A $280 Billion Unicorn Just Had its Legs Broken

Dec 28, 2020

First Read

$20,001/$300,000 (6.7%)
Sam Gaer and Joanne Morrison



Hits & Takes
John Lothian & JLN Staff

The holidays can be difficult for many people in normal years. This pandemic year presents special risks because of the way we are all separated. I encourage you to reach out to family and friends if you have not and check in on them. I also encourage you to continue to be safe, be smart and continue to do your best to beat this pandemic.

The holidays are normally a time when family and friends get together. Last night the Lothian family, my brothers and their wives and kids and my cousins and more gathered on Zoom to hold our annual Lothian Family Christmas. This year we played a game online and had a lot of fun with it. It was not the normal round robin of gift giving and stealing we have come to love, but it was still fun.

The news about the pandemic is not good in the U.S., and some experts say it will get worse.

December was the deadliest month of the COVID-19 pandemic in the US with more than 63,000 deaths so far this month. And the CDC says the total number of deaths have reached 330,901. And just to top it off, Dr. Anthony Fauci says the worst is yet to come.

Bitcoin hit new highs, again and again and has traded above $28,000.

Sam Gaer and Joanne Morrison are the latest to give the JLN MarketsWiki Education GoFundMe campaign. Sam’s donation moved the amount raised over the $20,000 mark by giving $1,000 to the campaign. Gaer is a veteran technology entrepreneur, trader and exchange executive. In fact, he even served as CEO of NYMEX Europe, when that was a thing. He also served as CIO of FiNRA. Joanne is a veteran journalist and writer who now works for the University of Maryland. She is a senior director of marketing and public relations at University of Maryland, Baltimore. She formerly worked for the FIA in their Washington, D.C., offices. Thank you to Sam and Joanne and all who have given and all who have yet to give. Support our efforts to preserve industry history by giving to our GoFundMe campaign.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


The FDA has turned its attention to the CBD swamp over the past few weeks. Last week they warned five companies for selling inhalants, nose sprays and eyewash that contain the “miracle” compound because the agency thinks the delivery methods are particularly risky for unproven medications like CBD. The previous week, they fined six different companies for selling CBD products represented as medicines without a demonstration that they worked as claimed. ~Thom Thompson


JPMorgan’s Jamie Dimon and His Brush With Death: ‘You Don’t Have Time for an Ambulance’; The CEO’s dangerous rip in his aorta came as the pandemic began to ravage the economy. The two emergencies would test the foundations of America’s largest bank.
David Benoit – WSJ
Fear jolted Jamie Dimon awake in the dark morning hours of March 5. U.S. coronavirus cases numbered only around a hundred, but markets were flashing warning signs. It was 4 a.m., and the JPMorgan JPM -0.44% Chase & Co. chief executive dialed up his top lieutenants to deliver a message that couldn’t wait: The economy is in trouble.

*****Lesson learned: An aortic tear doesn’t pay attention to financial crises.~SC


HKEX Foundation Raises Over HJ$100M For Charity in 2020
HKEX’s new $20 million Charity Partnership Programme will be funding 10 community projects, benefiting 40,000+ individuals in Hong Kong
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that since launching the HKEX Foundation in June 2020, it has raised more than $100 million to support community projects in Hong Kong. The Foundation has to date, funded a wide range of projects and charities, supporting Hong Kong’s most vulnerable and in need.

*****That is over $12 million in US dollars raised and very nice work.~JJL


DeFi protocol Cover exploited, attackers minted at least 40 quintillion tokens
Yogita Khatri – The Block
Decentralized finance (DeFi) protocol Cover, which recently merged with Yearn.Finance, has just been exploited terribly.
One of the attackers was able to mint 40 quintillion COVER tokens (worth about $11,826 quintillion at the time of writing) due to a bug in the protocol’s smart contracts.
Decentralized finance (DeFi) protocol Cover, which recently merged with Yearn.Finance, has just been exploited. One of the attackers was able to mint 40 quintillion COVER tokens (worth about $11,826 quintillion at the time of writing) due to a bug in the protocol’s smart contracts, according to The Block’s research analyst Igor Igamberdiev. There could be more exploits due to the bug, said Igamberdiev.

*****Is that all the money in the world?~JJL


Queen Elizabeth Thanks Medical Staff in Christmas Address
Iain Rogers – Bloomberg
Queen Elizabeth II used her annual Christmas message to thank medical staff on the front lines of the battle against Covid-19, and said the pandemic has helped bring communities together despite the need for social distancing. “Remarkably, a year that has necessarily kept people apart has, in many ways, brought us closer,” said the British monarch, who has delivered the broadcast every year except one since assuming the throne in 1952.

****You don’t need to have a crown to be a leader, but sometimes people with crowns are just that.~JJL


Thursday’s Top Three
The leading story on Thursday before the holiday break was from The Washington Post about a popular journalist who changed direction, What Happened to Maria Bartiromo? Second was news from Peak6, PEAK6 Acquires Switzerland-Based Hardcastle Trading. And the third most-read story was an interesting feature from Financial Times, Retail trading boom spills over into fine wine market


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Lead Stories

A $280 Billion Unicorn Just Had its Legs Broken; Ant’s story can no longer be the fairytale investors believed in
Tim Culpan – Bloomberg
Any doubts that Ant Group Co. overstepped the mark are now laid to rest. The new dilemma for the company’s management, and its bankers, is rewriting the narrative of the world’s biggest fintech giant. Executives have been told to return the Alibaba Group Holding Ltd. affiliate to its payments roots, Bloomberg News reported Sunday citing a statement from the People’s Bank of China. This directive implies that its credit, insurance and investment product lines may need to be dumped, though the central bank stopped short of calling for the company to be broken up.

Volatility Market Braced for ‘Too Close to Call’ Georgia Runoffs
Claire Ballentine, Felice Maranz, and Kamaron Leach – Bloomberg
‘Impossible to overstate how important elections are’: Cowen; ‘Focus turns to protection’ after stock rally, Nomura says
Investors aren’t quite ready to put this chaotic year behind them just yet. There’s one more lingering risk event to fret over: the final races of the 2020 elections that have spilled into next year. While not as pronounced as the hedging seen around Election Day last month, options and volatility futures do signal elevated concern over potential market turbulence resulting from the results of the Jan. 5 runoff races in Georgia that will determine whether Republicans maintain control of the Senate.

Britain’s Brexit Ordeal Has Barely Even Started; Exhausted by the negotiations that concluded last week? There’ll be plenty more.
Editorial Board – Bloomberg
Britain’s free-trade agreement with the European Union, announced last week after months of fractious talks and days before the transitional Brexit arrangements were due to end, is certainly better than the alternative. Separating with no deal at all would’ve poisoned relations and been worse for both sides than what lies ahead.

UK fires warning shot at Brussels over post-transition share trading; FCA says it may deviate from EU financial rules if City of London not granted equivalence
Philip Stafford and Jim Brunsden – FT
UK regulators have threatened to deviate from EU rules on share trading if Brussels does not deliver market-access permissions to the City of London. The move on Wednesday by the Financial Conduct Authority is a sign of UK frustration over the EU’s silence on post-January 1 arrangements.

Ant Turning From Windfall to Nightmare for Global Investors
Bloomberg News
Chinese regulators ask Ant to return to its payments roots; Central bank demands Ant overhaul business operations
Two months ago, global investors including Warburg Pincus, Carlyle, Temasek and GIC were on the cusp of a massive windfall from what would have been the world’s largest initial public offering. Now, returns on the hundreds of millions of dollars they invested with Ant Group Co. are in jeopardy. On Sunday, China ordered Ant to reexamine its fintech businesses — spanning from wealth management to consumer credit lending and insurance — and return to its roots as a payments service.

Ant’s Regulatory Nightmare Could Torment Other Chinese Tech Giants Too; Ant’s troubles may be particularly severe, but others should be watching their backs
Jacky Wong – WSJ
China’s latest salvo against one of its most well-known technology giants could portend a more perilous regulatory regime for others in the industry as well. China’s central bank Sunday publicly criticized Ant Group, which owns one of the country’s two dominant digital-payment systems, for multiple regulatory failings and urged the company to rectify problems in some of its fastest-growing areas such as online lending. Ant was accused of engaging in regulatory arbitrage, showing contempt for regulatory compliance, and damaging consumers’ rights. On Thursday, China’s market regulator said it had launched an antitrust probe into Alibaba, which owns a third of Ant.

EU ambassadors give green light to Brexit deal; Provisional approval comes as British fishermen attack ‘UK surrender’
Jim Pickard and Mehreen Khan – FT
EU ambassadors in Brussels on Monday gave the green light for the trade deal with the UK to come into provisional force from January 1, in a move designed to prevent border disruption as the Brexit transition period ends.

Covid exposes capitalism’s flaws; The pandemic is an opportunity for policymakers to fix the structure of the economic system
Mariana Mazzucato – FT
If there is an economic lesson from the past 12 months, it is this: Covid-19 is the moment to do capitalism differently. The pandemic showed our economic system is not simply in crisis, it is structurally flawed.

Boris Johnson admits Brexit deal is limited for financial services; UK must wait until new year for details on market access, says Brussels
Sebastian Payne and Chris Giles, and Jim Brunsden – FT
Boris Johnson has admitted that the Brexit trade deal failed to meet his ambitions on financial services, as Brussels signalled that the City of London must wait until after January 1 to learn what market access it will have in future.

Boris Johnson’s Post-Brexit Plan for Britain Remains a Puzzle; U.K. prime minister’s policies so far don’t suggest he wants to embark on a Margaret Thatcher-style economic revolution
Jason Douglas and Max Colchester – WSJ
British Prime Minister Boris Johnson has ended a rocky year on a high note, with a free-trade agreement with the European Union under his belt and mass vaccination against Covid-19 under way.

PM decides to establish Viet Nam Exchange
VGP – Prime Minister Nguyen Xuan Phuc has signed a decision on establishment of the Viet Nam Exchange (VNX) on the basis of rearrangement of the Ha Noi Stock Exchange (HNX) and Ho Chi Minh Stock Exchange (HOSE). The VNX will be headquartered in Ha Noi and operate as a one-member limited liability company wholly owned by the State. The Ministry of Finance will be the representative of the State capital ownership.

Milton Friedman Was Right About Shareholder Capitalism; Today’s critics misunderstand the Nobelist’s 1970 admonition to put profit first; he was not rationalizing corporate misconduct or short-termism.
Michael R. Strain – Bloomberg
Fifty years ago this month, the economist and Nobel laureate Milton Friedman published his famous essay in the New York Times Magazine arguing that, as the headline writer put it, “The social responsibility of business is to increase its profits.”

Robinhood salaries revealed: How much the fintech unicorn pays its employees as it prepares to go public in 2021, from $117,000 to as much as $326,000
Candy Cheng and Alex Nicoll – Business Insider
Robinhood, the popular stock-trading platform, has picked Goldman Sachs to lead a 2021 IPO that could value it at more than $20 billion, according to Reuters.


‘Believe in Science’: EU Kicks Off COVID-19 Vaccine Campaign
Nicole Winfield – AP
Doctors, nurses and the elderly rolled up their sleeves across the European Union to receive the first doses of the coronavirus vaccine Sunday in a symbolic show of unity and moment of hope for a continent confronting its worst health care crisis in a century.

Malaysia Extends Virus Curbs by Two Weeks as Cases Stay Elevated
Yantoultra Ngui – Bloomberg
Malaysia extended a conditional movement control order in capital Kuala Lumpur, Sabah and Selangor by two weeks to help contain the spread of coronavirus infections. The restrictions that had been due to end on Dec. 31 will continue until Jan. 14, Defense Minister Ismail Sabri Yaakob said on Monday. While interstate and inter-districts travel will remain unaffected, borders will stay closed for foreign tourists, he said.

Chinese citizen journalist jailed after accusing officials of Covid cover-up; Zhang Zhan sentenced to 4 years as Beijing reasserts official narrative of outbreak handling
Christian Shepherd and Tom Mitchell – FT
A Chinese citizen journalist who accused Wuhan authorities of a cover-up in the early stages of the coronavirus pandemic has been sentenced to four years in jail, as Beijing looks to assert its official narrative that it has successfully managed the outbreak.

Highly Touted Monoclonal Antibody Therapies Sit Unused in Hospitals; Medical centers overrun with critical Covid-19 patients are using just a fraction of allotted supplies of the treatment
Sarah Toy, Joseph Walker and Melanie Evans – WSJ
Doses of monoclonal antibodies—Covid-19 therapies authorized for emergency use last month—are sitting unused in hospital pharmacies, even as cases surge across the country.

How Mink, Like Humans, Were Slammed by the Coronavirus; Rampaging infections at farms caused scandal, scientific head-scratching and a search for a vaccine — for mink.
James Gorman – NY Times
Denmark’s mink industry is gone, a victim of the coronavirus. The nation killed all its 17 million mink because of fears of a mutation in the virus that had spread from mink to people.

Sweden Targets New Law Enabling Lockdowns From Early January
Rafaela Lindeberg – Bloomberg
Sweden’s government hopes to have the power to impose lockdowns from Jan. 10, if a bill submitted on Monday passes parliament. The temporary laws, if enacted, will give authorities the legal clout to shut down businesses and fine those infringing the restrictions put in place to slow the spread of the virus, according to the Minister of Health and Social Affairs Lena Hallengren.

Fauci: Mutant coronavirus strain must be taken ‘very seriously’
Zack Budryk – The Hill
Anthony Fauci, the nation’s top infectious diseases expert, on Sunday, said people should take the more contagious strain of the coronavirus that has emerged in southeastern England “very seriously.” Fauci, who has discouraged outright barring flights from the U.K., said in an appearance on CNN’s “State of the Union” that U.S. officials were right to require proof of negative coronavirus tests for anyone entering the country from Britain.

Europe Rushes to Boost Vaccine Output to Speed Up Pandemic Exit
Raymond Colitt, Chiara Albanese, and James Regan – Bloomberg
Germany, Italy are seeking to accelerate Covid inoculations; EU rollout could be about three months behind U.S. and Britain
To speed up the rollout of the vaccine, a debate has emerged about breaking BioNTech’s license or sharing it with other
Germany is pushing to ramp up production of Covid-19 vaccines as Europe faces pressure to close the gap with Britain and the U.S. in a bid to end to the pandemic.

Coronavirus Will Change How We Shop, Travel and Work for Years
Enda Curran – Bloomberg
Public health emergency is shaking up the world economy; Manufacturers forced to rethink where they buy, produce goods
Every economic shock leaves a legacy. The deadly coronavirus will be no different. The great depression spurred a “waste not want not” attitude that defined consumer patterns for decades. Hyperinflation in the Weimar Republic still haunts German policy. The Asia financial crisis left the region hoarding the world’s biggest collection of foreign exchange. More recently, the 2008 global financial crisis drove a wedge through mature democracies that still reverberates, with workers suffering measly pay gains in the decade since.

December deadliest month of COVID-19 pandemic
Joseph Choi – The Hill
December is the deadliest month for the coronavirus since the pandemic began, according to data compiled by Johns Hopkins University. The U.S. has recorded more than 63,000 deaths so far this month. April was previously the deadliest month of the pandemic, with more than 55,000 deaths. According to the COVID Tracking Project, deaths surpassed that number just three weeks into December as temperatures dropped, people gathered for the holidays and cases surged.

U.S. CDC reports 330,901 total deaths from coronavirus
Reuters Staff
The U.S. Centers for Disease Control and Prevention (CDC) on Sunday reported 18,909,910 cases of new coronavirus, an increase of 179,104 cases from its previous count, and said deaths had risen by 1,309 to 330,901.

New York State Probes Possibly Fraudulently Obtained Vaccines
Yueqi Yang – Bloomberg
Health care provider may have diverted vaccines to public; Local news said ParCare allows elderly to access vaccines
A health care provider in New York may have fraudulently obtained Covid-19 vaccines and diverted them to members of the public in violation of priority guidelines, the state government said on Saturday.

Top U.S. Health Officials Warn of Post-Holiday Coronavirus Surge
Bailey Lipschultz and Chris Strohm – Bloomberg
‘We have a grim month ahead of us,’ former FDA Chief warns; Fauci says U.S. is again approaching a ‘very critical point’
Current and former U.S. health officials took to the airwaves Sunday to warn Americans of a potential jump in Covid-19 cases after the holidays. “A surge upon a surge” may be on the way after the Christmas and New Year’s period, Anthony Fauci, the government’s top infectious-disease doctor, warned on CNN’s “State of the Union.”

The Mink Pandemic Is No Joke; Nine countries have now reported outbreaks on mink farms.
ZOË SCHLANGER – The Atlantic
Since early this summer, Keith Poulsen, the director of the Wisconsin Veterinary Diagnostic Laboratory, was worried about mink. Poulsen’s lab is part of a national network of veterinary labs that work on animal diseases, and they had “been watching COVID-19 very carefully,” Poulsen told me. In Europe, mink on fur farms were catching COVID-19. And they seemed to be able to pass it back to people. The Netherlands had an outbreak in April; Danish mink farms quickly followed in June. By October, the situation was gruesome: Hundreds of mink farms in Denmark and the Netherlands had COVID-19 cases, and two farms in Utah had reported the first U.S. cases in mink.

Covid-19 Propelled Businesses Into the Future. Ready or Not; Spurred by the pandemic, business changes that normally might have taken years unfolded in months. Now, shifts that began as temporary fixes are likely to become permanent.
Greg Ip – WSJ
For many who crossed the digital divide this year, there will be no going back. The Covid-19 pandemic forced Americans to collectively swap the physical for the digital world in a matter of months. As retailers learn to operate without stores, business travelers without airplanes, and workers without offices, much of what started out as a temporary expedient is likely to become permanent.

California Goes It Alone in the War on Covid; These are the stories you, dear reader, found the most compelling in an extraordinary year.
Brooke Sample – Bloomberg
California this week declared its independence from the federal government’s feeble efforts to fight Covid-19 — and perhaps from a bit more. The consequences for the fight against the pandemic are almost certainly positive. The implications for the brewing civil war between Trumpism and America’s budding 21st-century majority, embodied by California’s multiracial liberal electorate, are less clear.

Macron and Merkel Get the Least Bad Brexit Option; The EU’s treaty with the U.K. isn’t a “win,” but it avoids a messy divorce and gives the bloc leverage for the future.
Lionel Laurent – Bloomberg
The defining image of Britain’s Christmas Eve trade deal with the European Union was a beaming Boris Johnson with his thumbs up in the air. There were no celebratory pictures from any of his continental counterparts. Getting to this point is a win in itself for the U.K. An end to Brexit’s drama should let the Brits reenter a more breathable political atmosphere after almost five years talking about nothing else — other than Covid-19. Avoiding a messy “no deal” will save the economy from a long-term shock that might have cost 3% of gross domestic product. Even Nigel Farage is pleased.

Exchanges, OTC and Clearing

Conclusion of Incident Review: Derivatives Market Suspension on 5 September 2019
Hong Kong Exchanges and Clearing Limited (HKEX) plays a key role in supporting and enabling the resiliency and sustainable development of Hong Kong’s financial markets. Following trading suspension of the derivatives market on 5 September 2019 (the Incident), HKEX has today (Monday) published a Public Report of the Incident, which includes details on a range of enhancements to our processes, procedures and communications.


Council Post: Fintech Trends To Look Out For In 2021
Dmitry Dolgorukov – Forbes
2020 will go down in history as the year of the pandemic, but there’s one other thing it should be remembered for, too. It is kick-starting a wave of innovation. In just months, a vaccine for Covid-19 was developed. To put this in perspective, this process usually takes 10 years.

The Winners And Losers In Fintech And Banking In 2020
Ron Shevlin – Forbes
It seems unfair to name winners and losers in fintech for 2020. We should give the losers a pass because of the year we just had, right? This is the Fintech Snark Tank, folks—pity is for pansies. Let’s get to the lists.

5 Fintech startups to watch in 2021
Darren Sinden – FinanceFeeds
5 Fintech startups to watch in 2021 – FinanceFeedsThe world’s Forex industry news source
We are not quite out of 2020 yet but naturally our thoughts turn to the New Year as the old one begins to fade and attention turns to possible trends and areas of interest over the next 12 months.
Over the past few years, Business Insider has asked leading VCs which startups they think could “take off” in the year ahead and the report makes for interesting reading, particularly as this year there is a separate section for “hot trends” which included many fintech’s in their number.


Buy bitcoin as prices soar above $28,000 in holiday trade? Good luck!
Mark DeCambre – MarketWatch
Bitcoin prices shatter records during the Christmas weekend as investors look toward closing out a historic 2020 for the world’s most prominent digital currency, amid a global pandemic. The asset, however, is still seen as highly speculative, even if it is gaining greater mainstream attention.

Bitcoin on Longest Winning Run Since 2019 After Record
Eric Lam – Bloomberg
Largest cryptocurrency topped $28,000 for first time on Sunday; Wider interest spurring regulatory scrutiny of crypto industry
Bitcoin is on track for its longest monthly winning streak in more than a year after touching a record above $28,000 over the weekend. The largest cryptocurrency reached an all-time high of $28,365 on Sunday before paring some of the advance, according to a composite of prices compiled by Bloomberg. The run of outsized returns over October, November and December so far is the longest such stretch since mid-2019.

Bitcoin Faces Regulatory Scrutiny After Record-Breaking Rally
Vildana Hajric – Bloomberg
Treasury, SEC views seen looming large on 2021 crypto outlook; Deutsche Bank survey found a majority of investors are bullish
It’s been a tough year by all accounts. But for Bitcoin, 2020 has been a marvelous time. The cryptocurrency almost quadrupled, surpassing $20,000 for the first time as it notched record after record. The diehards cheered it as an inflation hedge in an era of unprecedented central bank largesse. Wall Street veterans from Paul Tudor Jones to Stanley Druckenmiller blessed it as an alternative asset, adding to the rally. And companies like MicroStrategy Inc. and Square Inc. moved cash reserves into crypto in search of better returns than near-zero interest rates deliver.

Israeli Tax Agency Is Seeking Crypto Holding Disclosure
Arnab Shome – Finance Magnates
The Israeli Tax Authority (ITA) is sending notices to the residents asking them to disclose their digital currency holdings for taxation purposes.

Is This Why Bitcoin, Ethereum, Litecoin And Other Cryptocurrencies Have Suddenly Shot Higher?
Billy Bambrough – Forbes
Bitcoin has continued its huge December rally over the last few days, climbing to a total value of around half a trillion dollars ($500 billion).
The bitcoin price, breaking $28,000 per bitcoin for the first time ever over the Christmas weekend, has added more than 50% this month—with other major tokens ethereum and litecoin surging along with it.

Tim Ogilvie: Proof-of-Stake Was Bigger Than Eth 2.0 in 2020
Tim Ogilvie – Coindesk
In just a single year, staking has gone from an academic exercise to a dominant force in crypto.
The biggest staking story of 2020 is, of course, the launch of Ethereum 2.0. But beyond that, the past year has seen a tremendous flowering of proof-of-stake (PoS) networks. Four of the top nine crypto assets by market cap are on a path to proof-of-stake. In January, the number was zero – and more are poised to follow.

Deribit Adding Options to Allow Bitcoin Traders to Bet on Rally to $120K, $140K
Kevin Reynolds – Coindesk
The folks at Deribit apparently think betting on a $100,000 bitcoin (BTC) price is so earlier-this-month because on Friday, mere hours before the leading cryptocurrency hit $25,000 for the first time, the crypto derivatives exchange announced contracts on $120,000 BTC with $140,000 added on Saturday morning.


The perverse political effects of Covid-19; Both the US and EU may end up being politically strengthened by the pandemic
Gideon Rachman – FT
Nothing, it seems, can get in the way of geopolitical rivalry. Not a pandemic, not the collapse of international travel or a worldwide recession. In different ways China, the US and the EU have all treated Covid-19 as a very public test of their rival approaches to governance — and as part of an international contest for prestige and influence.

The response to secular stagnation will drive the markets post-Covid; Much depends on how much Joe Biden boosts the fiscal stimulus as US president
Gavyn Davies – FT
When Lawrence Summers identified the central importance of secular stagnation for the global economy in his speech at the IMF in 2013, the Harvard professor put his finger on the most important motivating force for the financial markets in the 2010s.

The Post says: Give it up, Mr. President — for your sake and the nation’s
Post Editorial Board – NY Post
Mr. President, it’s time to end this dark charade. We’re one week away from an enormously important moment for the next four years of our country. On Jan. 5, two runoff races in Georgia will determine which party will control the Senate — whether Joe Biden will have a rubber stamp or a much-needed check on his agenda.

America Can’t Compete With Chinese Tech By Walling Itself Off; Trump-style export controls will backfire and leave U.S. companies isolated.
Noah Smith – Bloomberg
The election of Joe Biden will not end the U.S.-China trade war. Biden has already vowed to keep outgoing President Donald Trump’s tariffs as leverage for negotiations. That signals the dawn of a permanent new era of economic competition between the two superpowers. But beyond the flashy, headline-grabbing issue of tariffs and trade deals, there’s another, more important economic struggle being waged — the battle to control technology industries. And the U.S. is deploying some very risky weapons to win it.

Georgia Senate Races Near Finish With Trump a Central Player
Billy House and Eric Martin – Bloomberg
Two runoff elections set for Jan. 5 could hinge on turnout; Control of Senate, Biden’s legislative agenda hang in balance
The two Georgia runoffs that will decide control of the U.S. Senate begin their final stretch, with President Donald Trump again putting himself in the middle of the campaign. Trump ignited controversy last week by holding up pandemic relief and government funding. Although he signed the legislation Sunday night, a week after it cleared Congress, his late action will end up delaying the stimulus payments he criticized as too low and cutting a week’s worth of expanded benefits for the jobless.

GOP attacks on Warnock echo a disgraceful tradition
Beth Waltemath, David Lewicki and David Gushee – CNN
As members of the clergy, we are excited to see a fellow pastor running for the US Senate in Georgia. We know Rev. Raphael Warnock personally. His warmth, intelligence, advocacy and love for people distinguish him among our colleagues. He is a brilliant and funny person, and he is a gifted pastor and preacher.

Wall Street Exec Loeffler Leans on Farm-Girl Roots to Pitch Populist Candidacy
Ryan Mills – National Review
She’s been a high-powered corporate executive, the co-owner of a professional sports team, and now is likely the wealthiest member of Congress. But Georgia Sen. Kelly Loeffler started her working life as a 10-year-old “walking beans” on her family’s Illinois farm.

50-year study of tax cuts on wealthy shows they always fail to “trickle down”; Tax cuts for the rich increase inequality and don’t grow the economy or decrease unemployment, research shows
Igor Derysh- Salon
A study of 50 years of tax cuts found that “trickle-down” economics — a concept pushed by Republican lawmakers to justify slashing taxes on the wealthy — have only benefited the rich and worsened economic inequality while failing to decrease unemployment or grow the economy.

Trump’s Fraud Claims Died in Court, but the Myth of Stolen Elections Lives On; For years, Republicans have used the specter of cheating as a reason to impose barriers to ballot access. A definitive debunking of claims of wrongdoing in 2020 has not changed that message.
Jim Rutenberg, Nick Corasaniti and Alan Feuer – NY Times
President Trump’s baseless and desperate claims of a stolen election over the last seven weeks — the most aggressive promotion of “voter fraud” in American history — failed to get any traction in courts across seven states, or come anywhere close to reversing the loss he suffered to Joseph R. Biden Jr.

Investing and Trading

Gold Miners Set for Another Banner Year With Focus on Discipline
Aoyon Ashraf – Bloomberg
Analysts tout mining stocks with strong capital allocation; Stimulus, low rates and weaker dollar to lift gold in 2021
The good times for gold miners are expected to continue next year, especially for those that are able to tighten spending and increase returns to investors. The rally in gold prices has helped miners expand their margins and generate record levels of free cash flow, allowing many to pass on profits to shareholders already, Scotiabank analyst Tanya Jakusconek said.

The Winning Credit Trades That Made Debt Investors Rich in 2020
Davide Scigliuzzo – Bloomberg
Airbnb hands lenders a windfall after initial public offering; Tupperware comes back from brink on home-cooking revival
It was a year like no other in credit. Markets plunged at the onset of the pandemic, sending entire sectors teetering toward oblivion. Once solid companies were suddenly paying double-digit yields in a mad scramble for liquidity, while venerable household names could be scooped up for pennies on the dollar.

Bond Traders Close Out Chaotic Year With Key 1% Level in Sight
Vivien Lou Chen and Edward Bolingbroke – Bloomberg
Auctions, Senate elections may make elusive level achievable; But 0.973% is hard to get through, Citigroup strategist says
Treasury traders are buzzing about 1% yields again, with all eyes on whether a massive slate of auctions next week and two key U.S. Senate runoff elections in early January could get them there.

As 2021 approaches, watch out for a 1999-style stock-market correction
Barbara Kollmeyer – WSJ
Welcome to the last trading week of 2020, a year we can’t see the back of fast enough. Stocks are pointing higher after President Donald Trump signed that $900 billion stimulus bill, despite 11th hour demands for bigger relief checks. With just a handful of trading days before the year finishes, our call of the day says investors need to brace for a bumpy start to 2021 if we close out the year with stock-market records.

Only One Number Mattered to Global Markets in 2020; The remarkable rally in risk assets this year comes down to one thing. Ask global central bankers what it is.
Robert Burgess – Bloomberg
When it came to financial markets in 2020, the most frequently asked question was why. Why, in the midst of a global pandemic that has killed some 1.7 million people worldwide and plunged the economy into the worst crisis since the Great Depression, did equity markets stage a historic rebound to reach new highs and become completely disconnected from reality? And it wasn’t just stocks, as anything smacking of carrying any semblance of risk, from junk bonds to Bitcoin, had epic rallies.

Investors Double Down on Stocks, Pushing Margin Debt to Record; Chasing bigger gains, some have exposed themselves to potentially devastating losses through riskier plays, such as concentrated positions and trading options
Michael Wursthorn – WSJ
Bruce Burnworth used to clip coupons and look for deals before his investment in Tesla Inc. TSLA 2.44% made him a millionaire. He is part of a widening class of affluent Americans who are doubling, or even tripling, down on this year’s highflying stock market. The S&P 500 has soared 66% since bottoming in March in the early days of the Covid-19 pandemic, while dozens of individual stocks, like Tesla, have surged even higher.

Consumer Brands Bet Working From Home Is Here to Stay; Makers of Folgers coffee, Scott toilet paper and Kraft Mac & Cheese are investing in factories, new products aimed at remote workers post-pandemic
Annie Gasparro and Sharon Terlep – WSJ
Consumer-product companies are expanding factories and revamping production lines, wagering that work-from-home habits like growing beards and fixing quick lunches will outlast the coronavirus pandemic.

Environmental, Social and Corporate Governance

Companies Seek to Green the Grid With Trash Gas; Pipeline owners and utilities eye manure, landfills, sewage to burnish environmental credentials
Ryan Dezember – WSJ
Missouri hardly produces any natural gas, unless you count the hogs. The methane wafting from the manure ponds at swine farms across the state is increasingly funneled into pipelines and delivered to power plants and homes, where it is burned alongside shale gas for heat, hot showers and cooking.

The Gospel of Hydrogen Power; Mike Strizki powers his house and cars with hydrogen he home-brews. He is using his retirement to evangelize for the planet-saving advantages of hydrogen batteries.
Roy Furchgott – NY Times
In December, the California Fuel Cell Partnership tallied 8,890 electric cars and 48 electric buses running on hydrogen batteries, which are refillable in minutes at any of 42 stations there. On the East Coast, the number of people who own and drive a hydrogen electric car is somewhat lower. In fact, there’s just one. His name is Mike Strizki. He is so devoted to hydrogen fuel-cell energy that he drives a Toyota Mirai even though it requires him to refine hydrogen fuel in his yard himself.

Investors Rethink Role of Bonds, Tech and ESG After Chaotic Year
Bloomberg News
Mantra of ‘don’t fight the Fed’ held true during the pandemic; Performance of ESG-related stocks proved skeptics wrong
This has been a year like no other. Hammered by an unprecedented health crisis, global stocks tumbled into a bear market at record speed, and then rallied to new highs thanks to a flood of central bank money. Bond yields tanked to uncharted lows and the world’s reserve currency surged to all-time highs, only to then retreat to its weakest level in more than two years.


Commerzbank to Take $745 Million Provision for Planned Job Cuts
Steven Arons – Bloomberg
Commerzbank AG will set aside 610 million euros ($745 million) in the fourth quarter to cover restructuring costs after reaching an agreement with the works council on planned job cuts. The headcount reductions are part of the lender’s cost-cutting effort announced last year and are expected to lead to the elimination of 2,300 position between 2021 and 2024, according to a statement from the bank on Monday.

How ETNs Became ETFs’ Riskier, Less-Loved Cousins
Claire Ballentine – Bloomberg
Exchange-traded funds, which soared in popularity during the last decade, have a lesser-known cousin called the exchange-traded note. While ETFs and ETNs may sound a lot alike, there are huge differences, especially when it comes to risk. Massive price swings in 2020 have contributed to greater awareness about the downsides of ETNs. Now, their issuers are shutting them down at the fastest pace ever.

Bitcoin Miners in Nordic Region Get a Boost From Cheap Power
Jesper Starn – Bloomberg
Wet and mild weather pushed up output from hydro power plants; Lower input costs for making Bitcoin coincided with price rise
The Nordic region once again has become a lucrative place to mine crypto-currencies, thanks to a plunge in electricity prices. The wettest weather in at least 20 years boosted production from hydro-electric plants, leaving Sweden and Norway with some of the lowest power prices in the world. The resulting glut in the most important raw material for making the virtual coins coincided with a year when the price of Bitcoin almost quadrupled.

Goldman’s Jan Hatzius on the Lessons Learned in 2020
Joe Weisenthal and Tracy Alloway -Bloomberg
2020 has been an absolutely extraordinary year for the economy. In March, we saw the fastest economic contraction in history with an extraordinary surge in unemployment. Now, as the year closes out, we’ve had a housing boom, an extraordinary rise in financial assets, and unemployment has fallen much faster than most people expected. We spoke about this with Jan Hatzius, the chief economist at Goldman Sachs. We talked about the lessons learned, inflation, the outlook for 2021, his sectoral balances framework for analyzing the economy, and MMT.

Large asset managers boost staffing in EU by 38% since 2015; Rise in headcount has been driven by market expansion, Brexit and greater regulation
Siobhan Riding and Attracta Mooney – FT
Big asset managers have expanded their combined EU workforces by 38 per cent over the past five years in response to the growth of the market, Brexit uncertainty and increased regulation.

GQG emerges as pandemic winner with $30bn asset growth; Firm set up by former Vontobel manager Rajiv Jain has enjoyed a standout 2020
Laurence Fletcher – FT
The investment firm set up by former Vontobel star manager Rajiv Jain has more than doubled its assets to $62bn this year, making it one of the standout winners in the fund management sector from the coronavirus crisis.

Europe’s banks fear investor flight after dividend bans; Lenders are verging on uninvestable, making it harder to raise capital in the future
Owen Walker – FT
Bank bosses bragged at the start of the coronavirus pandemic that, unlike during the financial crisis, their institutions would help save rather than topple the global economy. But for many of their shareholders, 2020 was the year that Europe’s lenders verged on uninvestable.


Alibaba Antitrust Fears Drive $200 Billion Chinese Tech Selloff
Coco Liu – Bloomberg
Investors flee biggest names from Tencent to Meituan and JD; It coincides with a harsh clampdown on part-owned Ant Group
Alibaba Group Holding Ltd. led a second day of frenetic selling among China’s largest tech firms, driven by fears that antitrust scrutiny will spread beyond Jack Ma’s internet empire and engulf the country’s most powerful corporations.

Draghi’s Capitalist Model That Recast Italy Is Running Aground
Alessandra Migliaccio and Alessandro Speciale – Bloomberg
New era of state intervention dawns with coronavirus crisis; Country is clawing back many companies it sold in the 1990s
On June 2, 1992, Italy’s then-chief Treasury official, Mario Draghi, stepped aboard Queen Elizabeth II’s yacht, Britannia, docked near Rome, to ask a group of British bankers for help in slimming down the country’s bloated public sector.

Ignorance impedes growth of China ETF market, survey reveals; Only about 90 ETFs have been rolled out this year compared with 1,200 non-ETF funds
Echo Huang – FT
China’s burgeoning exchange traded fund industry has been outshone by the explosive growth of domestic active strategies this year, with market participants blaming a persistent lack of knowledge among retail investors and weak product diversity as the key barriers to higher adoption of ETFs.

Iran Cuts Gas Flows to Iraq, Threatens Further Reductions
Khalid Al Ansary – Bloomberg
Iran has slashed the amount of natural gas it exports to Iraq and threatened further cutbacks over unpaid bills, increasing the likelihood of more electricity shortages in Baghdad and other major cities.

Battered Turkish Economy Puts a Powerful Erdogan to the Test; Turkey’s veteran leader played an aggressive hand abroad, but as the country’s economy plummets, he is feeling ire at home as many Turks struggle to buy food.
Carlotta Gall – NY Times
Hobbled by restrictions on his tobacco shop, Ozgur Akbas helped organize a demonstration in Istanbul last month to protest what he called unfair rules imposed on merchants during the pandemic.

A deal to end the Brexit delusions; This remains a foolish and unnecessary divorce, yet the reality may bring some benefits
Martin Wolf – FT
After four and a half painful years, we have reached the end of the beginning of Brexit. We have a deal. It is, inevitably, a damaging deal for the British economy compared with remaining inside the EU. But it is far better than the stupidity of no deal. Above all, it maintains a working relationship with the UK’s close neighbours and principal economic partners.


Brexit Cloud Clears for the World’s Most Unpopular Stock Market
Michael Msika and Namitha Jagadeesh – Bloomberg
Deal comes as U.K. tightens restrictions to contain virus; Investors should give a fresh look to U.K. stocks: Oddo
After years of lagging behind peers, U.K. stocks are emerging from the Brexit shadow just as cheap stocks are getting a boost from bets of a global recovery from the pandemic. The country has been the worst performer among major equity markets since the 2016 Brexit referendum, both in local currency and dollar terms. For investors who have steered clear of U.K. shares during the period, their cheapness may hold allure as value stocks are forecast to shine in the coming year.

EU member states begin process to approve Brexit trade deal; UK publishes text of historic agreement as European ambassadors seek to give their assent by January 1
Jasmine Cameron-Chileshe, Mehreen Khan – FT
Details of the historic free trade agreement between the UK and EU have been published in full, as EU ambassadors began the process of assessing and approving the terms of the deal before the end of the year.

It’s Not Over: Major Issues the Brexit Deal Leaves Unresolved
Joe Mayes – Bloomberg
The level playing field and fisheries could flare up in future; Data, finance and Gibraltar also still up in the air
The trade agreement between the U.K. and the European Union brought welcome relief to businesses, averting the prospect of punitive tariffs and a chaotic no-deal split from Britain’s largest trading partner this week.

Throughout history Britain’s ruling class has created crisis after crisis – just like now
John Harris – The Guardian
When the novelist John le Carré died earlier this month, among the passages quoted by journalists was a short excerpt from The Secret Pilgrim, published in 1990. In the book, the words are spoken by Le Carré’s fondly loved character George Smiley. “?The privately educated Englishman – and Englishwoman, if you will allow me – is the greatest dissembler on Earth,” he says. “Was, is now and ever shall be for as long as our disgraceful school system remains intact. Nobody will charm you so glibly, disguise his feelings from you better, cover his tracks more skilfully or find it harder to confess to you that he’s been a damned fool.”

Brexit Deal Hands Business a Mix of Relief, Unwanted Change
Joe Mayes, Siddharth Vikram Philip, and Deirdre Hipwell – Bloomberg
Agreement removes prospect of punitive tariffs on goods; No mutual recognition on standards, qualifications is a blow
The U.K. and European Union may have signed a trade deal, but British businesses still face a raft of difficult changes. More than four years in the making, the Brexit agreement avoids the worst-case scenario of new tariffs and quotas after Dec. 31. That’s a welcome relief, and gives companies greater scope to focus on containing the damage from the coronavirus pandemic.

Brexit offers Britain chance to do financial services differently – minister
Reuters Staff
Brexit offers Britain a chance to do things differently in financial services, finance minister Rishi Sunak said on Sunday, but it will cooperate with the European Union on an approach to the sector despite little detail on the topic in its trade deal.

Brexit may bring windfall to Ireland’s financial services industry; The UK still has much to lose and the EU and Ireland much to gain
John Whelan – The Irish Examiner
A vast sigh of relief welcomed the last-ditch agreement between the EU and the UK. However, the deal only covers the exporting and importing of goods, services have been excluded from the get-go.


The Girl Scouts Accuse the Boy Scouts of Unfair Competition in Trademark Dispute; The use of the terms “scouts” and “scouting” in the recruitment of girls is a focus of a legal and public relations feud between the organizations.
Neil Vigdor – NY Times
The recruiting pitches are strikingly familiar: Character-building and leadership opportunities for girls await in time-honored scouting programs. But in a filing in federal court last week, the Girl Scouts of the U.S.A. said this wasn’t its recruitment message, but that of a rival organization — the Boy Scouts of America — that it accused of engaging in unfair competition and trademark infringement.

The Year Inequality Became Less Visible, and More Visible Than Ever; Even as shared public spaces emptied out, the gap between the economically privileged and the precarious became impossible to ignore.
Emily Badger – WSJ
This year, many Americans left the places where it was still possible to encounter one another. White-collar workers stopped going downtown, past homeless encampments and to lunch counters with minimum-wage staff. The well-off stopped riding public transit, where in some cities they once sat alongside commuting students and custodial workers. Diners stopped eating in restaurants, where their tips formed the wages of the people who served them.

Evil Geniuses hires Michael Fudzinski as Chief Revenue Officer
Joey Poole – Esportsinder.com
Seattle-based esports organisation Evil Geniuses has announced the hiring of former Red Bull Executive, Michael Fudzinski, as its new Chief Revenue Officer.

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CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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