Crypto Market Roiled by New Allegations Against Tether, Bitfinex

Apr 26, 2019

First Read

Hits & Takes
JLN Staff

FIA has published a recap of Boca 2019, the international futures industry conference.~JJL

The always popular Lynne Marek of Crain’s Chicago Business had a good take on the travails of the crypto industry in a recent report. She also had a story about the Jitesh Thakkar trial that we missed. And one on Citadel Securities and Uber. It is important we keep our friends at other publications happy.~JJL

Our friends at Hehmeyer Capital Management are looking for trading managers who have niche type trading strategies that are non-correlated to long-term trend followers. They want managers who accept separately managed accounts, have at least $500K under management and have actual trading performance of at least 12 to 18 months. They also want low volatility and consistent returns, as don’t we all. Interested managers can contact Hehmeyer at[JJL]]

The Chicago Board of Trade Building (where our office is) sent out an email advertising a presentation they are giving on what to do in an active shooter situation. As it happened, the subject line of the email was truncated in my inbox to: “Tenant Notice – Active Shooter.” Scared me and a co-worker more than a little. Worked better than coffee to wake me up, though.~JB

If the current controversy around Craig Wright has you wondering who the man is, he wrote this article on his profile in February. In it, he affirms (once again) that he is the real Satoshi Nakamoto, creator of bitcoin. He also talks about his values and interests.~MR


Nasdaq Opens New Global Headquarters and Client Experience Center: The New Headquarters Expands Media Partnerships and Events, Including New Programming with Barron’s, Bloomberg’s CIO Exchange, NASA and the Washington Post Live
Nasdaq, Inc. (Nasdaq: NDAQ), today announced the opening of its new global headquarters at 151 W. 42nd Street and Client Experience Center on the 10th floor, featuring a 2,100 square foot outdoor terrace above the iconic Nasdaq Tower in Times Square. The new state-of-the-art Client Experience Center has the capacity to host 400 people for industry and corporate events. During the next two years the company will consolidate its remaining New York office space into the new location.

*****Nasdaq also shared this video showing their new headquarters.~JJL


US budget deficit hits record $234 billion in February, national debt
Bob Bryan – Business Insider
The US posted a record budget deficit in the month of February, according to a new report form the Treasury Department.
The budget deficit for February came in at $234 billion, according to the Treasury, higher than the previous monthly record of $231.7 billion set in 2012. The deficit was also 8.7% higher than the $215.2 billion deficit posted in February 2018.

****Yesterday we had a story that Trump understated how many times stocks have hit record highs since he took office. I wonder if this helped?~JB


CryptoMarketsWiki Coin of the Week: Bitcoin SV (BSV)
Bitcoin SV has been delisted from major exchanges including Binance, Kraken, and Shapeshift in response to Craig Wright, the cryptocurrency’s most prominent proponent, filing a lawsuit for libel against podcaster Peter McCormack, as well as threatening similar action against several other people over Twitter.


Thursday’s Top Three
The top story on Thursday was John Lothian News’ video interview, Making an Independent FCM a Global Ag Powerhouse – Gerry Corcoran, R.J. O’Brien. Next was Bloomberg’s Shaving Milliseconds Off Currency Trades Could Make Singapore Billions. Tied for third were Eventus Systems’ Keeping an Eye on the Open: New Guidance from the CME Group and Bloomberg’s Son Creates Stock-Buying Startup After Mom Misses Million Dollar Opportunity


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Lead Stories

Crypto Market Roiled by New Allegations Against Tether, Bitfinex
Erik Larson, Matthew Leising, and Olga Kharif – Bloomberg
Bitcoin drops as case alleges that Tether’s cash was misused; Defendants allegedly obscured their loss of money last year
One of the world’s most widely traded virtual currencies faces renewed doubts about its stability, after New York’s top cop accused the coin’s issuer of participating in a cover-up to hide the loss of about $850 million in client and corporate funds.

Libor’s Looming Demise Is a Mammoth Financial Engineering Task
Benjamin Purvis and Alex Harris – Bloomberg
A matter of when, not if, rate becomes ‘unusable’: Wipf; ARRC has released principles on contract fallback language
The end is coming for Libor and financial markets need to get ready. That’s the view of Morgan Stanley’s Tom Wipf. He heads the Federal Reserve’s Alternative Reference Rates Committee, which on Thursday released recommendations for language to enable contracts linked to the beleaguered London interbank offered rate to work even if the benchmark disappears. Darrell Duffie, a finance professor at Stanford University, has also underscored the risks involved with shifting away from a set of benchmarks that underpin some $200 trillion in dollar-denominated instruments.

Central banks are finally taking up the climate change challenge; Slowly, they are recognising that global warming is a financial stability risk
Gillian Tett – FT
At the end of March, San Francisco’s Federal Reserve board issued an “economics letter” which argued that “in the coming decades, climate change?.?.?.?will have increasingly important effects on the US economy” that, it said, are “relevant considerations” for the central bank.

World Trade Volumes Are Plunging at the Fastest Pace in a Decade
Fergal O’Brien – Bloomberg
The global trade funk is dragging on, with new data on Thursday showing volumes are falling at the fastest pace since the depths of the financial crisis.

Glencore Faces New Corruption Investigation as CFTC Starts Probe
Jack Farchy and Elena Mazneva – Bloomberg
Trading house says inquiry has similar scope to that of DOJ; CFTC director warned of overseas fraud probes last month
Glencore Plc said it’s under investigation by the U.S. Commodity Futures Trading Commission for possible corrupt practices, the latest legal headache for the world’s biggest commodity trader.

New US exchange MEMX could come to Europe, backer hints; Virtu CEO tells conference: ‘The mandate of the MEMX Exchange is not limited to the United States’
Samuel Agini – Financial News
One of the backers of MEMX, the new US exchange set up to challenge Nasdaq and the New York Stock Exchange, has hinted that the model could be exported to Europe.

How Steve Cohen Is Helping Elon Musk Avoid ‘Bonehead’ Questions
Gabrielle Coppola – Bloomberg
A year after Elon Musk lost patience with analysts on an earnings call, Tesla Inc. devoted about eight minutes of its latest quarterly webcast to taking questions from a different audience.

Exchanges, OTC and Clearing

Exchange Updates and Streamlines Guidance Materials
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published one new Guidance Letter, updated four Guidance Letters and withdrew 26 Guidance Materials.

Candidates for Directors, etc
We hereby announce that Japan Exchange Group, Inc. (JPX) and its subsidiaries have nominated candidates for directors, etc. JPX and its subsidiaries will put forth the following candidates for approval at their respective annual general shareholders meetings and general meeting of members to be held on June 19, 2019. T

Japan Exchange Group, Inc. and Consolidated Subsidiaries; Consolidated financial results for the fiscal year ended March 31, 2019 (Based on IFRS), unaudited


Billionaire Laurene Powell Jobs Turned Her LLC Into a VC Machine
Sarah McBride and Gerry Smith – Bloomberg
In the seven years since the death of Apple co-founder Steve Jobs, his 55-year-old widow, Laurene Powell Jobs, has become one of the most high-profile philanthropists in the world. She’s donated tens of millions to innovative K-12 schools, stepped up her role in her longstanding charity helping underprivileged kids go to college and given multiple grants to investigative journalism outlets, in addition to acquiring a majority stake in the Atlantic magazine.

EU backs AI regulation while China and US favour technology; Race for innovation blunts efforts to safeguard basic rights
Siddharth Venkataramakrishnan – FT
The threat of artificial intelligence is not that robots are like us. The problem, according to scientists, is their inhumanity: we cannot make them care about justice or equality.

Regulators Around the World are Circling Facebook
Cecilia Kang and Adam Satariano – NY Times
Regulators on four continents are preparing for a long-awaited showdown with Facebook, after years of disinterest and half-steps. They largely have the same goal: changing the social media company’s behavior. Figuring out how is the hard part.

FlexTrade bolsters sell-side OMS sales team with two new hires; FlexTrade has appointed two co-heads of its sell-side OMS business to boost its client base in the EMEA region.
Hayley McDowell – The Trade
Execution and order management systems specialist FlexTrade has made two new appointments within its sales team as its looks to increase its sell-side business in Europe.


US probe claims Bitfinex covered up $850m loss with Tether reserves; Cryptocurrency exchange co-mingled client and corporate funds, New York attorney general alleges
Alice Woodhouse – FT
The New York attorney general’s office has accused cryptocurrency trading platform Bitfinex of covering up an $850m loss with cash reserves from affiliated digital currency Tether.

Cryptocurrencies Lose $10 Billion on Tether Cover-Up Allegations
Michael Patterson and Eric Lam – Bloomberg
Cryptocurrencies tumbled after New York’s attorney general cast fresh doubt on the stability of Tether, a virtual currency that plays a central role in trading on crypto exchanges around the world.

New Crypto-Mining Malware Targeting Asian Firms With NSA Tools
Yogita Khatri – Coindesk
A new form of malware is targeting enterprises in Asia to mine monero (XMR) cryptocurrency. Cybersecurity software provider Symantec published the news in a blog post Wednesday, saying that over 80 percent of victims are located in China, with nations such as South Korea, Japan and Vietnam also seeing activity.

Hamas shifts tactics in bitcoin fundraising, highlighting crypto risks: research
Tom Wilson, Dan Williams – Reuters
The armed wing of Hamas is using increasingly complex methods of raising funds via bitcoin, researchers say, highlighting the difficulties regulators face in tracking cryptocurrency financing of outfits designated by some as terrorist groups.

US Prosecutors Charge 2 Foreign Nationals Over Bitcoin Investment Scam
Yogita Khatri – Coindesk
Two Nigerian nationals have been indicted by U.S. prosecutors for allegedly running a fraudulent bitcoin investment scheme.

This browser will pay you in cryptocurrency to look at ads
Mike Orcutt – MIT Technology Review
It may sound like a scam, but in fact it’s a new feature available to users of the privacy-focused internet browser called Brave. The payment comes in crypto—specifically Brave’s Ethereum-based Basic Attention Token (BAT). BAT came into existence back in 2017, during the height of the ICO craze. In May of that year, the company behind Brave sold $35 million worth of BAT in less than a minute, becoming what CoinDesk calls “the original sold-out-in-seconds ICO.”

Analysing candlestick patterns within cryptocurrency
Shannon Greaney – Yahoo Finance
Candlestick patterns are visual indicators of how a security, derivative, or crypto asset has moved within a certain period. A period can be a minute, an hour, a week, a month, or any other set time frame. A basic candlestick is shown below.

2015 Bitcoin Price Resistance Re-Emerges Amid Bitfinex Controversy
Omkar Godbole – Coindesk
Bitcoin’s failure to hold on to the gains above the 50-week moving average, currently at $5,477, could prove costly. A similar rejection in July 2015 was followed by a sharp sell-off. The daily chart is reporting a bearish divergence of the relative strength index, while short-term averages have shed bullish bias. So BTC could drop below $5,000 over the next few days. The short-term outlook would turn bullish if the crucial 30-day moving average at $4,998 again provides strong support.

Buterin Proposal Could Turn Ethereum Staking Into $160 Million Industry
Christine Kim – Coindesk
A new proposal by Vitalik Buterin, the creator of ethereum, suggests he is considering increasing rewards for validators who would secure the operation of the next version of the world’s second-largest blockchain. Ethereum 2.0 is by far the biggest upgrade on the horizon for the ethereum blockchain, today valued at $17.5 billion. Its broader goal is to erase ongoing bottlenecks to transaction throughput and significantly decrease costs on the network.

Ohio State Legislature Introduces Bill to Allow Gov’t to Implement Blockchain Solutions
Marie Huillet – Cointelegraph
A new bill introduced on April 24 in the American state of Ohio’s House of Representatives would, if passed, allow the state government and other government entities to implement blockchain solutions in the exercise of their authority. According to the official website of the Ohio state legislature, the bill, titled House Bill 220, has been sponsored by the Republican Party’s State Representative Rick Carfagna, who represents Ohio’s 68th District in the House.

Will EU’s New AML Laws Refute Crypto’s Dirty-Money Image?
Rachel McIntosh – Finance Magnates
The debate over whether or not the cryptocurrency industry needs international regulations seems to be never-ending. On one side of the argument are those who believe that crypto is fine as it is, with a patchwork of regulatory jurisdictions that pepper crypto’s legal landscape.

China’s Proposal to Ban Cryptocurrency Mining Has Little to Do With The Environment
Roger Huang – Forbes
Recently, the National Development Reform Commission, China’s top economic planning body, proposed banning all cryptocurrency miners within its borders. China has banned initial coin offerings since 2017 and made it harder for domestic citizens to transact on cryptocurrency exchanges by banning them domestically.


Cantor Fitzgerald Doesn’t Want This Woman Talking About Her Mug in Court; Lee Stowell says she was bullied and harassed at a Wall Street brokerage. She wants her day in court.
Katia Porzecanski, Max Abelson – Bloomberg
Lee Stowell couldn’t find her Bernie Sanders mug. It was August 2016 at the Summit, N.J., outpost of Cantor Fitzgerald, the Wall Street brokerage. The tension in the office was becoming unbearable for Stowell—and not only because her colleagues couldn’t stand the rumpled-haired socialist on her mug. For a while, work had felt like a throwback to the early days of her career, when traders could spew invective with impunity, and women had to stomach it or find a way to hold their own.

Trump’s stonewalling of Congress is a constitutional crisis
Julian Zelizer, CNN Political Analyst
President Donald Trump is doing his best to obstruct the investigations into him, his campaign and his administration being carried out by the Democrats who control the House of Representatives. Trump is warning that he will refuse to allow key documents — such as his tax returns — to be released to the relevant congressional committees and that he won’t allow administration officials to testify. “We’re fighting all the subpoenas,” the President told reporters as he got on a plane for Atlanta. He even said, “If the partisan Dems ever tried to Impeach, I would first head to the US Supreme Court.”

The Trump Campaign Conspired With the Russians. Mueller Proved It; By the standards of a potential impeachment inquiry, the evidence is clear.
Jed Handelsman Shugerman – NY Times
In his first letter after receiving the Mueller report, Attorney General William Barr accurately quoted it as saying that “the investigation did not establish” that the Trump campaign “conspired or coordinated with the Russian government in its election interference activities.”

China’s Xi Signals Approval for Trump’s Trade War Demands
Bloomberg News
Chinese President Xi Jinping addressed some 40 world leaders at the Belt and Road forum in Beijing, but his speech may have been aimed at a head of state not in the audience: U.S. President Donald Trump.
Xi spent a large portion of his speech Friday addressing Chinese domestic reforms, pledging to address state subsidies, protect intellectual property rights, allow foreign investment in more sectors and avoid competitive devaluation of the yuan. All four are issues the U.S. is addressing in trade talks with Beijing.

Central Banks Are the World’s Newest Climate Change Activists
Katherine Dunn – Fortune
As groups of Extinction Rebellion protestors glued themselves to public transit and closed down large swathes of central London last week in a series of demonstrations that continued Thursday, a very different group was gathering just a couple hours’ train journey away in Paris. They, too, were meeting to discuss the impact of climate change, what they would do about it, and to send an urgent message to the world. They just so happened to be some of the world’s largest central banks.

Political gridlock blocks infrastructure progress and costs our economy
Adie Tomer and Lara Fishbane – The Brookings Institution
Infrastructure talks are heating up again. In just the last week, 2020 presidential candidate Amy Klobuchar pitched a trillion-dollar infrastructure proposal while the Trump administration and Congress continue to flirt with major infrastructure packages. This kind of thinking reflects clear public support for greater investment.

How She The People Is Changing Politics
Ellen McGirt – Fortune
The crowd turned out in force to watch eight Democratic presidential hopefuls – Senator Cory Booker, former HUD Secretary Julian Castro, Rep. Tulsi Gabbard, Senator Kamala Harris, Senator Amy Klobuchar, former Rep. Beto O’Rourke, Senator Bernie Sanders and Senator Elizabeth Warren – ask for their vote. But it began with a preacher’s rousing call. Reverend Leah Daughtry, a former chair of the Democratic National Committee and Pentecostal minister, opened the She the People Presidential Forum 2019 yesterday with a reminder that the issues that affect black women voters in the U.S. are everybody’s issues.

Here’s where the Democratic candidates stand on the biggest 2020 issues
Beatrice Jin and Caitlin Oprysko – Politico
The Democratic primary field for 2020 is largely set, but with former Vice President Joe Biden finally jumping in, the most high-profile candidate has yet to weigh in on many of the policy fights that so far have defined the battle to beat Donald Trump. Voters, donors and political organizations are grilling candidates on whether they would support paying reparations to descendents of slaves, expanding the Supreme Court or abolishing the Electoral College. Biden, who has so far avoided many of these knotty questions, is sure to face inquiries about them soon.


CFTC Approves Proposed Rule to Improve Data Quality and Streamline Regulations for Swap Data Repositories
The Commodity Futures Trading Commission (CFTC) today approved a proposed rule to improve the quality of swap data and to update and streamline regulations related to swap data repository (SDR) operations and governance. The proposed rule is the first rulemaking that is part of the Roadmap to Achieve High Quality Swaps Data, a comprehensive review of swap reporting regulations that the CFTC’s Division of Market Oversight announced in July 2017.

Statement of Commissioner Dan M. Berkovitz on Proposed Amendments to the Commission’s Regulations Relating to Certain Swap Data Repository and Data Reporting Requirements
I am pleased to support the Commission’s notice of proposed rulemaking (“NPRM”) to amend its rules for swap data repositories (“SDRs”) and data reporting requirements.[1] The proposed amendments reflect the Commission’s commitment to accurate, detailed, and timely swaps data for regulators, market participants, and the public through enhanced data verification and error correction procedures, among other amendments. They are an important step in achieving the Dodd-Frank Act’s mandate of swap data reporting as an integral part of OTC derivatives reform and financial market stability

Statement of Chairman J. Christopher Giancarlo on Proposed Rule Amendments to The Commission’s Regulations Relating to Certain Swap Data Repository and Data Reporting Requirements
A critical component of the 2008 financial crisis was the inability of regulators to assess and quantify the counterparty credit risk of large banks and swaps dealers. To address this shortcoming, the Dodd-Frank Act gave the CFTC broad responsibility to enhance regulatory transparency and price discovery for market participants through trade reporting to swap data repositories (SDRs).

Statement of Commissioner Rostin Behnam on Proposed Amendments to the Commission’s Regulations Relating to Certain Swap Data Repository and Swap Data Reporting Requirements
I respectfully concur with the Commodity Futures Trading Commission’s (the “Commission” or “CFTC”) approval of its proposed rule regarding amendments to the Commission’s Regulations Relating to Certain Swap Data Repository and Swap Data Reporting Requirements (the “Proposal”). In 2011, the Commission adopted part 49 of the Commission’s Regulations[1] to implement the requirements of section 21 of the Commodity Exchange Act (the “Act” or “CEA”).

Statement of Concurrence of Commissioner Dawn D. Stump on Proposed Rule Amendments to The Commission’s Regulations Relating to Certain Swap Data Repository and Data Reporting Requirements
The Commission is publishing for public comment “Proposed Amendments to the Commission’s Regulations Relating to Certain Swap Data Repository and Swap Data Reporting Requirements” (Proposal). Accurate swap data reporting is vital to our ability to make appropriate policy choices. I very much look forward to receiving feedback from all parties impacted by this Proposal to assure that the Commission has robust and accurate data, which is a lynchpin of future Commission decision-making.

Elon Musk, SEC Standoff Over Tweets Continues; The two sides now want until April 30 to resolve their dispute
Dave Michaels and Tim Higgins – WSJ
Elon Musk and the Securities and Exchange Commission want more time to work out their dispute over whether the Tesla Inc. TSLA -4.26% chief executive violated a court order restricting his use of social media.

Morgan Stanley to Pay California $150 Million Over Mortgage Crisis Claims
Stacy Cowley – NY Times
More than a decade after the mortgage crisis blew a hole in the United States economy, banks and prosecutors are still sorting out the tab for the damage.

ASIC succeeds in application to appoint a receiver to former OTC derivatives issuer Berndale Capital Securities Pty Ltd
ASIC has successfully applied to the Federal Court of Australia for orders to appoint receivers and managers of former OTC derivatives issuer, Berndale Capital Securities Pty Ltd (Berndale) and related companies, Berndale Capital Securities Management Pty Ltd and Algoplus Pty Ltd.

Report on Use of 2018 Fine Monies
FINRA is a not-for-profit, self-regulatory organization (SRO) dedicated to promoting investor protection and market integrity in a manner that facilitates vibrant capital markets. One of FINRA’s tools for achieving this objective is fair and effective enforcement of our member firms’ compliance with securities laws and regulations.

FINRA Orders Buckman, Buckman & Reid to Pay Approximately $205,000 in Restitution to Customers for Supervisory Failures Involving Excessive and Unsuitable Trading; Firm Owner Sanctioned for Failing to Supervise Two Registered Representatives
FINRA announced today that it has ordered New Jersey-based broker-dealer Buckman, Buckman & Reid, Inc. (BBR) to pay approximately $205,000 in restitution to seven customers for failing to reasonably supervise two former registered representatives who recommended excessive and unsuitable trades in multiple customer accounts. As part of the settlement, FINRA also required the firm to review and revise its supervisory system and written supervisory procedures. FINRA previously barred both registered representatives from the industry.

SEC Announces Members of Small Business Capital Formation Advisory Committee
The Securities and Exchange Commission today announced the inaugural members of the Small Business Capital Formation Advisory Committee. The Committee will hold its first meeting on Monday, May 6, 2019, at the SEC’s headquarters in Washington, D.C.

SEC Charges Truckload Freight Company With Accounting Fraud
The Securities and Exchange Commission today charged Indianapolis-based Celadon Group Inc. with an accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition.

FCA statement on delay to publication of final rules for CFDs products and CFD-like options
This statement provides an update on the Financial Conduct Authority’s (FCA) consultation on permanent product intervention measures to restrict the sale, marketing and distribution of contract for differences (CFDs) and CFD-like options sold to retail clients.

Investing and Trading

World’s Best Stock Market Rally has Investors Banking on More
Ksenia Galouchko – Bloomberg
Jefferies, Bienville Capital expect Greek stocks to rise more; Greek stocks are trading at almost 40% discount to 2014 high
For Greek stocks, this year’s world-beating rally may not run out of steam just yet.

Central Banks Have Broken Capitalism; While many agree that current monetary policies are not sustainable, few have offered realistic alternatives. Here are three.
Alberto Gallo – Bloomberg
It has been a decade since the Federal Reserve and other central banks began cutting interest rates to zero — or even below — and injecting unprecedented amounts of cash into the global financial system via quantitative easing. And while global stocks are at or near record highs, central banks around the world are increasingly abandoning their hopes of normalizing policy with economic growth slowing. On top of that, public and private debt levels are higher than ever.

Dead calm in currency markets unnerves investors; Collapse in volatility has eerie echoes of the run-up to the 2008 financial crisis
Eva Szalay – FT
Corporate treasurers tend to like nothing more than a stable exchange rate, allowing them to budget and plan with a measure of confidence. But for Wall Street strategists and traders who earn a living from market movements, extreme calm can be unsettling.

Goldman jettisons all its commodity trading recommendations; US bank unveiled ten new trades and a fresh outlook on commodities
Philip Georgiadis – FT
Second time lucky? Sometimes, the market can confound even the best efforts of Goldman Sachs. Four months into the year and the US bank’s commodity strategists have U-turned on all of their remaining ten trading recommendations from last December’s outlook, blaming “misplaced macro risk.”

Microsoft’s market capitalisation tops $1tn for the first time; Company becomes third to achieve milestone valuation after Apple and Amazon
Peter Wells – FT
Microsoft has joined the four comma club, as investors cheered the company’s latest quarterly results and pushed its valuation above $1tn for the first time, making it the biggest publicly traded company in the world by market capitalisation.

Invesco’s head of trading rules out outsourcing equities trading, saying ‘nobody can do it better than us’; Asset manager says its experience, technology and size mean that outsourcing the equities trading desk is not on its radar.
Jonathan Watkins – The Trade
The head of trading at Invesco says outsourcing the asset manager’s equities trading desk is out of the question, claiming “I don’t think anybody can do it better than we could”.


UBS Seeks More Deals Among Billionaires Through New U.S. Venture
Sonali Basak – Bloomberg
Firm will also seek a greater share of the middle market; UBS reported steep slump in merger fees, equity underwriting
UBS Group AG is starting a new venture at its U.S. operation, marrying its wealth-management unit and investment bank to capture more deals and trading activity among its ultra-rich clients.

BlackRock Tops BlackRock as Cheap ETF Surpasses Pricier Fund
Rachel Evans – Bloomberg
A ‘core’ developed-market fund is now bigger than the original; The money manager started a range of low-cost funds in 2012
The pupil has become the master within BlackRock Inc.’s exchange-traded fund business, with cost-conscious investors favoring a range of cheap funds over more established products.

Hedge Funds Keep Failing to Deliver on What They’re Selling; They neither outperform in bull markets nor offer insurance against bear retreats.
Barry Ritholtz – Bloomberg
The stark underperformance of hedge funds and others in the alternative-investments business since the end of the financial crisis has been a long-running mystery. Or as Worth so starkly put it, “What the Hell Happened to Hedge Funds?”

Ex-Credit Suisse Fraudster’s Victims Turn to Newspaper Ad
Hugo Miller – Bloomberg
Ad booked in Financial Times to coincide with bank’s AGM; Neue Zuercher Zeitung, others decline to run the full-page ad
Angry clients of Credit Suisse Group AG have filed lawsuits from New York to New Zealand to try to force the Swiss bank to disclose more details about a former employee who swindled them. Now they’re taking out a newspaper ad to publicize their case.

Rich Asians Help to Rescue UBS’s First Quarter
Alfred Liu – Bloomberg
UBS Group AG was expecting one of the worst quarters in recent history due to the turmoil in global markets. But those very swings also played a key role in buttressing its results.

Deutsche investment bank hit by ‘unfavourable’ environment in Q1; Trading revenues sink in latest sign of trouble for key unit
Olaf Storbeck – FT
Deutsche Bank’s troubled investment bank faced a further fall in revenues at the start of 2019, highlighting the tough restructuring task that lies ahead of chief executive Christian Sewing after merger talks with Commerzbank collapsed on Thursday.

Deutsche Bank Cuts Revenue Target a Day After Merger Talks Fail; The decision not to pursue a deal with Commerzbank has spurred a range of questions about Deutsche Bank’s next moves
Jenny Strasburg and Pietro Lombardi – WSJ
Deutsche Bank AG cut its full-year revenue target to “essentially flat” from 2018 in quarterly results, a day after saying it ended merger talks with smaller rival Commerzbank AG .


Saudi Sovereign-Wealth Fund Plans to Raise Billions in Debt for Investments; Public Investment Fund’s potential debut bond comes after Saudi Aramco raised $12 billion in debt market
Rory Jones – WSJ
Saudi Arabia’s sovereign-wealth fund is planning to tap the debt market for billions of dollars it needs for investments to help deliver Crown Prince Mohammed bin Salman’s ambitious economic overhaul, after its national oil company drew huge demand for its debut bond.

Chinese group sparks oversupply fears in steel market; Concern grows as country’s biggest producer Baoshan suffers profits plunge
Christian Shepherd, Anna Gross and Neil Hume – FT
Fears of oversupply in the Chinese steel market, the world’s biggest, rose sharply on Thursday after the country’s largest producer suffered a plunge in profits.

Europe’s Refineries Stop Taking Contaminated Russian Oil
Aliaksandr Kudrytski and Maciej Martewicz – Bloomberg
Druzhba pipeline flows stopped after organic chlorides found; Contaminant can damage oil refineries if it’s not removed
Europe’s oil refineries stopped taking piped deliveries of Urals crude from Russia after flows were found to be contaminated, choking off one of the continent’s main sources of supply.

No More Happy Hour: Japan Bank Boss Takes Aim at Drinks Culture
Yuki Hagiwara – Bloomberg
Says ‘nominication’ is unproductive and unfair to parents; Move comes as Japan tries to make workplaces more flexible
It’s time to stop drinking with the boss after work. That’s the message of Mitsubishi UFJ Financial Group Inc. banking unit executive Saiko Nanri, who wants to change Japan’s long-standing culture of drinks between managers and employees.

Turkey Renews Coup Purges With Targets in Media, Army, Police
Selcan Hacaoglu – Bloomberg
Turkey launched a new round of its three-year crackdown on purported followers of a U.S.-based cleric it blames for an attempted coup, ordering the arrest of former employees of an opposition newspaper, active-duty military officers and police.


May drops plan for new Brexit vote before local elections; Hopes fade for any cross-party accord with Labour that would get withdrawal agreement past MPs
George Parker, Jim Pickard and Laura Hughes – FT
Theresa May has dropped a plan to try to secure parliamentary approval for her moribund EU withdrawal agreement before next week’s local elections, as hopes fade for any cross-party accord with Labour on Brexit.

Hunt says he would choose no deal over no Brexit
Foreign Secretary Jeremy Hunt said on Thursday he would opt to leave the European Union without a deal if he was faced with a choice between a no-deal Brexit or not leaving the bloc at all.

RBS Alarm Bells on Brexit Challenge Sends Its Shares Sliding
Stefania Spezzati – Bloomberg
Economic uncertainty may impact income growth in near term; Bank shares falls the most in five months in London trading
Royal Bank of Scotland Group Plc tumbled after the state-backed lender said Britain’s slowing economy is likely to bite into income over the coming months.

Goldman Sachs says dragged-out Brexit is doing deeper damage to UK economy
Helen Reid – Reuters
Britain’s protracted divorce from the European Union is hurting the world’s fifth largest economy as dwindling company investment, signs of a looming labour market shock and poor productivity hinder growth, Goldman Sachs said.

Lloyd’s of London plots new course as storm clouds gather
Carolyn Cohn, Jonathan Saul – Reuters
Lloyd’s of London, the world’s oldest insurer of seafaring vessels, is facing its own perfect storm. Old-fashioned business practices, exposure to natural disasters, competition from rival centers and Brexit are all threatening Lloyd’s reputation as the place to insure anything from ships to sculptures to soccer stars’ legs.

RBS profit falls as Brexit and competition take toll
Iain Withers, Lawrence White – Reuters
Britain’s Royal Bank of Scotland reported lower first quarter profit on Friday, hurt by intensifying competition and Brexit uncertainty, while its investment bank also registered poor returns.


Fake German Heiress ‘Anna Delvey’ Convicted of Cheating Banks, Businesses
The Associated Press
A New York jury on Thursday convicted an extravagant socialite who bankrolled an implausibly lavish lifestyle with tens of thousands of dollars she swindled from banks, hotels and friends who believed she was a wealthy German heiress.

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Past Newsletters

Food groups’ fight over wheat manipulation re-erupts

Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe CFTC Kraft/Mondelez Global announcement is not worth two bits. Claiming to win the case, without clarity of the specific actions that were manipulative,...

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