Binary options are dead; Heat wave slowing markets; LCH’s record first half

Jul 5, 2018

Binary options are dead; Heat wave slowing markets; LCH’s record first half

Jul 5, 2018

Spencer Doar

Spencer Doar

Associate Editor

First Read

Hits & Takes
JLN Staff

Sunday members of the JLN team head to New York for the summer’s first sessions of MarketsWiki Education World of Opportunity. On Monday we are at Thomson Reuters in Times Square for one session. On Wednesday we are at Nasdaq for two sessions. The details of the events and sign up information is available HERE. Don’t forget to sign up your interns or send your college age children.

On Tuesday, Nasdaq is hosting two sessions of Trading Tech 300 and Nasdaq’s Allan Schoenberg will be teaching a merit badge workshop on the Public Speaking badge. I will be teaching the Communications badge.~JJL

We will have some free time while we are in New York and our video team will be present, so if you have some news or just want to catch up, let me know.~JJL

Check out the ICE House interview “Exploring the Cryptocurrency Frontier” with Michael Novogratz.~JJL

JLN yesterday published the Declaration of Independence on July 4, a company tradition. The large John Lothian John Hancock signature was new and for a purpose.~JJL

ICDA is hosting their 39th Annual European Summit (Burgenstock) on September 18, 2018, and Commissioner Brian Quintenz is the confirmed Gala Dinner speaker.~JJL

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IFM Blockchain Class

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FIA IDX 2018 – Cinnober looking to tap into treasury
JohnLothianNews.com

For Cinnober’s CEO Veronica Augustsson, 2017 was all about prepping for MiFID II, sticking to the company’s core services and diversifying. Cinnober implemented its clearing system and real time risk management technology at the Japan Exchange and another exchange in Singapore. It pushed into the post-trade clearing space and launched a new company called Minium. This year, Minium signed its first deal with Marex Spectron, with a goal of going live in 2019. The firm also sold an equity stake in its Irisium market surveillance company to risk management firm KRM22.
Watch the video here »

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CME patent identifies speculative systems used by speculators
Matt Hurd – Meanderful
This patent identifies a few potential techniques, aka tricks, for optimistically processing on a network to improve your effective latency. I referred to some of these in the recent “Negative Latency” piece. Some such speculative skills were also discussed a few years ago in my piece originally published by Automated Trader, and subsequently published here once the rights reverted, as, “The accidental HFT firm.”
/jlne.ws/2tUggsk

**I know that you know that I know what you are doing.~JK

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The US midwest will suffer in Donald Trump’s trade war; Rants, rage and unilateral actions only result in self-inflicted wounds
John Kasich – FT
America’s first war, for its independence, began with “the shot heard round the world”. Sadly, the latest one ó a trade war supposedly in defence of US economic independence ó is beginning with a shot to the foot.
/jlne.ws/2IUPDrR

**** Ohio governor and potential 2020 presidential candidate John Kasich sees the risk for this region from the Trump tariffs.~JJL

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Iran Tells Trump: Stop Tweeting, It’s Driving Up Oil Prices
Mohammed Sergie – Bloomberg
‘Pls stop it, otherwise it will go even higher!’: Kazempour; Trump responsible for at least $10 price rise: Shana The war of words over oil prices continues between U.S. President Donald Trump and Iran, and the latest salvo from Iran is for Trump to stop tweeting.
/jlne.ws/2IUWRvK

***** Iran is complaining prices are too high? Right.~JJL

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The Broker Who Saved America
Joshua M Brown – The Reformed Broker
You know Hancock and Washington and Franklin and Jefferson. You might even know Greene and Knox, Henry and Hale. And we know you know Hamilton, pretty tough to escape that one these days! But it is very unlikely that you know the name Haym Solomon. This is unfortunate, because he’s the guy who arranged financing to keep the Continental Army alive during its darkest days, finding the money to keep the revolution going when many were ready to throw in the towel.
/jlne.ws/2KPXgl2

***** Always a good read on July 4.~JJL

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Tuesday’s Top Three
Tuesday’s JLN was a mixed bag starting with John Lothian’s column NFX Basis Point Value Contracts; One quarter hubris, three quarters details as our top read item. For the record, I thought an electric car would be a great idea 15 years ago. Second went to the silent movie Closing Bell: Women in Listed Derivatives (WILD) promotes networking and relationship-building among women in our industry through social and educational events on Livestream. And third was Fortune’s Bitcoin Futures Killed the Bitcoin Rally, Economists Say

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MarketsWiki Stats
129,105,936 pages viewed; 23,175 pages; 213,857 edits
MarketsWiki Statistics

Lead Stories

Binary options trading is dead – though few will mourn it; It had the trappings of stock market trading – yet was closer to a punt at a bookie
Hannah Murphy – FT
Dearly beloved readers. We are gathered here today to celebrate the passing of binary options, the much-hated financial instrument. Traded by risk-hungry speculators, binaries brought riches to the few and hefty losses to the many. They inhabited that tantalising grey area between financial investment and gambling, luring us in with promises of mega returns and pictures of people on Twitter with Lamborghinis. Instead, most were left red-faced with empty pockets.
/jlne.ws/2IUwdU1

This Heat Wave’s So Bad It’s Even Slowing Down U.S. Stock Trades
Nick Baker – Bloomberg
The swampy heat wave pummeling the New York City area is slowing everybody down — and high-speed traders are no exception. High humidity is impeding radio transmissions Tuesday among three New Jersey data centers where U.S. stocks trade, according to a note Nasdaq Inc. sent customers. It’s taking about 8 microseconds longer to send information from Nasdaq’s facility in Carteret to the New York Stock Exchange data center in Mahwah, and an extra 2 microseconds to send data to Cboe Global Markets Inc.’s exchange in Secaucus.
/jlne.ws/2IQxSJZ

UK clearing house LCH sees record first half; The company cleared $576tn in notional interest rate swaps in six months to June
Philip Stafford – FT
Banks, asset managers and big corporations have shrugged off the uncertainty around the future regulation of euro derivatives clearing after Brexit by pouring even more business into LCH, the UK clearing house.
/jlne.ws/2IWmBrM

Financial crisis warning sign is flashing red; Tight liquidity and collapsing risk appetite spell trouble ahead
Michael Howell of CrossBorder Capital – FT
Financial crises start under blue skies, as investors in emerging markets know too well. They lead rather than follow business recessions. Ultimately, they are caused by a sharp tightening of liquidity conditions and collapsing investors’ risk appetite.
/jlne.ws/2KP9fiQ

The China-U.S. Power Struggle Is Just Beginning
Brian Bremner – Bloomberg
Xi’s ‘Chinese Dream’ envisions a nation less beholden to West; China economic rivalry destined to strain relations with U.S.
Chinese President Xi Jinping has an ambitious master plan for his country’s transformation into a wealthy, technology-driven global economic power. And U.S. companies need not apply.
/jlne.ws/2IUHzY3

Goldman Says Buy Commodities as Clock Ticks Toward Trade War
Jake Lloyd-Smith and Krystal Chia – Bloomberg
Impact on raw materials ‘will be very small,’ lender forecasts; Crude oil expected to lead rebound after setback seen in June
Commodity bull Goldman Sachs Group Inc. has poured cold water on the notion that a trade war between the U.S. and China represents a serious threat to raw materials, saying most of them aren’t likely to be significantly impacted, and after recent declines now’s the time to buy.
/jlne.ws/2KNPVCp

‘This Is Unbelievable’: A Hedge Fund Star Dims, and Investors Flee
Gregory Zuckerman – WSJ
For years, David Einhorn’s investors didn’t seem to mind his unusual waysóthe aloofness toward clients, midday naps, unpopular stock picks, late nights on the town. Until the billionaire hedge-fund manager fell into a slump. After more than a decade of winning on Wall Street, Mr. Einhorn’s Greenlight Capital Inc. has shrunk to about $5.5 billion in assets under management, his investors estimate, from a reported $12 billion in 2014, and his investments are struggling.
/goo.gl/qhZNzu

FCA to experiment with crypto assets in latest regulatory sandbox round; Crypto assets and distributed-ledger technology take centre stage in the fourth round of the FCA’s regulatory sandbox.
Hayley McDowell – The Trade Crypto
The UK’s Financial Conduct Authority (FCA) is to begin testing propositions relating to crypto assets, with FinTech firms chosen for its latest regulatory sandbox round.
/jlne.ws/2IUrulf

Growth in Trade Is Already Starting to Slow; Global export growth, strong in 2017, has slowed to a relative crawl as major economic regions come off the boil
Mike Bird and Riva Gold – WSJ
Even before a round of U.S. tariffs levied on China comes into force Friday, there are signs that global trade is already cooling.
/jlne.ws/2IXiv2v

Fed needs to wake up and admit the economy is overheating; US central bank risks having to slam on the brakes if it persists with gradualism
Jason Cummins – Financial Times
In Newton’s First Law, an object in motion stays in motion until a force acts upon it. Under new leadership, the Federal Reserve’s monetary policy strategy appears to be following the same logic. In his June press conference, chairman Jay Powell said the Fed would raise interest rates until “we get a sense that the economy is reacting badly”.
/goo.gl/sdr17r

Exchanges, OTC and Clearing

SGX adds Blackwell Global as derivatives trading member; Blackwell Global Futures to gain access to Asian derivatives market through SGX Asian Gateway.
Hayley McDowell – The Trade
Singapore Exchange (SGX) has added Hong-Kong based broker Blackwell Global to its derivatives market as a trading member.
/jlne.ws/2IVUtoE

****Press release here

LCH sets new records for SwapClear and ForexClear; LCH sees several new records in the first half of this year for foreign exchange and OTC interest rate swap clearing.
Hayley McDowell – The Trade
The London Stock Exchange Group’s clearinghouse LCH has set several new records for its OTC interest rate swap and foreign exchange clearing services.
/jlne.ws/2IVHkfe

Flow Traders gains approval for HFT business in Japan
Hayley McDowell – The Trade
High-frequency trading (HFT) firm Flow Traders has been handed formal regulatory approval in Japan to operate a high-speed trading business.
/jlne.ws/2KIMm0e

Going Dutch: London Stock Exchange applies for Amsterdam trading licence in case of hard Brexit
James Booth – City AM
The London Stock Exchange (LSE) has confirmed that it has applied for several trading licences in the Netherlands as a contingency against a hard Brexit.
/jlne.ws/2IXrwsn

“We have seen a fundamental turnaround in the market place.”
Eurex
Growing volumes, our Partnership Program and reference rates: we spoke to Phil Simons, Head of FI Sales and OTC Business Development, about how the Fixed Income segment has developed in June and about the developments to come in the second half of the year.
/jlne.ws/2KSx9d8

ECB eyes repo market for risk-free rate
Eurex
The secured interbank lending market may play a role in the search for a reliable indicator of the cost of funding in Europe.
/jlne.ws/2KOHFlA

Extension of trading hours for selected benchmark futures and MSCI futures
Eurex
As announced in Eurex circular 023/18, Eurex Deutschland will extend its trading hours for selected equity index futures, including all MSCI futures, and selected fixed income futures into the Asian time zone.
/jlne.ws/2IWvLVc

Banque Internationale ‡ Luxembourg and Clearstream enter into partnership to optimize fund settlement
Deutsche Bˆrse Group
Banque Internationale ‡ Luxembourg (BIL) has decided to further expand its partnership with the post-trade service provider Clearstream. In the future, Clearstream, part of Deutsche Bˆrse Group, will assist the bank in optimizing its business processes for the settlement of third-party funds. Services include order execution, settlement and asset servicing for mutual funds and hedge funds.
/jlne.ws/2IWw1DE

Xetra-Gold holds over 180 tonnes of gold; Semi-annual report: Six tonnes increase since the beginning of the year / Europe’s largest physical-backed gold security
Deutsche Bˆrse Group
The gold holdings of the Xetra-Gold bearer bond (ISIN: DE000A0S9GB0 ) stood at 181.34 tonnes at the end of the first half of the year. At the beginning of the year, the value was still at 175.04 tonnes. Holdings increase whenever investors buy Xetra Gold shares on the stock market. For each unit certificate, exactly one gram of gold is deposited in the central safe deposit for German securities in Frankfurt. The assets under management of Xetra-Gold currently amount to approximately EUR 6.3 billion. This makes Xetra-Gold Europe’s leading physical gold deposit.
/jlne.ws/2IUZZYC

Intercontinental Exchange Reports June and Second Quarter 2018 Statistics
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported June and Second Quarter 2018 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
/jlne.ws/2KQ4qps

HKEX to Offer Investors More Options When Xiaomi Shares Debut
HKEX
Xiaomi Futures and Options to be introduced on 9 July; Issuers can list Xiaomi derivatives warrants from 9 July; Xiaomi shares to be included in Designated Securities Eligible for Short Selling on 9 July
Xiaomi Corporation (Xiaomi, stock code: 1810) – the first company to list with a weighted voting rights structure after reforms to broaden Hong Kong’s listing regime took effect – will debut its share trading at Hong Kong Exchanges and Clearing Limited (HKEX) on 9 July 2018.
/jlne.ws/2KRI1In

SGX proposes to recalibrate financial and capital requirements of Bank and Remote Members
SGX
Singapore Exchange (SGX) is seeking feedback on proposed recalibrations of the financial and capital requirements of Remote Clearing Members, Remote Trading Members, Bank Clearing Members and Bank Trading Members (“RCMs”, “RTMs”, “BCMs” and “BTMs” respectively).
/jlne.ws/2IVXTI0

Producer sentiment inches up despite commodity price decline and continued trade war concerns
CME Group
Agricultural producer sentiment rose slightly in June according to the Purdue University/CME Group Ag Economy Barometer. The increase was unexpected given unresolved trade war concerns and sharp price declines for key commodities, including corn, wheat and, especially, soybeans during the month. The June barometer reading of 143 was only 2 points higher than May. The barometer is based on a monthly survey of 400 agricultural producers from across the country.
/jlne.ws/2KUnC5C

Fintech

Data in the age of increasing nationalism and trade disruption; Brexit and regulatory changes pose new challenges for collecting, managing, storing, using and disposing of data, writes James Petter
London School of Economics and Political Science
Today, data is one of organisations’ most valuable assets. For most, it is instrumental in every decision-making process. It drives production and distribution strategies, new product development decisions, and customer service planning and execution. As the world moves toward a future in which artificial intelligence (AI) and machine learning are increasingly prevalent, data is sure to assume an even more central role in virtually every organisation.
/jlne.ws/2IVLCDf

UBS creates digital clone of its chief economist
James Eyers
It’s a move that could redefine the delivery of advice and the future of work itself: UBS has created a digital clone of its Swiss chief economist, Daniel Kalt.
/jlne.ws/2IVCIpE

Hedge fund giants Howard, Stein back AI and machine learning analytics firm; Brevan Howard and Stone Milliner founders have invested in AI and machine learning firm Quant Insight.
By Hayley McDowell – The Trade
Two European hedge fund heavyweights have backed an artificial intelligence (AI) and machine learning analytics company Quant Insight through a funding round.
/jlne.ws/2IWv9il

Cryptocurrencies

Cryptocurrency Virtually Outlawed in India as Top Court Backs Ban
Upmanyu Trivedi and Rahul Satija – Bloomberg
Supreme Court says central bank directive to remain in effect; RBI had ordered banks to stop dealings with crypto firms
India’s top court refused to overturn a central bank ban on lenders from dealing in cryptocurrencies, a move that effectively outlaws the nascent industry in Asia’s third-largest economy.
/jlne.ws/2KPUgoO

Crypto Thefts Triple, Driving Growth in Coin Money-Laundering
Olga Kharif – Bloomberg
‘Whole new generation of cyber criminals’ is emerging; Regulators are likely to crack down, CipherTrace CEO says
Criminals are stealing more cryptocurrency from exchanges, and that’s driving growth in a cottage industry of services that allows for money laundering of coins, according to a new report.
/jlne.ws/2IUNgVZ

Switzerland looks to liberalise cryptocurrency banking access; Traditional banks have refused to operate accounts for the country’s ‘crypto valley’ start-ups
Ralph Atkins in Zurich – FT
Switzerland’s fast-growing cryptocurrency industry could have full access to conventional banking services by the end of the year, removing one of the restrictions to future growth, a top Swiss policymaker has said.
/jlne.ws/2KTikXJ

Politics

Trump’s Presidency Is Built Upon Double Standards; A record of falsehoods and misdeeds that never would have been countenanced before.
Albert R. Hunt – Bloomberg
Donald Trump and his always enabling press secretary Sarah Sanders charged there was a “double standard” when a television network apologized for a racist comment made about a top aide to Barack Obama but didn’t apologize to the current president for its critical remarks about him.
/jlne.ws/2KMHRlp

Trump’s Misguided Trade War; The president’s approach to China is a threat to American prosperity.
Editors – Bloomberg
U.S. President Donald Trump may sincerely think he’s battling to win Americans a better deal on trade with China. In fact, he’s making a better deal harder to achieve ó and threatening to inflict grave economic damage on the U.S. economy in the process.
/jlne.ws/2KSXtEh

Trump’s trade war could destroy 4% of global trade: ‘The threat to world growth is significant’
Jim Edwards – Business Insider
If US President Trump follows through on his threats to stage a trade war against his former allies in Europe, China, and other countries, it could reduce world trade by 4% and wipe away 0.4 percentage points of global GDP (about $800 billion), according to Oxford Economics.
/jlne.ws/2KQHA11

How Trump’s Policy Decisions Undermine the Industries He Pledged to Help
Coral Davenport and Ana Swanson – NY Times
“The assault on the American auto industry is over,” President Trump declared last spring in Detroit, promising auto executives that he would throttle back Obama-era regulations on vehicle pollution.
/jlne.ws/2KPYYCY

Take Our Cheese, Please: American Cheese Makers Suffer Under New Tariffs; Chinese, Mexican tariffs on U.S. cheese and whey are hurting farmers and driving up stockpiles
Heather Haddon – WSJ
Cheese makers that rely on foreign sales are suffering as China and Mexico raise tariffs on U.S. mozzarella and provolone.
/jlne.ws/2IVCK0w

With Tariff Deadline at Hand, Businesses Brace for the Fallout; Starting Friday, U.S. is set to impose tariffs on imported Chinese machinery, auto parts and medical devices
Yoko Kubota, Chao Deng and Lucy Craymer – WSJ
Businesses are bracing for disruptions in sales and supply chains as the U.S. and China hurtle toward levying tit-for-tat tariffs on billions of dollars in automotive products, farm crops and other goods.
/jlne.ws/2IVSFfc

How Google and Facebook Are Monopolizing Ideas; An ad ban for bail-bond companies raises the question whether it’s fair that an entire industry can be kicked out of a major advertising channel
Greg Ip – WSJ
In early May Google banned bail-bond companies from advertising on its platforms. Such companies profit from “communities of color and low income neighborhoods when they are at their most vulnerable,” it explained in a blog post. They use “opaque financing offers that can keep people in debt for months or years.”
/jlne.ws/2IZMlUk

One-third of the world’s population lives in a declining democracy. That includes the United States.
Anna Luhrmann and Matthew Wilson – Washington Post
Many scholars have argued that democracy ó particularly in the United States ó is under threat. Examples include Steven Levitsky and Daniel Ziblatt’s analysis of democratic backsliding and Yascha Mounk’s stringent critique of whether American democracy truly represents its citizens. Our newly released 2018 Varieties of Democracy (V-Dem) Project report rates the state of democracy across 178 countries, offering the most updated, comprehensive assessment of where things stand.
/jlne.ws/2IWbWNM

Mueller Taps More Prosecutors to Help With Growing Trump Probe
Chris Strohm – Bloomberg
The special counsel is making more use of U.S. attorneys; These things have a tendency to balloon,’ veteran lawyer says
Special Counsel Robert Mueller is tapping additional Justice Department resources for help with new legal battles as his year-old investigation of Russian interference with the 2016 election continues to expand.
/jlne.ws/2IV7xdT

Regulation

How Should Antitrust Regulators Check Silicon Valley’s Ambitions?
Hernan Cristerna – WSJ
The Justice Department has said that the United States District Court’s ruling in favor of AT&T’s bid to acquire Time Warner will harm consumers
/jlne.ws/2KT3W21

Are False Statements Enough to Prove Fraud?
Peter J. Henning – WSJ
Frauds usually start with some type of deception that leads victims to hand over their money. But what if false statements are not enough to prove a person engaged in a scheme to defraud?
/jlne.ws/2IVT6X2

Interpol Foundation Suspends Embattled Founder of Private-Equity Firm; Abraaj’s Arif Naqvi, who is facing arrest in the U.A.E., will leave fundraising foundation of global police organization
Simon Clark – WSJ
The fundraising foundation of international police organization Interpol has suspended the embattled founder of Dubai-based private-equity firm Abraaj Group from its board as he faces an arrest warrant.
/jlne.ws/2ITGFLu

DoJ targets Glasenberg’s Glencore; Group facing possible corruption and money laundering charges across the globe
Neil Hume, David Sheppard and Henry Sanderson – FT
For years Glencore’s pugnacious chief executive Ivan Glasenberg has taken pride in his company’s swashbuckling approach to business.
/jlne.ws/2IZOT4Q

British Supreme Court rejects Goldman Sachs appeal vs Novo Banco
Reuters Staff
Britain’s Supreme Court dismissed on Wednesday an appeal by Goldman Sachs for compensation from Portugal’s Novo Banco over a $835 million loan to Novo Banco’s bankrupt predecessor, Banco Espirito Santo (BES), which was carved up by the state in 2014.
/jlne.ws/2IVOGPM

IOSCO Seeks Feedback On Proposed Good Practices For Commodities Storage And Delivery
Mondovisione
The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on proposed good or sound practices to assist relevant storage infrastructures and their oversight bodies to identify and address issues that could affect commodity derivatives’ pricing and in turn affect market integrity and efficiency.
/jlne.ws/2IVcUK5

ASIC requires compliance with restrictions on use of ‘independent’
ASIC
ASIC is continuing to monitor the financial advice industry’s use of restricted terms ‘independent’ and ‘independently owned’, taking steps to intervene when it identifies concerns. Following surveillance of industry websites, ASIC has required four financial advice companies to cease and amend false claims of independence that could mislead consumers.
/jlne.ws/2KT9h9z

ASIC consults on proposed changes to the capital requirements for market participants
ASIC
ASIC has released a consultation paper proposing changes to the capital requirements for market participants, which prescribe the minimum amount of capital a participant must hold. The proposed changes will better protect investors and market integrity by strengthening the risk profile of market participants and reducing the risk of a disorderly or non-compliant wind-up.
/jlne.ws/2KT9olv

EBA and ESMA publish guidelines on suitability assessment for management body members and key function holders https://jlne.ws/2KU3qjW
ESMA
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have published their joint Guidelines to assess the suitability of members of management bodies and key function holders.
/jlne.ws/2KU3qjW

ESMA seeks candidates for its stakeholder group
ESMA
The European Securities and Markets Authority (ESMA) is seeking candidates to represent the interests of all types of financial markets stakeholders as members of its Securities Markets Stakeholders Group (SMSG).
/jlne.ws/2J03oWk

CFTC Chairman Giancarlo Names Matthew A. Daigler Senior Counsel
CFTC
Commodity Futures Trading Commission (CFTC/Commission) Chairman J. Christopher Giancarlo announced today that Matthew A. Daigler has joined the CFTC to serve as a Senior Counsel to the Chairman. Daigler will advise the Chairman on Commission matters, including the Chairman’s Swaps Regulation Version 2.0 agenda.
/jlne.ws/2KRhhrv

Investing and Trading

The Tax Wrinkle That Is Making Pension Funds Buy More Treasurys; Extra contributions have in part been spurred by the tax-code overhaul
Ben Eisen and Daniel Kruger – WSJ
U.S. companies are funneling extra money into their pension funds to take advantage of temporary tax savings, moves that are helping suppress yields on long-term Treasurys.
/jlne.ws/2KRz6qn

The retreat from easy money that markets cannot escape; Thin summer trading conditions risk amplifying the pressure facing risk assets
Michael Mackenzie – FT
The poor performance of many equity and credit markets this year has come alongside central banks’ retreat from the era of easy money, raising the prospect of a testing summer for investment portfolios.
/jlne.ws/2IWqxc1

Glencore launches $1bn share buyback; Miner and commodity trader responds to fall in stock price after DoJ subpoena
Neil Hume, Natural Resources Editor – FT
Glencore has responded to a sharp fall in its stock price following a subpoena from US regulators by announcing plans to repurchase up to $1bn of its shares.
/jlne.ws/2ITAoPW

Copper Pitches the Markets a Curveball; Futures prices are telling two different stories.
David Fickling – Bloomberg
For all the gloom in copper prices – down 10 percent year-to-date, the most of any base metal after zinc – there’s a glimmer of hope waiting in the futures curve.
/jlne.ws/2KNgRT2

Investors Can’t Get Enough German Bonds; Even as central banks tighten the taps on monetary policy, hunger for German debt remains undiminished
Jon Sindreu – WSJ
Even as central banks tighten the taps on monetary policy, hunger for German debt remains undiminished.
/jlne.ws/2IVcAel

Manhattan real estate has worst second quarter since financial crisis; Manhattan real estate had its worst second quarter since the financial crisis, according to a report from Douglas Elliman and Miller Samuel Real Estate Appraisers and Consultants.
Robert Frank – CNBC
Manhattan real estate had its worst second quarter since the financial crisis, with prices and sales dropping and inventory rising, according to a new report.
/jlne.ws/2ISHqnS

Institutions

It is a mystery why bankers earn so much; M&A advisers are paid millions for making boards of directors feel comfortable
John Gapper – FT
In the libel suit he brought in 1878 against John Ruskin, the Victorian painter James McNeill Whistler was asked under cross-examination how he justified charging 200 guineas for a painting of a London firework display that took him two days to finish. “I ask it for the knowledge of a lifetime,” Whistler declared.
/jlne.ws/2ISZuyk

Nomura readies redundancies at London sales and trading unit
Samuel Agini – Financial Times
Japanese banking group Nomura is preparing to axe around 50 staff from its sales and trading business in Europe, the Middle East and Africa, according to a person with knowledge of the matter.
/goo.gl/cTSZ6E

Banks Get Stress Tested. So Should Asset Managers; Europe gets it, but the U.S. doesn’t.
Mark Gilbert – Bloomberg
In the decade since the financial crisis, the banking industry has been subjected to regular stress tests designed to prevent finance from ever again trashing the global economy. But the asset management industry has escaped similar scrutiny. That may be about to change — in Europe, at least.
/jlne.ws/2IZQSGk

Crispin Odey’s Hedge Fund Is Making Money Again
Nishant Kumar – Bloomberg
Crispin Odey is making money again as markets start to reflect his bearish outlook. The flagship Odey European Inc. fund returned 2.9 percent in June, its sixth straight monthly advance, according to an investor update seen by Bloomberg News. The gains mark the hedge fund’s longest winning streak since 2013 and boost returns for the first half to 23 percent.
/jlne.ws/2ISCPC5

Britain’s Lloyds offers $100 million so far to HBOS fraud victims
Reuters Staff
Lloyds Banking Group (LLOY.L) has made compensation offers worth 76 million pounds ($100.46 million) to victims of a fraud at its HBOS Reading unit, lawmakers said on Thursday.
/jlne.ws/2KRqwrF

Regions

Italy Sticks With Budget Plan, Won’t Be Cowed by Market Threat
Lorenzo Totaro and Simon Kennedy – Bloomberg
Italy’s new government will have both tax cuts and a universal basic income in its very first budget to show financial markets the coalition isn’t backing down from its agenda, Finance Minister Giovanni Tria said.
/goo.gl/ALmQVd

Danske Bank shares fall on money laundering allegations;’ Reported figure of $8.3bn is more than double previous estimates
Richard Milne, Nordic and Baltic Correspondent – FT
Shares in Danske Bank fell 3 per cent after reports that it may have laundered up to $8.3bn through its Estonian operations, more than double previous estimates, increasing the pressure on Denmark’s biggest bank.
/jlne.ws/2KRqEaD

The China-U.S. Power Struggle Is Just Beginning
Brian Bremner – Bloomberg
Xi’s ‘Chinese Dream’ envisions a nation less beholden to West; China economic rivalry destined to strain relations with U.S.
Chinese President Xi Jinping has an ambitious master plan for his country’s transformation into a wealthy, technology-driven global economic power. And U.S. companies need not apply.
/jlne.ws/2IUHzY3

Beware China Equity Bulls; Return on equity is a dead metric.
Shuli Ren – Bloomberg
The next time an analyst tells you that China stocks look cheap, take it with a grain of salt.
/jlne.ws/2KP1nOd

China warns U.S. is ‘opening fire’ on the world with tariff threats
Elias Glenn, Christian Shepherd – Reuters
The United States is “opening fire” on the world with its threatened tariffs, China warned on Thursday, saying no one wants a trade war but it will respond the instant U.S. measures go into effect, as Beijing ramped up the rhetoric in the heated dispute.
/jlne.ws/2KSVwYt

UK banks told to show their backup plans for tech shutdowns
Reuters Staff
British banks and other financial services firms were given three months on Thursday to explain how they can avoid damaging IT breakdowns and respond to the growing threat of cyber attacks.
/jlne.ws/2KQElXp

Brexit

What is the EU single market and how does Brexit affect it?; Breaking free from the bloc’s regulations could involve costs for the UK
Delphine Strauss – FT
Theresa May promised last year to take the UK out of the EU’s single market and customs union, shake off the jurisdiction of the European Court of Justice, regain control of immigration and free her government to forge its own trade policy.
/jlne.ws/2KRxdtN

A ‘no deal’ Brexit puts jobs in Britain’s services sector at risk; Rolls-Royce technicians, lecturers and musicians are as vital as Airbus wing makers
Chris Giles – FT
Theresa May appears to be inching towards a request for UK membership of the EU single market, customs union and value added tax area as it applies to goods. The bloc’s 27 other countries will decide whether this is a basis for Brexit negotiations. Domestically, a different question arises. What does the prime minister have against Britain’s services sector?
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City of London struggles to unite on post-Brexit regulation; Financiers and ministers divided on rules for sector after UK leaves EU
Patrick Jenkins and Caroline Binham – FT
‘Mutual recognition’ framework unacceptable to EU27; City blueprint then moves to ‘enhanced equivalence’; Lord Hill recommends a third way ó ‘equivalence minus’
With Theresa May’s cabinet gathering on Friday to finalise a flagship policy document about the UK’s future relationship with the EU, financiers and ministers alike appear badly divided on what kind of arrangements they want after Brexit.
/jlne.ws/2IVNCvf

May’s Own Brexit Chief Rejects Her Latest Idea on Quitting EU
Tim Ross and Alex Morales – Bloomberg
Premier had proposed customs compromise to win over ministers; May meets Merkel Thursday, aims for Cabinet decision Friday
U.K. Prime Minister Theresa May is fighting to win Cabinet backing for her Brexit plan as her chief negotiator rejected the latest proposals as unworkable.
/jlne.ws/2KQIQ4f

Vote Leave broke electoral law, Electoral Commission expected to say
Laura Kuenssberg – BBC
The official Brexit campaign is expected to be found guilty of four charges of breaking electoral law, the BBC has been told.
/jlne.ws/2KRrgwX

Donald Trump’s visit puts Britain’s Brexit dependence on show
Guy Faulconbridge, William James – Reuters
When Donald Trump visits Britain next week, Prime Minister Theresa May will have to face a harsh reality: Brexit makes Britain more dependent than ever on an alliance with the most unpredictable U.S. president in living memory.
/jlne.ws/2KOuAsu

Miscellaneous

If You Say Something Is “Likely,” How Likely Do People Think It Is?
Andrew Mauboussin and Michael J. Mauboussin – Harvard Business Review
People use imprecise words to describe the chance of events all the time ó “It’s likely to rain,” or “There’s a real possibility they’ll launch before us,” or “It’s doubtful the nurses will strike.” Not only are such probabilistic terms subjective, but they also can have widely different interpretations. One person’s “pretty likely” is another’s “far from certain.” Our research shows just how broad these gaps in understanding can be and the types of problems that can flow from these differences in interpretation.
/jlne.ws/2KM8S8O

Open-Plan Offices Are Making Us Less Social; Being in a wall-less aquarium makes workers want to communicate electronically rather than face-to-face.
Leonid Bershidsky – Bloomberg
In recent years, a number of big companies – IBM, Bank of America, Aetna, Yahoo! under former chief executive officer Marissa Mayer – cut back on their telecommuting programs in the name of more interaction and cooperation between employees, supposedly fostered by being stuck together in an office. The business model of companies providing co-working spaces, such as $20 billion “unicorn” WeWork, is also based on the proposition that if people find themselves in a shared space, they’ll network and cooperate more.
/jlne.ws/2KRpNXt

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We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

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