Blockchain Hype Missed the Mark, and Not by a Little; This Man Wants to Mend, Not End, Libor

May 6, 2019

First Read

Editor’s Note: The following was sent to John Lothian News from Renato Mariotti, the attorney who defended Jitesh Thakkar, and Holly Campbell, who assisted with the defense, both of the law firm Thompson Coburn LLP:

Aggressive Government Positions Expand Liability for Non-Traders
Renato Mariotti and Holly Campbell

The recent case of United States v. Jitesh Thakkar demonstrated extraordinary government overreach that could result in a non-trader being liable for millions of dollars in trading losses even though the non-trader had no knowledge of the trading activity.

Jitesh Thakkar is the owner of a small software company that makes custom software for traders. Mr. Thakkar is a respected member of the industry who served on the CFTC’s Technology Advisory Committee. Mr. Thakkar’s company developed KillSwitchPlus, a product that helps firms and traders monitor and control trading activity and minimize risk.

Unfortunately for Mr. Thakkar, one of his company’s customers happened to be Navinder Sarao. After the government claimed Mr. Sarao precipitated the “Flash Crash” and charged him with wire fraud, commodities fraud, commodity price manipulation, and spoofing, Mr. Sarao pleaded guilty to wire fraud and spoofing and cooperated with the government against Mr. Thakkar. The government charged Mr. Thakkar with conspiracy to commit spoofing and with spoofing. The CFTC also filed a lawsuit against Mr. Thakkar and his company on these same allegations.

To read the rest of this story, go here.


Double Jeopardy, Sort Of – U.S. v Thakkar
Thom Thompson – John Lothian News

As just about everyone who reads this newsletter knows, the criminal case brought by the U.S. Department of Justice against Jitesh Thakkar dissolved last month when the judge dismissed the conspiracy to spoof charge and the jury split (10-2 for acquittal) on the two remaining spoofing charges. The presiding judge had called the DOJ’s case “thin.” A couple of weeks later the DOJ declined to re-try him on the two spoofing counts in the original indictment. You would think this whole, fruitless mess has been put to rest, that Thakkar could return to his business.

But not so fast! Thakkar still faces charges by the CFTC.

To read the rest of this article, go here.


Hits & Takes
JLN Staff

Thom Thompson from JLN is headed to the FIA Law & Compliance conference later this week. I sent him to cover the conference and the Marc Nagel-led discussion about the recent Jitesh Thakkar case. Renato Mariotti and Gary DeWaal will discuss the case. It should be interesting and I wanted Thom to continue his great coverage of the case.~JJL

Josh Inglis on his Twitter account, @Propllrhead, posted the following on Friday: “When JohnLothian launched MarketsWiki, I thought: That’s a ridiculous idea. What I missed in my bad take was the power of Team Lothian’s intense focus, dedication and vision. Congrats on 150 million page views. Incredible!”~JJL

Thank you to Josh for the very nice compliment for the JLN team.~JJL

The Block Crypto is reporting “Facebook acquired a trademark from a little-known tax company for its secret crypto project.” Lukka, the newly named firm, was at OIC last week.~JJL

The staff at the Trump Doral during last week’s OIC conference was excellent. They were incredibly proactive, numerous and friendly.~JJL

Congratulations to the OIC and MIAX on a well run Options Industry Conference. I was very pleased with the conference, the content and the social events. Even the rain did not bother me during the time at the pool.~JJL

Cboe announced at the end of the Options Industry Conference, with the ceremonial passing of the hammer, that next year’s OIC will be in Puerto Rico. They showed a video that teased that it will be in Las Vegas, and then gave the big reveal. The conference is being held there to help the people of Puerto Rico recover from hurricane Maria.~JJL

Stay tuned for a special episode of “The Spread” that will cover some of the hot topics at the Options Industry Conference.~SD

Cboe Global Markets’ quarterly earnings call on Friday revealed a few items, notably, assets under management for volatility-linked exchange traded products has been on a steady rise, from $2.5 billion in January and February to $3.1 billion in March and $3.6 billion in April.~JK

The CFTC’s website was not responding this morning when I visited it for news. Others in our office had the same problem, but some were able to get in.~JJL


Warren Buffett: If a bank needs a government bailout, the CEO and spouse should lose ‘net worth’
Fred Imbert – CNBC
Berkshire Hathaway Chairman and CEO Warren Buffett thinks CEOs of failing banks should lose literally everything they’re worth.
“If a bank gets to where it needs government assistance, the responsible CEO should lose his net worth and his spouse’s net worth,” Buffett said at Berkshire’s shareholders meeting. Whenever a situation like this arises, “it’s the shareholders who pay.”
Buffett’s comment was followed by cheers from the crowd at the CHI Health Center in Omaha, Nebraska.

***** We might as well draw and quarter them, too.~JJL


Trends in Surveillance and Market Risk Analysis Platforms
In this video, Eventus Systems CEO Travis Schwab talks about what clients are requesting in the regulatory technology space as well as Eventus’ plans for 2019. Eventus’ Validus platform was recently recognized at the 2019 RegTech Insight Awards.
Watch the video »


Do women really make better investors than men?; Although fewer females are in the stock market, numerous studies suggest they outperform on returns
Isobel Owen – FT
Plenty of articles have been written bemoaning the fact that women are less likely to invest in the stock market than men. However, several recent studies suggest that women who do take the plunge outperform men when it comes to investment returns.

***** Next up, “Male Traders Taking Estrogen Shots.”~JJL


Bridging the Week: April 29 – May 3 and May 6, 2019 (Fintech Charters; Fractional Reserves OK for Stablecoins?)
Gary DeWaal – Bridging the Week
The New York Department of Financial Services was told by a federal court in New York that it could proceed with its lawsuit challenging plans of the Office of the Comptroller of the Currency to accept and consider applications for special-purpose national bank charters from financial technology companies that have no intent to accept deposits. Separately, companies associated with an international cryptocurrency exchange and its affiliated issuer of a well-renowned stablecoin obtained a show cause order from a New York court, demanding that the New York Attorney General explain why they should comply with an extensive document request by the NY AG obtained through an ex parte process two weeks ago.


Friday’s Top Three
Our top story by a long shot was the New York Times’ How a Lone Norwegian Trader Shook the World’s Financial System. Second was The Block’s piece, New tech and younger faces: DRW’s Cumberland looks different, its counter-parties say. Third was the FT’s Nasdaq chief doubles down on data as NYSE fight intensifies


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Lead Stories

Blockchain Hype Missed the Mark, and Not by a Little; The technology might still change the world, but all the skepticism seems warranted.
Noah Smith – Bloomberg
Bitcoin’s glory has been a bit tarnished by the bursting of its price bubble since late 2017. But enthusiasm for blockchain technology is still going strong, with venture capitalists throwing almost four times as much money at the sector last year as in 2017:

***** I wish I had written this article.~JJL

This Man Wants to Mend, Not End, Libor; ICE Benchmark Administration president suggests pairing a revamped version of Libor with SOFR, the leading candidate to replace it
Daniel Kruger – WSJ
Financial regulators around the world agree the London interbank offered rate, a widely used lending benchmark that is prone to manipulation, has to go. But they have struggled to come up with a convenient replacement.

Regulators Ready to Approve Ethereum Futures, CFTC Insider Says
Nikhilesh De – Coindesk
The CFTC is willing to let an ether futures contract go to market after soliciting market feedback last year
A futures contract might bring in fresh institutional funding to the crypto space; This, in turn, might reassure retail traders looking at the cryptocurrency; Futures might also cement the CFTC’s jurisdiction over ether, which at present is limited to enforcement actions
The U.S. Commodity Futures Trading Commission (CFTC) is willing to approve an ether futures contract – provided it ticks all the right boxes, a senior official has told CoinDesk.

Famed economist Joseph Stiglitz calls for “shutdown” of “the cryptocurrencies”
The Block Crypto
Famed economist Joseph Stiglitz is calling for a shutdown of cryptocurrencies, according to a report by CNBC. As per CNBC, the Nobel-Prize winner said he worries digital assets facilitate criminal behavior, saying in a video he “thinks we should shut down the cryptocurrencies.” It is not clear who Stiglitz is referring to when he says “we,” nor is it clear how one would go about shutting down a single cryptocurrency, let alone all of them.

How Hedge Funds Became The Villains On Wall Street
Antoine Gara – Forbes
What a difference 30 years makes. At the end of the 1980s, Henry Kravis, George Roberts and their ilk epitomized the evils of Wall Street. Today that dubious honor goes to hedge funds, which offer a potent cocktail of dismal returns, short-term trading and bad behavior.

Who to Sue When a Robot Loses Your Fortune; The first known case of humans going to court over investment losses triggered by autonomous machines will test the limits of liability.
Thomas Beardsworth and Nishant Kumar – Bloomberg
Robots are getting more humanoid every day, but they still can’t be sued. So a Hong Kong tycoon is doing the next best thing. He’s going after the salesman who persuaded him to entrust a chunk of his fortune to the supercomputer whose trades cost him more than $20 million.

Paul Winfree Under Consideration for Federal Reserve
Michael C. Bender – The Wall Street Journal
President Trump’s next nominee to the Federal Reserve board may be one of his former domestic policy aides who now oversees economic policy studies at the conservative Heritage Foundation.
Paul Winfree, who was deputy director of the White House Domestic Policy Council, is under consideration for one of the two open positions on the Federal Reserve Board, White House officials said.

NYAG: Bitfinex Should Be Made to Disclose Tether Deal Documents
Nikhilesh De – Coindesk
New York prosecutors have struck back at cryptocurrency exchange provider Bitfinex, telling a local court that they believe the company should be made to turn over documents outlining a nearly $900 million line of credit offered by stablecoin issuer Tether.

Bitfinex Plans To Exchange New Lamps For Old
Frances Coppola – Forbes
Bitfinex’s missing $851m has been located. It has been seized by assorted governments including the U.S.’s Department of Justice. The unlicensed money processor, Crypto Capital Corporation, with which Bitfinex placed the money is accused of money laundering on a global scale, and two people have already been charged with fraud.
But this doesn’t solve Bitfinex’s immediate problem. It is still $851m down, and the money is not coming back any time soon – if at all.

Warren Buffett’s Case for Capitalism; I’m a card-carrying capitalist,” Warren Buffett said on Saturday at Berkshire Hathaway’s annual meeting. “I believe we wouldn’t be sitting here except for the market system.”
Andrew Ross Sorkin – NY Times
It is called “Woodstock for Capitalists” for a reason. More than 40,000 investors descended on Omaha this weekend for Berkshire Hathaway’s annual meeting, in celebration of an economic model that has come under attack over the past year by political leaders like Alexandria Ocasio-Cortez as well as billionaires who warn that capitalism could lead to “class warfare.”

Winklevosses, Private Equity Eye Power as U.S. Gas Glut Fix
Naureen S Malik – Bloomberg
Crusoe Energy, Mesa Natural Gas produce electricity from shale; Onsite power generation can avoid flaring, pipe bottlenecks
The Winklevoss twins and a Dallas-based private equity firm are putting their money behind one way to shrink a glut of natural gas from U.S. shale basins: Burn it to produce on-site electricity.

Lehman’s London Ghost Office Nears Wind-Down After 12 Years
Marion Dakers – Bloomberg
PwC ties up loose ends in ever-shrinking Canary Wharf space; Administrators are set to vacate by June of next year
Lehman Brothers is finally leaving Canary Wharf, almost a dozen years after the Wall Street giant’s collapse.

Exchanges, OTC and Clearing

Deutsche Boerse and Microsoft reach important milestone for cloud use in the financial services sector; Gradual migration of regulated applications to the Microsoft cloud platform
Deutsche Boerse
Deutsche Boerse and Microsoft have reached an important milestone for the financial services sector with a contract for the use of cloud services. With the agreement, the two partners are establishing new contract standards in the European financial industry that will allow the use of Microsoft cloud services for significant outsourcing. In the future, Deutsche Boerse will use, among others, the Azure cloud platform from Microsoft and Microsoft 365, the cloud offering for office and collaboration applications.

Eurex ends April on a high: largest month-end open interest of all time
Eurex, Europe’s largest derivatives exchange and part of Deutsche Bˆrse Group, has continued its upward trend in April. The number of traded contracts reached 160.8 million compared to 148.7 million in April 2018. This is an increase of 8 percent.

Exchange operator Cboe beats profit estimates on expense control
Cboe Global Markets Inc beat analysts’ estimates for first-quarter profit on Friday, as a tight lid on expenses helped offset lower transaction fees in a softer trading environment.

SIX Stock Exchange May Issue Its Own Token, Says Exec
Yogita Khatri – Coindesk
Switzerland’s top stock exchange SIX could issue a token to meet its goal of digitizing traditional assets, according to its head of securities and exchanges.

SGX taps MyInfo to roll out paperless CDP account opening service
Singapore Exchange (SGX)’s Central Depository (CDP) account opening service has gone digital, enabling greater convenience and security for retail customers. Customers looking to open an Individual CDP account can now apply and submit their applications online, without the need to provide paper documents.


Eventus Systems Wins Best Trade Surveillance Solution to Address Dodd-Frank Volcker Rule Requirement; In Year of Record Entries and Votes, Validus Platform Recognized in A-Team’s 2019 RegTech Insight Awards
Eventus Systems, Inc.
Eventus Systems, Inc., a leading global trade surveillance and market risk platform provider, has won the award for Best Trade Surveillance Solution to Address [the] Dodd-Frank Volcker Rule Requirement at the 2019 RegTech Insight Awards. Hosted in London by A-Team, the awards recognize outstanding performance by the vendors of data and technology solutions to the financial industry, focusing on those firms creatively finding solutions to help with regulatory challenges

Announcement Of A Change To The Management Board Of Solactive Date
Christian Grabbe has decided to pursue a new career opportunity outside Solactive and will therefore not be seeking re-appointment as a board member of Solactive AG.

Citigroup Forms Lab for Traders to Code and Coders to Trade
Jennifer Surane – Bloomberg
Markets Acceleration Lab is seeking about 12 people at first; Goal is ‘to attract and create a pipeline of unique talent’
Citigroup Inc. isn’t just teaching traders how to code, it’s also making sure its coders know how to trade.

Fintechs Founded by Women Are Better Investments, KPMG Finds
Silla Brush – Bloomberg
Fintech firms with female founders are better investments. That’s the conclusion from KPMG, which surveyed 91 financial-technology companies in the U.K., including nine where at least one founder was a woman. The report, published Friday, showed that firms with a female founder have more than double the internal rate of return on average than peers where the initial entrepreneurs were all male.


Fidelity Will Offer Cryptocurrency Trading Within a Few Weeks
Matthew Leising – Bloomberg
Asset manager will target institutional customers, not retail; Crypto markets continue to be plagued by fraud and theft
Fidelity Investments, which began a custody service to store Bitcoin earlier this year, will buy and sell the world’s most popular digital asset for institutional customers within a few weeks, according to a person familiar with the matter.

Facebook’s Cryptocurrency Might Work Like Loyalty Points
Gregory Barber – Wired
If Facebook’s pivot from town square to private living room wasn’t laden with enough irony, here’s a new twist: Big business, it appears, has been invited to join us by the fireplace. On Thursday, The Wall Street Journal reported new potential details about Facebook’s long-awaited cryptocurrency plans.

Bitcoin’s Lightning Comes to Apple Smartwatches With New App
Alyssa Hertig – Coindesk
You can now receive bitcoin’s experimental lightning payments with a few taps of an Apple smartwatch.

PepsiCo Blockchain Trial Brings 28% Boost in Supply Chain Efficiency
Yogita Khatri – Coindesk
Food and beverage giant PepsiCo has conducted a blockchain trial that brought a 28 percent boost in supply chain efficiency.

The New York A.G. and the Case of $850 Million in Missing Cryptocurrency
Matt Robinson, Olga Kharif, Matthew Leising, Bloomberg – Fortune
When New York’s attorney general last week accused Bitfinexóone of the world’s largest cryptocurrency exchangesóof hiding the loss of about $850 million in client and corporate cash, a crucial question was left unanswered: What happened to the money? Bitfinex contends the funds haven’t gone missing at all. The exchange says the money was deposited with a Panamanian-company called Crypto Capital and then, through no fault of Bitfinex’s, seized by government authorities in the U.S., Poland, and Portugal.

****More Bitfinex stories: Bitfinex’s Bitcoin Price Excluded from CoinMarketCap Average Calculation; Banking, Bitfinex and the Hidden Irony of Crypto’s Newest Controversy and Beware the Fake Bitfinex White Papers Appearing Online.

FUDs and facts surrounding cryptocurrency mining around the globe
Ross Chalmers – Yahoo Finance
One of the more controversial aspects of cryptocurrencies is the issue of mining. From accusations of energy waste, to countries outright banning the practice altogether, there is always news regarding the issue. Finding your way through such information and coming to a solid conclusion can be difficult with bias on both sides of the argument. Is cryptocurrency mining wasting precious resources? Has China once more banned Bitcoin mining? Let us take a look at some of the FUD and facts surrounding cryptocurrency mining.

MIT’s Christian Catalini Said to Be Working on Facebook’s Cryptocurrency
Brady Dale – Coindesk
Christian Catalini is on leave from MIT and working at Facebook, two people with knowledge of the situation told CoinDesk. The prominent crypto economist is helping the social media giant with its cryptocurrency efforts, the sources said. Facebook is reportedly developing a stablecoin that will let its billions of users send money to each other, and possibly make online purchases. Catalini declined to comment to CoinDesk.

Coinbase CTO Balaji Srinivasan is leaving the cryptocurrency exchange
Frank Chaparro – The Block
Cryptocurrency exchange Coinbase is parting ways with its CTO Balaji Srinivasan, who joined the firm as part of one of its largest acquisitions. The exit of Srinivasan is on the heels of the exit of Dan Romero, who led the firm’s international and institutional business before he left in April. Srinivasan will be transitioning out of his role over the next couple of weeks.

Blockchain Firm SETL Sidesteps Insolvency to Return as Leaner New Entity
Yogita Khatri – Coindesk
Blockchain infrastructure firm SETL Development Ltd., which filed for insolvency in March, is back as a trimmed-down new entity formed by its management team. The new company, SETL Ltd., said Friday that it has now acquired the operating assets, staff and intellectual property (IP) rights of the old entity. Further, the company has reached an agreement with “all major clients” to continue the firm’s previous support and development activities. SETL Development Ltd, which went into administration in March, is now being wound down.


Trump Issues Tariff Threat and China Considers Pulling Out of Talks; President’s warning to China takes Beijing by surprise
Bob Davis, Rebecca Ballhaus, and Lingling Wei – WSJ
President Trump threatened to drastically ramp up U.S. tariffs on Chinese imports, a surprise twist that put an accord in doubt as Beijing considered pulling out of talks scheduled to begin this week.

Trump, Twitter and Trade Make a Bad Mix for European Shares
Macarena Munoz Montijano and Jan-Patrick Barnert – Bloomberg
What was supposed to be a quiet day for stocks in Europe with the U.K. closed for a holiday turned into a broad-based retreat as President Donald Trump caught the market off guard with tweets on trade.

With Two Tweets, Trump Shatters Historic Calm in Global Markets
Joanna Ossinger and Michael Patterson – Bloomberg
Renewed threat of import tariffs roils stocks, currencies; China’s stocks tumble along with yuan, while VIX skyrockets
In the end, all it took was two tweets from Donald Trump. After weeks of warnings from many on Wall Street that price swings across global markets were too subdued, the American president’s threat to boost tariffs on China sent volatility soaring Monday. The VIX Index jumped 43 percent, the most since October — the start of a horrible quarter for U.S. equities. S&P 500 Index futures slid 1.7 percent and the Shanghai Composite fell 5.6 percent, the most since February 2016. European shares also dropped.

Trump’s Tariff Threat Leaves Beijing Stalling on Next Talks
Jenny Leonard, Steven Yang and Lucille Liu – Bloomberg
Trump on Sunday said he’ll raise duties on China this Friday; China’s Liu He was due to arrive in Washington this week
Talks between the U.S. and China to resolve their year-long trade standoff appeared to be on life-support Monday, with Beijing struggling to respond to a pair of tweets by President Donald Trump that threaten an escalation of tariffs by the end of the week.

Chinese Media Downplays Trump’s Tweets, Market Plunge
Bloomberg News
Tariff threats trigger China’s worst stocks rout since 2016; Slump adds to risks undermining this year’s bull run in China
Donald Trump is testing the limits of China’s bull market, and Beijing’s patience.

How To Solve America’s $100 Trillion Problem Of Wealth Inequality
Steve Denning – Forbes
A recent study by the Federal Reserve reveals the shocking extent of accelerating wealth inequality in America. Out of America’s total assets of $114 trillion owned by Americans in 2018, the wealthiest 10% of Americans owned 70% (up from 61% in 1989), while the bottom 50% of American households had virtually no net worth at allódown from 4% in 1989 to 1% in 2018.


CFTC Charges Principals Of Binary Options Trading Firm With $4.8 Million Fraud Scheme
The Commodity Futures Trading Commission (CFTC) announced the filing of a civil enforcement action (Complaint) against William Thomas Caniff of Steubenville, Ohio, Arie Bos, of Rotterdam in the Netherlands, their company, Berkley Capital Management, LLC (BCM), a Wyoming limited liability company with offices in Ohio and the Netherlands, and two pools that BCM operated as Delaware limited partnerships with offices in Wintersville, Ohio, BBOT 1, LP (BBOT) and Berkley II, LP (Berkley II) (collectively, defendants).

Beware the Ferrari-Driving FX-Trader on Instagram, Regulator Warns
Franz Wild – Bloomberg
FCA tells consumers to be ‘wary’ of Molly Ramm Instagram site; Ramm claimed to have turned 4,000 pounds into 200,000 pounds
A short video clip on the Molly Ramm Instagram account shows a young woman cruising down a sunbathed Dubai highway in a Lamborghini with the music blaring. She has a six-figure mindset, it says. But that may be changing.

SEC Charges Sapphire Glass Manufacturer And Former CEO With Fraud Date
The Securities and Exchange Commission today charged a New Hampshire-based company and its former CEO with misleading investors about the company’s ability to supply “sapphire glass” for Apple’s iPhones. The company, GT Advanced Technologies Inc., also is found to have misclassified more than $300 million in debt to Apple that resulted from its repeated failures to meet performance milestones.

Federal Reserve Board Invites Comment On A Proposal To Apply Netting Protections To A Broader Range Of Financial Institutions
The Federal Reserve Board on Friday requested comment on a proposal to reduce risk and increase efficiency in the financial system by applying netting protections to a broader range of financial institutions.

Revealed: UK Faces Serious Corruption And Money Laundering Risks Due To “Fundamental Gaps” In Register Of Company Owners
The UK Government is failing to act on fundamental gaps with its company register leaving UK companies as a vehicle of choice for money launderers, the corrupt and other criminals.

Investing and Trading

Nancy Prior, the quiet and unassuming trillion-dollar woman; The Fidelity veteran on team play, equal opportunities and staying close to her roots
Joe Rennison – FT
Nancy Prior is one of the most powerful bond managers in the world. As president of Fidelity Investments’ fixed-income group she oversees $1.1tn ó a pool of capital that ranks alongside BlackRock, Pimco and Vanguard ó yet many people in the industry have not heard of her.

The Rich Column: the wealthy are increasingly interested in ESG; To a demonstrable majority of present-day advisers, ESG criteria at least appear obvious
Matthew Vincent – FT
To the private bankers of yesteryear, “environmental concerns” extended no further than Bordeaux terroir, “social impact” was something best achieved with a pair of red trousers and “corporate governance” meant not embarrassing your chums over their boardroom pay. Even now, certain old-school attitudes persist.

Investors in Biggest Covered-Bond Market Face $16 Billion Crunch
Frances Schwartzkopff – Bloomberg
Danish borrowers call 110 billion kroner in bonds this quarter; It’s the biggest refinancing wave since 2005, Danske Bank says
Investors in Denmark’s covered-bond market, the world’s biggest, will have to settle for lower coupons or find a new place to put their money as record-low interest rates trigger the largest remortgaging wave in well over a decade.

‘Dark Pools’ Draw More Trading Amid Low Volatility; Share of U.S. stock trades executed on off-exchange trading venues hits highest level in more than a year
Alexander Osipovich – WSJ
The calm markets of recent months have meant more trades are getting done in the dark. Dark poolsóprivate trading platforms, typically geared toward big investorsóhave enjoyed growing market share this year. The share of U.S. stock trades executed on dark pools and other off-exchange trading venues rose to 38.6% in April, the highest level in more than a year, according to research firm Tabb Group, and up from 34.7% in December.

Opinion: How corporate monopolies fuel wage stagnation, inequality, and populism
John Coumarianos – MarketWatch
I was once a stock analyst at Morningstar, where the Warren Buffett-inspired approach begins with analyzing a company’s competitive position, and assigning a “moat” rating to it. A castle with a protective moat around it is Buffett’s metaphor indicating a company that is protected from competition. Superior technology, a name brand, a network effect, or high customer switching costs can all underpin moats.

Americans Don’t Save for Retirement Because They Don’t Earn Enough Money
Ronald Temple – Barron’s
Too few Americans are saving for retirement. Those who do save are putting away too little. It is only a matter of time before this sparks an economic and political crisis.

Stocks, Bonds, Oil, Bitcoin Are All Up. The Everything Rally Is Back, Worrying Some Investors; Nearly 90% of 70 financial asset classes posted positive total returns this year through April
Bouncing Back
Steven Russolillo and Akane Otani – WSJ
After a brutal 2018, stocks, bonds, credit markets, commodities and even cryptocurrencies have risen in 2019, with some asset classes such as U.S. equities recently scaling records.

A $300 Billion Blowup Has Traders Bracing for War in Washington
Vildana Hajric and Sarah Ponczek – Bloomberg
Political risks ahead of 2020 election add to investor angst; Health stocks plummet as fears of ‘Medicare for All’ intensify
All it took was a few mentions of Medicare for All this spring and suddenly health-care bulls were stuck with a $300 billion loss. For investors just warming to a government that professed to put their interests first, the chill has been palpable.

The Gambler Who Cracked the Horse-Racing Code; Bill Benter did the impossible: He wrote an algorithm that couldn’t lose at the track. Close to a billion dollars later, he tells his story for the first time.
Kit Chellel – Bloomberg
Horse racing is something like a religion in Hong Kong, whose citizens bet more than anyone else on Earth. Their cathedral is Happy Valley Racecourse, whose grassy oval track and floodlit stands are ringed at night by one of the sport’s grandest views: neon skyscrapers and neat stacks of high-rises, a constellation of illuminated windows, and beyond them, lush hills silhouetted in darkness.

Stock Volatility Isn’t Dead. It’s Just Got Freakish and Extreme
Yakob Peterseil and Luke Kawa – Bloomberg
HSBC, Goldman Sachs warn on vol-of-vol risk amid illiquidity; Fast-money traders vulnerable to episodic swings in prices
Beneath the calm in global stocks lies a brittle market prone to violent spasms. As central banks snuff out market fears for now and the brewing melt-up banishes memories of last year’s meltdown, the threat of brief but extreme price swings looms over fast-money traders.


Ex-Goldman Banker Sent to U.S. to Face 1MDB Charges; Malaysian citizen Roger Ng to face U.S. charges in connection with one of the world’s largest financial scandals
Yantoultra Ngui – WSJ
A former Goldman Sachs Group Inc. managing director is returning to the U.S. from Malaysia to contest U.S. criminal charges in connection with one of the world’s largest financial scandals, one of his attorneys said.

Big Banks Seek to Liberate Billions of Dollars in Funds; Dodd-Frank forced banks to hold funds in reserve; now some have found a way to free up that cash
Liz Hoffman – WSJ
Big banks have complained for years about a key feature of the Dodd-Frank overhaul requiring them to keep billions of dollars of cash in reserve. Some are trying to find a way around it.

Larry Fink, Barclays and the deal of the decade; How BlackRock’s $15.2bn purchase of BGI transformed the global asset management industry
Attracta Mooney and Peter Smith – FT
During the dark days of the financial crisis, BlackRock boss Larry Fink flew to San Francisco. As banks and insurers grappled to stay afloat and governments and central banks propped up the financial system, Mr Fink had his eye on a big prize.

Deutsche Bank Is Still a Worry for the ECB; Europe’s banking supervisors were spared the need to rule on the Commerzbank deal. But they should exert more pressure on Deutsche.
Ferdinando Giugliano – Bloomberg
When Deutsche Bank AG and Commerzbank AG pulled their merger talks at the end of last month, there was an audible sigh of relief at the European Central Bank.

Wells Fargo Botched A Fraud Inquiry. An Innocent Man Landed In Court; State and local governments continue to rely on a bank that keeps finding new ways to lose credibility.
Zach Carter – Huffington Post
Jeff Edwards comes across almost like a caricature of a mild-mannered Christian do-gooder. Since 1989, he’s been a pastor at the United Methodist Church of Parsippany, New Jersey, where he delivers sermons, teaches Bible study and directs Christmas plays for a congregation of about 200.

Glenview Capital Lost $2 Billion in Assets in About Nine Months
Hema Parmar – Bloomberg
Most of the redemptions are said to come from long-only fund; Clients pulled money from free fund that started charging fees
Glenview Capital Management lost about $2 billion in assets in less than a year as investors fled a fund that began charging fees after it was initially free.


Rising Trade Tensions Slaughter Hog Stock; WH Group, the world’s largest pork producer, sank as much as 9% on Monday after a pair of belligerent tweets from President Trump
Steven Russolillo and Lucy Craymer – WSJ
A company sometimes considered a proxy for U.S.-China trade tensions just suffered one of its worst trading days on record. Hong Kong-listed shares of WH Group Ltd., the world’s largest pork producer, sank as much as 9% on Monday after a pair of tweets from President Trump escalated the trade rhetoric between Washington and China.

China Syndrome Hits Emerging Markets, But Watch for a Recovery
Justin Carrigan – Bloomberg
Rand and Mexican peso lead sell-off as yuan, stocks nosedive; Longer trade standoff may hasten EM central bank rate cuts
Emerging markets were left reeling as the U.S.-China trade dispute thrust itself back on to traders’ radars after two Trump tweets killed any sense that the stand-off was near to being resolved. Though it was a sea of red across Asia on Monday, Chinese markets suffered the most as the market reopened from a holiday, with the yuan having the biggest drop in more than three years and the Shenzhen Composite retreating as much as 8 percent.

Palm Oil Titan Warns EU Limits on Biofuel Use Will Backfire
Alfred Cang – Bloomberg
EU ‘will get their karma,’ Franky Widjaja says of the curbs; Company is one of the world’s largest palm plantation firms
Franky Widjaja, head of one of the world’s biggest palm plantation companies, warned that the European Union’s plans to restrict use of the tropical oil in biofuel will misfire as the move will hurt growers and jeopardize future supplies of the vegetable oil.

A $90 Billion Danish Fund Refuses to Do Deals With Macquarie
Frances Schwartzkopff – Bloomberg
PFA, which oversees about $90 billion in assets, is refusing to enter new deals with Macquarie Group Ltd. amid a national campaign in Denmark to fight financial misconduct.

Swedish Krona Drops to Decade Low as Risk-Off Meets Growth Woes
Anooja Debnath – Bloomberg
Sweden’s krona declined to a decade low against the euro amid renewed anxiety about a global trade war and as the latest data fueled concern a slowdown in the Scandinavian economy is deepening.


Is Brexit impasse turning Britain into Belgium?; UK stasis about EU departure verges on the surreal, says Brussels’ Charles Michel
George Parker and Jim Brunsden – FT
Even viewed from the land of Magritte and its once famously dysfunctional government, the Brexit paralysis gripping British politics verges on the surreal, according to Charles Michel, the Belgian prime minister.

Private equity deals drop as Brexit reduces UK appeal; Buyouts riskier for investors amid record figures for rest of Europe
Javier Espinoza – FT
Private equity investments in UK companies fell last year as buyout bosses postponed decisions because of Brexit uncertainty even as deals in the rest of Europe hit a record, new research has shown.

Bankers Ring New Alarm Bells Over Brexit Threat to the Economy
Silla Brush – Bloomberg
HSBC CFO is more cautious on U.K. than almost anywhere else; RBS warned of uncertainty eating into income in coming months
Brexit is taking an even bigger toll on the largest U.K. banks. After years of work and millions of pounds spent in preparation for the U.K.’s withdrawal from the European Union, the delay to October and seemingly endless questions about the outcome are casting a cloud over bankers’ outlooks and taking the shine off the rise in shares this year. The sentiment was underlined on Friday when HSBC Holdings Plc’s Chief Financial Officer Ewen Stevenson warned that the uncertainty is plaguing consumer and business confidence.

Britain’s Post-Brexit Carbon Market Looks Just Like Europe’s
Mathew Carr and Jeremy Hodges – Bloomberg
Planned markets seen helping attract investment to Britain; Link with EU will potentially lower the cost of emission cuts
Despite its efforts to leave the European Union, the U.K. is planning a carbon copy of the EU’s emissions market.

Brexit delays Goldman’s Marcus launch in Germany; US bank pushes back roll-out of high-tech consumer operation
Laura Noonan, David Crow and Patrick Jenkins – FT
Goldman Sachs has postponed the German launch of its consumer bank Marcus until next year after the six-month Brexit delay removed the urgency for setting up a new deposit base within the EU.

Brexit dangerously overshadows the UK’s social mobility crisis; While politics is fractured and weak, society must tackle our lamentable inequalities
Alan Milburn – FT
The unravelling of the UK’s relationship with the EU, if it happens, will take time and the impact on our economy and society will be profound. Brexit will dominate political discourse and consume public policy effort for years to come. The fractures it has caused in our political parties will continue to widen and deepen over time. It is hard to see how the Labour and Conservative duopoly that has dominated British politics for the past century can survive.

Local elections: Tories call for unity after election drubbing
BBC News
Senior Conservatives have called for the party to pull together after it suffered its worst results in English local elections since 1995. The Conservatives lost 1,334 councillors in Thursday’s votes. Home Secretary Sajid Javid admitted voters had “issues of trust” over Brexit, and said the European elections would “be even more challenging”. Health Secretary Matt Hancock said the party needed to listen to the results and be “in the mood for compromise”.


Forgers Are Forcing a $9 Trillion Business Into Digital Age
Krystal Chia – Bloomberg
Trade finance has to go paperless: OCBC commodity finance head; Bank has tripled client base, expanding in Hong Kong, U.S.
The $9 trillion business of financing global trade needs to go digital, according to southeast Asia’s second-biggest lender. Forgers have become so adept at faking documents used by banks that going paperless has become a necessity for the industry, said Ng Chuey Peng, managing director and head of global commodities finance at Singapore’s Oversea-Chinese Banking Corp Ltd., the region’s second-biggest bank by assets. Digitalization will also make the financing process more efficient, she said.

Big Agriculture Is Breeding a Worldwide Health Crisis; The widespread use of antifungals in food production is hastening an increase in drug-resistant infections, putting millions of people at risk.
Mark Buchanan – Bloomberg
On the surface, our modern system of food production looks efficient: It produces plenty of food and seems highly innovative. But it also encourages people to eat unhealthy sugars and fats, while fully one-third of all food produced is lost or goes to waste. Industrial agriculture is defiling lakes and rivers with chemical runoff and depleting irreplaceable fertile topsoils.

Opinion: Happy birthday, Gordon Gekko: My 5 favorite quotes from the ‘Wall Street’ villain=
Tomi Kilgore – MarketWatch
Gordon Gekko was a bad guy in a movie released 32 years ago, and yet he is still widely quoted on Wall Street today.

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