaq, Inc., announced a recommended public cash offer to the shareholders and warrant holders in Cinnober Financial Technology Aktiebolag (“Cinnober”) to acquire all shares and warrants in Cinnober for SEK 75 for each share and SEK 85 for each warrant (the “Offer”).The initial acceptance period for the Offer expired on 14 December 2018. Nasdaq Technology now increases the consideration in the Offer to SEK 87 in cash for each share and SEK 121 in cash for each warrant in Cinnober, waives the condition regarding regulatory, governmental or similar clearances and extends the acceptance period until 9 January 2019. Shareholders representing 82.6 percent in aggregate of the shares and votes in Cinnober1, have either accepted the Offer or unconditionally undertaken to accept the Revised Offer (see definition below).
bit.ly/2EtFsMe

Katrin Otto: “Together we can build a bridge between the Chinese and the European capital markets”
Eurex
How Katrin Otto, member of the Executive Board of CEINEX, became involved in China, strategy and, ultimately CEINEX
bit.ly/2EBz7z4

Randolf Roth and Matthias Graulich on our connection to Tradeweb; A major milestone for the seamless processing of spread trading
Eurex
Eurex, Europe’s largest derivatives exchange, and Tradeweb, a world leader in building and operating electronic over-the-counter affirmation platforms, have built a direct connection to fully automate basis trading, i.e. the combined trading of listed and over the counter derivatives. Randolf Roth and Matthias Graulich discuss the new solution.
bit.ly/2EAW45I

DGCX and FXCM Group Sign MoU to Collaborate on new FX Products
Press release via MENA Herald
The Dubai Gold and Commodities Exchange (DGCX) and FXCM Group, LLC (FXCM Group or FXCM), a leading international provider of online foreign exchange trading, CFD trading, bitcoin and related services, today announced the signing of a Memorandum of Understanding (MoU), agreeing to collaborate on launching new and innovative FX products on the DGCX.
/goo.gl/X7gCKj

Exchange Introduces E-training for Listed Companies’ Directors
HKEX
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Tuesday) introduced e-training for directors of companies listed on the Exchange.
bit.ly/2Ex8jPA

Fintech

What fintech can learn from Robinhood’s ‘epic fail’ of launching checking accounts
Kate Rooney – CNBC
Robinhood’s attempt to launch a disruptive, first-of-its-kind product offers some lessons for fintech companies trying to break the mold in a highly regulated industry. On Thursday, the popular stock-trading start-up rolled out what executives said was the biggest announcement in the company’s history: Checking and savings products with a 3 percent interest rate, and zero fees. But just a day later, the start-up un-winded its ambitious plan. There were a number of questions about the product ó but mostly on the regulatory side.
/goo.gl/fcsrr2

JPMorgan tries to streamline spending in tech arms race; New digital division set up to better manage bank’s $10.8bn technology budget
Laura Noonan – FT
JPMorgan Chase says it is raising the bar for investment bankers and traders looking for a slice of the firm’s $10.8bn technology budget, and will be knocking back more pitches for projects that are “not scalable” or strategic.
/on.ft.com/2EzEjDL

Microsoft, BlackRock Partnering on Retirement Platform
Bernice Napach – ThinkAdvisor
Microsoft, the largest company in the world by market cap, and BlackRock, the world’s largest asset manager, are planning to develop a technology platform that helps people save and invest for retirement.
/goo.gl/WtJ49h

FIX Trading Community Collaborates With Trade Associations For The London EMEA Trading Conference In March 2019 Including AFME, ICMA, EDMA And BVI
MondoVisione
FIX Trading Community, the non-profit, industry-driven standards body at the heart of global financial trading, today announced that the EMEA Trading Conference on 14th March 2019 will be held in association with a number of Trade Associations, including: The Association for Financial Markets in Europe, AFME, International Capital Market Association, ICMA, the European Debt Market Association, EDMA, and the German Investment Funds Association, BVI.
bit.ly/2ErUjXy

MiFID II prompts Bloomberg to partner with ETF providers to launch volume feed; Increasing transparency
Tom Eckett – InvestmentWeek
Bloomberg has joined forces with ETF providers including Invesco and BlackRock to launch an ETF volume feed that will allow investors to view data for over-the-counter (OTC) trades.
bit.ly/2EtMgta

Cryptocurrencies

One of the first crypto millionaires says bitcoin is ‘dead’
Post Staff Report – NY Post
Erik Finman, who gained renown after becoming one of the earliest crypto millionaires, told MarketWatch in an interview that the virtual currency that made him wealthy is headed to the trash bin.
/nyp.st/2EC5Mou

Crypto 2018 Was a Tale Told By An Idiot – But It Doesn’t Have to Signify Nothing
James Greaves – Coindesk
James Greaves is the co-founder of Glyph, an identity service built for the blockchain era. The following is an exclusive contribution to CoinDesk’s 2018 Year in Review.
bit.ly/2EqF94O

Peter Thiel-backed crypto broker, Tagomi, went live today ó and it’s hoping to hold Wall Street’s hand as it dips its toes into bitcoin
Frank Chaparro – The Block Crypto
Tagomi is an electronic broker looking to help onboard crypto firms into the nascent market
The firm’s platform went live today and it already has a number of clients
Ask any large investor what’s keeping them out of the nascent market of cryptocurrencies, and the answer might not necessarily be its breakneck volatility. But rather the fact that they don’t know how to make a trade in the market.
bit.ly/2Eyy7fn

Coinbase Adds Crypto-to-Crypto Trading for Retail Customers
Nikhilesh De – Coindesk
Coinbase users can begin trading cryptocurrencies directly with other cryptocurrencies, the exchange startup said Monday.
bit.ly/2ECgGuf

Politics

Russia’s Bid to Help Trump Revealed as Much Wider Than Once Known
Steven T. Dennis, Ben Brody, and Sarah Frier – Bloomberg
Russia’s plot to wield social media sites to divide Americans and aid Donald Trump in the 2016 election was even more massive and sophisticated than previously understood, and efforts to disseminate disruptive messages continue.
/bloom.bg/2A3JhVj

Russian 2016 Influence Operation Targeted African-Americans on Social Media
Scott Shane and Sheera Frenkel – NY Times
The Russian influence campaign on social media in the 2016 election made an extraordinary effort to target African-Americans, used an array of tactics to try to suppress turnout among Democratic voters and unleashed a blizzard of activity on Instagram that rivaled or exceeded its posts on Facebook, according to a report produced for the Senate Intelligence Committee.
/nyti.ms/2EDu4hV

Millions of People Post Comments on Federal Regulations. Many Are Fake; A Wall Street Journal investigation uncovered thousands of fraudulent posts on agencies’ dockets, in hot-button areas such as net neutrality and payday lending
James V. Grimaldi and Paul Overberg – WSJ
A comment posted on the Federal Communications Commission’s public docket endorses a Trump-administration plan to repeal a “net neutrality” policy requiring internet providers to treat all web traffic the same.
/on.wsj.com/2ECUEHQ

How Donald Trump Got Caught in a Legal Vise; The breadth of investigations is so sweeping that they may hang over the president and his entourage long after Robert Mueller’s probe is finished.
Timothy L. O’Brien – Bloomberg
As President Donald Trump and his lawyers turn toward the new year, they’ll have to contend with a legal narrative that’s taken fuller shape through a flurry of court filings and news reports that began landing about three weeks ago and extended through Friday afternoon: Members of Trump’s presidential campaign ó and possibly “Individual 1” himself ó may have orchestrated a number of criminal conspiracies that took root before and during the 2016 presidential campaign, continued after Trump won the election, and have tainted the White House’s policies and torn at its operations ever since.
/bloom.bg/2EAHR8I

Russian Trolls Came for Instagram, Too; A look at posts from the Internet Research Agency reveals that the group used Instagram for several distinct purposes.
Kevin Roose – NY Times
In the wake of the 2016 election, Instagram ó known as the home of preening influencers, artfully arranged grain bowls and Icelandic vacation photos ó somehow escaped much of the scrutiny of other social networks.
/nyti.ms/2EEKsP0

Regulation

CFTC and State of Utah Amend Their Complaint Against Rust Rare Coin and Gaylen Rust to Charge Additional Defendants for Participating in $200 Million Salt Lake City Precious Metals Ponzi Scheme
CFTC
The Commodity Futures Trading Commission (CFTC) and the Utah Department of Commerce, Division of Securities, through its Attorney General (State of Utah) filed an amended complaint alleging that Denise Gunderson Rust (Denise Rust) and Joshua Daniel Rust (Joshua Rust) actively participated and aided and abetted, in a precious metals Ponzi scheme with defendants Gaylen Dean Rust (Gaylen Rust) and Rust Rare Coin, Inc. (RRC). Through this scheme, Gaylen Rust and RRC fraudulently solicited at least $200 million from investors since May 2013 for the purported purpose of pooling their money to purchase silver, a commodity in interstate commerce (Silver Pool). [See CFTC Press Release 7842-18]
bit.ly/2ED4J7o

BNY Mellon to Pay More Than $54 Million for Improper Handling of ADRs
SEC
The Securities and Exchange Commission today announced that Bank of New York Mellon will pay more than $54 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).
/goo.gl/Hm4d61

EU agrees bad-loan rules, stricter provisioning schedule
Francesco Guarascio – Reuters
European Union lawmakers and governments on Tuesday reached a political agreement on new rules for the money that banks should set aside against possible losses from new loans that turn sour.
/reut.rs/2EARUe6

BoE lays out framework for UK bank ‘living wills
Stephen Morris – FT
The Bank of England has laid out the framework under which the UK’s major banks will start making public self-assessments of their plans to wind down in an orderly fashion without the need for a taxpayer bailout.
/on.ft.com/2EAxzW9

ESMA Updates Q&A On Implementation of CRA Regulation
ESMA
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&As) on the Credit Rating Agencies Regulation (CRAR).
bit.ly/2EqeCER

ESAs publish joint EMIR STS standards
ESMA
The European Supervisory Authorities (ESAs) published today two joint draft Regulatory Technical Standards (RTS) to amend the RTS on the clearing obligation and risk mitigation techniques for non-cleared OTC derivatives.
bit.ly/2EvedB5

FINRA Fines UBS $5 Million for Significant Deficiencies in Anti-Money Laundering Programs; UBS to Pay $15 Million Total Fine to FINRA, SEC and FinCEN
FINRA
FINRA announced today that it has fined UBS Financial Services Inc. (UBSFS) $4.5 million and UBS Securities LLC (UBSS) $500,000 for failing to establish and implement anti-money laundering (AML) programs reasonably designed to monitor certain high-risk transactions in customer accounts. The high-risk transactions included foreign currency wire transfers at UBSFS, and transactions in low-priced equity securities, or “penny stocks,” at UBSS.
bit.ly/2EvRRiV

Optional One-Day Extension for Customer and PAB Reserve Formula Computations and Required Deposits Around the December 2018 Month-End Holidays
FINRA
FINRA is notifying member firms of an optional one-day extension for making the deposit of amounts required to be reserved pursuant to SEA Rule 15c3-3, based on the customer and PAB reserve formula computations required under SEA Rule 15c3-3(e)(3) and computed by firms as of Friday, December 21 and Friday, December 28, 2018. The extension is based upon discussions with staff of the SEC Division of Trading and Markets and is similar to extensions previously announced in 2007 and 2012.
bit.ly/2ErhzVE

Proposed Rule Change to Amend FINRA Rules 7610A and 7620A to Modify Certain Fees and Credits Applicable to FINRA/Nasdaq TRF Retail Participants
FINRA
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend FINRA Rules 7610A and 7620A to modify certain fees and credits applicable to Retail Participants that use the FINRA/Nasdaq Trade Reporting Facility Carteret (the “FINRA/Nasdaq TRF Carteret”) and/or the FINRA/Nasdaq Trade Reporting Facility Chicago (the “FINRA/Nasdaq TRF Chicago”).
bit.ly/2EqSSsp

BNY Mellon to Pay More Than $54 Million for Improper Handling of ADRs
SEC
The Securities and Exchange Commission today announced that Bank of New York Mellon will pay more than $54 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).
bit.ly/2EsglcB

Hong Kong’s Securities And Futures Commission And China Securities Regulatory Commission Hold High-Level Meeting On Enforcement Cooperation
MondoVisione
The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) held the seventh regular high-level meeting in Hong Kong recently to discuss a range of matters concerning cross-boundary enforcement cooperation.
bit.ly/2Exyvdh

Investing and Trading

Managed Futures: ‘Tis the Season for Losses
Tripp Zimmerman, CFA, Associate Director of Research – Wisdomtree
Managed futures strategies have been among the most disappointing investment categories since the bottom of the financial crisis. For the largest funds in the category, performance went from bad to worse in 2018. Now’s the time to evaluate these strategies and see if they can at least provide a potential tax benefit.
/goo.gl/B1Cxax

Jeffrey Gundlach says the S&P 500 is headed to new lows: ‘I’m pretty sure this is a bear market’
Michael Sheetz – CNBC
“We’ve had pretty much all of the variables which characterize a bear market,” DoubleLine Capital CEO Jeffrey Gundlach told CNBC. He “absolutely” believes the S&P 500 will go below the lows that the index hit early in 2018.
/goo.gl/AgdJWV

How to Invest in Water Commodities in 2019
Brian O’Connell – TheStreet.com
Take Dr. Michael Burry, played rather eccentrically by the actor Christian Bale in the 2016 film, “The Big Short.” In real life, Burry invests in water and the evidence shows that he and other aqua investors are onto something. In fact, it takes 872 gallons of water to create one gallon of wine. It also takes 2,061 gallons of water to make one pound of chocolate.
/yhoo.it/2EyzL0x

Opinion: Here’s a winning strategy for harvesting short-term stock losses
Mark Hulbert – MarketWatch
The last couple of weeks of the year are when stock investors would be wise to consider strategies for reducing the tax bill that would otherwise be due on any capital gains realized since Jan. 1.
/on.mktw.net/2EC51vE

Investors gloomiest in a decade about world economy: BAML survey
Reuters
Investor outlooks have deteriorated to their most pessimistic in a decade, Bank of America Merrill Lynch’s December investor survey showed on Tuesday.
/reut.rs/2ExUaTa

Even Stan Druckenmiller Doesn’t Know Where Markets Go Next
Erik Schatzker and Katherine Burton – Bloomberg
Key indicators aren’t red yet but ‘they are definitely amber’; Legendary former hedge fund manager speaks in BTV interview
The only question for Stanley Druckenmiller: How much worse does it get?
/bloom.bg/2EEGbLs

This Odd Couple Plots to Save $100 Billion Gold Mining Business
Danielle Bochove and Thomas Biesheuvel – Bloomberg
Chairman vows ‘New Barrick’ will be world’s best gold company; CEO must win over investors soured on gold as a safe haven
John Thornton is a Goldman Sachs alumnus educated at Yale, Harvard and Oxford. Mark Bristow is a South African geologist and big-game hunter.
/bloom.bg/2EE0nwQ

How Socially Responsible Investing Lost Its Soul; ESG funds that promise to align your money with your values are often more marketing than science.
Rachel Evans – Bloomberg
“It’s easy to invest in what you believe.” That’s the pitch for TD Ameritrade’s foray into socially responsible ETFs, one of the year’s hottest financial crazes.
/bloom.bg/2EEIdLA

How Markets Behave Before and After Fed Rate Decisions
Jesy Beeson – CME Group OpenMarkets
The Federal Open Market Committee (FOMC) does not aim to surprise markets with its rate decisions. However, participants can have differing opinions about the likelihood of the FOMC changing the fed funds rate at its scheduled meetings. These opinions can be observed in the CME Group FedWatch tool, which calculates the implied probability of a rate hike by the FOMC.
/goo.gl/AhGdf6

Institutions

Can Fund Manager Bill Miller Use Earthquakes to Predict the Market?; The investor is hoping to develop a financial seismograph that would predict market shocks
Jason Zweig – WSJ
Bill Miller isn’t always right, but he’s never boring. The former manager of the Legg Mason Capital Management Value Trust mutual fund beat the S&P 500 stock index for an unprecedented 15 years in a row only to lose a bloodcurdling 55% in 2008. The largest mutual fund he now runs, Miller Opportunity Trust, has outperformed 99% of similar funds over the past five years, although it lagged badly in 2016. And a hedge fund run by Mr. Miller has made a bet on bitcoin, the digital currency.
/on.wsj.com/2EBYC3y

E*TRADE Launches Referral Network for Advisors to Expand Wealth Management Services to Its Customers Participating registered investment advisors (RIAs) gain access to a unique client pipeline and retail branch network
BusinessWire
E*TRADE Financial Corporation (NASDAQ:ETFC) today announced the launch of the E*TRADE Advisor Network, a national referral program that connects independent financial advisors to potential clients who need wealth management services beyond the scope of E*TRADE’s in-house offerings.
/goo.gl/HgY7px

Andurand Oil Hedge Fund Is Said to Lose 17% in First 11 Months
Nishant Kumar and Javier Blas – Bloomberg
The fund has delivered positive returns every year since 2013; Andurand lost 5.9% in November as oil and gas prices gyrated
Pierre Andurand, one of the oil market’s last remaining hedge fund managers, suffered further losses in November, putting his fund on the cusp of the first annual decline since its inception five years ago.
/goo.gl/Ndhy8u

European markets will test the mettle of active managers in 2019; Strains over fiscal constraints, the end of QE and slowing growth point to testing times
Kate Allen, Eva Szalay and Laurence Fletcher – FT
With politics souring, the economic outlook darkening and the European Central Bank nonetheless switching off its long-running bond-buying stimulus programme, investors are braced for a rough ride in European markets in the opening months of next year.
/on.ft.com/2EAZ8hZ

Hedge fund Man Group’s China head to retire; Li Yifei briefly disappeared from public view during China stock market rout in 2015
Lindsay Fortado and Gabriel Wildau – FT
Li Yifei, head of hedge fund Man Group’s China division, is retiring from the company after more than a decade, just as Man is expanding its presence in the country following recent market-opening measures.
/on.ft.com/2EyBVxb

Goldman Sachs Ignored 1MDB Warning Signs in Pursuit of Asian Business; Firm blames rogue bankers for dealings with scandal-plagued Malaysian investment fund, but engaged in lax oversight of partners
Tom Wright and Liz Hoffman – WSJ
?Goldman Sachs Group Inc.’s GS -2.76% push for Asian business and lax oversight of partners led the bank to dismiss warning signs in its dealings with a corrupt Malaysian investment fund, internal documents and interviews with people involved in the transactions show.
/on.wsj.com/2EC8w4V

****Other sources: Reuters and NY Times

Regions

Goldman, Morgan Stanley gain clout in Brazil as NY IPOs grow
Tatiana Bautzer, Carolina Mandl – Reuters
Goldman Sachs Group Inc (GS.N), Morgan Stanley(MS.N) and Bank of America Merrill Lynch(BAC.N) are regaining clout in Latin America’s largest economy as Brazilian companies opt to list shares in New York instead of on their local exchanges, Refinitiv data shows.
/goo.gl/6wVfgX

Exclusive: Venezuela creditors demand payment on defaulted $1.5 billion bond – lawyer
Brian Ellsworth – Reuters
A group of creditors has demanded payment on a $1.5 billion Venezuelan bond that is in default, their lawyer said on Monday, kicking off a long-awaited showdown between creditors and the crisis-wracked OPEC nation.
/goo.gl/vBQmHu

Investors Push Venezuela for Payment on $1.5 Billion Defaulted Bond; The action will likely touch off similar moves by holders of other Venezuelan debt
Micah Maidenberg and Julie Wernau – WSJ
A group of investors is demanding the Venezuelan government pay off both the interest and principal of a defaulted $1.5 billion bond that won’t mature until 2034, escalating the battle between bondholders and President Nicol·s Maduro’s administration.
/on.wsj.com/2EASclc

UBS says Asia’s wealthy trade less, cut debt as politics shift
Brenna Hughes Neghaiwi, Angelika Gruber – Reuters
Wealthy Asian investors are trading less, worried that trade tensions are tilting the global balance of power, Martin Blessing, co-head of wealth management at UBS (UBSG.S), said.
/reut.rs/2EEGeH8

Netherlands Plans to Limit Banker Bonuses Further With Lock-Up
Ruben Munsterman – Bloomberg
Finance minister also proposes making bankers justify their pay; Country already has a low ceiling on executive bonuses
The Dutch aren’t done with regulating banker pay in a country that already has one of the strictest remuneration laws in the European Union.
/bloom.bg/2EC7cyZ

A $1 Trillion Stock Pocket Has Likes of BlackRock on Edge
Ksenia Galouchko – Bloomberg
Investors guard against leverage risk as debt premiums rise; Defensive sectors looking more vulnerable, says Morgan Stanley
Besieged by political drama, trade woes and feeble growth, European stock investors are sizing up a fresh nemesis as the era of quantitative easing draws to a close.
/bloom.bg/2EzEFtX

Brexit

Credit Suisse advises clients to consider moving assets out of UK; Lack of clarity around Brexit prompts call by private bankers to top clients
Stephen Morris, Katie Martin and Alice Ross – FT
Private bankers at Credit Suisse have advised clients to consider moving assets out of the UK because of a lack of clarity around Brexit.
/goo.gl/juNgWp

No-deal dreamers could force a Brexit rethink; Stories of immediate chaos distract attention from the long-term economic damage
Robert Shrimsley – FT
At one of the recent cabinet discussions on no-deal Brexit preparations, the international development secretary, Penny Mordaunt chipped in to say that her department could play a valuable role, given its expertise in emergency planning. When the head of the ministry specialising in disaster relief offers help with post-Brexit contingency planning, alarm bells really ought to ring. Food parcels and clean water might be welcome in drought-ridden Afghanistan. Their arrival in Cumbria might be taken as a sign that all was not well with Brexit.
/on.ft.com/2EC0ppi

Brexit chaos pushes companies to pull the plug on investment; Business lobby group warns that expansion plans will be hit even if a cliff edge EU exit is avoided
Delphine Strauss – FT
UK businesses have “hit pause” on growth plans and will not step up investment next year even if the government avoids a cliff edge Brexit, according to the British Chambers of Commerce.
/on.ft.com/2EAxvFT

Miscellaneous

NYC Subway Chief Warns of ‘Death Spiral’ Without $40 Billion Fix
Henry Goldman – Bloomberg
A Democratic Senate and a transit crisis may spur more funding; Politicians continue to fight over who will pay, and how much
The Metropolitan Transportation Authority, which manages New York’s transit system, is at a crossroads after decades of underfunding and neglect.
/bloom.bg/2EA12zF

Man United Coach Mourinho Leaves After Worst Start for 28 Years
Joe Easton – Bloomberg
Loss to Liverpool leaves club 11 points from top four places; Carrick, Zidane frontrunners to replace Mourinho: Sky Bet
Manchester United Plc said manager Jose Mourinho had left the club with immediate effect. It follows the worst start to a Premier League season in 28 years for the world’s most valuable soccer team.
/bloom.bg/2ED2ZuS

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