“Regulatory Creep” – Legal Issues in U.S. v. Thakkar
Thom Thompson for John Lothian News
Thursday afternoon as part of the FIA Law & Compliance Conference, Marc Nagel, attorney advisor to the derivatives training firm Exchange Analytics, moderated a panel composed of attorneys Gary DeWaal and Renato Mariotti discussing the recent federal criminal charges against computer programmer Jitesh Thakkar.
The panel was sponsored by Thompson Coburn. Mariotti, a partner at Thompson Coburn, and DeWaal, special counsel at Katten Muchin Rosenman, had a history of disagreeing about many aspects of the government’s case – the first federal spoofing case – which Mariotti, as a federal prosecutor in the Northern District of Illinois, successfully brought against Michael Coscia in 2015.
To read the rest of the story, go here.
Hits & Takes
The London Metal Exchange has appointed Gay Huey Evans as the first female chair in its 142-year history. See the press release under “Exchanges” for more about her.~SR
The CME Group’s astounding Micro E-mini equity complex volume jumped 20% yesterday, another record day, with 632,570 contracts trading, including 340,710 Micro E-Mini S&P futures. Just WOW!~JJL
Chip Dempsey is no longer with the OCC. He was formerly their chief commercial officer. I found that out when he introduced himself on a panel at the Association of Futures Markets Conference in Chicago.
Leo Melamed at the conference told the story about how he arranged a trip to Moscow to consult for Vladimir Putin on how to mitigate wheat harvest shortages. The trip was arranged by his friend HIllary Clinton. However, when Leo arrived in Moscow, he received word from Putin that he could not meet, as he was needed for a European meeting called by German Prime Minister Merkel related to the Greek debt crisis. Thus, none of the Russian exchanges have had Leo’s direct help.~JJL
When Leo was introduced, part of the introduction included a reference to a story I wrote about him in which I called him the greatest futures industry salesman in history. After his talk, I asked Leo who he thought was the second best salesman in the history of the futures industry was. His reply was classic: “Well, it sure as heck wasn’t Pat Arbor,” he said.~JJL
Curious about non-horned unicorns? Looking at the IPO pipeline? Check out this infographic: Visualizing the Unicorn Landscape in 2019. ~SD
Currency.com, a Belarusian exchange, announced tokenized Belarusian government bonds with additional government and corporate bonds coming. Just, interesting.~JK
It’s been a conference laden week in Chicago. Barchart hosted its cmdtyExchange event, the Trading Show was at Navy Pier, the Morningstar Investment Conference is at McCormick Place, and the Association of Futures Markets is hosting its 22nd Annual Conference at the Palmer House Hilton. (And for good measure, Thom Thompson is in D.C. for the FIA Law & Compliance Conference.)~SD
Algos and Execution: How Do You Roll? – Thomas Ascher, Quantitative Brokers
Quantitative Brokers spent 2018 building out its global footprint. With offices globally now, the firm offers 24/7 high touch support for its low touch offering – algorithms for best execution. In this video, Quantitative Brokers Executive Chairman Thomas Ascher talks about why traders need liquidity seeking algorithms.
Watch the video »
Not FiTT For Purpose
There has been renewed talk recently among the Democratic Presidential candidates about the long proposed Financial Transaction Tax (conveniently we will refer to as FiTT, though more commonly referred to as FTT). Although it is highly unlikely to pass anytime soon with the current President and Republican Senate majority, we thought we would provide our take on why this proposal is not a good idea. It is not like a sales tax, where you don’t like paying it but it is not going to prevent you from making the purchase anyway.
****There have been plenty of high level theory/policy pieces on a potential financial transaction tax, but this post from QB actually gets down to real-world examples: If you’re a trading firm that buys and holds a December crude oil contract for a day, what would the tax be? Answer: $3.12, based on some approximations. (More examples in the post.)~SD
Air pollution from every single power plant in the world, tracked
WattTime is going to use satellite imagery to precisely track the air pollution (including carbon emissions) coming out of every single power plant in the world, in real time. This is a very big deal. Poor monitoring and gaming of emissions data have made it difficult to enforce pollution restrictions on power plants. This system promises to effectively eliminate poor monitoring and gaming of emissions data.
****Also from the story, air pollution is the fifth greatest mortality risk in the world.~JK
Thursday’s Top Three
First – a correction. Our second most read piece Wednesday was Sarah Rudolph‘s JLN story about the RCG integration with Marex Spectron, RCG Weathers Record Cold, Becoming RCG Division of Marex Spectron and the benefits it has brought. ~JK
Thursday’s top three were led by Bloomberg’s piece on a use case for security tokens in SocGen Introduces Crypto to $2 Trillion Market for Covered Bonds. Second was Matt Raebel’s JLN coverage of the Bcause bankruptcy case, http://bit.ly/2WtTmnS|Bcause in Talks With Bitmain, Others To Climb Out of Debt. Third was Bloomberg’s Burned-Out Broker Got Rich Giving Free Trades to Millennials.
150,505,172 pages viewed; 23,713 pages; 218,803 edits
CrytpoMarketsWiki Coin of the Week: Bitcoin (BTC)
Bitcoin continues its slow recovery as developers continue to make it easier for commercial users to use the cryptocurrency. Bluewallet, a crypto wallet available for purchase in the Apple iTunes store, allows users to make payments using bitcoin using an Apple Watch and bitcoin’s Lightning Network, a software protocol that significantly increases the speed of bitcoin P2P transactions.
China Is Armed With Powerful Market Weapons in Duel With Trump
Katherine Greifeld – Bloomberg
Currencies, Treasuries and soybeans are seen as cudgels; Yuan and beans have fallen, but bonds have remained buoyant
China has a powerful financial-market arsenal for its trade tussle with America, including a hoard of Treasuries and its currency. But using those weapons is not without cost.
CME gains boost with new ‘micro’ futures contracts; Success for financial infrastructure industry despite investors turning more cautious
Philip Stafford – FT
The Chicago Mercantile Exchange’s record-breaking launch of “micro” e-mini equity index futures contracts provided a shot of optimism this week. The new contracts trade in smaller increments than the exchange’s normal e-mini futures, which are widely used by investors to speculate or hedge against movements in the S&P 500. Those longstanding contracts traded an average of 1.8m a day in March.
Dublin-based Ion Group in talks to buy Mergermarket owner; Software and data group nears deal for £1bn-plus takeover of Acuris
Javier Espinoza, Philip Stafford and Arash Massoudi – FT
Ion Group, an acquisitive Irish-based financial software and data group, is in talks to buy the owner of Mergermarket in a transaction that is expected to fetch just over £1bn, three people close to the talks said.
Trader who has waited his entire career for an Uber IPO; Citadel Securities’ market maker has role at the centre of the blockbuster listing
Nicole Bullock – FT
On Friday, Peter Giacchi will get up at 4am, as he does every morning. The senior trader at Citadel Securities will then take the same 5.45am ferry from Belford, New Jersey, to lower Manhattan, sit in the same place (starboard, fourth row, first seat) use the same turnstile entering the New York Stock Exchange, and open public trading in Uber ó hopefully without a hitch.
Hedge Funds No Longer Stars of Their Flashiest Conference; Politicians, venture capitalists highlighted the SALT gathering hosted by Anthony Scaramucci
Rachael Levy – WSJ
Daniel Loeb was once a featured speaker at a Las Vegas event considered a staple of the hedge-fund circuit. This year the billionaire manager didn’t show.
New iShares ESG Fund Off to Roaring Start; Fund, which will try to invest in best U.S. corporate citizens, expects to raise more than $800 million with its trading launch
Asjylyn Loder – WSJ
A brand new exchange-traded fund that tries to invest in the best corporate citizens in the U.S. began trading at Thursday’s opening bell, but is already on track to be one of the most successful fund launches in history.
CFTC Charges Former Natural Gas Head Trader with Fraudulently Mismarking Futures and Physical Trades
The Commodity Futures Trading Commission (CFTC) filed a federal civil enforcement action today in the U.S. District Court for the Southern District of New York against defendant David Smothermon of Houston, Texas, charging him with defrauding the commodities-trading company where he worked as president and head trader of the company’s gas division by scheming to inflate the reported mark-to-market profit-and-loss value of the gas division’s overall trading book in order to conceal losses that ultimately grew to cause the company to suffer more than $100 million in realized losses.
Large US banks up security to get ahead of the quantum threat
David Beach – bobsguide
Large US banks are racing to get ahead of quantum computing powered encryption breakers, by showing interest and investing early in quantum key distribution (QKD), the only known prevention mechanism “This is like the space or arms race and it’s the sort of race the US can’t afford to come second in,” says John Prisco, CEO of Quantum Xchange, the quantum security firm, describing the real threat the move to quantum computing will have on global cybersecurity.
Currency Mispricing and Dealer Balance Sheets
ino Cenedese, Pasquale Della Corte and Tianyu Wang – Bank Underground
Deviations from covered interest parity (CIP) represent an arbitrage opportunity, at least in theory. In a new paper, we show that post-crisis financial regulation may explain why this mispricing persists and cannot be arbitraged away. Our exercise uses a unique dataset on contract-level foreign exchange derivatives coupled with an exogenous variation associated with the public disclosure of the leverage ratio. We find that dealers with a higher leverage ratio demand an extra premium from their clients for synthetic dollar funding (e.g., borrowing in euros and swapping into dollars) relative to direct dollar funding (i.e., borrowing dollars in the money market), resulting in CIP deviations.
A Rothschild Flew the Nest and Still Became Fabulously Rich
Benjamin Stupples – Bloomberg
Jacob Rothschild, 83, is retiring from RIT Capital Partners; He and family will remain significant shareholders of the firm
Four decades ago, Jacob Rothschild did something crazy. After a family falling out, he turned his back on the riches of Europe’s biggest banking dynasty to pursue his own interests.
Ethereum Co-Founder Says Tether, Bitfinex Mess Won’t Get Better
Vildana Hajric – Bloomberg
Other stablecoins could benefit as a result, says Joe Lubin; Tether, Bitfinex accused of obscuring $850 million in losses
The turmoil surrounding Tether and Bitfinex, both of which are ensnared by allegations of wrongdoing, isn’t likely to subside, said Joseph Lubin, a co-founder of Ethereum and founder of crypto-related software company ConsenSys.
Beleaguered Bitfinex Says Its Crypto Exchange Turns 97% Profit
Olga Kharif – Bloomberg
Offering circular says net profit was $404 million last year; Exchange seeks to raise $1 billion amid government probes
Bitfinex is giving potential investors a peek into just how lucrative it can be to operate a cryptocurrency exchange.
Hedge Funds Raid BNP’s Shuttered Prop Desk in Race for Talent
Donal Griffin and Nishant Kumar – Bloomberg
Traders from Opera unit find new roles after January closure; Hedge funds compete for traders as returns lag, recruiters say
BNP Paribas SA’s closure of its prop trading desk has triggered a hiring frenzy for the world’s biggest hedge funds.
Exchanges, OTC and Clearing
TMX Group Announces Trayport Acquisition of VisoTech
TMX Group Limited (TMX Group) today announced that Trayport Limited, a wholly owned subsidiary of TMX Group has entered into an agreement to acquire Vienna-based VisoTech, a leading provider of European short-term energy trading solutions.
B3 Announces Results For The First Quarter Of 2019
Brasil, Bolsa, Balc„o reports today its first-quarter 2019 (1Q19) earnings. Total revenues reached R$1,531.9 million, a 24.1% increase over the same period of the previous year (1Q18), while recurring EBITDA totaled R$970.8 million, up by 27.7%. The Company¥s recurring net income in 1Q19 was R$736.5 million.
Liquidity Matters: Amid Equity Market Melt Up, Dark Pools Continue to Slip
Larry Tabb – Tabb Forum
A declining VIX framed the US equity market in April 2019, as lower trading volumes followed lower volatility. As trading volumes drifted down, Trade Reporting Facilities increased their market share month over month, while ATSs continued to lose trading volume and Citi shuttered its CitiBlock dark pool.
TMX Group Limited Reports Results For First Quarter Q1/19
TMX Group Limited today announced results for the first quarter ended March 31, 2019.
LME announces Gay Huey Evans OBE as new Chairman of the Board
The London Metal Exchange (LME) is pleased to announce that Gay Huey Evans OBE has been elected as Chairman of the Board of Directors of the London Metal Exchange. Gay will replace Sir Brian Bender when he retires from the Board in early December 2019, as previously communicated.
STEMMER IMAGING AG new in the Prime Standard
STEMMER IMAGING AG (ISIN: DE000A2G9MZ9 ) is listed in the Prime Standard of the Frankfurt Stock Exchange today. The company, based in Puchheim near Munich, was previously listed in the Scale segment for small and medium-sized enterprises. STEMMER IMAGING is the fourth company to move from Scale to the Regulated Market.
TMX Group Announces Trayport Acquisition of VisoTech; London-based connectivity platform for European wholesale energy markets to add leading short-term and algorithmic trading solutions
TMX Group Limited (TMX Group) today announced that Trayport Limited, a wholly owned subsidiary of TMX Group has entered into an agreement to acquire Vienna-based VisoTech, a leading provider of European short-term energy trading solutions.
TMX Group Limited Declares Dividend of $0.62 per Common Share
The Board of Directors of TMX Group Limited today declared a dividend of $0.62 on each common share outstanding, payable on June 7, 2019 to shareholders of record at the close of business on May 24, 2019.
Tradeweb Earnings Top Views; New IPO Tradeweb Stock Near Buy Point
Investor’s Business Daily
Online trading platform Tradeweb Markets (TW) reported first-quarter earnings and revenue slightly above estimates. Tradeweb stock rallied in Thursday’s trading, moving toward its first-ever buy point.
SGX updates rules on securities trading and market practices
Singapore Exchange (SGX) is amending on 3 June 2019 a raft of SGX rules including those on securities trading and market practices after generally supportive feedback received during an earlier public consultation.
Quants, Algos, and AI
A recent graphic by Tractica shows that over $7.5 billion dollars is forecasted to be spent on Algorithmic trading strategy improvement via AI in the next 10 years. Wow! That’s a lot of quants in the world’s payroll. What exactly is a quant? How do algorithms (algos) fit in? And what does Artificial Intelligence have to do with all of it?
AllianceBernstein looks to OpenFin for new desktop technology infrastructure; US asset manager to overhaul digital infrastructure based on OpenFin operating system incorporating legacy and third-party applications.
John Brazier – The Trade
US-based investment management and broker AllianceBernstein has partnered with OpenFin to overhaul its existing desktop technology infrastructure to a cloud-based operating model.
MarketAxess outlines plans for Open Trading live order book; Live Markets will offer view of two-way, actionable prices of most traded bonds on Open Trading platform.
Hayley McDowell – The Trade
MarketAxess has revealed plans to establish a live order book providing market participants with a view of two-way, actionable prices in the most actively traded bonds on its Open Trading marketplace.
Binance, Bitfinex and Tether: What’s the Worst That Can Happen?
Daniel Cawrey – Coindesk
All investors, institutional or otherwise, have a duty to try to see the world as it truly is. Not as they wish it to be. This is especially true when putting investment dollars at risk. One needs to ask questions to understand elements influencing the outcome of an investment. One of those questions is: How could things go wrong here? Investment guru Charlie Munger, for example, says: “Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there?”
Crypto Exchange Binance Says It’s Revamping Security in Post-Hack Update
Yogita Khatri – Coindesk
Cryptocurrency exchange Binance said it is revamping security measures after losing some 7,000 bitcoin worth over $40 million in a hack earlier this week. “Significant” changes related to its application programming interface (API), two-factor authentication (2FA) and withdrawal validation are being made, Binance CEO Changpeng Zhao said in a blog post published on Friday. The exchange did not disclose more details regarding these efforts, but said it is also improving its risk management and know-your-customer procedures to fight phishing, among other additional security measures at the back-end.
SEC Commissioner Fears ‘Heel-Dragging’ Will Stifle Crypto Innovation
John Biggs – Coindesk
Hester M. Peirce, a member of the Securities and Exchange Commission, is worried that the regulator is moving too slowly for the crypto ecosystem. Addressing fellow regulators at the Securities Enforcement Forum in Palo Alto, California (the heart of Silicon Valley) on Monday, Peirce said that one year ago she was concerned that the SEC “as one of [the token market’s] potential regulators, would stifle its growth.” She wryly added: “I will admit today that I was very wrong, not about whether the SEC would stifle the industry’s growthóit hasóbut in how it would do it.”
A New Crypto ETF Has Just Been Filed With the U.S. SEC
Daniel Palmer – Coindesk
A prospectus for a new cryptocurrency-based exchange-traded fund (ETF) has just been filed with the U.S. Securities and Exchange Commission (SEC). The proposed ETF, posted by the SEC on May 9, was created by Crescent Crypto Index Services LLC, a subsidiary of Crescent Crypto Asset Management LLC, to track the performance of a market capitalization-weighted portfolio of bitcoin (BTC) and ether (ETH).
Bitcoin’s Software Has Been Rolled Back Before
Jamie Redman – Bitcoin.com News
When Binance lost $40 million to hackers this week, the crypto community discussed reorganizing the chain after it was suggested by a developer from MIT. Many people were upset by this proposition, declaring that there was no way a coordinated effort with miners could be pulled off.
Why Cryptocurrency Investors Are Renouncing Their US Citizenship
Avi Mizrahi – Bitcoin.com
Andrew Henderson is the founder of Nomad Capitalist, a company which helps people from around the world move to different countries while minimizing their tax obligations. In recent years the company has created plans for dozens of people who made their wealth from the cryptocurrency sector, including business owners, traders, investors and consultants.
Binance-Backed Crypto Bank Appoints Deutsche Bank Executive as New CEO
Helen Partz – Cointelegraph
Malta-based cryptocurrency bank Founders Bank has appointed former executive of Deutsche Bank as its new CEO, according to a Bloomberg report on May 9. Backed by major global crypto exchange Binance, Founders Bank plans to assist blockchain and crypto-related firms in securing financial services from traditional banking institutions, the report notes.
US Rep Sherman Calls for Crypto Ban, Says It Threatens to Diminish American Power
Marie Huillet – Cointelegraph
United States Congressman Brad Sherman (D-CA) has called on colleagues to outlaw cryptocurrencies, saying they threaten to disempower American foreign policy and diminish the rule of law. Crypto-oriented non-profit Coin Center tweeted the remarks of the congressman, a Democratic representative for California’s 30th congressional district, on May 9.
Americans can now move their money into bitcoin from thousands of U.S. banks
Christina Comben – Bitcoinist
Earlier this year, Abra launched its non-custodial Bitcoin-backed global investment app to democratize investing in stocks, bonds, EFTs, and cryptocurrencies. Now it’s stepping up a gear, making it easier for users to move money to and from their banks to crypto.
Why bitcoin isn’t a big focus yet at PayPal (Video)
Brian Sozzi – Yahoo Finance
PayPal isn’t yet entirely sold on bitcoin being the future of payments. “We have teams clearly working on blockchain and cryptocurrency as well, and we want to take part in that in whatever form that takes in the future ó I just think it’s a little early on right now [on bitcoin],” PayPal Chief Financial Officer John Rainey said on Yahoo Finance’s The First Trade Tuesday.
FinCEN Issues New Crypto Interpretive Guidance
The Block Crypto
The Financial Crimes Enforcement Network (FinCEN) issued new “interpretive guidance” today that “consolidates current FinCEN regulations, and related administrative guidance issuance since 2011” relating to the application of the Bank Secrecy Act (“BSA”) to money transmission involving “convertible virtual currencies” (“CVC”). The first significant release by FinCEN since issuing guidance in 2013, FinCEN says that this thirty-page document is offered to “help financial institutions comply with” existing BSA obligations, the violations of which can result in significant criminal and civil liability to “money servicing businesses.”
All of It Dark, All of It P2P: After the Binance Hack, Bitcoin Doesn’t Cut It
Amir Taaki – Coindesk
Binance, the biggest crypto exchange by volume, was hacked on Tuesday. The hacker took $40 million or 7000 BTC.
Crypto Bank Hires Former Deutsche Bank Executive
Olga Kharif and Nour Al Ali – Bloomberg
Startup seeks to service tech sector, including blockchain; Altunis was global co-head of institutional client group
Founders Bank, which plans to offer financial services to crypto companies, has appointed former Deutsche Bank executive Kenan Altunis as chief executive officer.
U.S. Slaps Higher Tariffs on Chinese Imports as Trade Talks Resume; President says U.S. would impose fresh levies on $325 billion in Chinese goods as negotiators move to salvage potential deal
Bob Davis and Josh Zumbrun – WSJ
The U.S. increased tariffs on $200 billion of Chinese goods to 25% Friday as President Trump ratcheted up pressure on Beijing and threatened to impose additional levies on virtually everything China exports to the U.S.
Trump Tariffs on China Likely to Cost 400,000 Manufacturing Jobs, Group Says
John Harney – Bloomberg
President Donald Trump’s higher tariffs on Chinese imports will have “dire consequences” for U.S. equipment manufacturers and worsen prospects for American farmers and others already reeling from lower commodity prices, an industry trade group warned on Friday.
Stocks Show It Hasn’t Paid to Be Long on Donald Trump; A big-league disappointment leads market commentary. Plus, inversion reversion and a weakening yuan.
Robert Burgess – Bloomberg
U.S. stocks were on the defensive Thursday as traders awaited the results of a crucial meeting between U.S. and Chinese trade negotiators. With little to divine from the day’s market activity, it’s a good time to dissect the longer-term price action in equities to see what that might say about the Trump administration’s willingness to escalate the trade wars.
Trump’s Trade War Is Terrible Politics; By personalizing his signature policy, the president is creating some major risks for himself.
Jonathan Bernstein – Bloomberg
I can’t think of a recent historical parallel to President Donald Trump’s continuing trade wars. Just this week, we saw new tariffs imposed on Chinese products, threats of retaliation, and the promise of yet another round of punitive measures to follow. Whether this is brave or foolhardy is perhaps up for debate. But it’s certainly unusual.
GOP proposes more Puerto Rico aid in latest offer to Democrats
Sarah Ferris and John Bresnahan – Politico
Congressional Republicans on Thursday floated a new disaster aid proposal to Democrats to break the logjam over Puerto Rico, but it is unlikely to end the bitter, monthslong stalemate that has frustrated both parties, according to multiple aides. The Republicans’ latest funding offer would add billions of dollars in funding under the Senate’s disaster-aid bill, which would dole out badly needed cash to states ravaged by wildfires, hurricanes and severe flooding. It includes hundreds of millions more for Puerto Rico, but falls short of resolving the key sticking point, which has pitted Democrats against President Donald Trump since last year.
Here’s why Democrats may rethink impeaching Trump
Darren Samuelson – Politico
Democrats know that impeachment is a losing proposition against President Donald Trump right now. But there’s another rationale for launching impeachment that has some Democrats reconsidering the idea ó getting access to the sensitive documents and testimony that Trump’s team is withholding.
SEC Proposes Amendments to More Appropriately Tailor the Accelerated and Large Accelerated Filer Definitions
The Securities and Exchange Commission today voted to propose amendments to the accelerated filer and large accelerated filer definitions. The proposed amendments would reduce costs for certain lower-revenue companies by more appropriately tailoring the types of companies that are categorized as accelerated and large accelerated filers while maintaining effective investor protections.
SEC proposes eliminating auditor checks on controls at low-revenue biotechs
Francine McKenna – MarketWatch
The Securities and Exchange Commission on Thursday proposed exempting a group of companies from getting an auditor’s opinion on their controls, a move that would benefit mostly biotechs which have been receiving a high number of warnings.
Statement At Open Meeting On Proposed Amendments To Sarbanes Oxley 404(B) Accelerated Filer Definition, SEC Commissioner Elad L. Roisman, May 9, 2019
So many people across several divisions and offices worked on this release. It would be a disservice to just name a few people, so I will just say a collective “thank you” to the staff of the Division of Corporation Finance, the Office of General Counsel, the Division of Economic and Risk Analysis, the Division of Investment Management, and the Office of the Chief Accountant for all of the time you spent with me and my staff discussing the release and addressing the questions I had. It was really terrific to see how efficiently and effectively the staff throughout the agency was able to collaborate on this proposal. I am hopeful that we are asking the right questions to ensure that commenters have the ability to provide us with feedback that will inform the rules we ultimately adopt.
ASIC announces problem-solving regtech events for financial services industry
ASIC has launched three regulatory technology (regtech) events in conjunction with industry and other stakeholders to promote regtech adoption among Australian financial services organisations.
Remarks of CFTC Chairman J. Christopher Giancarlo at the Futures Industry Association Law & Compliance Division Conference
“The Tao of Derivatives Clearing: Clearinghouse Resiliency, Recovery and Resolution”
Investing and Trading
As the World Fractures, Asset Allocators Are Doing… Nothing. Are They Insane? A peek inside the psyche of today’s most important investors.
Amy Whyte – Institutional Investor
The two largest economies in the world are at each other’s throats. Natural disasters vie for attention with nuclear threats. Social media posts drive market movements. And, somehow, Brexit is still happening. Geopolitical advisory firm Eurasia Group has described the current global environment as “the most dangerous it’s been in decades.” And BlackRock’s geopolitical risk indicator – tracking what the giant asset management firm views as the ten biggest risks to portfolios – has spiked to levels not seen since the heights of the European debt crisis.
The Fleeting Nature of Alpha
Murray Coleman – Evidence Based Investor
Active fund managers tout how much “alpha” they can deliver for investors. Besides representing a Greek letter, this terminology in finance represents how much “excess” return a fund makes relative to a comparative index.
A Short Seller Bets It All on a Spectacular Market Crash; Horseman Capital’s Russell Clark has been bearish for more than seven years. And if he’s wrong? “This could be my farewell interview,” he says.
Nishant Kumar – Bloomberg
Russell Clark’s entry into the high-stakes world of investing could hardly have been less promising. As a graduate trainee at UBS Group AG in Sydney, he was wowed by friends getting rich by day-trading tech stocks in 2000. So he spent his first few paychecks on five dot-com shares. Four crashed to zero, and the fifth lost half its value as the tech bubble burst.
One Lousy Treasury Bond Auction Doesn’t Say Anything; There’s not a whole lot to gain from reading into a single subpar U.S. debt offering.
Brian Chappatta – Bloomberg
The U.S. Treasury Department sold $27 billion of 10-year notes on Wednesday, and by one important metric, it drew the lowest demand in a decade. Some called the results “stunningly weak.” Others claimed that buyers stepping back validated JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon’s observation that yields are “extraordinarily low.”
The Fed Would Struggle to Match Japan’s Bond-Market Control; Fed policy makers want to explore yield targets like those used by the BOJ, but would find the U.S. bond market less accommodating
Mike Bird – WSJ
Federal Reserve board member Lael Brainard raised the question of whether the U.S. should follow Japan’s lead with explicit targets for longer-dated bond yields this week.
A $90 Billion Fee Pool Beckons as BofA Considers First Data Split
Jennifer Surane and Lananh Nguyen – Bloomberg
Bank of America Corp. is about to decide just how big it wants to be in payments. Executives at the lender have only weeks left to tell First Data Corp. whether they want to wind down a decade-old joint venture scheduled to renew automatically in mid-2020, according to an April regulatory filing. Known as Bank of America Merchant Services, the unit helps retailers and other clients handle electronic payments. But Bank of America could offer those services directly, potentially strengthening ties with customers and earning more.
Danske Bank picks ex-ABN banker Vogelzang as CEO to rebuild trust
Jacob Gronholt-Pedersen – Reuters
Danske Bank hired ex-ABN AMRO banker Chris Vogelzang as its new chief executive on Friday as it wrestles to limit the fallout of its involvement in one of the biggest money laundering scandals.
Pimco Hires Nobel-Winning Economist Richard Thaler for Advisory Role
Annie Massa – Bloomberg
Pacific Investment Management Co. added Nobel laureate Richard Thaler as a senior adviser on retirement and behavioral economics.
Scaramucci celebrates hedge funds in Vegas at SALT with less glitz
Svea Herbst-Bayliss – Reuters
After a one-year pause, the hedge fund industry schmooze fest organized by Anthony Scaramucci, the investment manager who briefly served as President Donald Trump’s communications director, returned to the Las Vegas strip this week.
Yet another scam in China’s fund management sector leaves investors scrambling to recoup close to US$1 billion; A Chinese online news portal reported that the company had failed to repay its investors since August 2018
Ren Wei – South China Morning Post
Shanghai-based asset management group PGA Venture Partners has suspended operations after failing to repay investors 6.6 billion yuan (US$967 million), the latest sign that the mainland’s finance sector is plagued by scams and frauds.
A sharp jump in mobile internet prices shows the true value of Zimbabwe’s troubled currency
Farai Shawn Matiashe – Quartz
While Zimbabwe’s central bank is trying to make the case for a respectable value for its three-month old currency the Zimbabwean Real Time Gross Settlement (RTGs) dollars against the US dollar, local mobile operators are showing the RTGs’ true value in, well, real time
Guy Verhofstadt: ‘Never repeat Brexit again’, MEP warns
Frances Perraudin – The Guardian
The European parliament’s Brexit coordinator, Guy Verhofstadt, has warned that the UK’s decision to leave the EU has already done “far more damage than has ever been predicted”. Appearing alongside the Liberal Democrat leader, Vince Cable, at a European election campaign event in Camden, north London, on Friday morning, the leader of the Alliance for Liberals and Democrats for Europe said he wanted to send a message to people on the continent to “never repeat Brexit again”.
Can Jeremy Corbyn heal the Brexit divide?
Laura Kuenssberg – BBC
Jeremy Corbyn wants to ditch the labels of Leave and Remain, to stop worrying about the “48” and the “52” and to concentrate on the country as a whole. He says only Labour can bring the two warring sides together. In other words – time to move on. The idea of turning the page will be tantalising to millions, but peeling those labels off our politics is, for now at least, probably wishful thinking. In his own party, the most fevered question is over whether to allow, even help Brexit on its way, or to have another referendum to try to stop it – that’s an issue of Leave or Remain.
Brexit tears apart support for big parties ahead of European poll
John Burn-Murdoch – Financial Times
The Brexit crisis is tearing into the support for both main UK political parties, according to a Financial Times analysis of recent polls, with most Conservative voters shifting to more Eurosceptic groups and more than a quarter of Labour backers switching to pro-Remain parties.
Economists warn over impact of customs union Brexit
A Brexit involving staying in the customs union would leave the UK £80bn worse off a year than if it had remained in the EU, a report says. The National Institute of Economic and Social Research (NIESR) said tax income would fall by £13bn a year. The research was commissioned by the People’s Vote campaign for a further EU referendum. Some pro-Brexit economists have argued the UK has “nothing to fear” from leaving the EU customs union.