Disinformation campaigns distorting global news; Euronext ups Oslo Børs offer; Cboe considers HQ move

Feb 11, 2019

First Read

Hits & Takes
JLN Staff

Tayloe Draughon has set up a Go-Fund Me campaign to help support Jitesh Thakkar, who has been charged by the U.S. Department of Justice with “attempting to make programmers criminally liable for their users’ actions.” This is a very important case for the trading industry and could have a devastating impact on technology companies supporting the industry and ultimately market liquidity. I have donated. Will you too?~JJL

Sunday was Scout Sunday celebrating the founding of Boy Scouts on February 8 back in 1910. I gave a reflection at our chartering organization church about its impact on the youth beyond its membership. My message was well received.~JJL

More media consolidation news: Apollo Global Management is set to spend $3 billion to buy 14 regional TV stations from Cox Enterprises.

JLN has released five interviews thus far that were filmed at STAC’s 93rd Annual Midwinter Meeting:

The Pathway to Liquidity in Unregistered Securities with Templum Markets CEO Vince Molinari
Fintech in 2019: The Year Cloud Computing Hype Gets Realized with USAM Group CEO Feargal O’Sullivan
Dash Financial Technologies Eyes Equities and Buy-Side Growth with Dash Financial Technologies’ Chief Growth Officer Glenn Lesko
Trading Venues and Best Execution with Imperative Execution CEO Roman Ginis
Eyes on the House: STA’s Outlook with STA CEO and President Jim Toes

There have now been some 40 episodes of “The Spread,” JLN’s weekly recap of notable happenings in the options trading world. I just rewatched the first one ó we’ve come a long way.~SD

MIAX’s SPIKES start trading on February 19.~JJL

In the main hallway on the 6th floor of the NYSE they are showcasing 3 contemporary artists: Mister E, King Saladeen, and JohnBorn.~JJL

Goldman Sachs has just acquired a trading licence in Switzerland, FiNews reports, meaning that some of its London-based traders could be based in Zurich at some point. FiNews call this bad news for those traders, but hey – London is London, but Zurich’s not a bad second choice.~SR

Bitcoin’s (BTC) price is up $200 from where it was a week ago and, as usual, it has taken much of the altcoin market with it. Notable exceptions are Bitcoin Cash (BCH), TRON (TRX), Tether (USDT), and IOTA – all of which are slightly down in price, though not dramatically so.~MR

The Steptoe Blockchain Blog has a post titled A Regulatory Fork for Stablecoins: Is New Texas Guidance a Sign of Things to Come?~JJL

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The Spread – Everything Is Gonna Be (A) Fine – 2/8
JohnLothianNews.com

What’s your favorite TLA (Three Letter Acronym)? If it’s “SOQ,” then you should definitely tune in. If SOQ is not your favorite TLA, still tune in as there is plenty more exchange news to catch up on.

Watch the video and see the stories referenced here »

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ICE CEO calls Bakkt a “moonshot bet”
The Block Crypto
Intercontinental Exchange announced fourth quarter earnings last week, beating analysts’ estimates on some fronts including adjusted EPS. During a call with equity analysts, CEO Jeffrey Sprecher outlined the firm’s performance in Q4 2018 and shed some light on the progress of its cryptocurrency project Bakkt.
bit.ly/2UUKpCS

****** To the moon, Alice? Or one small step for man, one giant leap for CryptoKind?~JJL

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Cryptocurrency Was Their Way Out of South Korea’s Lowest Rungs. They’re Still Trying; A generation of the young with dead-end social and economic prospects, calling themselves ‘dirt spoons,’ aimed to strike it rich. They’ve ended up with big losses.
Alexandra Stevenson and Su-Hyun Lee – NY Times
Kim Ki-won is keeping a secret from his parents. It isn’t just that he has bought and sold an immense number of digital coins. Mr. Kim, who is 27 and lives with his parents, once made so much money trading cryptocurrencies that he was spending $1,000 a month on whatever he wanted. He quit his job. He borrowed to buy more. He planned to buy a house.
/nyti.ms/2tjnl50

*****Humbling story about trying to climb out from the bottom, only to dig a bigger hole.~JJL

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Friday’s Top Three
Our top read story on Friday was Bloomberg’s Quadriga Clients Won’t Get Help From Regulator on Lost Millions. Second was Reuters’s piece on MEMX [https://reut.rs/2MVsmJV|[NYSE-owner ICE warms to new challenger as profits rise]]. Third was TheBlockCrypto.com’s people story, ErisX fills C-Suite spot with former Barclays exec as it eyes the launch of its institutional crypto exchange

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Lead Stories

Disinformation campaigns are distorting global news; Media organisations must take action to provide an antidote to this poison
Tony Hall – FT
The BBC was issued with a D-notice, a gagging order, last week to silence its reporting of the gilets jaunes protests in France. Or so you might believe if you followed reports on social media. This story was entirely false. But it’s a sign of how powerfully momentum gathers behind misinformation ó or deliberate attempts to mislead ó that we have received freedom of information requests demanding “the truth”.
/on.ft.com/2tgDsQw

Euronext ups offer for Oslo B¯rs in bid to fend off Nasdaq; Exchange operators in bidding war for Norway’s main stock exchange
Philip Stafford – FT
Euronext has raised its offer to buy Oslo B¯rs, aiming to persuade undecided shareholders to reject a rival offer from Nasdaq for Norway’s main stock exchange.
/on.ft.com/2tf0ck1

Cboe Global Markets considers Chicago headquarters move
Lynne Marek – Crain’s Chicago Business
Cboe Global Markets is considering moving its Loop headquarters, though the Chicago Board Options Exchange parent would not leave Chicago and it would leave its trading floor where it is. During a conference call today with analysts about its fourth-quarter earnings release, the company’s chief financial officer, Brian Schell, mentioned the possible move, without providing details. He was explaining a nearly 50 percent increase in capital expenditures forecast for this year, when he referenced the possibility of the move.
bit.ly/2DZVTzl

****Talk of this has been bouncing around for a bit. While the current outlook is “still in the Chicago area,” that could quickly change if the prospect of a LaSalle Street Tax crops up again. ~SD

Swiss Franc Slumps in Mini ‘Flash Crash’ as Japan Curse Strikes
Michael G Wilson and Ruth Carson – Bloomberg
Franc slides almost 1% in a matter of minutes before reversing; Japan holidays now signposted on traders’ desks: NAB’s Catril
The Swiss franc swooned almost 1 percent at the start of Asian trade Monday as thin liquidity caused by a Japan holiday led to a mini recurrence of the “flash crash” that roiled FX markets early last month.
/bloom.bg/2timrFM

A Rarity On Wall Street: A Female- and Minority-Led Activist Hedge Fund; Impactive Capital, led by two industry veterans, is launching with $250 million from Calstrs
Cara Lombardo – WSJ
The upper ranks of hedge funds are almost exclusively white and male. Impactive Capital LP, a new activist fund being launched by two industry veterans, will be one of the exceptions.
/on.wsj.com/2tgEzQc

Deutsche Bank’s funding woes deepen; Lender pays highest rates on euro bond market this year for a leading international bank
Stephen Morris, Robert Smith and Olaf Storbeck – FT
Deutsche Bank has had to pay the highest financing rates on the euro debt market for a leading international bank this year, in a further sign of the German lender’s uphill struggle to reduce its funding costs.
/on.ft.com/2teDNn3

Thieves Mine Catalytic Converters for Metal More Valuable Than Gold; As palladium prices soar, criminals are on the prowl for the emissions-control devices
David Hodari – WSJ
Soaring palladium prices are inspiring an unusual band of criminals: catalytic converter thieves. The exhaust-control devices common in most cars contain the silvery white precious metal, whose prices have climbed more than 50% since mid-August. Palladium is now more expensive than gold.
/on.wsj.com/2tpmgbX

Euronext Tries to Beat Nasdaq With Raised Bid for Oslo Bors
Sveinung Sleire, Jonas Cho Walsgard and Will Hadfield – Bloomberg
Euronext offers 4% more than Nasdaq to win over shareholders; Oslo exchange board, largest owners have backed Nasdaq bid
Euronext NV stepped up a struggle with Nasdaq Inc. for control of Oslo Bors, raising its bid for Norway’s main stock exchange to about $790 million.
/bloom.bg/2tjp8XM

Eurex clears first swap transaction for U.S. end clients
Eurex
Eurex Clearing, one of the world’s leading central counterparties (CCP), has cleared its first swap transaction for end clients domiciled in the U.S. Citi is the first futures commission merchant (FCM) offering client swap clearing through Eurex Clearing. Eight fund companies have already joined Citi to take advantage of this service.
bit.ly/2UYzBDR

U.K. Signs Post-Brexit Trade Continuity Deal With Switzerland
Lucy Meakin – Bloomberg
The U.K. reached an agreement with Switzerland that will allow it to continue trade without any additional tariffs after it leaves the European Union.
/bloom.bg/2tgzXtq

Fall of Fugitive ‘Batman’ Puts Global Oil Trading on the Spot
Sabrina Valle and Lucia Kassai – Bloomberg
To his friends, Rodrigo Berkowitz lived within his means in a rented house in the suburbs of Houston. The former oil trader for state-controlled producer Petroleo Brasileiro SA bought clothes in outlet malls and sent his two daughters to public school. For a family Christmas trip to Orlando, his plan was to drive the 960-mile route in their black Honda CR-V sport utility — because it was crazy to spend on plane tickets, he said.
/yhoo.it/2UUIUVg

Do You Want the World’s Most Expensive Chatroom? Regulator Imposes $40m Fine for Market Manipulation
Shiran Weitzman – Globalbankingandfinance.com
Last week,it was reported that the UK bank, Standard Chartered, had agreed to pay a fine of $40m to the New York State Department of Financial Service (DFS). The reason for the eye-watering penalty was the use of chat rooms between 2007 and 2013 to rig the foreign exchange (FX). What is troubling is that at the start of 2019 and one-year on from MiFID II coming into force, many financial institutions are still struggling to get to grips with how to deal with electronic communications (eComms).
bit.ly/2theEbp

Exchanges, OTC and Clearing

Euronext details its strategic project to create a leading player in the Nordics with Oslo B¯rs VPS and adjusts its offer
Euronext
Create a leading player in the Nordics with Oslo B¯rs VPS, a combination for growth; Offer price raised from NOK 145 to NOK 158 per share; Acceptance period extended by four weeks to 11 March 2019
Euronext, the leading pan-European exchange, provides additional details on its strategic ambition to further develop Oslo B¯rs VPS Holding ASA (“Oslo B¯rs VPS”) and revises certain terms of its offer.
bit.ly/2tiQA7X

CME Group Announces Record 55,000 NYMEX WTI Houston Crude Oil Futures Contracts Traded Since Launch
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced more than 55,000 NYMEX WTI Houston Crude futures contracts have traded since launch on November 5, 2018.
bit.ly/2E0zge4

M&A Activity Sparks Into Life Among Global Exchange Groups As FTSE Mondo Visione Exchanges Index Up By 5.4% In January, Brazil’s B3 Up by 24.9%
Mondovisione
M&A activity among global exchanges flickered into life at the end of 2018 when large shareholders in Oslo Bors pitched to be bought out by Euronext. In mid January Euronext launched a formal bid to acquire Oslo Bors. The flickering M&A flame became more intense when at the end of January Nasdaq made an offer to acquire Oslo Bors, setting it on a collision course with Euronext. Oslo B¯rs’s board considers Nasdaq’s offer the best alternative for all stakeholders and unanimously recommends that shareholders accept the offer and not accept Euronext’s.
bit.ly/2DYYIjT

Borsa Italiana Monthly Update
Mondovisione
/goo.gl/jsj2gr

EEX to launch LNG futures end-Q2 as first step to global offering: CEO
Andreas Franke – S&P Global Platts
German energy exchange EEX will launch an LNG futures products settled against the Platts JKM benchmark by the end of the second quarter, its CEO said.
bit.ly/2E0WMHM

NYSE exec finishes her to-do list using ‘1-3-5 rule’ of productivity
Mark Abadi – Business Insider
If you often struggle to get through the items on your to-do list, you’d be wise to try a productivity hack from Betty Liu, the executive vice chairman of the New York Stock Exchange.
Liu told Business Insider that since January 1 she’s been following the “1-3-5 rule” to organize her day. Under the 1-3-5 rule, every day you write down nine items to accomplish before the day is over: one big thing, three medium things, and five small things. Liu said she writes her list every morning on her train commute, though she said that ideally she would write them the night before.
/read.bi/2SiKwv0

Fixed Income Highlights – February 2019 edition
Eurex
A cautious start is how I’d describe the start to 2019. European Fixed Income (FI) markets have been notably quiet with a risk-off tone evident throughout. Carry trades look set to be the theme in Q1 as there is a strong correlation between market moves and absolute levels of carry (adjusted against volatility ratio’s) which implies the market is positioning for future volatility. It’s hard to get excited at this juncture as the underlying market is trading in tight ranges, with a low level of realized volatility contributing to weaker volumes in Eurex’s core markets. Having said this, volumes at the beginning of 2018 set a high bar and January had plenty of event risk.
bit.ly/2tiCB1L

Fintech

Niall Ferguson joins blockchain project Ampleforth
Jemima Kelly – Financial Times
Ampleforth: not just an ideal school to send your kids if you’re Catholic and can afford it, but also, “an ideal money”. More specifically (and perplexingly): “A decentralised store of value protocol that is volatile in price and supply at launch, but is strictly better than Bitcoin at steady state because it converges on a stable unit of account.”
And Niall Ferguson, the rightwing British historian and who once called himself a “fully paid-up member of the neo-imperialist gang”, has joined its advisory board.
/on.ft.com/2DoNtQv

FinTech Credit: Not So Clear And Present Danger
PYMNTS.com
As the payments landscape evolves and becomes ever more digital in scope, and as FinTech firms make inroads into traditional financial services, regulators are looking at FinTech credit ó and how it might be defined and shaped. There seem to be no easy answers on just how to regulate the space.
bit.ly/2GApnFD

What can four innovative fintech startups and their investors tell…
Stuart Jackson – Finextra
Fintech is a sector that thrives only through innovation. It’s in constant flux; changing and evolving all the time. While we can see spikes of activity and the general trajectory, it’s hard to predict what lies ahead just by taking a high-level view.
To get a more accurate picture you need to drill down and analyse some of the startup companies that have gained traction with global startup investors; individuals such as Tom Chapman of Matchesfashion, Yuri Milner of Digital Sky, Fabrice Grinda and Peter Thiel who founded PayPal. The sums injected and the calibre of investor in these companies tells you that they are the true predictors. Here are four of the most interesting.
bit.ly/2GBPXOD

Fintech Companies Raised a Record $39.6 Billion in 2018: Research
Forbes
Venture capital-backed financial technology companies raised a record $39.57 billion from investors globally in 2018, up 120 percent from the previous year, according to research by data provider CB Insights published on Tuesday.
Funding was raised through 1,707 deals, up from 1,480 in 2017, the research said.
bit.ly/2GBQ50z

Cryptocurrencies

Ontario securities regulator looking into digital platform Quadriga
John Tilak, Matt Scuffham – Reuters
Canada’s biggest securities regulator said on Friday that it was looking into Quadriga CX, as concerns grow that a regulatory gap leaves investors in the digital platform unprotected against potential losses.
/reut.rs/2thXJW4

NYSE Parent ICE Anticipates Over $20 Million Spend on Bakkt This Year
Wolfie Zhao – Coindesk
Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, estimates it will spend more than $20 million this year in building Bakkt, its bitcoin futures trading and custody platform.
bit.ly/2US8zO5

Funds Were Moving From QuadrigaCX Right Before Its Collapse
Anna Baydakova – Coindesk
Nearly $1 million worth of ether (ETH) left QuadrigaCX and went to other cryptocurrency exchanges in December, the same month its CEO died, a CoinDesk review of public blockchain data shows. In a series of transactions sent from QuadrigaCX’s hot wallet (meaning one connected to the internet), more than 9,000 ETH moved from the embattled Canadian exchange to accounts at Binance, Bitfinex, Kraken and Poloniex (owned by Circle).
bit.ly/2TM0Z7u

Software Engineer Loses Life Savings in Quadriga Imbroglio
Doug Alexander – Bloomberg
Tong Zou sought to save on fees before moving back to Canada; Crypto exchange’s 115,000 customers unable to access accounts
Tong Zou wasn’t a stereotypical crypto bro bent on accumulating flashy trophies such as Lamborghinis when he deposited his life savings into Quadriga CX’s digital exchange. The 30-year-old software engineer, who’d been working in California for seven years, just wanted to save a few bucks on transfer fees after deciding to move to Vancouver. It proved to be a C$560,000 ($422,000) mistake.
/bloom.bg/2thFCzp

HSBC Whistleblower Falciani to Launch Anti-Fraud Cryptocurrency
David Kimberley – Finance Magnates
Famous French whistleblower HervÈ Falciani is going to be launching a new cryptocurrency according to a Reuters report published on Friday. Called Tabu, Falciani hopes that the new token will be picked up by regulatory authorities and used as a means of ensuring money is clean and transactions are not conducted fraudulently.
/bit.ly/2UPC6Ih

SEC Commissioner Peirce Confirms Guidance on Crypto Tokens Is Coming
Yogita Khatri – Coindesk
The U.S. Securities and Exchange Commission (SEC) plans to clarify when securities laws might apply to crypto token sales, an official said Friday.
bit.ly/2UMdtMC

SEC Commissioner Says Bitcoin ETF Will Be Approved ‘Eventually’
Yogita Khatri – Coindesk
A commissioner at the U.S. Securities and Exchange Commission (SEC) believes a bitcoin exchange-traded fund (ETF) will ultimately be approved.
bit.ly/2E0ztOo

IBM Blockchain Assists Groundwater Pilot in Drought-Prone California
Yogita Khatri – Coindesk
IBM and two other organizations will marry blockchain and IoT to help manage groundwater usage in an “at-risk” Californian aquifer. Aimed to improve sustainable use of the key water resource, IBM announced Friday that California’s Sacramento San Joaquin River Delta will be tracked in “real-time” through a joint effort between the Freshwater Trust, a U.S-based nonprofit working to preserve and restore freshwater ecosystems, and SweetSense, a provider of internet of things (IoT) sensors for the development sector.
bit.ly/2UPNxzN

Ethereum Has Shot Past Ripple’s XRP In The Cryptocurrency Rankings–Here’s Why
Billy Bambrough – Forbes
Ethereum, the decentralized app network and cryptocurrency rival to bitcoin, has continued to climb after last week’s sudden market pump, overtaking Ripple’s XRP digital token to reclaim the number two spot in the list of the world’s largest cryptocurrencies by market capitalization.
bit.ly/2UUCTI9

Harry Potter-Inspired Crypto Function Sends Prices Levitating
Olga Kharif – Bloomberg
Litecoin jumps as much 36% on Mimblewimble protocol optimism; Bitcoin is poised for its first weekly increase in six weeks
Crypto prices appear to be getting a magical bump from optimism over a software privacy function known as Mimblewimble, which is named after a Harry Potter spell that stops people from revealing secrets.
/bloom.bg/2UQQ8JJ

***I feel like it was a missed opportunity not to use ‘Wingardium Leviosa’ in the title of this article.~MR

Stories from Alternative Crypto Sources

US SEC Highlights Dedicated ICO Guide Amid Ongoing Regulatory Debate
William Suberg – Cointelegraph
/bit.ly/2Sriw8o

A Major Philippine Bank Just Launched Crypto ATMs and it May Fuel Massive Bitcoin Adoption
Joseph Young – CCN
/bit.ly/2SpgFBi

How We Will Remember the Year of the Dog? ICO Market Decline, Trend Toward Compliance and Other Takeaways
Stephen O’Neal – Cointelegraph
/bit.ly/2RTnoht

Politics

For Democrats Aiming Taxes at the Superrich, ‘the Moment Belongs to the Bold’
Patricia Cohen and Maggie Astor – NY Times
The only thing more startling than the flurry of tax proposals Democrats have unveiled in recent weeks is the full-throttle response they’ve gotten from the public.
Representative Alexandria Ocasio-Cortez suggested a near doubling of the top income tax rate. Senator Bernie Sanders, who caucuses with the party, introduced a bill to raise taxes on dynastic heirs. And Senator Elizabeth Warren proposed a levy that has never existed in the United States: a wealth tax, assessed annually on America’s biggest fortunes.
/nyti.ms/2E19EOk

Warren Starts 2020 Bid, Vows to End System `Rigged’ by Rich
Sahil Kapur – Bloomberg
Massachusetts senator to focus on America’s income inequality; Proposing levy on the very rich to fund progressive goals
Senator Elizabeth Warren made it official on Saturday: She’s running for president to change a country she says is “rigged by the wealthy.” She quickly drew the attention of President Donald Trump’s re-election campaign.
/bloom.bg/2US9A8R

Trump official slams cartels as U.S. lawmakers push anti-OPEC bill
Timothy Gardner – Reuters
A senior administration official said on Friday that U.S. national security depends on affordable energy, and slammed cartels when asked if President Donald Trump would support a bill targeting the OPEC production group’s oil supply cuts.
/reut.rs/2E0lYOz

Millions of Americans could be stunned as their tax refunds shrink
Heather Long – The Washington Post
Millions of Americans filling out their 2018 taxes will probably be surprised to learn that their refunds will be less than expected or that they owe money to the Internal Revenue Service after years of receiving refunds. People have already taken to social media, using the hashtag #GOPTaxScam, to vent their anger. Many blame President Trump and the Republicans for shrinking refunds. Some on Twitter even said they wouldn’t vote for Trump again after seeing their refunds slashed.
/wapo.st/2SoudwK

Hedge fund manager: Stock buybacks should be ‘illegal’
Matt Egan and Julia Horowitz, CNN Business
Buybacks: Veteran hedge fund manager Mark Yusko is deeply skeptical of the stock buyback boom set off by President Donald Trump’s tax overhaul.
/cnn.it/2USICho

The Green New Deal Shows How Grand Climate Politics Can Be
Adam Rogers – WIRED
IF IT’S HARD to imagine the sweeping changes proposed in the “Green New Deal” actually happening, don’t blame the Green New Deal. It’s just that it has been so long since any politician suggested something so grand.
/bit.ly/2SGeOHm

Regulation

SEC Commissioner Says Bitcoin ETF Will Be Approved ‘Eventually’
Yogita Khatri – Coindesk
A commissioner at the U.S. Securities and Exchange Commission (SEC) believes a bitcoin exchange-traded fund (ETF) will ultimately be approved.
Robert J. Jackson Jr., in an interview published by government-focused news source Roll Call on Wednesday, said: “Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.”
bit.ly/2E0ztOo

Federal Court Orders Husband and Wife Team and Their Company to Pay Defrauded Customers More Than $1 Million in Connection with a Futures Trading Scheme
CFTC
The Commodity Futures Trading Commission (CFTC) announced today that on December 27, 2018 a Washington State federal court ordered Bellevue, Washington residents Sung Hong a/k/a Lawrence Hong or Laurence Hong, his wife, Hyun Joo Hong a/k/a/ Grace Hong, and their company Pishon Holding LLC to pay more than $1.25 million in restitution in connection with an enforcement action brought by the CFTC charging the defendants with fraudulent solicitation and misappropriation involving futures contracts. In addition to the restitution, the Court Order also imposes a permanent trading and registration ban on the Hongs and Pishon and prohibits them from violating provisions of the Commodity Exchange Act (CEA) as charged.
bit.ly/2DZFxqm

Former mining executive sentenced to serve 9 months for insider trading
ASIC
Former managing director of mining company Golden Fields Resources Pty Ltd, Mr Darren James Lind, has been sentenced by the District Court of South Australia for insider trading in contravention of s1043A of the Corporations Act.
bit.ly/2thXc6A

AAT reduces banning period for two former Macquarie advisers
ASIC
The Administrative Appeals Tribunal (AAT) has reduced the banning period for former Macquarie advisers, Mark Alexander Landau and Marcus Roderick Campbell, from 10 years to 18 months.
bit.ly/2tiDzuW

Is RegTech The Answer To Corporate Governance And Risk Management Issues?
Nizan Geslevich Packin – Forbes
Financial technology, also known as FinTech, has changed the lives of billions by making financial services and products more accessible, and even integral, to their daily lives. For example, FinTech is what makes it possible for payments to be processed quickly across the globe for low fees, or for individuals to buy and sell online securities directly in the stock market without the advice of intermediaries. As an additional example, the sharing economyóthe market for consumption of unused assets, facilitated by social mediaóis often powered by FinTech companies as well.
bit.ly/2tgEzzK

Investing and Trading

Krugman Sees Possible U.S. Recession With Little Fed Wiggle Room
Yousef Gamal El-Din and Alaa Shahine – Bloomberg
Interest-rate increases were not grounded in the data; Current U.S. Treasury chief is ‘no Hank Paulson,’ Krugman says
Nobel laureate Paul Krugman said the U.S. economy may be heading into a recession at a time when the Federal Reserve doesn’t have the firepower to properly combat a slump.
/bloom.bg/2tgA8F6

US loans face liquidity drain as investors fly to quality
Jonathan Schwarzberg, Loan Pricing Corporation – Reuters
Nearly US$20bn of outflows from retail loan funds since late 2018 have drained liquidity out of the US leveraged loan market and are helping increasingly selective investors to demand better terms and pricing amid a rising supply of new loans, reversing the aggressive borrower-friendly market conditions of 2017 and 2018.
/reut.rs/2DrkgnQ

Giving to Colleges Jumps 7.2% to Record $46.7 Billion; Seven schools received gifts of at least $100 million in fiscal 2018
Melissa Korn – WSJ
U.S. colleges and universities brought in a record $46.7 billion in donations last fiscal year, fueled by stock market gains and strategically timed gifts allowing donors to prepare for changes in tax laws. Giving increased by 7.2% in fiscal 2018, the ninth consecutive year of gains, according to the Council for Advancement and Support of Education’s Voluntary Support of Education survey, released Monday. The fiscal year ended June 30 for most schools.
/on.wsj.com/2tgHEjp

This Options Bet Helps Tame Markets, but There Are Risks; ‘Reach for yield’ behavior underscores concerns about the early decade-old bull market in U.S. stocks, some analysts say
Gunjan Banerji – WSJ
More investors are selling options in a bid to boost returns, a shift that traders say is helping to tamp down market volatility nowóbut potentially at the expense of greater turbulence later.
/on.wsj.com/2teGQvv

Investors demand huge fee discounts from asset managers; Institutions can knock off more than 30 per cent on charges for bond funds
Siobhan Riding – FT
Bond fund managers have given large investors discounts of more than 30 per cent in a sign of how a combination of low yields and pressure from passive funds has eroded the value of active fixed-income funds.
/on.ft.com/2tdoXx4

Fidelity and Allianz performance-fee funds struggle to pull in money; Advisers say investors are put off by complex and unpredictable charging structure
Siobhan Riding – FT
Minimal assets have been gathered by a series of funds that link fees to performance, which were launched with fanfare by Fidelity International and Allianz Global Investors in 2018. The situation emphasises the problem facing alternative pricing structures.
/on.ft.com/2tgGX9N

Traders eye ‘bad trade’ in Swiss franc flash fall; Currency abruptly dropped early in the Asian trading day
Katie Martin – FT
The Swiss franc is the latest currency to have gone bump in the night. At the point where the week’s global trading got under way in Asia, the euro abruptly shot up one whole point from SFr1.1325 before immediately dropping back down. The dollar made a similar move.
/on.ft.com/2tkGZxb

Options Markets Suggest Swiss Franc ‘Flash Crash’ Is a One-Off
Vassilis Karamanis – Bloomberg
While the Swiss franc’s almost 1 percent drop gave currency traders a shock during Monday’s Asia session, options suggest it’s back to business as usual.
/bloom.bg/2thTOZq

Trump Trade War Helps Push Farmers Into Record Number Of Bankruptcies
Mary Papenfuss – Huffington Post
Hard times for farmers got tougher with President Donald Trump’s trade war. Now Midwestern farmers are filing the highest number of bankruptcies in a decade, according to a Wall Street Journal analysis of federal data.
bit.ly/2UPNIer

India seeks to lure medtech to growing market
Meg Bryant – Medtech Dive
With 1.3 billion people and a new regulatory regime aimed at luring industry, India’s medical device market seems primed for growth. Valued at $5.2 billion, the sector is growing at an annual compound growth rate of 15.8%, putting it on track to hit $50 billion by 2025, according to Make in India, a government-led initiative to attract investment in the nation.
/bit.ly/2SgK942

Index funds track the market, but they’re not all evenly matched
MarketWatch
Index mutual funds tracking the same market benchmark may look alike ó until you peek under the hood. Fees and expenses, structure, and average market-capitalization are just some of the potential differences between fund offerings that can impact performance.
/on.mktw.net/2thUmyo

The ETF Industry’s Biggest Problem, and How to Fix It
Crystal Kim – Barron’s
Exchange-traded funds have been hailed for their accessibility, transparency, and, above all, low costs. But the way in which investors are actually able to buy and sell ETFsóand at what costóruns counter to their promises.
bit.ly/2tf6lwB

Institutions

Barclays to shift some credit and equity derivatives sales jobs to Paris: sources
Pamela Barbaglia – Reuters
Barclays is shifting some jobs in its London-based credit and equity derivatives sales teams to Paris as it reorganizes its operations ahead of Brexit, two sources familiar with the matter said.
/reut.rs/2DnPs7G

Bank of America boosts CEO Brian Moynihan’s pay 15% to $26.5 million after record profit last year
Hugh Son – CNBC
Bank of America CEO Brian Moynihan got a 15 percent raise, the biggest increase among bank chiefs to disclose pay so far, after the lender reported record earnings last year.
/cnb.cx/2E1HtP6

Morgan Stanley, in Its Biggest Deal Since Crisis, Courts Future Millionaires; Wall Street bank to pay $900 million for Solium Capital, a manager of employee stock plans
Liz Hoffman – WSJ
Morgan Stanley MS -1.62% is making a play for the thousands of employees in the startup economy who might one day be millionaires. The Wall Street bank will pay $900 million to acquire Solium Capital Inc., SUM 1.14% which manages the stock that corporate employees receive as part of their pay. The deal is the bank’s largest acquisition since the financial crisis.
/on.wsj.com/2thMDjS

Lloyds to hire 700 advisers in wealth management push; Joint venture with Schroders targets £25bn in assets within five years
Nicholas Megaw and Kate Beioley – FT
Lloyds Banking Group plans to hire more than 700 financial advisers, setting the stage for a potential acquisition spree and war for talent against rivals such as St James’s Place and Rathbones.
/on.ft.com/2tffdCn

UBS Changes Bonus System for 10,000 Corporate Center Staff
Catherine Bosley – Bloomberg
UBS Group AG scrapped individual variable bonuses for about 10,000 employees at its corporate center, and instead will pay people a percentage of their annual salary.
/bloom.bg/2th8O9Z

SocGen French Union Braces for ‘Important’ Hit to Trading Staff
Fabio Benedetti Valentini – Bloomberg
One of Societe Generale SA’s main French labor unions is bracing for an “important” hit to headcount in trading after the bank announced 500 million euros ($570 million) in fresh cost reductions.
/bloom.bg/2tdu3tc

Regions

Foreigners invest record $9bn into Chinese stocks in January; Cheap valuations and dovish Fed attract bargain hunters after disastrous 2018
Gabriel Wildau – FT
Foreign investors poured a record $9bn into Chinese equities in January, the largest single-month inflow on record, betting the mainland market has bottomed out after a disastrous 2018 and anticipating that a more dovish US Federal Reserve will boost emerging markets.
/on.ft.com/2tplnA9

Bolsonaro’s financial guru plans free-market perestroika; Paulo Guedes sets out ambitious programme of economic liberalisation
John Paul Rathbone and Andres Schipani – FT
Paulo Guedes touches a finger to his temple. “People from the left have soft heads and good hearts,” he says. “People from the right have hard heads, and?.?.?.?” He searches for the correct phrase. “Not-so good hearts.”
/on.ft.com/2te6K2k

Nordea Investor Complaints Show How Much Trouble Bank Is In
Leo Laikola, Kati Pohjanpalo and Niklas Magnusson – Bloomberg
The bank has yet to turn its business around after deep cuts; Nordea’s cuts can’t keep pace with the bank’s sinking revenue
After years of severe cuts, Nordea Bank Abp is now losing revenue faster than it’s reducing costs.
/bloom.bg/2tfdTPV

Two Large Chinese Borrowers Miss Bond Payments, Sources Say
Bloomberg News
China Minsheng Investment bondholders said to not get paid; Defaulter Wintime is said to miss debt payment milestone
Two large Chinese borrowers missed payment deadlines this month, underscoring the risks piling up in a credit market that’s witnessing the most company failures on record.
/bloom.bg/2UQAEFy

China’s Hunger for Capital Is Behind Market Opening; Authorities must improve the quality of financial statements and legal protections to revive confidence among foreign investors.
Christopher Balding – Bloomberg
Beijing is selling its relaxation of inward foreign investment limits as a natural opening of financial markets. The reality is that China needs the capital to keep the economy going, and the question is whether investors will buy the hype.
/bloom.bg/2UPDCdr

Brexit

Brexit goes to the brink; History tells us we should not draw conclusions from the lack of agreement at this moment
Wolfgang M¸nchau – FT
Donald Tusk’s outburst imagining a “special place in hell” for the UK’s proponents of Brexit without a plan tells us that he has moved on to the next phase in the five stages of mourning. The president of the European Council is angry because he has finally realised that Brexit is actually going to happen ó and that the UK could leave the EU without a deal. Mr Tusk is probably still confused, but at least he is now confused at a higher level.
/on.ft.com/2teFJvP

May offers concessions to win Labour support for Brexit deal; Workers’ rights on table but call for customs union with EU rejected
Jim Pickard, Henry Mance and George Parker and Alistair Gray – FT
Theresa May has indicated her willingness to work with Labour to break the Brexit impasse, offering fresh concessions on workers’ rights and calling for further cross-party talks.
/on.ft.com/2tiBorf

British and U.S. Banks Are Deeply Divided on Brexit Ties
Jess Shankleman , Harry Wilson , and Robert Hutton – Bloomberg
U.K. Treasury seeks to publish post-Brexit strategy next month; Financiers and insurers met with Treasury Minister last week
With just seven weeks to go before Brexit, it’s not just U.K. politicians who are bitterly divided over the country’s withdrawal from the European Union — large banks are also at loggerheads.
/bloom.bg/2tilsW6

U.K. Economy Wilts as Brexit Jitters Hit Business Investment
Andrew Atkinson – Bloomberg
Growth in 2018 was the weakest in six years, may slow more; No widespread evidence of stockpiling seen in the figures
Brexit uncertainty dragged U.K. investment to its worst slump since the financial crisis, leaving the economy with barely any momentum.
/bloom.bg/2tgC1l6

U.K. Sued Over Brexit Deal With Ferry Company Without Boats
Kaye Wiggins – Bloomberg
Eurotunnel says contracts based on “secretive, flawed” process; Case comes days after contract with Seaborne Freight scrapped
The companies that run the Channel tunnel are suing the British government over its award of ferry contracts to handle freight shipments in a no-deal Brexit, just days after one of those contracts, with a startup company that doesn’t own any ships, fell through.
/bloom.bg/2URdDm0

Lessons for Brexit from Norway’s hard border with Sweden
David Keyton and Jill Lawless- AP
With fresh snow crunching under their boots and a handful of papers to be checked and stamped, truck drivers from Latvia, Sweden and Poland make their way across Norway’s Orje customs station to a small office where their goods will be cleared out of the European Union and into Norway.
bit.ly/2UU9oX0

Brexit: ‘Very real’ chance of Irish unity poll if no deal
Nick Eardley – BBC News
Several cabinet ministers have told the BBC a no-deal Brexit could lead to a vote on Irish unification. One senior minister said the prospect is “very real” and very much on the prime minister’s mind. A second cabinet minister warned the government risked “sleepwalking into a border poll”.
/bbc.in/2Bxx3oC

Brexit’s Corporate Refugee Numbers in Netherlands Set to Swell
Ruben Munsterman – Bloomberg
250 candidates still in talks about potential move, NFIA says; Amsterdam picked by speed traders, media, drug regulator EMA
Brexit is driving companies out of the U.K., and the Netherlands is raking in the corporate refugees.
/bloom.bg/2tgEwny

Miscellaneous

Global economy: Why central bankers blinked
Sam Fleming and Jamie Smyth – Financial Times
As Donald Trump rhapsodised on Tuesday night about the “unprecedented economic boom” he is seeing across America, central bankers in Australia, India and the UK were preparing to join a broader retreat from plans to tighten monetary policy.
Hours after the US president finished his State of the Union address in the House chamber, Philip Lowe, the governor of the Reserve Bank of Australia, stood up to warn of an “accumulation of downside risks” ó including trade skirmishes between China and the US, rising populism and Brexit. The next move in interest rates could be down, he said, instead of up.
/on.ft.com/2E0nfW3

Journalism Isn’t Dying. It’s Returning to Its Roots
Wired
THE PAST FEW weeks have brought bad news to the hardworking scribes of the news business. Three leading digital outletsóBuzzFeed, the Huffington Post, and Viceóannounced layoffs that left many accomplished journalists unemployed. The fingers of blame quickly pointed to the great bogeymen of our media ageóFacebook and Googleóand warned about a threat to democracy. After all, if the most savvy and avant-garde of the new digital journalists can’t make a living, what hope is there for old-school newspapers? To many, the health of our democracy is inextricably tied to the health of our journalism: If the latter begins to die, the former must immediately follow.
bit.ly/2tgaSih

***An interesting read about journalistic objectivity and how social media-based reporting in some ways mirrors the nature of journalism in the time of Benjamin Franklin.~MR

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Get a FREE 90 day trial of John Lothian Newsletter First Read Mr. Heath Tarbert Chairman, Commodity Futures Trading Commission Three Lafayette Centre 1155 21st Street, NW Washington, DC 20581 July 12, 2019 Dear Chairman Tarbert:...

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