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U.S. Government Shutdown Freezes IPO Market, Imperiling Expectations for 2019

Jan 9, 2019

First Read

Hits & Takes
JLN Staff

STAC is coming to Chicago next week. The Security Traders Association of Chicago 92nd Annual Mid-Winter Meeting is a great way to kick off the new year of trading related events. The JLN team will be there attending sessions and conducting interviews, including our video team.~JJL

Not to be outdone, the Mid-Atlantic Securities Traders Association is holding their 2019 Mid-Winter Conference on January 31 at 4:00 pm to February 1 at 10:00 pm at The Four Seasons Baltimore. The always interesting Ken Griffin of Citadel and Joe Gawronski of Rosenblatt Securities are among the speakers.~JJL

Speaking of Rosenblatt Securities, I really enjoyed the Rosenblatt Securities analysis of the MEMX announcement. The historical and strategic perspectives were interesting and on target. Contact them to get on their research list.~JJL

Starting January 22, Vanguard will not allow customers to purchase leveraged or inverse mutual funds, ETFs or ETNs, per a notice on their site.~SD

Thank you to John Needham for the shoutout yesterday on Twitter about the importance of being a John Lothian Newsletter reader and paid subscriber. John, you are a gentleman and scholar.~JJL

ISDA and TABB Forum are teaming up to produce DerivCon, which appears to be the latest derivation of SEFCON, pun intended. The event is on Wednesday, February 27 in New York. Details are available HERE.~JJL

The Chicago Blockchain Project is holding an event in the Chicago offices of Foley & Lardner LLP on Thursday, January 31 from 5 PM to 8 PM on the subject of “The Future of Regulated Crypto Trading.” For details, click HERE. ~JJL

On February 1, girls age 10 to 17 can officially join the rebranded Scouts BSA, formerly Boy Scouts. On Saturday I am taking the girls in my Exploring Club to the Scout shop to buy their Scouts BSA uniforms. The Exploring Club will become a Scouts BSA Troop officially on February 1 and I will become their first Scoutmaster. Exciting times.~JJL

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Are Those Gold Teeth or Did You Just Eat in the Gaudiest Place on Earth?
WSJ
An edible-gold arms race is on in the United Arab Emirates, and the upscale treats can be a mess to eat. ‘I had gold all over my teeth and my mouth.’
/jlne.ws/2Fjkv6Z

****There are first world problems…and then there’s this. ~JB

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Realtors say the government shutdown is sinking home sales
Crain’s Chicago Business
The U.S. housing market, already losing steam, is taking another hit from the government shutdown, delaying closings and damaging buyer confidence, according to a National Association of Realtors survey.
About 20 percent of 2,211 agents surveyed by the group said they had clients who were impacted in some way by the shutdown that began on Dec. 22, the organization said today.
/goo.gl/ye7fp5

***** Tax returns, real estate values, IPOs. What could be next?~JJL

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Hedge Fund Tycoon Robert Mercer’s Sheriff’s Badge Has Been Revoked
Zachary Mider – Bloomberg
Robert Mercer, turn in your badge. There’s a new sheriff in town. The New York hedge fund magnate and conservative donor had his status as a volunteer deputy sheriff revoked by Yuma County, Colorado, Sheriff Chad Day on Monday, his last day in office. Day lost his re-election bid last year after Bloomberg News reported on Mercer’s role and his purchase of a new pickup truck for the sheriff’s official use.
/jlne.ws/2Fjh14A

***** The problem with buying politicians is that they don’t stay bought.~JJL

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Tuesday’s Top Three
Our top story of the day on Tuesday was Jim Kharouf’s JLN column What’s In Style? Member’s Exchange Brings Together Wall Street Behemoths To Take On Nasdaq, NYSE and Cboe Global Markets. Second was Bloomberg’s New Stock Market Exchange Is an Old Nightmare for Wall Street. Third was the announcement R.J. O’Brien Affiliate Officially Launches OTC Agricultural Structured Products Group

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Lead Stories

U.S. Government Shutdown Freezes IPO Market, Imperiling Expectations for 2019; Biotech firms could be put in the most perilous position by the closure of the SEC
Corrie Driebusch, Maureen Farrell and Dave Michaels – WSJ
The government shutdown is threatening to spoil what was poised to be a banner year for IPOs. The partial closure of the Securities and Exchange Commission is forcing companies that were seeking to list shares in January to push back their plans, according to bankers and lawyers. They include biotechnology firms Gossamer Bio Inc., Alector Inc. and Blackstone Group LP’s Alight Solutions LLC.
/jlne.ws/2FjCpGQ

Volatility: how ‘algos’ changed the rhythm of the market; Critics say high-frequency trading makes markets too fickle amid rising anxiety over the global economy
Robin Wigglesworth – FT
Philippe Jabre was the quintessential swashbuckling trader, slicing his way through markets first at GLG Partners and then an eponymous hedge fund he founded in 2007 — at the time one of the industry’s biggest-ever launches. But in December he fell on his sword, closing Jabre Capital after racking up huge losses. The fault, he said, was machines.
/jlne.ws/2FjE0fO

UK regulator gives green light to property exchange; Investors will be able to buy shares through new IPSX trading venue
Judith Evans – FT
A new commercial real estate exchange has been recognised by the City watchdog, paving the way for investors to buy shares in buildings through the new trading venue.
/jlne.ws/2Flk502

UK financial watchdog steps up plans for no-deal Brexit
Philip Stafford – The Financial Times
UK markets regulators have announced further measures to ensure millions of financial contracts will be unaffected by Brexit, as authorities step up preparations to avoid financial turmoil should Britain leave the EU without any agreement.
The Financial Conduct Authority said on Tuesday it would introduce proposals for EU institutions with business in Britain to run down contracts such as life insurance policies or bespoke derivatives over the next five years, even if the companies have no plans to apply for a temporary UK licence.
/goo.gl/dypJM3

Economists Turn to Shutdown-Proof Reports With U.S. Data Delayed
Katia Dmitrieva – Bloomberg
Tuesday’s trade report is latest release to be postponed; ‘We’re flying blind to a large extent,’ one economist says
The U.S. government shutdown has thrown some key economic measures into the dark, forcing analysts to focus on alternative data to gauge the effects of a trade war and the pace of growth in recent weeks.
/jlne.ws/2Fm4RrB

Hedge Funds Lost Almost 6% Last Year as Markets Roiled Managers
Alan Mirabella – Bloomberg
Equity hedge, CTA/managed futures led the declines in 2018; Funds slid 1.9% in December: Bloomberg Hedge Fund Database
Hedge funds posted a loss of 5.7 percent last year as managers struggled to capitalize on volatility and were roiled by political uncertainty.
/jlne.ws/2Fl7OZp

Goldman’s $500 Million Lawyer Is Ready to Call It Quits
Sridhar Natarajan and Tom Metcalf – Bloomberg
Legal chief Greg Palm has reaped more than $500 million; After Blankfein exit, he’s the largest stockholder inside firm
He took on the sheriff of Wall Street, Eliot Spitzer. He jousted with an angry Congress. He contained scandals that, at times, reached into the bank’s innermost sanctums.
/jlne.ws/2Fm3Pf6

Gundlach Compares Recent Buy-the-Dip Mentality to Subprime Crisis; DoubleLine’s chief investment officer warns about complacency in stocks, high-yield bonds and bank loans.
Brian Chappatta – Bloomberg
Jeffrey Gundlach is worried that investors are getting suckered into buying the dip in stocks, high-yield bonds and leveraged loans.
/jlne.ws/2FjLaAJ

Why Wall Street Wants to Build Its Own Stock Exchange
Bill Alpert – Barron’s
The stocks of America’s big trading exchanges got shaken Monday by the announcement of a new competitor. As nine big Wall Street firms unveiled plans to form a stock exchange called MEMX, stock in the incumbents fell, in an otherwise rising market.
bit.ly/2FoQH9n

‘The boom in new corporate bond trading platforms is over’: There could be a wave of M&A in the bond-trading business
Dan DeFrancesco – Business Insider
The herd is about to be thinned. A new report from financial-research firm Greenwich Associates predicts a consolidation of US corporate-bond platforms over the next 18 months.
/jlne.ws/2Fi40bk

Bond-Market Warning Seen in Weakest Treasuries Demand Since 2008
Katherine Greifeld – Bloomberg
Bid-to-cover ratio hits decade-low as Treasury supply surges; Debt auctions could get “hairy” in 2019, Jefferies says
As the U.S. government kicks off its debt sales this year, here’s one potentially worrisome sign for traders to keep in mind: the steep decline in demand at its bond auctions.
/jlne.ws/2FiH7Vs

Traders track down the wrong suspect for the liquidity squeeze; The Fed’s decision to unwind quantitative easing is not the culprit here
Megan Greene – FT
Former chairman of the US Federal Reserve Ben Bernanke sums up the prevailing wisdom when he notes that economic recoveries don’t die of old age, they are murdered by central banks overtightening credit. Given the worst performance for US equities in December since 1931, the flattening of the yield curve (which plots government bond yields of different maturities on a single graph) and the rise in volatility, many investors seem to have decided the culprit in this game of Cluedo is Mr Fed, on the trading floor, with quantitative tightening.
/jlne.ws/2FlknUG

Exchanges, OTC and Clearing

NZX Shareholder Metrics December 2018
NZX, New Zealand’s Exchange
/jlne.ws/2CYpfNK

US corporate bond e-trading platforms set for consolidation; Research has suggested that despite a surge in trading volumes, mergers and acquisitions among platform providers is likely over the next 18 months.
Hayley McDowell – The Trade
Electronic trading platforms for corporate bonds face consolidation in the US despite a surge in trading volumes executed in 2018, new research suggests.
/jlne.ws/2Fm8EoP

Tradegate Exchange: Trading turnover reaches a record 106 billion euros; Growth of 16 percent over 2017 / Amazon.com and Wirecard are the most traded stocks in December
Deutsche Börse Group
The Tradegate Exchange, which belongs to the Deutsche Börse Group, achieved an order book turnover of EUR 106 billion in 2018. This is the highest trading volume since its foundation in 2010. Tradegate Exchange is thus the largest trading center in Germany, following the Xetra platform of the Frankfurt Stock Exchange. In the full year 2017, the volume was still 91 billion euros.
/jlne.ws/2FlenLx

LCH SwapAgent facilitates its first cross-currency swap compression
LCH
LCH SwapAgent, a service for the non-cleared derivatives market, announces that for the first time, trades registered in LCH SwapAgent were successfully compressed in TriOptima’s multilateral USD/EUR cross-currency swap compression cycle. Using its triReduce compression service, EUR4.5 billion in notional of trades registered in SwapAgent were compressed. During the run, SwapAgent and non-SwapAgent trades were blended together to achieve maximum benefits.
/jlne.ws/2FkyOZ2

TMX Group Equity Financing Statistics – December 2018
TMX
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for December 2018.
/jlne.ws/2FiaUgK

Nasdaq December 2018 Volumes, 4Q18 Estimated Revenue Capture and Listings Statistics
GlobeNewswire
Nasdaq (Nasdaq:NDAQ) today reported monthly volumes for December 2018, as well as quarterly volumes, number of listings and estimated revenue capture for the quarter ending December 31, 2018 on its investor relations website.
/jlne.ws/2FlCXMv

Nasdaq Launches Water Pricing Index
GlobeNewswire
Nasdaq (Nasdaq:NDAQ), along with Veles Water and WestWater Research, announced the launch of the Nasdaq Veles California Water Index (NQH2O), the first of its kind water index that benchmarks the price of water in a way that supports price discovery and enables the creation of a tradable financial instrument.
/jlne.ws/2Fic2ku

SGX reports market statistics for December 2018; Market turnover of securities products increases 22% in 2018 to S$23.5 billion; Derivatives volume rises to record 217.4 million in 2018, up 22%
Securities
Total Securities market turnover value was at S$16.7 billion, down 22% month-on-month (m-o-m) and down 13% year-on-year (y-o-y), over 20 trading days. There were 21 trading days in November 2018 and 20 in December 2017.
Total Derivatives volume was 18.35 million, down 7% month-on-month (m-o-m) and up 17% year-on-year (y-o-y).
/jlne.ws/2FiccZ8

Ag Producers’ sentiment drifts lower; trade disputes continue to concern farmers
CME Group
There was a modest drop in agricultural producer sentiment in December as farmers’ perception of both current and future economic conditions weakened, according to results from the Purdue University/CME Group Ag Economy Barometer. The December barometer reading of 127 was 7 points lower than November. The barometer is based on 400 survey responses from agricultural producers across the country.
/jlne.ws/2FmaeHh

Fintech

The Race to Become the Next Stripe, PayPal or Square Heats Up; Upstarts with names like Bolt, Toast and Due are muscling into the payments market and could become acquisition targets.
Olga Kharif – Bloomberg
For several years, PayPal, Square, Adyen and Stripe have dominated the lucrative payments market. Now hundreds of upstarts with names like Bolt, Toast and Due are muscling into the market with their own twist on facilitating commerce between merchants and shoppers.
/jlne.ws/2FiGB9T

London raked £1.8bn in tech funding last year, almost double its next closest rival
Emily Nicolle – City AM
London has retained its spot at the top of the tech charts for another year, securing almost double the amount of investment in 2018 than its next closest European competitor.
/jlne.ws/2Fm2u8b

Fintech Revolution Still Not Here a Year Into `Open Banking’
Edward Robinson – Bloomberg
When European lawmakers ushered in the era of “open banking” for consumers one year ago, both lenders and financial technology startups expected a sea change. For the first time, banks would be required to share account data with competitors as long as customers gave their permission.
Politicians in the U.K., where four banks control 75 percent of deposits, were particularly keen on the law’s goal of encouraging new entrants.
/bloom.bg/2skMknG

Fintech start-up Plaid to buy competitor Quovo for $200 million in its first major deal
Kate Rooney – CNBC
Fintech firm Plaid is making its first major acquisition.
The company announced Tuesday it will buy a similar start-up called Quovo for just south of $200 million, according to a source familiar with the deal, who asked not to be named because negotiations were private.
/cnb.cx/2sf2oYg

The US is Losing the AI, Blockchain & FINTECH Arms Race (But IS Crypto-Friendly)
Steve Andriole – Forbes
Late last year I described how the US was losing the technology arms race, particularly as it applies to artificial intelligence (AI) and China. The US is competing in the FINTECH arms race and is struggling here as well.
bit.ly/2skE4Et

U.S. banking regulator defends plan to charter fintech companies
Dena Aubin – Reuters
The U.S. Office of the Comptroller the Currency has asked a federal judge in Washington D.C. to dismiss a lawsuit by state banking regulators challenging its plan to issue banking charters for fintech companies, saying the lawsuit lacks merit and is premature.
/reut.rs/2sgBJdB

Cryptocurrencies

Cryptocurrency ransom demanded for missing wife of Norwegian businessman
Reuters
The wife of a wealthy Norwegian businessman has gone missing in a rare suspected kidnapping and her family has received a ransom demand to be paid in cryptocurrency, police said on Wednesday.
/jlne.ws/2FjYMff

One Of The World’s Richest People Is Backing Bitcoin–Here’s Why
Billy Bambrough – Forbes
Bitcoin has its fair share of backers and detractors, but it’s not every day one of the world’s richest people, in this case, Hong Kong billionaire Li Ka-shing, throws their weight behind the nascent technology.
/jlne.ws/2FlLsas

Bitcoin Exchanges and Wallet Services Should Get Pan-EU Rules, Says European Banking Authority
David Meyer – Fortune
Europe’s top banking regulator wants lawmakers to look into creating pan-EU rules for cryptocurrencies such as Bitcoin and Ethereum, in order to give consumers better protection across the bloc.
/jlne.ws/2FjEP8o

One year since crypto peaked and it all looks very different
Luke Thompson – Asia Times
Exactly a year ago, on January 8, cryptocurrency markets reached their all-time high. Twelve months later and things are looking very different.
/jlne.ws/2CXToNc

BitTorrent’s Master Plan to Bring a Tron-Powered Crypto Token to the Masses
Brady Dale – Coindesk
This weekend, Binance founder Changpeng Zhao lauded Tron on Twitter for bringing a crypto-powered business model to the storied file-sharing software it bought last summer, BitTorrent. Zhao, who topped CoinDesk’s Most Influential list for 2018, wrote: “The grandfather of Dapp[s] finally finds its decentralized currency and business model. Should be a very interesting case study.”
/jlne.ws/2M0Cxw6

ECB Policy Maker Calls Crypto a ‘Load of Nonsense’
Arnab Shome – Finance Magnates
Estonia remains one of the most crypto friendly nations despite its central bank governor’s criticisms. A key member of the Governing Council of the European Central Bank (ECB) has recently slammed cryptocurrencies calling it a “complete load of nonsense,” according to a Bloomberg report. Ardo Hansson, who also holds the position of the governor at Estonia’s central bank, made this harsh criticism while speaking at a conference in Riga, Latvia.
/jlne.ws/2TB34mj

Case Study – Identifying The Best Featured Cryptocurrency
Gerald Fenech – Forbes
Choice is a great thing particularly when it comes to decentralized technologies, but with the boom experienced in the bull-run of late 2017, early 2018, there are questions as to whether the increased number of projects can lead to further confusion, particularly with those who are interested in the space but not fully conversant in the technology.
/jlne.ws/2CbrdJ9

Crypto Miner Manufacturer Canaan Seeks a US IPO
Arnab Shome – Finance Magnates
China’s second-largest Bitcoin mining hardware manufacture Canaan is considering to file for an initial public offering (IPO) in the United States, according to a recent Bloomberg report. This came months after the company’s application for an IPO lapsed in Hong Kong-based stock exchange.
/jlne.ws/2VCORY8

Japan Eyes Regulation of Unregistered Crypto Investment Schemes
Yogita Khatri – Coindesk
Japan’s financial regulator is reportedly looking to close a legal loophole that lets unregistered investment firms solicit funds in cryptocurrencies rather than cash. According to a report from Sankei Shimbun on Tuesday, Japan’s Financial Service Agency (FSA) is planning revisions to bring such schemes under the country’s Financial Instruments and Exchange Act, although no timeline for the changes was provided.
/jlne.ws/2VDy9aZ

Stories from Alternative Crypto Sources

Kidnappers Demand Crypto Ransom Payments from South African Anti-Crime Group Within 48 Hours
Bitcoin Exchange Guide
/jlne.ws/2CZwchX

Ethereum Classic 51% Attack Fuels Ripple PoW Debate
Jeremy Wall – Invest In Blockchain
/jlne.ws/2CXToNc

India May Legalize Crypto but with Strict Conditions
Talha Dar – BitcoinNews.com
/jlne.ws/2Fhvlvj

Politics

House ‘will open up money-laundering inquiry’ into Trump-Russia ties, says key Democrat
Michael Isikoff – Yahoo News
A key Democrat on the House intelligence committee said the panel plans to start the new session of Congress by aggressively investigating President Trump’s finances, contending that there is already “probable cause” to believe his business was complicit in money laundering from Russia dating back to the early 2000s.
/jlne.ws/2FkvMnC

Tom Steyer, Billionaire Democrat, to Make Announcement In Iowa
Terrence Dopp – Bloomberg
Tom Steyer, the billionaire Democratic activist who has made impeaching President Donald Trump one of his signature issues, said he will announce his “political plans for 2019 and beyond” Wednesday in Iowa, site of the first presidential nominating contest.
/jlne.ws/2Fm4oWg

Trump Wants Trade Deal With China to Boost Stocks, Sources Say
Jenny Leonard, Jennifer Jacobs, Saleha Mohsin, and Shawn Donnan – Bloomberg
Advisers said to make case for deal, citing market volatility; Trade negotiations in Beijing ‘going very well,’ Trump says
President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.
/jlne.ws/2FlySrr

May Is Cornered by Parliament as She Fights for Her Brexit Deal
Robert Hutton and Tim Ross – Bloomberg
Commons re-starts debate on U.K. divorce terms before key vote; MPs warn they’ll act to stop no-deal departure in blow to May
Prime Minister Theresa May will re-start her stalled bid to win support for her Brexit deal on Wednesday, just a day after her strategy suffered a serious defeat.
/jlne.ws/2Fm7oC0

Regulation

Deutsche Bank Prosecutors Said to Obtain Client List During Raid
Steven Arons – Bloomberg
List said to include name of 900 individuals and entities; Clients on list said to be mostly located outside Germany
Frankfurt prosecutors obtained a list of more than 900 clients from Deutsche Bank in a tax evasion case commonly known as the Panama Papers, a key piece of evidence in an investigation that spurred a raid at the German lender’s headquarters in November.
/jlne.ws/2FlyIQR

ESMA: Crypto platforms should trade under MiFID II rules
Hayley McDowell – The Trade
The EU financial regulator has said that certain crypto platforms should trade under MiFID II rules in cases where the crypto-assets being traded qualify as financial instruments under the regulation.
/jlne.ws/2FjIpzm

ESMA is seeking corporate reporting experts for stakeholder panel
ESMA
The European Securities and Markets Authority (ESMA) has issued today a call for candidates in order to renew the composition of its Consultative Working Group (CWG) which advises ESMA’s Corporate Reporting Standing Committee (CRSC).
/jlne.ws/2FlnNqu

Crypto-assets need common EU-wide approach to ensure investor protection
ESMA
The European Securities and Markets Authority (ESMA) today publishes its Advice to the European Union (EU) Institutions – Commission, Council and Parliament – on initial coin offerings and crypto-assets. The Advice clarifies the existing EU rules applicable to crypto-assets that qualify as financial instruments, and provides ESMA’s position on any gaps and issues in the current EU financial regulatory framework for consideration by EU policymakers
bit.ly/2Fk6fLj

Podcast: Behind the Scenes: FINRA’s Board of Governors
FINRA
Academics, economists, CEOs. FINRA’s Board of Governors is made up of a diverse group of individuals with diverse perspectives—a must for a group responsible for overseeing a complex organization such as FINRA.
bit.ly/2FlCklT

FINRA Updates Supplemental Statement of Income; Implementation Date: The updated SSOI applies beginning with all SSOI filings that report on the period January 1 through March 31, 2019, and are due by April 26, 2019.
FINRA
FINRA is updating the Supplemental Statement of Income (SSOI) to conform with amendments adopted by the SEC that simplify and update certain of the FOCUS reporting requirements for broker-dealers. Pursuant to Rule 4524, the SSOI must be filed by all FINRA members as a supplement to the FOCUS Report within 20 business days after the end of each calendar quarter. FINRA is making available the updated SSOI instructions and form, as well as a resource that illustrates the SSOI form updates.
bit.ly/2Fm8IoL

Investing and Trading

Palladium Just Smashed Another Record
Elena Mazneva and Yuliya Fedorinova – Bloomberg
Best metal of 2018 now commands $500 an ounce more than rival; Substitution in autocatalysts still seen as unlikely: Norilsk
Palladium’s premium to platinum jumped to a record, building on its ranking as the best-performing metal of 2018.
/jlne.ws/2FkkRdE

Wall Street Banks Slash Yield Forecasts on Gloomy Growth Views
John Ainger – Bloomberg
Goldman Sachs Group Inc. joined a growing number of Wall Street banks lowering their forecasts for Treasury yields in the face of slowing global economic growth and faltering bets on tighter monetary policy.
/jlne.ws/2FlyJV9

Credit investors should be wary of tech disruption risk; Corporate cash flows may seem solid but tech breakthroughs could change the outlook
Laurence Fletcher – FT
As financial markets fall, investors often start to find out what they have really been holding in their portfolios. Questions that perhaps were not asked thoroughly of companies or investments during a bull market can quickly be answered during a bear market.
/jlne.ws/2FnsPTA

Aluminum Is the Market to Watch Closely in 2019; The metal has become a better gauge of economic growth than copper, partly because demand is more broadly distributed.
Jason Schenker – Bloomberg
On the long list of leading indicators that market participants attempt to use to figure out where the economy may be headed, don’t overlook aluminum.
/jlne.ws/2FjLqjb

Bonds Are Back as Your Best Hedge Against Stock-Market Doom
Ksenia Galouchko – Bloomberg
BlackRock to JPMorgan seek salvation in rallying Treasuries; Correlation breakdown tainted tried-and-true strategy in ’18
Reports of the death of bonds as a hedge against stock nightmares have been greatly exaggerated. In the recent equity sell-off, U.S. Treasuries are back with a vengeance, and bringing with them the decisive return of a relationship investors have counted on for decades: When stocks go down, bonds tend to go up and vice-versa.
/jlne.ws/2FmUfsn

Institutions

Deutsche Bank to Cut Bonus Pool by About 10% for 2018
Steven Arons – Bloomberg
Deutsche Bank AG’s management board plans to cut the bonus pool by around 10 percent as the German lender juggles cost pressures while trying to retain key employees, according to people familiar with the matter.
/goo.gl/u4U1j3

World Bank’s Jim Yong Kim to join private equity firm; Global Infrastructure Partners led consortium that bought Gatwick airport in 2009
James Politi, Sam Fleming and Mark Vandevelde – FT
Jim Yong Kim will leave the presidency of the World Bank to join Global Infrastructure Partners, a New York-based private equity fund, after accepting a one-year cooling off period during which he will be barred from doing business with the organisation he has led since 2012.
/jlne.ws/2Fm3LMH

Deutsche Bank to Slash Bonus Pool by About 10%
Steven Arons – Bloomberg
Lender will pay bonuses more selectively to top performers; Executives pledged to pay ‘competitively’ to retain talent
Deutsche Bank AG’s management board plans to cut the bonus pool by about 10 percent as the German lender juggles cost pressures while trying to retain key employees, according to people familiar with the matter.
/jlne.ws/2FoHa25

Deutsche Bank slashes bonuses after lacklustre year; Executives braced for ‘pretty horrible’ payout round after results and shares disappoint
Stephen Morris and Olaf Storbeck – FT
Deutsche Bank’s investment bankers are bracing for a double-digit cut in their bonus pool after the division recorded one of its worst years since the financial crisis and its shares slumped to a record low.
/jlne.ws/2Fl79Hp

HSBC’s Gender Pay Gap, the Worst in U.K. Banking, Is Now Even Bigger
Harry Wilson and David Hellier – Bloomberg
Bank reported a 59% gap last year, already biggest among peers
National average is around 17 percent, finance skews higher; Women Are on Track to Earn the Same as Men… in 202 Years
Pay for female staff at HSBC Holdings Plc’s U.K. business fell further behind male colleagues’ in the last year, according to new figures from the London-based bank.
/jlne.ws/2FoH3DH

Citadel Hedge Fund Gains 9% in Strong Multi-Strategy Year
Hema Parmar and Melissa Karsh – Bloomberg
Millennium Management returned 5%; Hudson Bay was up 6.5%; Big multi-strategy funds outperformed the hedge fund industry
Big multi-strategy hedge funds found a way to make money in a tumultuous year when so many other firms floundered.
/jlne.ws/2FktLIb

American Express Suspends a Director in Foreign-Exchange Pricing Probe; Employees were informed that Taylor Simonin was suspended last month
AnnaMaria Andriotis – WSJ
American Express Co. AXP 0.49% suspended a director in its foreign-exchange department as part of its ongoing investigation into pricing practices in the division, according to people familiar with the matter.
/jlne.ws/2FnsFLY

AQR announces job cuts after disappointing 2018; Quantitative investment group’s biggest public funds hit amid market volatility
Robin Wigglesworth – FT
AQR, the quantitative investment group founded by billionaire Clifford Asness, says it is making “small reductions” to its headcount after a tough 2018, when most of its biggest public funds suffered big losses.
/jlne.ws/2Flvw7P

Haven-buying spurs jump in gold ETF holdings in December
Neil Hume – FT
Holdings in gold-backed exchange traded funds rose by 2.4m ounces, or 76 tonnes, in December as investors looked for safe places to shelter from volatile equity markets.
/jlne.ws/2FmRHuj

Deutsche Bank Courts New York Hedge Funds After Cuts
Steven Arons , Sonali Basak , and Melissa Karsh – Bloomberg
German lender has tried to shift some business away from U.S.; On Thursday, its leaders privately met clients it aims to keep
Deutsche Bank AG’s hedge fund clients have had a front-row view of tumult this year, as the lender’s new leader unveiled another strategy, dramatically shrinking its U.S. prime brokerage.
/jlne.ws/2FhZnhH

Regions

Iraqi stockpickers see a silver lining as public mood darkens; Despite challenges, fund managers eye potential for returns in the thinly traded exchange
Chloe Cornish – FT
Baghdad saw in 2019 with sparkling fireworks and customary volleys of merry gunfire. The showers of bullets falling back to earth reportedly injured at least 10 — an inauspicious start to a new year in the war-scarred capital of nearly 10m people.
/jlne.ws/2FpepCr

China’s GMO Ruling Hands U.S. Farmers New Tool in Battle Against Weeds; Approval is given to DowDuPont soybean that is genetically modified to survive powerful herbicide combination
Jacob Bunge – WSJ
China’s approval of new genetically engineered crops will open a new front in U.S. farmers’ long-running war against hard-to-kill weeds.
/jlne.ws/2Fm3byv

Riches to Rags: Swiss Central Bank Swings from Record Profit to Large Loss; Economic and political uncertainties lifted demand for the Swiss franc, eroding the value of the bank’s foreign stock and bond holdings
Brian Blackstone – WSJ
One year after posting a record 54 billion franc ($55 billion) profit, the Swiss National Bank swung to a 15 billion franc loss in 2018, as a double whammy of weaker global equity markets and a stronger Swiss franc eroded the value of its massive holdings of foreign stocks and bonds.
/jlne.ws/2FkhGme

It’s Not Easy Being a Chinese Bank; Some officials have harangued banks for lending too much to state-owned enterprises and not enough to private companies
Nathaniel Taplin – WSJ
Chinese banks need to lend more to private enterprises. Too bad that won’t help their credit profiles.
/jlne.ws/2FjCjPu

Citigroup Suspends Hong Kong Trader Amid Stocks Probe
Donal Griffin – Bloomberg
Reviewing if some traders practiced full disclosure to clients; Bank suspended equities trader Cindy Lui last month: sources
Citigroup Inc. suspended an equities trader in Hong Kong in the past few weeks as the firm kick-starts an internal investigation into its dealings with some clients, people familiar with the matter said.
/jlne.ws/2FoTQpk

Brexit

MPs seek to force Theresa May to present Brexit ‘plan B’; Amendment from cross-party MPs including nine Tories marks latest Commons rebellion
Henry Mance – FT
MPs will seek to force Theresa May to come up with a plan B on Brexit within days if her deal is defeated in parliament next week, in a further sign of growing rebellion at Westminster.
/jlne.ws/2FiHwqS

May cabinet faces up to prospect of defeat in Brexit vote; Fears grow that any EU intervention on withdrawal agreement will not be enough
George Parker and Tobias Buck – FT
Theresa May’s cabinet on Tuesday discussed the prospect of defeat in next week’s crunch Commons vote on the prime minister’s Brexit deal, amid fears at the top of government that a last-minute EU concession will not be enough to save the day.
/jlne.ws/2Rc6KhP

China puts the squeeze on high rollers in Macau; Geopolitical threats mount in the world’s biggest gambling centre
Henny Sender – FT
2019 is the year of the pig, according to the Chinese calendar. It is also the year that marks the 20th anniversary of the return of the former Portuguese colony of Macau to the motherland of mainland China.
/jlne.ws/2Fm83U7

Miscellaneous

Have We Got a Carbon Tax ‘Dividend’ for You; Rent seekers, virtue signalers and green lobbyists will love it. Taxpayers not so much.
Mark P. Mills – WSJ
This could be the year Congress tries to enact the mother of all taxes, a carbon tax—a levy on the use of oil, natural gas and coal. Everything that is fabricated, grown, operated or moved is made possible by hydrocarbons. That makes the carbon tax different from a mere consumption or excise tax. The latter is attached to purchasing—spend more, pay more. A carbon tax is a tax on existence, because all aspects of living require energy, and hydrocarbons provide 80% of America’s energy, more for the rest of the world. And hydrocarbons are used to create or build everything else that produces energy.
/jlne.ws/2FldTFk

John Lothian Newsletter

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