Cursed affair – How LSE and Deutsche Börse’s merger unravelled; Deutsche Bank to raise 8 billion euros, plans major reorganization; Wall Street Cops Reined In as SEC Braces for Trump Budget Cuts

Mar 6, 2017

First Read

Bits & Pieces
By John J. Lothian

Sorry to start with the sad, but former CME President & CEO Clayton Yeutter has passed away at the age of 86. Yeutter was CME CEO when I started my post-collegiate career and I was lucky enough to cover a speech he gave about the Farm Bill of 1984 and the impact that would have on commodity prices.

In happier news, I turned 56 on Saturday and my neighbors threw a parade a couple of blocks from my home in Elmhurst that attracted thousands of people wearing my favorite color, green. Now some said it was the St. Patrick’s Day Parade, but I know better. It was not St. Patrick’s birthday or his day. It was mine.

The JLN trio returned home from Stockholm on Friday after a quick trip to put on a MarketsWiki Education World of Opportunity event. We had about 200 hungry KTH students and friends at the event, which featured eight speakers. I say hungry because they devoured six bags of sandwich wraps and another four of pastries.

Thank you to Veronica Augustsson, Rolf Andersson, Johan Toll, Peter Fredriksson, Karl Hagerman, Pierre Nyquist and Stefan Carlsson for participating in the program. Thank you also to CME Group as our Global Premier Sponsor and Cinnober, Nasdaq and KTH Finance Society for being event sponsors. The KTH Finance Society did an incredible job of hosting the event.

So it is a week of back to normal in Chicago before members of the JLN team head to Boca Raton for the FIA’s annual International Conference. I am hoping my international friends don’t have any problems getting into the country.

Lastly, MarketsWiki has passed the 95 million pageview mark. One hundred million, here we come.

Have a good week!

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Clayton Yeutter, former U.S. secretary of agriculture and native Nebraskan, dies at 86
Paul Hammel and Mara Klecker – Omaha World-Herald
/goo.gl/4JzN7v

**** A true public servant. Condolences to Mr. Yeutter’s family and friends.

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EEX set to acquire 100% ownership of US Nodal Exchange
Business Wire
The European Energy Exchange (EEX) and the owners of US-based Nodal Exchange Holdings, LLC have reached an agreement under which EEX will acquire 100% of the equity in Nodal Exchange for a low triple digit million US-Dollar investment. As a result, Nodal Exchange will become part of EEX Group.
/goo.gl/gPuXAo

**JK: A powerful move by Peter Reitz & Co.

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How a $26 Billion Hedge Fund Lures the Beautiful Minds
Nishant Kumar and Katia Porzecanski – Bloomberg
Citadel to host 18 competitions at universities worldwide; Demand for scientists and engineers has never been higher
On the warmest February day on record in Cambridge, about 60 students at the Massachusetts Institute of Technology opt to stay inside a dimly lit lobby, crunching data and churning out pages of analysis, rather than enjoy the sunny, summer-like Friday afternoon.
/goo.gl/9KtxNJ

**JK: We’re gonna need a bigger whiteboard.

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EFRPs; Sanctions; Regulator Hide and Seek; Red Flags Missed (Again)
Bridging the Week by Gary DeWaal
Little news emanated from the Commodity Futures Trading Commission or the Securities and Exchange Commission last week. However, a few interesting matters came out of self-regulatory organizations that reminded me of some valuable compliance tips. As a result, the following matters are covered in this week’s edition of Bridging the Week:
Non-Member Sanctioned by NYMEX Business Conduct Committee for Non-Bona Fide EFRPs; Can’t Shift Blame to Broker or FCM Despite Try (includes Compliance Weeds);
jlne.ws/15ZyR7H

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Is Wall Street Responsible For Our Economic Problems?
Sheelah Kolhatkar – The New Yorker
When I met Jeffrey Sachs, an economist at Columbia University and the author of “The End of Poverty,” for coffee recently, he was stubbornly holding on to a sense of optimism in spite of a discouraging turn in world events. Sachs served as an adviser to Bernie Sanders during his Presidential campaign, and has published a new book, “Building the New American Economy,” in which he presents the policy ideas that likely would have animated a Sanders Presidencyóideas that feel almost inconceivable in the current political climate.
/goo.gl/2seHa3

**JK: Cut taxes and spend more. Why doesn’t that work?

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Everything the Market Thinks About Inflation Might Be Wrong; How much money a central bank prints may be less important to inflation than commodity prices
Jon Sindreu – WSJ
No number is more important for investors right now than inflation. The belief that it will continue to rise underpins the recent rally in financial stocks and the slump in government bonds. It is key to commodities, currencies and more.
/goo.gl/d1ADbk

**JK: Another for the “might be wrong” file.

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Friday’s Top Three
Friday’s top three included a couple of stories on what else, SnapChat. Our top story was from Marketwatch, Stop! This is NOT like the dot-com bubble… it’s much worse, according to this chart. Second went to the new world order for cell phones at Goldman in Bloomberg’s Goldman Irks Bankers With New Rules on Mobile Perks. Third went to Business Insider’s Snapchat’s Imran Khan career, and how much money he made in IPO

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MarketsWiki Stats
95,029,808 pages viewed; 22,367 pages; 204,077 edits
MarketsWiki Statistics

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Lead Stories

Cursed affair: How LSE and Deutsche Bˆrse’s merger unravelled; Series of shocks undermines attempt to link Europe’s two most powerful financial capitals
Philip Stafford – Financial Times
The heads of the London Stock Exchange Group and Deutsche Bˆrse went to Brussels at the start of February on the verge of clearing a major obstacle for their historic EUR29bn merger. Xavier Rolet and Carsten Kengeter thought EU regulators were set to bless the deal they had been working on for more than a year. But midway through the meeting, Mr Kengeter stepped out to take an emergency phone call.
/goo.gl/PfRtFq

Deutsche Bank to raise 8 billion euros, plans major reorganization
Arno Schuetze – Reuters
Deutsche Bank (DBKGn.DE) plans to raise capital, list its asset management business and overhaul its business structure as it tries to reinvent itself after spending two years dealing with its past misdeeds and huge losses.
/goo.gl/Usgh3t

Wall Street Cops Reined In as SEC Braces for Trump Budget Cuts
Matt Robinson and Benjamin Bain – Bloomberg
SEC attorneys forced to skip bond group’s annual Vegas event; Non-essential travel and new hires targeted in austerity push
When Wall Street bond dealmakers congregated in Las Vegas last week for their annual get-together, one group of folks was conspicuously absent: SEC enforcement officials.
/goo.gl/FpCkUq

London Financial Jewel Brightens Even as Brexit Reckoning Looms
John Detrixhe – Bloomberg
LSE’s CEO says clearing business hasn’t been ‘frittering away’; France and Germany put a bullseye on LCH’s clearinghouse
One of London’s crown financial jewels — a business sought after by the rest of Europe — is shining brighter than ever before.
/goo.gl/AabVRz

Citi Reorganises – Creates Single FX Business
Profit & Loss
Following the retirement of head of G10 FX James Bindler, Citi is reorganising its business structure by merging its G10 and emerging markets FX activities into a single global foreign exchange trading business. As previously reported by Profit & Loss, Itay Tuchman has been appointed to head the new business, reporting to Nadir Mahmud, head of FX and Local Markets.
/goo.gl/j8GQbr

FTSE Russell announces schedule for annual Russell US Index reconstitution
FTSE Russell
FTSE Russell, the global index provider, today announced the 2017 schedule for the annual reconstitution of its Russell US Indexes. The reconstitution process, closely watched by market participants, is designed to capture and reflect market shifts that have occurred in the past year to ensure investors continue to have the most accurate US equity market benchmarks.
jlne.ws/2lIyZRm

CME, Thomson Reuters step down from providing London silver benchmark
Jan Harvey – Reuters
CME Group and Thomson Reuters are to step down from providing the LBMA silver price benchmark auction, the London Bullion Market Association said on Friday, less than three years after they successfully bid to provide the process.
/goo.gl/HTHtwF

China overtakes eurozone as world’s biggest bank system; Status reflects global influence but also reliance on debt to fuel economy
Gabriel Wildau – FT
China’s banking system has surpassed that of the eurozone to become the world’s largest by assets, a sign both of the country’s increased influence in world finance and its reliance on debt to drive growth since the global financial crisis.
jlne.ws/2mLVKYM

Disturbing New Facts About American Capitalism
Jason Zweig – WSJ
“Let your winners run” is one of the oldest adages in investing. One of the newest ideas is that the winners may be running away with everything. Modern capitalism is built on the idea that as companies get big, they become fat and happy, opening themselves up to lean and hungry competitors who can underprice and overtake them. That cycle of creative destruction may be changing in ways that help explain the seemingly unstoppable rise of the stock market.
/goo.gl/nqBWP9

Brought Down by Long Bust, Texas Oilmen Pray for Another Boom; The Schillers of Houston have put their mansion on the market, sold some horses and are plotting a comeback; ‘What other choice is there?’
Bradley Olson – WSJ
Just 2.5 years ago, when a barrel of oil sold for about $100, John Schiller and his wife, Kristi, were living luxuriantly in Houston high society.
/goo.gl/0W8Psw

UK carbon emissions fall to late-19th century levels; Coal power production diminished by gas, renewables and government policy
Pilita Clark – FT
Carbon emissions in the UK have fallen to levels barely seen since the latter days of Queen Victoria after a collapse in the use of coal, new figures show.
/goo.gl/h9MIgf

Leashes Come Off Wall Street, Gun Sellers, Polluters and More
Eric Lipton and Binyamin Appelbaum – NY Times
Giants in telecommunications, like Verizon and AT&T, will not have to take “reasonable measures” to ensure that their customers’ Social Security numbers, web browsing history and other personal information are not stolen or accidentally released.
/goo.gl/AgAOCR

Exchanges, OTC and Clearing

CME’s new chief is in a big, big hurry
Lynne Marek – Crain’s Chicago Business
What does Terry Duffy want? Results. When does he want them? Today. CME Group CEO Terry Duffy sometimes sings softly to himself as he swivels in his black leather executive chair, but don’t mistake him for a laid-back leader. Perched four floors above the Chicago River, which once flowed with grains that formed the basis of CME’s commodity markets,? Duffy says he has a different approach to? spending and investing from that of his predecessor, Phupinder Gill, who exited abruptly last year.
/goo.gl/XpXAhe

CME to Change FX Option Expiry Process
Profit & Loss
CME Group says it will change the exercise and assignment rules for all options on FX futures contracts. On March 24, CME will amend how it handles options that end up precisely at the money on expiry. Currently, CME options that are at least one tick in or out of the-money at expiration are automatically exercised or assigned, and if the final underlying price happens to occur exactly at a strike price, both calls and puts at that strike are also expired without exercise.
jlne.ws/2lvYIAs

Deutsche Boerse blames Britain for failed LSE tie-up: chairman in paper
Reuters
Deutsche Boerse (DB1Gn.DE) Chairman Joachim Faber has put the blame for a failed tie-up with the London Stock Exchange (LSE.L) on Britain and its vote to leave the European Union.
/goo.gl/jlVdo5

LSE chief executive confirms likely end of Deutsche Bˆrse deal
Philip Stafford – FT
The London Stock Exchange Group on Friday indicated it was not about to change its mind on rejecting a key Brussels antitrust demand which it admits is likely to doom the UK group’s planned EUR29bn merger with Deutsche Bˆrse.
/goo.gl/f3q4UI

Deutsche Boerse CEO says work on LSE merger still ongoing
Reuters
Deutsche Boerse (DB1Gn.DE) Chief Executive Carsten Kengeter said it is continuing preparations for a merger with the London Stock Exchange (LSE.L), despite the LSE’s refusal to sell its Italian MTS trading platform.
/goo.gl/77V53N

LSE’s CurveGlobal makes play for NLX open positions
Luke Jeffs – FOW
The LSE Group has told clients of the defunct Nasdaq NLX trading platform they can move their open positions to the LSE-operated CurveGlobal, a move that could boost Curve’s volumes overnight. The London exchange group’s clearing house LCH said in a notice to members seen by FOW there are three options for firms with open positions, one of which is move them to CurveGlobal. The LCH note read: “For those members holding open positions, please note the below options are available: trade out to close remaining open positions; enter into a process to convert open NLX contracts to equivalent CurveGlobal contracts; cash settle remaining open contracts.”
/goo.gl/2qgDZy

LSE raises dividend by 20% as tie-up plan unravels; Payout is latest sign UK group expects failure of EUR29bn Deutsche Bˆrse merger
Philip Stafford – FT
The London Stock Exchange will offer shareholders a 20 per cent increase in their full-year dividend, a further sign that the group is preparing for the expected unravelling of its EUR29bn merger with Deutsche Bˆrse.
/goo.gl/Z0VqLf

Deutsche Boerse blames Britain for failed LSE tie-up: chairman in paper
Reuters
Deutsche Boerse (DB1Gn.DE) Chairman Joachim Faber has put the blame for a failed tie-up with the London Stock Exchange (LSE.L) on Britain and its vote to leave the European Union.
/goo.gl/2DCkGJ

LSE on the Rebound
Chris Hughes – Bloomberg Gadfly
It wasn’t meant to be this way. By now, Xavier Rolet was supposed to be planning for his next gig.
/goo.gl/wHVv7q

BM&FBOVESPA publishes February market performance
BM&FBOVESPA
Trading value in the equity market (BOVESPA segment) totaled BRL 165.23 billion in February, compared with BRL 144.33 billion in the previous month. Average daily trading value was BRL 9.17 billion, versus BRL 6.87 billion in January. Total volume amounted to 18,609,157 shares, compared with 18,954,467 shares in the previous month. Average daily volume was 1,033,842 shares (902,594 shares in January).
/goo.gl/5F044h

New FTSE ST indexes capture Singapore’s consumer goods and services sector
SGX
FTSE Russell, the global index and data provider, announces the launch of two new indexes tracking firms operating in the consumer goods and services index and listed on Singapore Exchange (SGX). The FTSE ST Consumer Goods & Services Index comprises the constituents in either the Consumer Goods or the Consumer Services Industries (ICB code 3000 or 5000) under the FTSE ST All-Share Index. The FTSE ST Consumer Goods & Services Liquid 20 Index comprises the most liquid stocks in the sector.
/goo.gl/WzjWV2

Euronext invests in Algomi and expands Joint Venture globally; Euronext makes $10 million strategic investment in Algomi; The existing pan-European partnership will be expanded globally to launch a new network of fixed income venues
Euronext
Euronext today announces the global expansion of its Joint Venture and a $10 million investment in a minority stake in leading fixed income technology provider, Algomi. This strategic investment, which follows the agreement of a Joint Venture between both companies[1], will enable corporate bond traders to access Algomi’s innovative bond information network on a global basis and exchange risk more efficiently by identifying the most appropriate counterparty.
/goo.gl/Yr4JgK

Euronext announces volumes for February 2017
Euronext
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for February 2017.
/goo.gl/Ixdjrl

Eurex veteran Bradley secures another board seat
Merle Crichton – FOW
The former head of innovation at Eurex Brendan Bradley has secured another board position at joining Global Alternatives. Bradley has taken a position as non-executive chairman at Global Alternative, an operator of marketplaces for alternative investments. Bradley, who left the Deutsche Boerse-owned company in May 2016, has already taken up two other non-executive roles at fintech firms.
/goo.gl/NgptHp

Fintech

Brokers want ASX blockchain to do more
Australian Financial Review
Stockbrokers have told the Australian Securities Exchange that to justify the costs of moving to a new technology to replace CHESS, a broad range of “system enhancements” should be added to the project, including eliminating paper processes that manage corporate actions and the transfer of securities.
jlne.ws/2lw8y5s

The Trouble With Fintech (Or Why ‘Now’ is the Time for DLT)
Coindesk
With the rise of the ‘bitcoin bubble’, Silicon Valley began paying attention to finance technology in a new way. An army of talking heads and oracles quickly declared the state of finance technology to be a world of ‘broken’ business models and antiquated ideas ‘ripe for innovation’.
What followed next should come as no surprise: venture capitalists began their plans for ‘disruption’ through the dot-com model of funding aggressive development teams with esoteric company names, and they went full steam for projects such as ‘Ripple’ and ‘Digital Asset Holdings’ – all of which were designed to lubricate the wheels of interbank financial systems.
Two years in, what have we got to show for this exuberance? I would argue not much
jlne.ws/2lw1UvX

Broadridge Financial Solutions Brings 1,000 Jobs To Newark’s 2 Gateway Center
Jersey Digs
Downtown Newark’s 2 Gateway Center is getting a major new tenant, and 1,000 jobs. Financial communications firm Broadridge Financial Solutions has inked a lease on 160,000 sq. ft. in this Class A building at the corner of Market Street and the McCarter Highway.
jlne.ws/2lw6vhP

Metamako launches 96-port layer 1 switch
Automated Trader
FPGA-enabled networking platforms, has launched MetaConnect 96, a 96-port deterministic, low latency device for the financial markets. It doubles the number of ports compared to MetaConnect 48, while keeping deterministic port-to-port latency at 6 nanoseconds, at the same latency level as its other devices.
jlne.ws/2lw0qBI

The Hyperledger Blockchain Project Announces Its First Graduate Project
Cryptocoinsnews.com
Hyperledger, a Linux-led open source blockchain initiative, announced in a blog that Hyperledger Fabric, one of five of its incubator projects, will be released at the end of the month. Hyperledger Fabric is designed to be used as a foundation for distributed applications.
jlne.ws/2lw2SIs

Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?
Nathaniel Popper and Steve Lohr – NY Times
Frank Yiannas has spent years looking in vain for a better way to track lettuce, steaks and snack cakes from farm and factory to the shelves of Walmart, where he is the vice president for food safety. When the company dealt with salmonella outbreaks, it often took weeks to trace where the bad ingredients came from. Then, last year, IBM executives flew to Walmart’s headquarters in Arkansas to propose a solution: the blockchain. As Mr. Yiannas studied their pitch, he said, “I became increasingly convinced that maybe we were onto the holy grail.”
/goo.gl/wv0UUU

Some of the UK’s hottest fintech startups went down on Sunday ó here’s why
Oscar Williams-Grut – Business Insider
At least four fintech startups that offer payment cards linked to apps went down on Sunday when a company that helps them all process payments was hit by a technical glitch.
/goo.gl/98lkNE

Equinix offers a SmartView for enterpises moving to the edge
CBR
Equinix is set to roll-out a data centre monitoring software platform, dubbed IBX SmartView, designed to give visibility into distributed infrastructure. – www.cbronline.com
Giving transparency to a global deployment across Equinix International Business Exchange (IBX) data centers, the platform enables enterprises to proactively plan and optimise operations.
jlne.ws/2lvVYDi

Politics

Trump’s Energy Policies Will Weaken Natural Gas Prices
Shelley Goldberg – Bloomberg View
President Donald Trump’s promise to increase U.S. fossil-fuel production will have many parlous consequences, not least by driving natural gas prices even lower.
/goo.gl/6EuFVL

Home Alone in the Trump Administration
Editorial Board – NY Times
President Trump has appointed fewer than three dozen of the top 1,000 officials he needs to run the federal government. Worse, he doesn’t think that’s a problem. The president seems to have lost interest in the nomination process after making his cabinet and Supreme Court picks, people involved in the transition say. Now, he’s trying to pass off his inattention as some kind of plan. “In many cases, we don’t want to fill those jobs,” he said on Fox News this week. “What do all these people do? You don’t need all those jobs.”
/goo.gl/Ez3bRU

The World’s Top Tech Investor Is Betting Big on Trump
Landon Thomas Jr. – NY Times
The world’s largest technology investor is preparing to ramp up his bet on the Trump economy. Masayoshi Son, the billionaire technology entrepreneur from Japan, promised President Trump late last year that he would create 50,000 new jobs in the United States through a $100 billion technology fund. Now, Mr. Son and his financial advisers are weighing several major possible deals for Sprint, the struggling American wireless operator controlled by Mr. Son’s SoftBank.
/goo.gl/hTDZSg

Regulation

FCA rebukes 39 senior financial services executives
Caroline Binham – Financial Times
The City of London watchdog secretly censured 39 senior executives of financial firms over five years, 14 of whom still hold authorised roles. Among those who have received rebukes from the Financial Conduct Authority that will never be made public are 14 chief executives, according to statistics provided by the FCA to the Financial Times after a Freedom of Information request concerning recent use of “private warnings” for the most senior ranks of the City.
/goo.gl/Dag7d6

New Class of Mutual Fund Shares in Limbo as ‘Fiduciary’ Rule Is Delayed
Michael Wursthorn and Sarah Krouse – WSJ
The delay of a rule that tightens standards on brokerages’ retirement-savings advice is disrupting efforts to roll out a new class of mutual-fund shares designed to comply with the regulation. Work to create these transaction or “T” shares has been delayed or suspended while the Labor Department reviews the rule for repeal or revision, according to some brokerage firms familiar with fund managers’ efforts surrounding the shares.
/goo.gl/4VXOdl

Trump’s choice for SEC chair clears ethics hurdle: source
Reuters
President Donald Trump’s pick to chair the Securities and Exchange Commission, Jay Clayton, passed a key hurdle toward his confirmation after a government ethics watchdog gave him a clearance, a person familiar with the matter said on Friday.
/goo.gl/PZfegj

Ex-Barclays Trader Sought Libor Rate Help `Absolutely Openly’
Jeremy Hodges – Bloomberg
Contogoulas accused of Libor manipulation in criminal trial; He had no reason to think he was doing anything wrong: lawyer
A former Barclays Plc trader charged with rigging a key interest-rate benchmark wasn’t involved in any subterfuge and did everything in the open, his lawyer told jurors.
/goo.gl/HHLu1j

Investing and Trading

Bullish Commodity Bets Hit Record Highs, as Investors Seize on Signs of Growth
Stephanie Yang – WSJ
Commodity prices are enjoying their best run in years, fresh evidence that investors are betting on a pickup in the global economy after years of sluggish growth and scant inflation. The S&P GSCI Index, which tracks commodity futures, rose 28% last year in its biggest gain since 2009. Many commodities have continued to rally this year. Oil and natural-gas prices have soared more than 50% over the past 12 months. Precious metals like silver and materials like lumber have scored big gains in recent weeks.
/goo.gl/8cUiCc

Titans of oil world meet in Houston after two-year price war
Ernest Scheyder – Reuters
The biggest names in the oil world come together this week for the largest industry gathering since the end of a two-year price war that pitted Middle East exporters against the firms that drove the shale energy revolution in the United States. When OPEC in November joined with several non-OPEC producers to agree to a historic cut in output, the group called time on a fight for market share that drove oil prices to a 12-year low and many shale producers to the wall.
/goo.gl/npdYi8

Snap Bears May Drive $1 Billion of Short Sales Within a Week
Lu Wang – Bloomberg
All the love for Snap Inc. is sure to draw out the haters. That’s the view of S3 Partners LLC, a financial analytics firm, which says short interest in the photo-app maker is liable to reach $1 billion within a week, particularly if today’s rally continues. The contrary bet won’t be cheap, either, with the cost to borrow shares likely to start at 25 percent and rise.
/goo.gl/JAnaAj

Small Investors Run to ETFs
Asjylyn Loder and Chris Dieterich – WSJ
Ordinary investors are buying low-cost exchange-traded funds at a record-breaking pace, adding fuel to the U.S. stock rally. Investors have poured $124 billion into ETFs in 2017, the most aggressive start since the industry was founded 24 years ago. Individual investors accounted for as much as 85% of the inflows at BlackRock Inc.’s iShares ETFs in the first two months of the year, far higher than the usual 50% to 60%, said Martin Small, head of U.S. iShares.
/goo.gl/70rXmx

Jack Bogle: ETFs have beaten hedge funds
Chris Newlands – Financial Times
John “Jack” Bogle, the legendary investor, has predicted that the level of money in hedge funds will never again surpass the size of the exchange traded fund industry, which witnessed its 35th month of consecutive inflows in December.
/goo.gl/eBf2nB

Bitcoin hits all-time high as talk of U.S. ETF approval intensifies
Gertrude Chavez-Dreyfuss – Reuters
Digital currency bitcoin hit a record high on Friday on optimism about the approval of the first U.S. bitcoin exchange-traded fund by the Securities and Exchange Commission. “There’s one catalyst at the moment and that is the expectation that the Winklevoss Trust will be approved on the 11th of March. That’s the only game in town,” said Daniel Masters, portfolio manager of Jersey-based Global Advisors Bitcoin Investment Program.
/goo.gl/PjoCmS

Investors Are Shunning Hedges in the Trump Rally, Goldman Sachs Says
Sid Verma – Bloomberg
Hedge the inauguration, bet the presidency. That’s the mantra of investors diving into the U.S. stock rally with only modest downside protection despite a gale of headwinds, from elevated corporate leverage and Federal Reserve rate hikes to U.S. policy risks. Data from Goldman Sachs Group Inc. show investors have discarded hedges bought in the first leg of the global rally — between the November election and the end of last year — as they rush headlong into risk.
/goo.gl/KFcNeJ

Bond investors send warning for record high equity market; Structural reasons that have kept yields low seen staying in place
Robin Wigglesworth – FT
While equity market euphoria at the prospect of President Donald Trump’s spendthrift, deregulatory agenda remains undimmed, bond investors are sending a very different message.
/goo.gl/MkkY7u

Warm US winter leaves natural gas market with supply problem; First-ever recorded rise in inventory as balmy weather sweeps across country
Gregory Meyer in New York – FT
Winter has lost its icy bite for the second straight year in the US, wrongfooting forecasters and slackening demand for natural gas, resulting in excess supplies.
/goo.gl/OyRS69

Cashing In on Global Threats Lures Investors to New Nordic Fund
Niclas Rolander and Niklas Magnusson – Bloomberg
Summa Equity raised almost $500 million for its first fund; Says investors are looking for funds with sustainability focus
There’s a new Nordic buyout fund that’s drawing in investors eager to make money by responding to demographic and climate-related threats.
/goo.gl/mjf7bB

Ex-Employees Note a Hint of Turmoil in Bridgewater’s Recipe for Success
Alexandra Stevenson and Matthew Goldstein – NY Times
It is not every workplace where a top executive is accused of lying on a video for every employee to see. It is also unusual for a company founder to fire an employee in a group email and then later dismiss it as simply a joke.
/goo.gl/PznqoI

‘Green’ funds flush with new cash, challenges as Trump era dawns
David Randall – Reuters
Environmentally conscious investors are using their pocketbooks to protest President Donald Trump’s plans to slash environmental regulations, fueling a rally in funds that only invest in companies that meet progressive criteria for sustainability.
/goo.gl/XIH07q

Institutions

John Cryan changes Deutsche Bank’s course again; New strategy not only includes EUR8bn of new capital but reversal of past shake-ups
James Shotter and Martin Arnold – FT
Four years ago, Anshu Jain declared that Deutsche Bank’s capital problems were off the table, after Germany’s biggest bank raised EUR2.8bn in a share sale. Twelve months later, he went back to investors for another EUR8bn.
/goo.gl/5wJxdw

How the Rest of the World Paved the Way for a March Fed Hike
Jeanna Smialek – Bloomberg
U.S. data has been good enough to allow the Fed to hike, and global risks haven’t soured the outlook
/goo.gl/zKdJ1W

Yellen Hints at More Aggressive Rate Path Upon Locking in March
Rich Miller and Christopher Condon – Bloomberg
Federal Reserve Chair Janet Yellen left little doubt on Friday that the central bank will raise interest rates this month. More importantly, she dropped hints that it might end up having to increase them this year more than planned.
/goo.gl/KiiaT4

Regions

Brazil’s fast-growing fintechs form groups to discuss regulation
AluÌsio Alves – Reuters
Financial technology firms in Brazil are grouping to discuss with local watchdogs how to regulate the fast-growing sector, in which the number of players has risen roughly six-fold over the past couple of years.
/goo.gl/O2liXJ

Jim Rogers, Intrepid Investor, Finds Bumpy Road to North Korea
Patrick Boehler and Ryan McMorrow – NY Times
China was an economic backwater when Jim Rogers began traveling its dusty byways more than three decades ago. Still, Mr. Rogers, a former partner of George Soros, saw its promise. Today, Mr. Rogers, 74, doles out advice to China’s rising investor class at financial seminars, where he often draws a crowd. Part of his message involves another unloved market, where he sees promise despite authoritarian leadership and international sanctions: North Korea.
/goo.gl/QGlmqx

China vows new steel, coal capacity cuts to make sky blue
Reuters
China will cut steel capacity by 50 million tonnes and coal output by more than 150 million tonnes this year, its top economic planner said on Sunday as the world’s No. 2 economy deepens efforts to tackle pollution and curb excess supply.
/goo.gl/CqdDTT

Better Together for Scottish Fund Managers
Chris Hughes and Lionel Laurent – Bloomberg Gadfly
It’s a wedding between one of Scotland’s financial aristocrats and a relative upstart. The union of Standard Life Plc and Aberdeen Asset Management Plc will create one big Scottish money management business with a combined market value of 11 billion pounds ($13.5 billion).
/goo.gl/zRWpyQ

Brexit

U.K. May Be on Course for Early Clash With EU Over Brexit Costs
Alex Morales – Bloomberg
U.K. Prime Minister Theresa May’s government looks set for an early clash with European Union leaders over the terms of Brexit as a report suggested it can leave the bloc without paying a financial settlement.
/goo.gl/4O8Pmh

Miscellaneous

Paul Kangas, 79, Anchor Who Brought Stocks Into Living Rooms, Dies
Patricia Cohen – NY Times
Paul Kangas, a stockbroker who helped pioneer television’s first daily business news show, died on Tuesday in Miami. He was 79. His death, after a long illness, was confirmed by Mark Elieff, his stepson. With 24-hour cable stations now airing nonstop business and economic coverage, the uniqueness of Mr. Kangas’s early reports may be hard to recapture. But when he joined the new “Nightly Business Report” as a stock commentator on a South Florida public television station, WPBT, in 1979, there was no other program like it on the air.
/goo.gl/vS4tVq

Prime London Office Values May Fall 20% This Year on Brexit
Sharon R Smyth – WSJ
Values have already declined by 5% to 10% from peak level; Business rate tax increase in April will add to occupier costs
Central London office values will probably fall as much as 20 percent this year as the economy slows and investors are deterred by uncertainty in the face of the U.K.’s exit from Europe and increased business rates, according to Deutsche Bank AG’s asset management unit.
/goo.gl/XnPkVG

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