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Trump Is a Test of the Economy’s Breaking Point

Dec 27, 2018

First Read

Hits & Takes
JLN Staff

Tomorrow will be the last edition of JLN for 2018. It has been an amazing year for news and we have done our best to keep you informed and hopefully a little entertained.~JJL

This year, the last exchange trading day at Eurex will be Friday, 28 December. This will also be the last day of the year on which exercises can be done. Click HERE for further information.~JJL

The United States has been added to the list of the most dangerous countries for journalists for the first time. At least 63 professional journalists were killed doing their jobs in 2018, a 15 percent increase over last year, Reporters Without Borders said. The US is listed as the 5th most dangerous country, coming in right behind Afghanistan, Syria, Yemen, & Mexico.~JJL

Yesterday’s market rally was the biggest swing to the upside in a decade.~SD

Last year’s VIX average was about 11. This year it’s 17.~SD

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Stop messing with the market, Mr. President
Editorial Board – Washington Post
In American politics, it is axiomatic that presidents get (and take) the credit for economic prosperity and the blame for downturns. The reality is that the state of the U.S. economy at any given time results from factors that the president can control, such as his own policies and leadership style; factors that he can’t control, such as conditions in China, Europe and other distant markets; and factors that he might influence but probably shouldn’t, such as the decisions of the independent Federal Reserve. The current turbulence in the financial markets, limited to paper losses so far but worryingly capable of spreading to the “real” economy, illustrates the point.
/wapo.st/2EQOzHZ

***** The headline says it all. Leave Mr. Market alone.~JJL

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How Much of the Internet Is Fake? Turns Out, a Lot of It, Actually.
Max Read – NY Mag
In late November, the Justice Department unsealed indictments against eight people accused of fleecing advertisers of $36 million in two of the largest digital ad-fraud operations ever uncovered. Digital advertisers tend to want two things: people to look at their ads and “premium” websites — i.e., established and legitimate publications — on which to host them. The two schemes at issue in the case, dubbed Methbot and 3ve by the security researchers who found them, faked both.
/nym.ag/2ETD56x

****** There are three types of lies. Lies, damn lies and statistics. Statistics will get you 9 times out of eight.~JJL

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Trump Brags To Troops About A Fictional Giant Pay Raise He Got Them
Dave Jamieson,- HuffPost
During his first visit to a combat zone since assuming office nearly two years ago, President Donald Trump couldn’t help but take personal credit for a very generous and fictional pay raise for U.S. troops.
/yhoo.it/2EV5xou

****** Rule number one. Don’t lie to people with guns.~JJL

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Wednesday’s Top Three
The top story of the day on Tuesday was The Wall Street Journal’s The Billion-Dollar Mystery Man and the Wildest Party Vegas Ever Saw about Malaysian Jho Low. Second was The Wall Street Journal’s Behind the Market Swoon: The Herdlike Behavior of Computerized Trading. Third was the JLN column from Dave Weisberger in Crypto: The Good the Bad and the Ugly…

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Lead Stories

Trump Is a Test of the Economy’s Breaking Point; So far, presidential chaos hasn’t mattered very much. There’s no guarantee that will last.
Noah Smith – Bloomberg
The president usually doesn’t do a lot to affect the U.S. economy. When people say that President Barack Obama or President George W. Bush created jobs, it shouldn’t be taken literally — what really created the jobs was a confluence of vast and complex economic forces that the president affects only marginally. To substantially change the course of the economy, a president has to enact bold, dramatic policies, such as a fiscal stimulus, tax cuts or a big infrastructure plan. Getting them through Congress is hard. Even big policies, like Trump’s tax cut, often have only modest effects. And even when the effects are substantial, they’re hard to measure. Nevertheless, we probably tend to give presidents too much credit for good times and blame for bad times.
/bloom.bg/2EQRHDJ

U.S. Shale’s Blows Leave Middle East Oil Producers Staggering
Serene Cheong – Bloomberg
U.S. light-oil flows to Asia erode OPEC members’ market share; Jump in U.S. fuel exports spurs decrease in refining margins
The U.S. oil industry is delivering a one-two punch to Middle East producers already reeling from a collapse in prices.
/bloom.bg/2ERc97s

The Hedge Fund King and a Technological Arms Race; A whole industry is watching whether Man Group CEO Luke Ellis can successfully integrate humans and machines.
Mark Gilbert – Bloomberg
Luke Ellis, the CEO of Man Group Plc, exemplifies the challenge facing the whole of the investment management industry: how does the world’s largest publicly traded hedge fund win a technological arms race that’s roiling the entire business?
/bloom.bg/2ETEGt0

Money managers: the new warriors of climate change; Spreadsheet-analysing investors in control of trillion-dollar funds are forcing polluters to change
Anjli Raval and Attracta Mooney – FT
When an activist shareholder group last year launched a campaign to force Royal Dutch Shell to set hard targets for cutting carbon emissions, just 6 per cent of those eligible to vote backed the plan.
/on.ft.com/2ESqxMO

Tariffs overtake tax as focus of corporate America; Analysis of investor relations events shows how the year’s hot topics have shifted
Andrew Edgecliffe-Johnson – FT
US executives and analysts are now more focused on trade war concerns than the benefits of lower corporate taxes, according to a Financial Times analysis of their public remarks since the Tax Cuts and Jobs Act became law a year ago this week.
/on.ft.com/2ESqiBo

Mega-deals drive rise in fundraising from initial public offerings; Bankers expect trend to continue in 2019 despite recent volatility in equity markets
Nicole Bullock, Katie Martin, Leo Lewis and Emma Dunkley – FT
International “mega-IPOs” drove an uptick in fundraising from initial public offerings in 2018, a trend that is seen continuing into next year despite volatile markets as Silicon Valley unicorns line up to go public.
/on.ft.com/2EQQD2H

Traders See End to ‘Feverish Fear-Mongering’ After Stocks Surge
Abhishek Vishnoi, Min Jeong Lee, Matthew Burgess, and Livia Yap – Bloomberg
Bargain hunters came back with a bang, Oanda’s Innes said; Japan’s Topix and Nikkei 225 jumped more than 4 percent each
Some Asia equity traders greeted U.S. stocks’ best rally since 2009 — and subsequent strong gains in Japanese shares — with conviction that this is more a turning point than a dead cat bounce.
/bloom.bg/2ESpLzo

FBI steps up efforts against ‘money mules’ online fraud
Eric Tucker, Michael Balsamo – AP
The email caught the executive at a small company by surprise one morning in 2016. The company’s owner, or so he thought, was requesting a money transfer to pay for supplies from a new vendor.
bit.ly/2ERBOg3

U.S. Farmers Wary of ‘Ulterior Motive’ for Traders’ Digital Push
Mario Parker – Bloomberg
ADM, Cargill seek U.S. nod to create joint online platform; Data will be private, helpful in navigating market: Companies
Facing competition from hi-tech startups, two of the world’s biggest trading houses are seeking U.S. approval to create a joint digital network designed to let farmers manage their data online. That may be the easy part. The tough part: Persuading wary growers to use it.
/bloom.bg/2ESsPv8

Trump Didn’t Kill the Global Trade System. He Split It in Two; Allies find relations modestly tweaked, despite the president’s rhetoric, while relations with China are entering a deep freeze
Greg Ip – WSJ
When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global trading system the U.S. and its allies had built over the past 70 years.
/on.wsj.com/2ES3zFu

The rise of poverty among EU workers since the financial crisis — in charts; Large numbers have failed to secure the benefits of strong economic growth
Valentina Romei – FT
The strongest economic growth in a decade, the highest unemployment on record — yet the latest data suggest that the share of EU workers in poverty has kept rising steadily since the financial crisis.
/on.ft.com/2ESjHqr

Jerome Powell Is ‘100% Safe’ at Fed, Trump Economic Adviser Says; White House officials say they are working to orchestrate a meeting with the president and believe the Fed chairman is open to the idea
Peter Nicholas and Paul Kiernan – WSJ
Federal Reserve Chairman Jerome Powell has told White House officials he is open to their suggestion that he meet directly with President Trump, a sit-down that they hope will defuse Mr. Trump’s anger over interest rate increases that he blames for dramatic market swings, a senior administration official said Wednesday.
/on.wsj.com/2ETDFkJ

Exchanges, OTC and Clearing

Cyprus Stock Exchange Monthly Bulletin, November 2018
Mondovisione
Cyprus Stock Exchange’s monthly bulletin for November 2018.
bit.ly/2ESrLYf

St. Petersburg Currency Exchange Launches Exchange-Traded Repos With The Bank Of Russia Performed Using NSD’s CMS
Mondovisione
Starting 25 December 2018, the St. Petersburg Currency Exchange (SPCEX) will give participants the option of concluding exchange-traded repos with the Bank of Russia performed using National Settlement Depository’s Collateral Management System (CMS) and settlement system.
bit.ly/2EQaSgJ

NSEL files criminal case against Maharashtra govt; National Spot Exchange Ltd (NSEL) has blamed the Maharashtra government for not taking action against brokers and trading members in the NSEL scam
Jayshree P. Upadhyay – Live Mint
Five years after the ?5,574-crore NSEL scam came to light, National Spot Exchange Ltd on 29 November filed a criminal writ petition before the Bombay high court, blaming the Maharashtra government for not taking action against the brokers and trading members, or attaching their assets. The court has also issued a notice to the state government asking it to seize the assets of the accused brokers. The matter will be next heard when the court reopens in January.
bit.ly/2EOJvUx

Fintech

Nyca Partners’ Hans Morris hunts for great fintech investments amid volatility
Gregg Schoenberg – TechCrunch
Hans Morris is a name to know in fintech, and as finance and tech sectors prepare for tougher time next year, he has some incisive thoughts to share about the kinds of companies that will succeed (or not) in a financial downturn. The managing partner of investment firm Nyca Partners, Morris also serves as the chairman of the board of Lending Club and is a director of other start-ups including AvidXchange, Boomtown, Payoneer and SigFig. At Nyca, which is on its third fund, Morris spends much of his time meeting with entrepreneurs focused on payments, credit models, digital advice and financial infrastructure.
/tcrn.ch/2rVH2Pt

Fintech Unicorn Brex Considers Brazil Launch
Angelica Mari – Forbes
Brazil is a possible future destination for financial services startup Brex – even if that is unlikely to happen in the short-term.
The fintech led by 23-year-old Henrique Dubugras and 22-year old Pedro Franceschi provides a corporate credit card for startups, clocking in at $213 million in funding and a valuation of about $1.1 billion.
bit.ly/2s6mu7b

7 (realistic) predictions about fintech in 2019
Bob Legters – PaymentsSource
When it comes to fintech, there is no shortage of big bets on which new technologies will come to fruition and the levels of mass adoption. From talk of plastic cards going away to the end of cash, everyone is eager to anticipate the next big trend.
But change takes time.
Fintech is an exciting industry to work in, filled with innovations to satisfy ever-shifting consumer needs and a demand for more seamless ways to manage money. However, even the best technologies are always iterative.
bit.ly/2rSUnIq

Deutsche: Making FI/FinTech Partnerships Work
PYMNTS.com
It may be conventional wisdom to assume that banks and FinTech firms are on opposite ends of the financial services spectrum, where large, asset-rich, traditional financial institutions (FIs) stand in stark contrast to small, bootstrapped tech upstarts, competing for clients’ attention and spend. However, these roles are shifting from competitor to collaborator — and from battle for market share to shared revenues amid shared resources.
The ongoing sea change of collaboration between banks and FinTech firms can offer a mutually beneficial relationship, according to Deutsche Bank’s Head of Cash Management Americas and Global Head of Digital Products David Watson.
bit.ly/2rYZjvs

Cryptocurrencies

Mt Gox CEO Mark Karpeles Claims Innocence as Trial Nears End
Daniel Palmer – Coindesk
In his closing arguments in a Tokyo court, Mark Karpeles, former CEO of collapsed bitcoin exchange Mt. Gox, has restated his innocence in the events that saw the firm lose millions in customer funds and ultimately go bankrupt.
bit.ly/2ERcEhQ

The Difference Between Crypto And A Dollar, Euro, Yen, Etc.
Jay Adkisson – Forbes
Folks who are considering an investment in cryptocurrency will often ask me about something they’ve been told by a promoter, which is that crypto is exactly the same as a dollar or any other government-issued currency (known as “fiat currency”) in that a dollar bill per se has little practical use, unless you’re looking for something quick upon which to write down a phone number or something, but instead is simply a unit of exchange.
bit.ly/2rWSEBL

Suspected Electricity Thief Arrested After Mining $3 Million in Bitcoin, Ether
Yogita Khatri – Coindesk
A man in Taiwan has been arrested over claims he mined millions of dollars’-worth of cryptos using stolen power. According to a report from EBC Dongsen News on Wednesday, a man with the surname Yang is suspected of stealing electricity valued at over NT$100 million ($3.25 million) via his various business premises to mine bitcoin and ether, reaping around the same amount in mining profits.
bit.ly/2EQP1pt

As Bitcoin sinks, industry startups are forced to cut back
Kate Clark – Techcrunch
Around this time last year, the price of Bitcoin hit an all-time high of nearly $20,000. Cryptocurrency enthusiasts everywhere boasted about the wealth 2018 would bring, initial coin offerings exploded and startups continued to pull in record amounts of venture capital. Fast-forward one year: Bitcoin is down 75 percent to a meager $3,700, sinking as quickly as its meteoric rise, and industry startups are paying the price.
/tcrn.ch/2EQ68I5

Asset-Backed Securities: Entering the Crypto Conversation in 2019
Charlie Moore – Coindesk
We are at the end of another busy autumn conference season, and I have had the opportunity to speak at half a dozen events to focus on the intersection of capital markets and distributed ledger technology. As we wind down for the holidays and plan for 2019, I wanted to reflect on the key themes and current trends in structured credit based on my interactions with leaders and innovators in the market.
bit.ly/2CBEz2O

Remember Bitcoin? Some Investors Might Want to Forget
By Nellie Bowles – NY Times
Last year around this time, a toy called a cryptokitty sold for $170,000. A real estate agent remade himself as CoinDaddy, producing cryptocurrency-themed music videos. The man behind a company called Ripple became for a moment richer than Mark Zuckerberg. Kids barely out of high school were buying Lamborghinis because of a crypto meme. Experts went on CNBC to say Bitcoin was going to reach $100,000 per coin.
/nyti.ms/2EUKYsv

Crypto M&A Skyrockets in 2018 With a Slumped Market
Arnab Shome – FinanceMagnates
2018 has not been a good year for the cryptocurrency investors. However, the plunged price of Bitcoin has attracted a new breed of audience to the industry – the deal-makers. According to PitchBook data compiled by JMP Securities, the deals related to the cryptocurrency and blockchain companies has increased by 200 percent in 2018. These deals include majority investments, partial liquidation, and full acquisitions.
bit.ly/2LC4MRF

Stories from alternative crypto sources

Looking to 2019: What Will Bring About the Next Crypto Bull?
Eustace Cryptus – Bitcoinist
bit.ly/2BEDOnO

Bitcoin Private core developers plan hard fork to remove covertly premined coins
The Block Crypto
bit.ly/2EUmLSM

Litecoin Foundation to Sponsor UFC Title Fight in Bid to Increase Crypto Adoption
Ana Alexandre – Cointelegraph
bit.ly/2GIaN0i

Ripple’s XRP Last Three Months Wrapped – Most Promising Future Competitor Against BTC
Alex Tomzack – Ethereum World News
bit.ly/2GJSh7O

Bitcoin’s Lightning Network is Quietly Scaling for the Next Bull-Run
Esther Kim – Bitcoinist
bit.ly/2RlKz8a

Politics

Donald Trump’s Tweets Are Destabilizing the Economy and Hurting Stock Markets, Former Economic Officials Tell White House: Report
Tim Marcin- Newsweek
President Donald Trump’s messaging—especially his tweets—aren’t doing the American economy any favors, former economic officials have told the White House, according to a report this week in The Wall Street Journal.
bit.ly/2EVcaHo

Trump’s Favorite Barometer Is Warning Him; The president craves approval from the stock market, which is in no mood to give it to him.
Nir Kaissar – Bloomberg
The stock market is calling the White House to account, and it won’t be easily distracted.
/bloom.bg/2EUIPwX

Trump started a fight with the Fed he had zero chance of winning — now he’s backing down
Jeffry Bartash – MarketWatch
President Donald Trump fought the Federal Reserve — and the Fed won. The president has bashed the Fed and his hand-picked chairman, Jay Powell, repeatedly since the summer for raising interest rates. Wall Street largely took the president’s criticism in stride until Trump reportedly mused about whether he could fire Powell.
/on.mktw.net/2ESuXTE

Trump’s personnel problems harm the nation’s financial stability
Benjamin Edwards – The Hill
The Trump White House’s personnel problems now generate increased systemic risk. The problems have long been apparent with aides and officials penning anonymous op-eds, pleading guilty to federal crimes and resigning in protest.
bit.ly/2ES7Cla

A Concise History of Presidential Commentary on the Stock Market
Vildana Hajric and Sarah Ponczek – Bloomberg
It’s rare the executive branch weighs in on equity valuations. But sometimes a president just can’t resist.
/bloom.bg/2ESvaq8

The White House Makes Chaos Out of Nothing at All; The Trump administration makes its own market crisis and then makes it worse.
Shira Ovide – Bloomberg
You may have noticed there’s a pattern to this White House. 1) Make an unnecessary mess. 2) Try to clean it up; make it worse instead. 3) Try again to clean up the mess that shouldn’t have existed at all.
/bloom.bg/2ETFZbo

Trump’s ‘Tremendous Buy’ Stock Market Isn’t a Bargain; The numbers don’t support the argument that shares are oversold.
Stephen Gandel – Bloomberg
A year ago, when the market was rallying, President Donald Trump seemed sure stock prices were an accurate measure of his presidency. Now with the Dow Jones Industrial Average off more than 4,000 points from its peak, the president is not so sure about the market’s efficiency.
/bloom.bg/2EQQ6xx

Robert Mercer Cuts Political Spending After Unwelcome Turn in Spotlight
Zachary Mider and Joshua Green – Bloomberg
Donations fell by more than two-thirds since last midterms; Hedge fund manager became target for liberal activists
Robert Mercer, the publicity-shy hedge fund tycoon whose backing of Donald Trump earned him unwelcome fame, is stepping back into the shadows.
/bloom.bg/2EV9Sbg

Regulation

JPMorgan to pay more than $135 mln for improper handling of ADRs
Pete Schroeder – Reuters
JPMorgan Chase & Co will pay over $135 million to settle charges it mishandled so-called “pre-released” American Depositary Receipts (ADRS), the Securities and Exchange Commission announced on Wednesday.
/goo.gl/xcd4tP

Morgan Stanley unit to pay $10 million fine for anti-money laundering violations
Suzanne Barlyn – Reuters
Wall Street’s industry funded watchdog fined the U.S. brokerage unit of Morgan Stanley $10 million on Wednesday for compliance failures in the firm’s anti-money laundering program, the regulator said.
/reut.rs/2EROtzA

FINRA Fines Morgan Stanley $10 Million for AML Program and Supervisory Failures
FINRA
FINRA announced today that it has fined Morgan Stanley Smith Barney LLC $10 million for anti-money laundering (AML) program and supervisory failures that spanned a period of more than five years.
bit.ly/2ESiRd5

Sydney trader pleads guilty to manipulating Chicago futures market
Patrick Hatch – The Sydney Morning Herald
An Australian commodities trader has pleaded guilty to market manipulation in Chicago, after being caught out as part of what the US Justice Department says is the largest legal action of its kind in history.
Jim Zhao, who was arrested in Australia in January and extradited to the US, on Wednesday admitted to manipulating futures contracts through “spoofing”, according to reports.
bit.ly/2s6mILz

Traders Face New Landscape With Powell at Microphone After Every Fed Meeting
Elizabeth Stanton – Bloomberg
As Fed chair speaks after each meeting, hedging may shift; But quarterly forecast schedule seen keeping repricing minimal
U.S. rates traders are gearing up for a new landscape in 2019, when Federal Reserve Chairman Jerome Powell plans to start holding press conferences after all eight of the central bank’s meetings.
/bloom.bg/2ESJ5fz

JPMorgan to Pay More Than $135 Million for Improper Handling of ADRs
SEC
The Securities and Exchange Commission today announced that JPMorgan Chase Bank N.A. will pay more than $135 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).
bit.ly/2EReejD

Investing and Trading

Insider Stock Buying Surges to 8-Year High
Lu Wang – Bloomberg
It’s a sign of executive confidence in corporate America; Last spike preceded market bottom after equity sell-off
A group of optimists who’ve proved prescient in the past have stepped up their buying even as U.S. stocks teeter on the brink of a bear market.
/bloom.bg/2ESHQwV

The Dow Just Gained 1,086 Points, but That Was Not Its Best Day Ever
Ben Levisohn – Barron’s
The Dow Jones Industrial Average had a great day, and, if you believe the headlines, its best day ever. Not quite.
bit.ly/2EQSa8X

Most shorted stocks log record gain as Wall Street surges
Reuters
One notable factor in Wall Street’s monster rally on Wednesday was a record gain in an index of stocks that have the largest bets placed against them by market contrarians.
/reut.rs/2ERGL8I

Opinion: That massive one-day stock market rebound was a sucker’s rally
Michael Sincere – MarketWatch
Many traders and investors were expecting (or hoping for) a huge rally in the stock market this week. And they got it — at least for one day.
/on.mktw.net/2ERF0bC

Collapse of ethical lenders stokes fears over access to credit; Eight credit unions went out of business in 2018 while many others cut back on lending
Nicholas Megaw – FT
Ethical lenders that have been touted as alternatives to high-cost firms such as Wonga and BrightHouse are going out of business at the fastest rate in years, fuelling concerns that less well-off customers are in danger of losing access to credit.
/on.ft.com/2EUGYZ1

As Credit Losses Pile Up, One Bond Guru Dismisses Crisis Talk
Molly Smith – Bloomberg
Big names in finance have raised alarms about corporate bonds; BofA’s Hans Mikkelsen says credit quality is best in decades
He seems like the Pollyanna of credit. While just about everyone on Wall Street is fretting about U.S. corporate debt, Hans Mikkelsen is remarkably carefree. Rather than worry about a collapse in investment-grade bonds — which are down the most in a decade — the Bank of America strategist says investors might want to take a deep breath.
/bloom.bg/2ES5WrS

Institutions

Fund Investors Pull $56 Billion in Biggest Exit Since 2008
Charles Stein – Bloomberg
Stock, bond funds both saw redemptions for week ended Dec. 19; But ETFs attracted about $25 billion in the same period
Investors are bailing out of mutual funds as if it were 2008. Mutual funds suffered redemptions of $56.2 billion in the week ended Dec. 19. That’s the biggest outflow since the week ended Oct. 15, 2008, according to data released Wednesday by the Investment Company Institute. And the numbers over the last several weeks have only gotten worse as the chart below show
/bloom.bg/2ESvDso

Markets Aren’t Helping Deutsche Bank Shake Off Bad News; Investment banking is getting more difficult, just as the German lender needs support
Paul J. Davies – WSJ
It was a shock when Deutsche Bank’s stock closed at a then-record low of EUR9.16 in late May. Chief Executive Christian Sewing wrote to staff: “There’s no reason for us to be discouraged. Yes, our share price is at a historic low. But we’ll prove that we have earned a better valuation on the financial markets.”
/on.wsj.com/2ER8kyZ

Deutsche Bank will be unlikely 2019 trading star
Christopher Thompson – Reuters
Whisper it gently: Deutsche Bank shareholders might finally have something to cheer about. The German lender has in recent years seen seemingly irreversible declines in trading revenue that have outpaced cost-cuts. In 2019 its business mix, and the potential for currency volatility and rising European rates, should make it a relative winner. Ever since the financial crisis Europe’s investment banks have resembled a car crash in slow motion.
/reut.rs/2EOFfEx

Nomura CEO Signals More Job Cuts in Europe to Reverse Losses
Takashi Nakamichi and Takako Taniguchi – Bloomberg
Firm needs to control ‘excessively large costs,’ Nagai says; Says client activity in the region ‘weakened significantly’
Next year is shaping up to be another tough one for Nomura Holdings Inc.’s employees in Europe, with more job losses likely as the Japanese securities firm shifts business away from the region to more profitable centers in Asia and the U.S.
/bloom.bg/2ETHo1E

This Italian Bank Lost 83% Market Value in 2018
Dan Liefgreen – Bloomberg
Banca Carige SpA plunged in Milan trading after the struggling bank’s biggest investor blocked a planned stock sale at a Dec. 22 shareholders meeting, throwing a vital restructuring into doubt.
/bloom.bg/2ERc8jL

Regions

Number of Chinese IPOs in US hits eight-year high; NYSE and Nasdaq draw 33 listings but China market weakness has hurt shares’ performance
Nicole Bullock – FT
The US welcomed the most initial public offerings for Chinese companies since 2010 in spite of a high-profile trade war between the two countries that threatened the cross-border flow of goods and roiled financial markets in 2018.
/on.ft.com/2ESvC7A

Chinese regulator approves wealth management units at two major banks
Reuters
China’s banking and insurance regulator approved plans by China Construction Bank Corp and Bank of China Ltd to set up wealth management units, it said on its website on Thursday.
/reut.rs/2ETqaBg

China’s Ant Financial in talks to buy WorldFirst for $700m; Acquisition of payments group would be Alibaba affiliate’s first big move into UK
Oliver Ralph and Don Weinland – FT
Alibaba affiliate Ant Financial is in talks to buy WorldFirst, the UK-based international payments group, for about $700m.
/on.ft.com/2EJs7Q9

China to use perpetual bonds to boost banks’ capital adequacy; Regulators promote hybrid capital instruments to help lenders meet Basel requirements
Gabriel Wildau – FT
China will encourage commercial banks to replenish capital by issuing perpetual bonds, offering a new tool for lenders facing pressure to improve capital ratios amid a slowing economy and tightening regulation.
/on.ft.com/2EQ6JJH

China’s state-owned venture capital funds battle to make an impact; Obstacles to raising and deploying cash might indicate $1.8tn hoard is overstated
Emily Feng – FT
China has claimed that it has amassed Rmb12.5tn ($1.8tn) of state money across thousands of venture capital funds to achieve its goal of technological dominance by 2025.
/goo.gl/G7o8Br

Special Report: Oil output goes AWOL in Venezuela as soldiers run PDVSA
Alexandra Ulmer, Marianna Parraga – Reuters
Last July 6, Major General Manuel Quevedo joined his wife, a Catholic priest and a gathering of oil workers in prayer in a conference room at the headquarters of Petroleos de Venezuela SA, or PDVSA.
/goo.gl/UncaQn

Russia’s Bad Bank Eyes $15 Billion Hole From Rescued Lenders
Anna Baraulina and Jake Rudnitsky – Bloomberg
CEO says only half of Trust’s assets have sources of funding; Bank holds bad assets from three lenders nationalized in 2017
More than a year after Russia nationalized three leading private lenders, the magnitude of the losses is starting to take shape and criminal investigations are being opened against former owners and management.
/bloom.bg/2EQPWGr

China’s middle class hit by shadow banking defaults; Scale of problem underestimated as investors keep losses under wraps
Lucy Hornby and Archie Zhang i- FT
Shanghai office worker Jin Linglan had just put a downpayment on a car when she realised her savings were gone. Like many prosperous Chinese, Ms Jin invested in financial products that promised a high rate of return. And, like many of her fellow investors, she has made the painful discovery that her money has been swallowed up by the recurring defaults in China’s shadow banking market.
/on.ft.com/2ESdBWT

No Grain in the Rain as Vancouver Export Ships Unable to Load
Jen Skerritt – Bloomberg
Safety concerns halt vessel loading in rainy weather; Industry says stoppages posing ‘challenges’ amid wet season
As Canadian grain companies spend millions to upgrade and build new export terminals in Vancouver, a new problem is threatening to cause transportation bottlenecks at the nation’s largest port: vessels can’t load grain in the rain. And it rains a lot in Vancouver.
/bloom.bg/2EStXz8

Drought Hurts South Africa Corn, Soy Plantings, Grain SA Says
Ana Monteiro – Bloomberg
The window for planting corn and soybeans in South Africa has passed, and with hardly anything planted in western growing ares because of drought, the likelihood of the need for imports increases, a grain farmers’ lobby group said.
/bloom.bg/2ES9B96

Brexit

‘Brexit economic news continues to be bad, horrid or disastrous’ – experts debate data
The Guardian
The economic news on Brexit continues to be bad, horrid or disastrous. The growing risk of a no-deal Brexit is inevitably hitting business activity. Oh what a surprise!
The Bank of England, after warning of the dire consequences of a disorderly Brexit, held rates steady at 0.75% at its December meeting last week. However, it warned that since the last monetary policy committee (MPC) meeting a month ago that “Brexit uncertainties had intensified”. It noted that those uncertainties, coupled with the slowing global economy, has weighed on the near-term outlook for UK growth. The MPC also reported that its market contacts viewed uncertainty about Brexit as having had an adverse impact on sterling.
bit.ly/2rX5Eas

Business confidence in UK at lowest ebb since Brexit vote – IoD
The Guardian
Business confidence in the British economy has fallen to the lowest level since the EU referendum, according to a survey of company directors.
Business leaders in all parts of the UK are gloomy about 2019, said the Institute of Directors, with Scotland and London – areas where voters were heavily in favour of remaining in the EU – most pessimistic.
bit.ly/2rYcxbz

Miscellaneous

Catholic Church Used Bankruptcy for Sexual-Assault Cases. Now Others Are Following Suit; USA Gymnastics, Boy Scouts of America explore chapter 11 to handle victims’ claims
Tom Corrigan – WSJ
The Archdiocese of Portland was the first to do it. Three months later the Roman Catholic Diocese in Tucson, Ariz., followed suit and three months after that the diocese in Spokane, Wash., did it, too.
/on.wsj.com/2ERIQS4

John Lothian Newsletter

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Past Newsletters

Facebook Token Runs Into Instant Political Opposition in Europe

[the_ad_group id="5822"] Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffJustin Llewellyn-Jones, chief operating officer and global head of derivatives at Fidessa/ION, announced he is leaving at the end of the month. Justin is one...

Facebook Plans Global Financial System Based on Cryptocurrency

[the_ad_group id="5822"] Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe FT has an entire series of articles on "Libra: Facebook's digital currency."~JJLI will not be heading to Asia this fall after all. I declined the...

10 EU Countries OK Financial Transaction Tax Revenue-Sharing Plan

[the_ad_group id="5822"] Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffSidley partner David R. Sawyier passed away on June 10 after a battle with cancer. He founded the firm's private investment funds practice in their Chicago...

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