CFTC pulls disputed public statements from its website; Chicago titan Citadel just keeps growing

Aug 20, 2019

First Read

CFTC v. Kraft/Mondelez: Agency Reserves Its 5th Amendment Rights Against Self-Incrimination; Agrees to Remove Offending Statements From Website
Thom Thompson – John Lothian News

Attorneys for the U.S. Commodity Futures Trading Commission appeared in court Monday to answer a motion filed by Kraft and Mondelez (K&M). K&M are asking that the court order the CFTC to comply with all parts of their agreement, especially Paragraph 8 of the order’s Section I which gags the agency, and for the court to sanction the CFTC for its breeches. Paragraph 8 (“the gag order”) says, “Neither party shall make any public statement about this case other than to refer to the terms of this settlement agreement or public documents filed in this case, except any party may take any lawful position in any legal proceedings, testimony or by court order.” K&M is also seeking sanctions against the CFTC.

On Wednesday last week the parties agreed to a settlement of the case the CFTC brought in 2015 against K&M for their alleged manipulation of the CBOT wheat futures contract in 2011. The U.S. Federal Court in Chicago entered the agreement as a consent order on Thursday.

To read the rest of this report, go here.


Hits & Takes
JLN Staff

The AFX’s Ameribor daily market statistics are now on the Cboe website. They show 20 contracts traded yesterday and 5 contracts of open interest. Thank you to Cboe for fixing this.~JJL

The CFTC has stepped into a big steamy pile of Cheese Whiz with this Kraft/Mondelez settlement announcement.~JJL

Mike McLeod, an outspoken derivatives attorney, is calling for a “Coalition for Futures Reform.” He can be reached at or you can see his blog at

Many of you support A Leg To Stand On, the charity that helps provide prosthetics and limb procedures for children. The organization announced yesterday that it has added three new countries to its list by partnering with medical care organizations in Laos, India and Uganda. ALTSO now operates 11 programs in 10 developing countries across Asia, Africa, and Latin America. ALTSO’s annual charity events are set for Chicago on October 10 and New York on October 24th. Get your tickets now to help kids in need.~JK

My favorite line from the 2015 CFTC complaint against Kraft for wheat manipulation: “Kraft maintains several trading accounts in which it does wheat futures transactions for both long and short hedging purposes. Kraft’s internal computer software cannot distinguish between long and short positions for the same contract month within the same account, so Kraft’s practice has been to place its long wheat futures position in one account and its short wheat futures position in a second account to keep track of them.” So the allegations against Kraft for exchange for physical (EFP) infractions were all the byproduct of bad tech. ~SD

Another CME Group disciplinary notice hit the wire: Macquarie Futures was fined $7,500 for infractions pertaining to user IDs.~SD

The OIC is offering a free one-hour webinar about “Options Strategies for Higher Volatility” on Wednesday, August 21, 2019 at 03:30 PM Central Daylight Time. Brushing up on your toolkit for volatility could only be a good idea heading into what looks like a volatile fall trading season.~JJL

I am tired of getting robo-calls from an Asian-sounding person claiming to be Jamie Dimon of Chase.~JJL


A Tale of Two Cities: Inequitable Capital Flows in Chicago’s Neighborhoods
In this video from MarketsWiki Education’s World of Opportunity event, Chicago Neighborhood Initiatives President David Doig talks about rectifying income inequality and making Chicago’s South and West Sides a welcoming place for investments.
Watch the video »


‘We Can’t Waste a Drop.’ India Is Running Out of Water; Population growth, modernization and climate change spawn a resource crisis; trouble in a remote Himalayan region
Bill Spindle – Wall Street Journal
The Ladakh region of northern India is one of the world’s highest, driest inhabited places. For centuries, meltwater from winter snows in the Himalayan mountains sustained the tiny villages dotting this remote land.

***** Get ready for some more migration.~JJL


Where’d all the stocks go? Nasdaq’s CEO on shrinking market
Stan Choe – AP
The stock market is a much less crowded party than it used to be. In the late 90s, when a bevy of hot dot-com companies were rushing to sell their shares on public markets, investors had more than 7,500 U.S. stocks to choose from. The dot-com bust culled many of those stocks, though, and the number has continued to shrink steadily, now down more than half from its 1998 peak.

*****This is important.~JJL


Calling Bakkt a ‘crypto exchange’ misses the mark on what they’re actually doing
Frank Chaparro – The Block Crypto
Intercontinental Exchange (ICE) captivated the attention of the entire cryptocurrency market last August with the announcement of Bakkt, a new venture led by former ICE investor relations head Kelly Loeffler, which promised to usher bitcoin into the mainstream. Then, Bakkt was presented in media reports, especially this gushing Fortune profile, as the panacea to the problems hanging over the nascent bitcoin market, which has been plagued by hacks and has struggled to attract the attention of professional money managers and investors.

*****JLN Contributing Editor Thom Thompson is quoted in this article.~JJL


Deutsche Boerse Photography Foundation presents exhibition “Foam Talent 2019” in The Cube, Eschborn / Frankfurt; Works by 20 young artists to be seen from September 6 to November 1, 2019 / Press tour on September 5 at 11:00
Deutsche Boerse
The Deutsche Boerse Photography Foundation opens the exhibition “Foam Talent 2019” in The Cube, in Eschborn / Frankfurt. On display are works by 20 young artists from 13 nations selected for the annual Young Talent Development Program of the Foam Fotografiemuseum Amsterdam. As part of its commitment to promoting contemporary photography, the Deutsche Boerse Photography Foundation has been a partner of the program since 2017. After its presentation in Amsterdam, New York and London, the exhibition will be on display from 6 September to 1 November 2019 in The Cube.

*****Sounds like a photo competition for baristas.~JJL


Monday’s Top Three
Our top story of the day on Monday was TT’s blog Update on the TT Outage on August 13, 2019. If you want to know what a Zookeeper and an UMP have to do with TT’s outage, it’s all in there. Our second place story deals with the uncomfortable question of being overqualified, even when you’re not, in The Wall Street Journal’s The ‘Overqualified’ Trap Can Hit You at Any Time. Third was the simple name game story that focused on a castle in East Lothian, in Bloomberg’s A Scottish Castle in Perfect Condition Is On Sale for $9.7 Million. So tough when you live there for a month before discovering an extra room in the house. Let the bidding begin.


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Lead Stories

US regulator pulls disputed public statements from its website; CFTC takes ‘remarkable’ step after reaching legal settlement with Kraft Heinz and Mondelez
Gregory Meyer – FT
A US financial regulator has removed sensitive public announcements from its website and been ordered to send top officials to testify in court as it faces blowback from an extraordinary legal settlement with two giant food companies.

Chicago titan Citadel just keeps growing. The rest of the city’s hedge fund industry, not so much.
Lynne Marek – Crain’s Chicago Business
Tired of paying hefty fees for mediocre returns, investors have pulled money out of hedge funds in recent years. With less capital to go around, Chicago’s hedge funds are caught in the $3.1 trillion industry’s consolidation that increasingly favors megafirms. Many of the local firms, including No. 2 Magnetar Capital Partners, have fewer assets today than at their peak, and one returned investors’ money this year as it shut down trading for outside clients. At the same time, few new hedge funds have sprung up.

Banking bodies consider shorter trading day to attract more women; Banks and asset managers to discuss flexible working practices in male-dominated sector
Nikou Asgari – FT
European banking and asset management bodies are considering a push to boost the number of women joining the financial sector by cutting stock market trading hours.

Bitcoin Pioneer Skeptical of the Latest Satoshi Nakamoto
Olga Kharif – Bloomberg
Purported Bitcoin creator says real name is James Caan; Jeff Garzik says writing not similar to early communication
Jeff Garzik used to exchange emails with Satoshi Nakamoto before the anonymous creator of Bitcoin disappeared years ago. He doubts Satoshi has resurfaced again. When an internet posting Sunday claimed to come from Satoshi, and promised to reveal his or her true identity on Tuesday, Garzik read it. His verdict: “The writing style does not strike me as the same,” Garzik said in an interview.

How Shareholder Democracy Failed the People; Shareholder democracy seemed like a good idea at the time. What we got was shareholder supremacy.
Andrew Ross Sorkin – NY Times
Democracy is a messy thing. Shareholder democracy may be even messier. For nearly a half-century, corporate America has prioritized, almost maniacally, profits for its shareholders. That single-minded devotion overran nearly every other constituent, pushing aside the interests of customers, employees and communities.

Group of top CEOs says maximizing shareholder profits no longer can be the primary goal of corporations
Jena McGregor – The Washington Post
The organization representing the nation’s most powerful chief executives is rewriting how it views the purpose of a corporation, updating its decades-old endorsement of the theory that shareholders’ interests should come above all else.
The new statement, released Monday by the Business Roundtable, suggests balancing the needs of a company’s various constituencies and comes at a time of widening income inequality, rising expectations from the public for corporate behavior and proposals from Democratic lawmakers that aim to revamp or even restructure American capitalism.

Banking and investment bodies begin talks to cut stock market trading hours
Samuel Agini – Financial News
Banks and asset managers are working on revolutionary proposals to cut stock market trading hours across Europe, Financial News has learnt.
Proponents say the plans can help to end the testosterone-fuelled culture that has deterred women from pursuing a career on the trading floor. Critics point out that simply reducing hours may not be enough to attract more women to the industry.

Brexiteers Say If Switzerland Stood Up to EU, So Can U.K.
Silla Brush, Alexander Weber and Catherine Bosley – Bloomberg
Brexit Party lawmaker in Brussels says U.K. has been ‘timid’; SIX exchange sees one-third increase in equity market volumes
In the Swiss-versus-the-European Union battle that’s ensnared stock trading, the smaller market appears to have won the first round.

Treasury Seizes the Moment to Revisit Ultra-Long Bond Proposal
Emily Barrett and Alex Harris – Bloomberg
Strong demand for duration helps, says Simons at Jefferies; Yet there’s a risk that low yields may deter investors
The odds on the U.S. Treasury’s ultra-longshot may just have narrowed. Record-low interest rates make this an opportune time for the Treasury to revisit a proposal it’s shelved in the past: To issue the longest-term debt it can. So for the second time since President Donald Trump took office, the department is exploring the prospect of selling bonds due in 50 or 100 years, going way beyond the current three-decade maximum.

The World Needs Chinese to Care About Climate Change; Surprisingly few say they’re concerned, which doesn’t bode well for China’s efforts to meet its Paris commitments.
Adam Minter – Bloomberg
The world’s biggest emitter of climate-changing carbon is China, but Chinese people don’t seem overly worried. According to a first-of-its-kind national survey, only 14.2% of Chinese said they were “very seriously concerned” about global warming and climate change. Not surprisingly, such concerns declined in areas economically dependent upon carbon-intensive industries.

Hedgie plundered own fund to avoid giving $90M bonus to employees: suit
Carleton English – NY Post
A vengeful hedge fund manager looted his own fund to avoid paying two former employees their bonuses, according to new bombshell complaint. Paul Touradji has been moving hundreds of millions of dollars out of his eponymous fund to keep it out of the hands of two former staffers who have been after him for $46 million in back pay, according to a complaint filed in New York State Court earlier this month.

Donald Tusk rejects Boris Johnson demand to scrap Irish backstop; European Council president says UK lacks ‘realistic alternatives’ to prevent hard border after Brexit
Mehreen Khan – FT
The EU has firmly rejected Boris Johnson’s demand to remove the Irish backstop from a Brexit divorce deal, claiming the UK had offered no “realistic alternatives” to prevent the creation of a hard border in Ireland.

Insurgent Chris Flint wins contested Finra election for big-firm board seat; Linde Murphy wins small-firm board seat that was also subject of contested election
In a contested election for a large-firm seat on the board of the Financial Industry Regulatory Authority Inc., insurgent candidate Chris W. Flint has won over incumbent Andrew S. Duff, who was selected to run by the Finra board’s nominating committee.

Visium Sues Widow of Portfolio Manager Who Died by Suicide; The hedge fund is seeking more than $100 million in repayment for money it says it paid Sanjay Valvani
Rachael Levy – WSJ
A hedge fund that closed after securities regulators accused the firm of insider trading is seeking more than $100 million from the estate of one of its former portfolio managers.

Exchanges, OTC and Clearing

Insight: ECB recommendations for the EURSTR transition; Foundation of the work to come
In a nutshell
The Working Group on Euro Risk-free Rates (RfR) recently issued further recommendations on the EURSTR transition. We spoke to Andreas Franke, who works in Eurex Clearing’s CCP Risk Management Department in the Risk Methodology OTC unit about the working Group, its activities, recommendations and the challenges ahead.

Exchange Speed Bumps: An Indirect Way to Reduce Buy-Side Trading Costs
Jeff Bacidore – Traders Magazine
Speed bumps have been a popular topic recently. The most recent discussion has centered around asymmetric speed bumps, like the one proposed for CBOE EDGA. Such speed bumps would slow incoming “take” orders by a few milliseconds, effectively giving potential resting counterparties extra time to cancel or modify their existing orders. The benefit to liquidity providers is obvious – they have a greater opportunity to adjust their quote in moving markets and avoid being “adversely selected” by faster traders. The net effect on other traders, however, is less clear.

The World Federation of Exchanges invites industry to discuss sustainability & commodity derivatives in new white paper
The WFE Research Team
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today a published a white paper on sustainability and commodity derivatives.

BSE to expand commodity derivatives with slew of new contracts next quarter; Brent crude oil, soya bean, kapas and almonds futures on the cards
Rajesh Bhayani – Business Standard
The Bombay Stock Exchange is planning several new contracts whose launch is scheduled for the December quarter, after consolidating its position in the commodity derivatives segment. The new contracts it plans to introduce in October-December quarter include Brent crude oil, soya bean, kapas and a first-of-its-kind almond contract in India, all subject to regulatory approval.


CyrusOne eyed for very large acquisition by private power group of investors
Joao Marques Lima – Data Economy
US data centre REIT CyrusOne is reportedly considering a potential sale of the business to a group of private investors which are said to also intend to take the company out of the stock exchange.

There’s no future for traders who don’t know Python
Sarah Butcher – efinancialcareers
Raoul-Gabriel Urma could have been a trader. He could have been a top technologist in an investment bank. Or he could have worked for Google. He could have done a lot of things, but instead he’s chosen to proselytize about the need to know Python and data science techniques if you want your trading career to have a whiff of a future.

A startup that helps companies build their own AI-based tools just closed a $72.5 million round co-led by Goldman Sachs and the world’s largest insurer
Dan DeFrancesco – Business Insider Prime on Tuesday closed a $72.5 million Series D round led by Goldman Sachs and the Ping An Global Voyager Fund.
The startup automates how companies apply artificial intelligence across their business.
Ediz Ozkaya, Goldman Sachs’ head of AI strategies in securities, told Business Insider the bank was attracted to how easily’s tools merged with the work Goldman was already doing in AI.

Neptune launches bond market data composite with CME Group; Data for the global bond market composite has been sourced from a combination of axe/inventory positions and two-way streams.
Hayley McDowell – The Trade
Fixed income data specialist Neptune Networks has teamed up with US exchange operator CME Group to launch a composite product for the global bond market.

Apple splashes $6bn on new shows in streaming wars; iPhone maker boosts spending to draw stars such as Jennifer Aniston and Reese Witherspoon
Anna Nicolaou and Tim Bradshaw – FT
Apple has committed more than $6bn for original shows and movies ahead of the launch of its new video streaming service, a ballooning budget aimed at catching up with the likes of Netflix, Disney and AT&T-owned HBO.
/ nabs $30M more to help enterprises manage their profiles online
Ingrid Lunden – Techcrunch
In these days where endorsements from influential personalities online can make or break a product, a startup that’s built a business to help companies harness all the long-tail firepower they can muster to get their name out there in a good way has raised some funding to expand deeper into feedback and other experience territory., which works with big enterprises in areas like automotive and healthcare to help improve their visibility online and provide more accurate reports to the businesses about how their brands are perceived by customers and others, has raised $30 million in equity financing, money that CEO Joe Fuca said the company will use to continue to expand its tech platform to source more feedback and to future-proof it for further global expansion.

Cryptocurrencies Receives Approval of its FINRA Membership as Registered Broker-Dealer; Blockchain-Based Securities Issuance Platform Ready for Launch
Business Wire
IOI Capital and Markets, LLC (IOICM), an SEC registered broker-dealer and a wholly owned subsidiary of iownit capital and markets, Inc. today announced that the Financial Industry Regulatory Authority, Inc. (FINRA) has approved its membership application. This approval allows IOICM to be a placement agent for digital private securities issued on the blockchain-based platform developed and operated by its parent company.

Former UBS and IMF execs join Utility Settlement Coin blockchain company Fnality; Company founded to lead the Utility Coin Settlement project has made three senior hires as it moves forward with initiative.
Hayley McDowell – The Trade
Fnality International has made three senior appointments, two of which are former executives from UBS and the International Monetary Fund (IMF), to bolster its management team shortly after the company was founded.

Government Cryptocurrency Cop Heads to Law Firm; Departure comes as Securities and Exchange Commission takes on bigger crypto cases
Dave Michaels – WSJ
The former government lawyer who managed Washington’s crackdown on cryptocurrency fraud is joining Davis Polk & Wardwell LLP, a white-shoe law firm whose clients include some of Wall Street’s biggest banks and stock exchanges.

Facebook’s Libra in Focus as U.S. Group Visits Switzerland
Patrick Winters – Bloomberg
Facebook Inc.’s Libra cryptocurrency will be discussed as a delegation of American lawmakers visits Switzerland in the coming days.

Bitfinex Faces Trial Over New York Claim That it Hid Losses
Olga Kharif and Chris Dolmetsch – Bloomberg
New York judge ruled that attorney general’s suit can proceed; The litigation has impacted related companies’ use of funds
Crypto exchange Bitfinex faces a trial over New York Attorney General Letitia James’s claim that it hid the loss of comingled client and corporate funds.

LSE-listed crypto miner Argo to boost electricity supply by over 350%, aiming to become the world’s largest by 2020
The Block Crypto
The London Stock Exchange (LSE)-listed cryptocurrency mining firm Argo Blockchain is set to increase its electricity supply by 357%, aiming to become “the world’s largest publicly-listed crypto miner by 2020.”

Central Banks, Stablecoins and the Looming War of Currencies
Michael J Casey – Coindesk
Facebook’s Libra project, in which a group of companies managing a basket of fiat currencies will maintain a digital token at a stable, redeemable value, has taken the idea of “stablecoins” out of the crypto echo chamber and thrust it into the public arena.

Dark Web Drug Dealer to Forfeit Millions of Dollars in Illicit Crypto Earnings
Daniel Palmer – Coindesk
A man has been sentenced in San Diego, California, for conspiring to sell drugs over dark web markets for cryptocurrencies.

Deloitte Launches ‘Blockchain In a Box’ to Help Enterprises Showcase Tech
Daniel Palmer – Coindesk
Deloitte, one of the “Big Four” professional services firms, has officially launched a plug-and-play product aimed to help enterprises showcase their blockchain solutions to clients.


Trump calls for big rate cut and economic stimulus
The US central bank should consider cutting interest rates by one percentage point and introduce “some quantitative easing” stimulus measures, president Donald Trump has said.

Trump Says a Recession Isn’t Possible Because ‘Consumers Are Rich’
Ryan Bort – Rolling Stone
President Trump isn’t worried about the economy. No really, he isn’t. Everything is going to be fine. Seriously. All of that talk of a recession last week and over the weekend, spurred by a few ominous market indicators, a sputtering global economy, and Trump’s continuing trade war with China, was overblown hype peddled by forces that want nothing more than to make the president look bad. After all, how bad could things really be when we’re all so rich?

****JB: I’m rich! Didn’t even know it.

US enticed by Greenland’s rare earth resources; Search is on to secure supplies of critical metals that China dominates
Harry Dempsey – FT
President Donald Trump’s idea to buy Greenland may be fantasy, but the US has staked an interest in the island’s resources ó in particular, its rare earth minerals.

Europe’s Shaky Union Faces Trump’s G-7 Stress Test
Brendan Murray – Bloomberg
Europe has a lot at stake ensuring the 2019 Group of Seven summit doesn’t end badly like last year’s gathering in Canada.

Europe Has Had Enough of Trump’s Tirades From Trade to Security
Alan Crawford, Andre Tartar and Hayley Warren – Bloomberg
When Emmanuel Macron welcomes Donald Trump to the Group of Seven summit in France, he’s sure to deploy one of his vice-like handshakes. But as he tightens his grip, loosening Europe’s dependence on the U.S. will be on Macron’s mind.

Old U.S. Friends Brace for Meeting With Trump
Alan Crawford – Bloomberg
When Angela Merkel and Emmanuel Macron made back-to-back visits to the White House last year in a coordinated effort to sway Donald Trump, he rebuffed their approaches.

Twitter, Facebook Say China Used Fake Accounts to Target Hong Kong Protests
Sarah Frier – Bloomberg
China-backed effort tried to undermine legitimacy of protests; Twitter says it will no longer accept ads from state-run media
Twitter Inc. found and deleted hundreds of accounts it said China used to undermine the Hong Kong protest movement and calls for political change.

It shouldn’t be partisan or divisive to want a moral role model in the White House
Robert Schmuhl – USA Today
FDR called the presidency ‘a place of moral leadership.’ That’s what I’ve taught students for decades. Will we get that back after Donald Trump?
I received an overture the other day to compose a journalistic effusion on the consequences of presidents ó well, to be specific, one president ó trafficking in conspiracy theories and using the news media to amplify unverified, if not completely false, allegations. You can probably guess that an aging president-watcher would harbor a view or two on that subject. But, in a rare spasm of wordsmith reluctance, I declined.

What Trump’s immigration crackdown means for this big chicken processor; Park Ridge-based Koch Foodsóthe target of a major ICE raid earlier this monthóruns on a steady supply of migrant labor.
Claire Bushey – Crain’s Chicago Business
Immigrant workers willing to work long hours in tough conditions for low pay have bolstered the bottom line at Koch Foods and other poultry processors for decades. Now White House attempts to restrict immigration threaten industry profit margins already eroded by low unemployment.


FINRA Announces Governor Elections and Appointments; WASHINGTONóFINRA announced today the election or appointment of four Governors to its Board of Governors:
Chris W. Flint, President & Chief Executive Officer, ProEquities, Inc. and Senior Vice President, Distribution Companies for Protective Life Insurance Company, was elected by large firms as a Large Firm Governor, one of three representatives of large firms on the Board. FINRA small firms elected Linde Murphy, Chief Compliance Officer, M.E. Allison & Co., Inc., as one of three small firm representatives on the Board of Governors.

S.Korea to probe interest rate derivatives sales
South Korea’s financial regulator said on Monday it would investigate interest rate derivative products sold by banks and brokerage firms that put investors at risk of losing nearly all their money.

States to Move Forward With Antitrust Probe of Big Tech Firms; Investigation would put additional scrutiny on an industry already under a federal spotlight
John D. McKinnon and Brent Kendall – WSJ
A group of states is preparing to move forward with a joint antitrust investigation of big technology companies, according to people familiar with the situation, adding another layer of scrutiny to an industry already under a federal spotlight.

Disney Whistleblower Tells MarketWatch Revenue Was Inflated
Rob Golum – Bloomberg
Former accountant has filed a series of tips with SEC; In response, Disney says the claims are ‘patently false’
A former Walt Disney Co. accountant has accused the company of overstating revenue for years and has filed a series of whistleblower tips with the U.S. Securities and Exchange Commission.

Investing and Trading

Investors’ New Weapon in Japan: Votes to Embarrass the Boss; Taboo is weakening, as part of a yearslong push to improve profitability and corporate governance
Suryatapa Bhattacharya and River Davis – WSJ
Shareholders are growing more vocal in Japan, lodging protest votes against chief executives, presidents and other company directors. Embarrassing bosses like that was once rare in the consensus-based corporate culture. But the taboo is weakening, as part of a yearslong push to improve Japanese companies’ profitability and corporate governance, and to encourage more involvement from investors.

The corner of the bond market that won’t go negative
Thomas Hale – FT
On Friday, Aza Teeuwen at TwentyFour Asset Management had some interesting observations about triple-A securities at a time of pervasive negative rates. He points out that the highest rating tranches of collateralised loan obligations, which are backed by lending to companies, trade at yields of over 1 per cent in the euro primary market – far above tranches of other asset-backed securities (ABS) with similar, or even much lower, ratings.

Buy Gold ‘At Any Level,’ Mobius Says as Central Bankers Ease
Ranjeetha Pakiam and Haslinda Amin – Bloomberg
Investor says rise of ‘psycho’ digital currencies aids demand; Bullion has rallied to the highest since ’13 as Fed cuts rates
Veteran investor Mark Mobius gave a blanket endorsement to buying gold, saying accumulating bullion will reap long-term rewards as leading central banks loosen monetary policy and the rise of cryptocurrencies serves only to reinforce demand for genuinely hard assets. Prices climbed.

Companies Might Be Smarter With Workers in the Boardroom; Top executives don’t always know what’s going on at the operations level.
Noah Smith – Bloomberg
When legendary physicist Richard Feynman was called in to help solve the mystery of the Challenger space shuttle explosion in 1986, he didn’t use advanced math. Instead, according to his own account of the incident, he went and talked to the engineers. The workers who actually built the space shuttle, he found, had a good idea of which parts were likely to fail. Talking to them helped point Feynman toward a flaw in the rubber O-ring joints, which everyone eventually realized was what brought the shuttle down.

Opinion: The U.S. stock market right now is riskier than you think
Mark Hulbert – MarketWatch
Will the stock market’s real rate of return please stand up? It’s an important question. Depending on your frame of reference, the U.S. stock market is either performing fantastically or dismally.

Investors Rush Into Havens as Growth Fears Persist; Portfolio managers are hedging their bets in case the argument for recession becomes clearer
Amrith Ramkumar and Ira Iosebashvili – WSJ
Investors are snapping up safer assets including gold, dividend-paying stocks and the Japanese yen, as portfolio managers hedge their bets with major U.S. stock indexes near record highs.


Banks Want Efficiency. Critics Warn of Backsliding.
Jeanna Smialek, Peter Eavis and Emily Flitter – NY Times
A decade after big banks needed government support to dig out of the financial crisis, the Federal Reserve is slowly, but steadily, making a series of regulatory changes that could chip away at new requirements put in place to prevent a repeat of the 2008 meltdown.

Move Over, Shareholders: Top CEOs Say Companies Have Obligations to Society; Business Roundtable urges firms to take into account employees, customers and community
David Benoit – WSJ
The leaders of some of America’s biggest companies are chipping away at the long-held notion that corporate decision-making should revolve around what is best for shareholders.

Pimco looks to offload ultra-hot bonds after huge rally; Bond giant trims positions, saying debt prices could slump on US-China trade dÈtente
Robin Wigglesworth – FT
Pimco has pared its positions in government debt on fears that a breakthrough in US-China trade talks could trigger a violent sell-off, putting an end to one of the biggest fixed income rallies in history.

New Danske Bank CEO Does Away With Thousands of Job Titles
Frances Schwartzkopff – Bloomberg
Danske Bank A/S is getting rid of thousands of job titles as the lender rebuilds its image after a year of scandal and losses.

Humbled Deutsche Bank faces battle in its own backyard
Tom Sims, Patricia Uhlig – Reuters
Online retailer Zalando is just the kind of fast-growing German business with foreign expansion plans that Deutsche Bank Chief Executive Christian Sewing needs to help drive the struggling lender’s recovery.


Hong Kong billionaire tycoons call for end to protests as unrest affects their profits
Kathryn Diss – ABC News (Australia)
Hong Kong’s property tycoons are hurting, the share market is tanking and the tourism sector has taken a beating as the pro-democracy movement continues to strangle the city.
While the US-China trade war has fuelled some of the losses, weeks of violent protests have wreaked havoc for investor sentiment and caused huge reputational damage for the semi-autonomous territory as an economic powerhouse.

****JB: It is worth noting that these billionaires are neither siding with nor opposing the protestors. They just want it to stop because it hurts their bottom line.

Line and Nomura Launch Zero-Commission Online Brokerage in Japan
Takashi Nakamichi and Takako Taniguchi – Bloomberg
Line Corp. and Nomura Holdings Inc. said they launched an online brokerage venture which will charge zero commissions for trading in Japanese shares.

Price Surge Means `Hell’ for India Gold Sales as Demand Ebbs
Swansy Afonso and Ranjeetha Pakiam – Bloomberg
Trade body expects demand to be at par with 2016’s 666 tons; Gold futures in India have gained about 17% since June
Jewelers in India, the top consumer after China, are facing a bleak outlook as record high prices and fading demand threaten to drag annual gold sales to the lowest in three years.

Germany to Test Haven Demand as Ultra-Long Bond Coupon Set at 0%
James Hirai – Bloomberg
Germany will sell an ultra-long bond at a 0% coupon for the first time on Wednesday, in a flurry of debt sales in the next two weeks offering negative rates.

Biggest European Stock ETF Sees Worst Exit of 2019 as Risks Rise
Ksenia Galouchko – Bloomberg
Vanguard FTSE Europe ETF has lost $331 million in August; European political, growth woes weigh on investor sentiment
European equities may have pared back some losses but passive investors continue to rush out the door, as the largest exchange-traded fund focused on the region’s stocks suffered its biggest single-day outflow since December.

Denmark’s Jyske Bank imposes negative interest rates; Customers with balances over DKr7.5m will have to pay a default rate of 0.6 per cent a year
Richard Milne – FT
Jyske Bank has become the first Danish lender to impose negative interest rates on customer deposits and has warned that sub-zero rates were looking “rather permanent”.

S.Korea may consider easing share buy-back, short-selling rules
South Korea may consider easing market restrictions, such as those on share buy-backs or short selling, to stabilise local financial markets, Vice Finance Minister Kim Yong-beom said at a scheduled meeting on Tuesday.

Palestinian president fires advisers as financial crisis hits
Ramallah (Palestinian Territories) (AFP) – Palestinian president Mahmud Abbas has fired all of his advisers, his office said Monday, amid a financial crisis in the occupied West Bank that has prompted deep salary cuts.


EU rebuffs Boris Johnson’s effort to ditch Brexit backstop; Letter to Donald Tusk on Irish border gets cold reception in Dublin and Brussels
Sebastian Payne and Arthur Beesley – FT
Boris Johnson has been rebuffed in his latest effort to jettison the Irish border backstop from the Brexit withdrawal agreement, following his letter to the EU setting out why he sees it as “inconsistent” with his vision for the UK’s relationship with the bloc.

Hong Kong Billionaire Bets on a Brexit Certainty; For Li Ka-shing’s CK Asset Holdings, one thing is clear: Brits aren’t going to stop drinking beer.
Chris Hughes – Bloomberg
The 2.7 billion-pound ($3.3 billion) offer for Greene King Plc from an investment group backed by Hong Kong billionaire Li Ka-shing is a sign one thing is certain whatever the outcome of Brexit: Brits will keep drinking beer and eating pies.

Boris Johnson’s Bid to Renegotiate Brexit Starts on Irish Border
Robert Hutton and Ian Wishart – Bloomberg
Says U.K. won’t put border up if the EU promises the same; Corbyn demands release of latest no-deal Brexit impact report
U.K. Prime Minister Boris Johnson made his first public attempt to renegotiate the Brexit deal by telling the European Union he wants to explore different ways to prevent a hard border on the island of Ireland.

British Crops Are Being Rushed to Market Before Brexit Deadline
Megan Durisin and Olivia Konotey-Ahulu – Bloomberg
A no-deal Brexit may roil trade with European grain buyers; British barley, wheat harvests expected to rise this season
British farmers are rushing to sell their big harvests of wheat and barley before October to avoid the potential market chaos of a no-deal Brexit.

Fate of Brexit deal in hands of the EU: UK Conservative chairman
The European Union needs to show flexibility over the Irish border “backstop” because the issue of whether Britain leaves the bloc with or without a deal is now mainly up to Brussels, Conservative party chairman James Cleverly said on Tuesday.

EU officials reject Boris Johnson’s new Brexit demands before he even sits down with European leaders
Thomas Colson – Business Insider
European officials in Dublin and Brussels have immediately rejected UK Prime Minister Boris Johnson’s new demand to renegotiate Britain’s exit deal, ahead of his meetings later this week with German Chancellor Angela Merkel and French President Emmanuel Macron.

Jeremy Corbyn will do ‘everything necessary’ to stop no-deal Brexit; Labour leader promises significant domestic reform in pitch for potential snap election
Sebastian Payne – FT
Jeremy Corbyn pledged to do “everything necessary” to avoid a no-deal Brexit on October 31 as well as setting out his electoral platform ahead of a potential general election later this year.


Uber confirms it’s moving to massive space in The Old Post Office
Ally Marotti and Ryan Ori – Chicago Tribune
Uber Technologies has signed a 10-year lease for a massive amount of office space at The Old Post Office, giving it room for thousands of employees.

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Past Newsletters

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