Duffy reigns as CME rises

Jan 21, 2019

Duffy reigns as CME rises

Jan 21, 2019

First Read

Hits & Takes
JLN Staff

Today is Martin Luther King, Jr. Day in the US. It is a holiday where we celebrate the life, message and mission of the peacemaker who gave us all a great dream of a better future. What do you say we work harder to make that dream a reality?~JJL

Miax Options has reported: “the launch of trading on SPIKES™ options and activation of interface specification changes previously announced for January 22, 2019 have been temporarily placed on hold due to the government shutdown and its impact on pending SEC approvals.”~JJL

The HBO series “Brexit” premiered this weekend. It stars Benedict Cumberbatch as Dominic Cummings, the architect of Britain’s Vote Leave campaign.~JJL

Here’s a bit of an odd story from The Hill for Martin Luther King Jr. Day: “Civil rights group marks MLK Day with call for ‘Trump card’ national ID.” It’s hard to imagine the folks in this article wanting to carry around something called a Trump Card.~SR

China put out Q4 and annual GDP numbers today. The picture wasn’t pretty. Real GDP growth for 2018 came in at 6.6 percent. (Of course, there is always debate about the accuracy of these numbers.)~SD

Bloomberg is reporting that “Jaffray Woodriff, a co-founder of Quantitative Investment Management, gave $120 million to the University of Virginia, which is the largest private gift in its 200-year history.”~JJL

Vogue posted a short list of notable documentaries about Martin Luther King Jr. – a good way to remember a great man. You can find it here.~MR


The Spread – Closing Props – 1/18


Give ’em their props – they gave it a go. (Plus, the OCC’s big decision was revealed.)

Watch the video and see the stories referenced here »


From Greenspan to Yellen, Economic Brain Trust Backs Carbon Tax
Jennifer A Dlouhy – Bloomberg
An all-star lineup of economists, from Alan Greenspan to Paul Volcker, is endorsing a plan to combat climate change by slapping a tax on greenhouse gas emissions and then distributing the revenue to American households.
All living former Federal Reserve chairs, several Nobel Prize winners and previous leaders of the president’s Council of Economic Advisers have signed on to a statement asserting that a robust, gradually rising carbon tax is “the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.”

***** Since when is a tax a market based solution?~JJL


IMF flags trade war threat and warns of global economic slowdown; Fund revises down growth forecasts to 3.5% this year and 3.6% in 2020
Chris Giles in Davos – The Financial Times
The global economy is weakening faster than expected with risks increasing from trade wars and volatility in financial markets, the IMF said on Monday ahead of the start of this year’s World Economic Forum in Davos.

*****The trend is the story, not the absolute levels of growth.~JJL


***** Still time to sign up for Rates Evolved and use the link in the image above to get a 20% discount for up to 10 people.~JJL


Martin Luther King Jr. Said, ‘The Time Is Always Right To Do What Is Right’: Here’s How You Can Start
Jack Kelly – Forbes
We would all love to change the world. For the majority of us, we have family, careers, social obligations and personal challenges that suck up our time and energy leaving little time to pursue worthwhile causes. In light of Martin Luther King Day, it would be a terrific time to think of this vision and try to employ them in our daily lives at work.

*****The time IS always right to do what is right.~JJL


Hacking at the SEC; Digital Assets; Spoofing
Gary DeWaal – Bridging the Week
Last week the Securities and Exchange Commission filed an enforcement action against nine defendants related to its 2017 discovery that its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system used for receiving and retaining various corporate filings had been hacked and that persons likely had traded on material nonpublic information obtained through the cyber intrusion. A related criminal indictment organized by the Department of Justice was also filed. Separately, during the prior week, the first person convicted and sentenced to serve time in prison for spoofing under the Dodd Frank Wall Street Reform and Consumer Protection Act requested a new trial based on data he claimed was not made available for use by relevant exchanges during his initial trial.


Friday’s Top Three
Everyone wants to avoid paying their taxes – thus our top story on Friday was The Wall Street Journal’s How Wealthy Americans Like Jack Benny Avoided Paying a 70% Tax Rate. Second, confirming the truth of its title, was (once again) Institutional Investor’s Maria Bartiromo Was a Generational Icon for Financial Television. What Happened?. And third was the news in Bloomberg on SocGen Considers Shutting $4.7 Billion Prop-Trading Unit


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Lead Stories

Duffy reigns as CME rises
Lynne Marek – Crain’s Chicago Business
CME Group Chairman and CEO Terry Duffy has what traders call a “hot hand” as he approaches his next high-stakes challenge: integrating the company’s biggest acquisition in more than a decade. CME closed the $5.5 billion purchase of London-based NEX in November, capping a strong year for the world’s biggest operator of futures exchanges. Trading volume jumped 18 percent over 2017, as resurgent volatility in financial markets spurred demand for futures. Rising revenue and profit lifted CME stock 20 percent over the past 12 months, while the S&P 500 dropped 6 percent.

Why the Quants Aren’t Adding Up; Black-box investing strategies supposedly based on rocket science are vulnerable to a host of inherent biases, which are now being exposed.
By Satyajit Das – Bloomberg
Like alchemists seeking to transform base metals into gold, asset managers are constantly seeking the perfect formula for investment success. In recent years, the search has focused on proprietary quantitative strategies, involving rule-based investments. The genre is ill-defined and marketed under different names, including factor investing, risk parity, smart beta and so forth.

Jack Bogle Changed Your Life Even If You Don’t Know Who He Was
By Ben Steverman – Bloomberg
Vanguard chief’s idea of low-cost index fund flopped at first; Bogle, who died Wednesday, exposed drawbacks of stock-picking
Jack Bogle knew how to make a nuisance of himself. “What he meant to most people in the investment business was that he was a royal pain in the bottom,” said Jeremy Grantham, co-founder of Boston-based Grantham Mayo Van Otterloo, or GMO.

Lehman’s Bankruptcy Keeps Getting More Expensive; Lawyers and accountants spent a decade and charged $7 billion to carve it up. They’re not done yet.
Matt Levine – Bloomberg
Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15, 2008, making this week the 10 year and, uh, 4 month anniversary of what might be the central event of the global financial crisis. The New York Fed’s Liberty Street Economics blog has a series of posts this week commemorating the occasion, which seems like weird timing until you notice that the posts are not keyed to the anniversary of the bankruptcy filing but to the end of the bankruptcy process. Or, not the end even; the beginning of the end. “This week, we will publish a series of four posts that provide an assessment of the value lost to Lehman, its creditors, and other stakeholders now that the bankruptcy proceedings are winding down,” says the first post.

Davos Billionaires Keep Getting Richer; The world’s elite have prospered since the financial crash.
Tom Metcalf and Simon Kennedy – Bloomberg
The global elite descending on Davos are richer than ever. A decade after the financial crisis poured flat champagne on the World Economic Forum, gold-collar executives set to gather there this week have bounced back, and then some.

Davos has produced an amazing new guide on precisely how not to think about risk
Thomas Hale – FT
The World Economic Forum is tomorrow continuing its campaign to prevaricate about the world’s grandest fathomable topics. Part of the skill of the game is to identify loosely defined words or topics which can then be further diluted through a series of panel sessions, like a kind of conference-room homeopathy. Robots. Digital. Geopolitical. Tensions.

Investment banking: The battle for Barclays; The UK lender has wrangled for decades over whether to maintain its investment bank. Now an activist investor is trying to force the issue
David Crow and Stephen Morris – FT
Jes Staley does not act like a man under siege. He comes across as confident and relaxed, but his breezy demeanour belies the fact that Barclays, the bank he has run as chief executive since December 2015, is the target of the most audacious assault by an activist investor on a UK company in recent history.

Another Politician Sinks Bond Markets by Bumbling Default Lingo
By Marton Eder and Ben Bartenstein – Bloomberg
Lebanese debt miscommunication is latest in series of mishaps; Markets roiled as officials mix restructuring with refinancing
Restructuring. It’s the word that lurks in the nightmares of every bond investor, and should only be used by governments in case of emergency. So it’s a bit surprising that hapless policy makers keep saying it by mistake.

Mifid II’s transparency rules go global; Pressure on rivals as US group moves to absorb research cost
Siobhan Riding – FT
European financial regulation usually strikes fear into US asset managers. Twelve months after the implementation of Mifid II, however, some US managers are voluntarily signing up for transparency rules that do not apply to them.

Economists Need to Add a Little History to Their Tool Kit; If those in the field spent more time studying the past there would be fewer surprises in the present.
Noah Smith – Bloomberg
Back in 2011, as the U.S. and other countries debated what to do about a recession that was stretching on much longer than expected, economists Brad DeLong and Larry Summers bemoaned what they considered a major gap in their fellow economists’ toolkit. Economists, they noted, learn a lot of mathematical models and empirical facts about the present, but not much history. If graduate programs taught more economic history, DeLong and Summers argued, they wouldn’t have been so blindsided by the financial crisis or the long, grinding recession that followed.

The Future Is Now for LNG as Derivatives Trading Takes Off
Stephen Stapczynski and Dan Murtaugh – Bloomberg via Yahoo
With natural gas demand growing faster than for any other fossil fuel, LNG futures may be finally taking off. Derivatives represented about 2 percent of global LNG production at the beginning of 2017 as an array of contracts around the world struggled to gain traction. But by the end of last year, volumes had grown to almost 23 percent, led by a burgeoning Intercontinental Exchange Inc. contract based on S&P Global Platts’ Japan-Korea Marker spot price assessments.

Billionaire founder of hedge fund Citadel buys £95m London home; Deal comes amid a slump in the market for high-end London homes
Judith Evans, David Bond and Lindsay Fortado – Financial Times
Ken Griffin, the billionaire founder of the $28bn hedge fund Citadel, has bought a Georgian house near Buckingham Palace in a commitment of about £95m to central London’s real estate as Brexit approaches.

MIT and Stanford Professors Are Designing a Cryptocurrency to Top Bitcoin: Bloomberg via Fortune
Some of the brightest minds in America are pooling their brain power to create a cryptocurrency that’s designed to do what Bitcoin has proved incapable of: processing thousands of transactions a second.

The Eight Most Popular Cryptocurrency Transaction Types Are Not What You Expect
Jason Bloomberg – Forbes
Even now that the Bitcoin bubble has long since popped, increasingly desperate cryptocurrency (crypto) fans are still exhorting the virtues of the technology’s supposedly rosy future.

A Major Market’s Major Headache: Stocks That Crash Without Warning; Some stock-price collapses have made Hong Kong seem more like an untamed emerging market
Mike Bird – WSJ
Hong Kong is home to a developed, $3.8 trillion stock market. A series of stock-price collapses has made it seem, of late, more like an untamed emerging market.

China’s Xi Warns Party of `Serious Dangers’ as Risks Mount
Bloomberg News
President urges greater efforts to ensure political stability; Unusual meeting convened in recent weeks as economy slows
President Xi Jinping stressed the need to maintain political stability in an unusual meeting of China’s top leaders — a fresh sign the ruling party is growing concerned about the social implications of the slowing economy.

Big 5 banks had a tough time trading in volatile markets
Tomi Kilgore – MarketWatch
When the going gets tough on Wall Street, brokers can lose money too, just like their customers. There’s a scene in the classic 1983 movie “Trading Places,” in which the Duke brothers, played by Ralph Bellamy and Don Ameche, explain to Eddie Murphy’s character Billy Ray Valentine that whether their clients make money or lose money, their brokerage Duke & Duke makes money.

Exchanges, OTC and Clearing

Shenzhen exchange says Chinese listed companies’ pledged-share risk under control
Zhang Shidong – South China Morning Post
The risks to China stock markets from pledged shares – which led to jaw-dropping collapses in share prices on the Shanghai and Shenzhen exchanges last year – are under control, authorities said.

Nasdaq Elects David Rosato to the Board of Directors of its U.S. Exchanges
Nasdaq, Inc. (Nasdaq:NDAQ), today announced the election of David Rosato to the board of directors of the following U.S. exchanges operated by the company: The Nasdaq Stock Market LLC; Nasdaq PHLX LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq MRX, LLC; and Nasdaq GEMX, LLC.

ETF settlement: Change of settlement structure for ETFs of Invesco Markets III plc
Effective 28 January 2019, Invesco Markets III plc will convert their Exchange Traded Funds (ETFs) traded on Xetra (MIC: XETR) and Börse Frankfurt (MIC: XFRA) to the International Central Securities Depository (ICSD) model.


Big banks embrace fintech to exploit disrupters’ expertise
Nicholas Megaw – Financial Times
Barclays and Santander have taken stakes in British fintech group MarketInvoice in a sign of established lenders’ growing willingness to team up with technology-driven challengers. Barclays and Santander InnoVentures, the venture capital arm of Spanish bank Santander, jointly led a £26m equity investment in the London-based technology group.

WhatsApp Limits Message Forwards in Attempt to Fight Fake News
Saritha Rai – Bloomberg
Facebook Inc.’s WhatsApp messaging service has begun to globally restrict the number of people a message can be forwarded to, in an attempt to fight fake and misleading information from going viral on its platform.

Jeffrey Gundlach to Delete Twitter Account on Suspicious Activity
Katrina Nicholas and Michael Sin – Bloomberg
Says won’t be setting up another account for people to follow; DoubleLine’s Total Return Bond Fund outperformed peers in ’18
DoubleLine Capital LP Chief Executive Officer Jeffrey Gundlach said in a tweet that he will be deleting his Twitter account “due to suspicious activity.”

Big banks embrace fintech to exploit disrupters’ expertise; Barclays and Santander lead £26m investment into UK-based lender MarketInvoice
Nicholas Megaw – FT
Barclays and Santander have taken stakes in British fintech group MarketInvoice in a sign of established lenders’ growing willingness to team up with technology-driven challengers.

The “Fortnite” economy now has its own black market
Dave Gershgorn – Quartz
Fortnite’s in-game currency, V-bucks, are now being used to launder money from stolen credit cards, according to a report by The Independent and cybersecurity firm Sixgill.

The Power Of Celebrity Fintech Influencers
Madhvi Mavadiya – Forbes
Snoop Dogg was revealed as the new celebrity face and shareholder of Klarna in a new advertising campaign for the POS financing house – another big name to add to the growing list of fintech influencers including the likes of Will.I.Am, Shaquille O’Neal and Akon.


Ethereum’s Split Pushed Back Until After Valentine’s Day
Olga Kharif – Bloomberg Quint
The developer group that helps manage the Ethereum cryptocurrency network said a delayed software update will now take place on Feb. 27. The so-called fork will reduce rewards paid to miners to two coins from three per block, and it should reduce inflation and bring more stability to the Ether digital coin. The upgrade is designed to stave off the so-called difficulty bomb, which would make the network unusable unless regular software upgrades are made.

Cryptocurrencies Fail Fundamental Tests, BOE’s van Steenis Says
Tom Keene, Francine Lacqua, and David Goodman – Bloomberg
Cryptocurrencies fail fundamental tests of financial services, according to Huw van Steenis, senior adviser to Bank of England Governor Mark Carney.

HSBC Says It’s Settled $250 Billion in Trades With Distributed Ledger Tech
Nikhilesh De – Coindesk
HSBC, one of the largest banks in the world, announced Monday it had settled more than $250 billion in transactions using distributed ledger technology (DLT).

Are Crypto Lending And Institutional Custody Good For Crypto? First Principles
Caitlin Long – Forbes
One of the network effects necessary for Bitcoin & other crypto assets to become widely adopted—including by institutional investors—is financialization, as noted by early Bitcoin owner Trace Mayer. I agree with his assessment and believe all crypto assets need financialization in order to succeed, because financialization—if done properly—enables the efficient allocation of resources.

The Six Ways To Make Money Mining Cryptocurrency Are Equally Surprising
Jason Bloomberg – Forbes
Savvy readers of yesterday’s article, The Eight Most Popular Cryptocurrency Transaction Types Are Not What You Expect, may have noticed an important omission: any discussion of processing cryptocurrency (crypto) transactions, what the crypto cognoscenti call mining.

Netherlands’ Proposed Crypto License Could Crush Startups
Rachel McIntosh – Finance Magnates
The proposed crypto license would require crypto companies to store large amounts of customer data. A few more details on the proposed license for cryptocurrency companies in the Netherlands have been made public in a January 18th report from Nederlandse Omroep Stichting (NOS).

Japan’s SBI Invests $15 Million In Crypto Card Wallet Maker Tangem
Yogita Khatri – Coindesk
Japanese financial services giant SBI Group has invested $15 million in Swiss startup Tangem, maker of a slimline hardware wallet for cryptocurrencies. Tangem describes its crypto storage product as a “smart banknote for digital assets.” Designed to be used like a bank card, the product allows off-chain physical transactions to be used, for example, for in-store payments, once cryptos have been loaded onto the device via an NFC-enabled smartphone.

A darknet vendor is allegedly selling images and data associated with crypto exchange identity verification processes
The Block
A darknet vendor is supposedly selling 100,000 personal documents that were used to pass KYC on Binance, Bitfinex, Poloniex and Bittrex. The documents were supposedly ‘dumped’ early 2018 when a third party KYC solution provider suffered a breach. The documents allegedly include selfies, scans of identity documents and proof of address of each person. Following the publicity, the vendor is now debating whether to start a crowdfunding campaign to delete all the hacked documents.

Crypto Garage Gets Japanese Regulator’s Approval to Test Stablecoins
Arnab Shome – Finance Magnates
Tokyo-based blockchain firm Crypto Garage today announced that it has gained regulatory approval to start the trail of its settlement system using Blockstream’s Liquid Sidechain. Crypto Garage is claiming to be the first Japanese blockchain firm to receive such approval under the country’s regulatory sandbox scheme. The firm along with its partner cryptocurrency exchanges will continue the pilot program for a year.

Mark Cuban-backed crypto fund looks to raise an additional $60 million
Frank Chaparro – The Block
As reported by the WSJ, the firm could raise as much as $60 million for the new fund. 1confirmation, the crypto investment firm backed by Mark Cuban, is looking to launch a second fund, according to a report by The Wall Street Journal. The report, which cites a person with knowledge of the situation, said 1confirmation could raise $60 million for the new fund, which would invest in early-stage cryptocurrency projects.

Stories from Alternative Crypto Sources

Coinbase Acquires Data Collection Startup Blockspring
Neil Matthew – BTC Manager

All You Need to Know About the Security Token Offering
Victor Larionov – Coinspeaker

UAE, Saudi Arabia Launch Cryptocurrency Pilot for Cross-Border Payments
Habiba Tahir – CCN


In Business and Governing, Trump Seeks Victory in Chaos
Russ Buettner and Maggie Haberman – NY Times
Three decades ago, Donald J. Trump waged a public battle with the talk show host Merv Griffin to take control of what would become Mr. Trump’s third Atlantic City casino. Executives at Mr. Trump’s company warned that the casino would siphon revenue from the others. Analysts predicted the associated debt would crush him.

Companies Try to Skirt Shutdown’s IPO Limbo; With IPO approvals frozen, biotechs consider going without SEC greenlight; energy firm faces potentially prolonged roadshow
Dave Michaels, Corrie Driebusch and Maureen Farrell – WSJ
The monthlong government shutdown is forcing some companies to seek alternate routes to go public while the main markets regulator is unable to greenlight IPOs.

China Calls U.S. Warning to Israel on Investment ‘Ridiculous’
Bloomberg News
U.S. particularly concerned about penetration by Huawei, ZTE; Chinese foreign ministry says U.S. acting ‘extremely nervous’
China slammed the U.S. for warning Israel over investments by Chinese tech giants Huawei Technologies Co. and ZTE Corp., calling its actions “ridiculous.”

Globalization Is Surviving Trump; European and Asian countries are doubling down on economic cooperation.
Shawn Donnan – Bloomberg
Kevin Kester is used to taking the long view—his family has raised cattle on the land his Bear Valley Ranch occupies in California since 1867. But he also can see what looms in the not-too-distant future across the Pacific Ocean.

Trump, Democrats Inch Closer Amid Personal Shutdown Sniping
Steven T. Dennis – Bloomberg
President suggests he’d trade ‘amnesty’ for a broader deal; Democrats seek protection for Dreamers, reopened government
Donald Trump and senior Democrats took their first steps toward a possible compromise deal on immigration and border security over the weekend, even as the president ramped up his feud with Speaker Nancy Pelosi with the government shutdown in its fifth week.

Mueller’s office disputes BuzzFeed report that Trump directed Michael Cohen to lie to Congress
Katelyn Polantz and Caroline Kelly, CNN
Special counsel Robert Mueller’s office disputed an explosive story from BuzzFeed News as “not accurate” Friday night, after the news outlet reported the President had directed his personal attorney Michael Cohen to lie to Congress, for which Cohen was later prosecuted.

Pawnshops and payday lenders surge on US government shutdown; Specialist consumer-financiers help bridge earnings gap for federal workers
Nicole Bullock – FT
Pawnshop chains and payday lenders, some of the most contentious companies on Wall Street, have experienced a big lift during the longest government shutdown in US history.

The Unbelievable Story Of The Plot Against George Soros; How two Jewish American political consultants helped create the world’s largest anti-Semitic conspiracy theory.
Hannes Grassegger – Buzzfeed
The glass tower that houses George Soros’s office in Manhattan is overflowing with numbers on screens, tracking and predicting the directions of markets around the world. But there’s one that’s particularly hard to figure out — a basic orange chart on a screen analyzing sentiment on social media.


Hong Kong’s Securities And Futures Commission: Market Misconduct Tribunal Sanctions China AU’s Former CEO And Related Persons For False Trading
The Market Misconduct Tribunal (MMT) has imposed a disqualification order, a cold shoulder order, and a cease and desist order against Ms Samantha Keung Wai Fun, the former CEO of China AU Group Holdings Limited (China AU) after finding her culpable of false trading following proceedings brought by the Securities and Futures Commission (SFC) (Note 1).

Preparation already underway for next rounds of initial margin rules; With a new wave of initial margin rules on the horizon, BNY Mellon says clients are already more prepared.
Charles Gubert – The Trade
The level and extent of the readiness at financial institutions ahead of the introduction of the final two waves of initial margining requirements for bilaterally traded, uncleared over-the-counter (OTC) derivatives is a dramatic improvement over the previous compliance deadlines, according to BNY Mellon.

Industry opposes regulatory intervention for periodic auctions; The EU financial regulator has published responses to its call for evidence, revealing that the industry is firmly behind the use of periodic auctions.
Hayley McDowell – The Trade
Responses from the market on the EU regulator’s call for evidence on the operation of periodic auctions have revealed that the industry is largely unsupportive of regulatory intervention to restrict the recently emerged execution venue.

Probe into Wall Street banks over rigging US Treasury auctions stalls
Kevin Dugan – NY Post
A politically dicey investigation into Wall Street banks allegedly rigging US Treasury auctions has stalled due to a lack of evidence, and it’s unclear if the federal government will bring any charges against the companies, The Post has learned.

Beware the unintended impact of high pay rules; Orcel affair is a sign of how hard it is to get remuneration policy right
The editorial board – FT
The battle to align executive pay with what shareholders, directors and society desire is a little like trying to sculpt a balloon: push down on one part and problems bulge out in another.

If investors don’t overhaul banker pay, populism will; Santander’s volte-face on new CEO over EUR50m of outstanding pay shows winds have changed
Patrick Jenkins – FT
When UBS, humbled by its near collapse in 2008, vast misconduct fines and a rogue trading scandal, began a corporate overhaul in the wake of the financial crisis, the Swiss bank went further than most rivals.

Yale economist Stephen Roach calls for China and US to establish global cyber accord, new forum for trade talks
Enoch Yiu – South China Morning Post
The US and China should take the lead in pushing for a global cyber accord and introduce a permanent forum for talks on trade, according to Yale University economist and leading Wall Street authority on Asia, Stephen Roach.

Investing and Trading

State Street plans 1,500 job cuts and senior management scale back
New State Street chief executive, Ron O’Hanley, begins the year by announcing job cuts in earnings release.
Jon Watkins – The Trade News
State Street has said it will reduce its senior management by 15% in 2019, along with 1,500 employees as part of a new expense program.
The move came as new CEO, Ron O’Hanley, delivered his first quarterly earnings presentation. State Street said the loses would occur in “high cost locations” as the bank realises benefits of “automation and standardised global processes”.

IMF cuts global growth outlook, cites trade war and weak Europe
Leika Kihara – Reuters
The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilize a slowing global economy.

Brussels targets large index fund managers on ‘common ownership’; Lawmakers warn that influence of ‘big three’ could distort competition
Siobhan Riding – FT
European lawmakers have taken aim at the influence of the largest index fund managers — and the debate could have implications for the likes of BlackRock, Vanguard and State Street Global Advisors.

Market delivers humiliating verdict on Dell; Languishing equity price means core computer business is valued at less than nothing
Mark Vandevelde and Sujeet Indap- FT
Investors have delivered Michael Dell a humiliating verdict on his company’s return to the stock market, where the computer maker’s core business is now reckoned to be worth less than nothing.


Bank Investors Look Beyond Trading Revenue to Deliver Strong Gains; Last week, bank stocks posted their strongest five-day gains in more than two years
Telis Demos – WSJ
Wall Street trading desks had a horror-show fourth quarter that dragged on bank results. But investors in big-bank stocks focused instead on gains in lending businesses and improving sentiment around the U.S. economy.

Fee drag on retail fund performance comes into focus; Chart of the week: Bogle’s fight to win a better deal for savers remains unfinished
Chris Flood – FT
Jack Bogle, the founder of Vanguard who died on Wednesday, succeeded in his 89-year life in reducing the cost of investing for millions of ordinary savers.

BlackRock and Vanguard assets plummet most in a decade; Industry leaders see total of $700bn wiped from AUM in fourth quarter
Owen Walker – FT
Market volatility sucked hundreds of billions of dollars from the world’s largest fund managers last month, with the two industry leaders reporting significant annual declines in assets for the time since the financial crisis.

BlackRock accidentally exposes confidential data on advisers using popular iShares ETFs: Bloomberg
BlackRock Inc. BLK, +1.68% the world’s largest asset manager, inadvertently posted confidential information about thousands of financial adviser clients on its site, Bloomberg News reported late Friday, citing a glimpse of the released data before it was removed by the investment firm.

TD Bank should have seen ‘red flags’ as senior lost $732K in romance scam, son says; The bank says staff asked questions but the customer gave a consistent story to explain the wire transfers
Erica Johnson · CBC News
The son of an Ontario senior who drained his entire life savings and then went deep into debt says TD Bank didn’t do enough to prevent his father from being victimized — over and over — in a romance scam.


Qatar offers support to Lebanon’s battered bond market; Doha plans to buy $500m of sovereign debt to ease one of world’s biggest burdens
Chloe Cornish and Simeon Kerr – FT
Qatar plans to buy $500m worth of Lebanese sovereign bonds in an effort to boost the troubled economy of a country that is often caught between regional rivals seeking to expand their influence.

The raid on the Reserve Bank of India is risky; Modi needs to recognise the value of credible central bank independence
The editorial board – FT
The Indian government wants the Reserve Bank of India to transfer more money into its coffers. Many believe this demand was a leading reason for the resignation of Urjit Patel, the central bank’s previous governor, last month. Yet this is just one of several points of friction between the government of Narendra Modi and the RBI.

Friends Don’t Let Friends Become Chinese Billionaires
Ray Kwong – Forbes
I’m no statistics whiz, but it seems to me that a Chinese billionaire dies every 40 days. China Daily reported Friday that unnatural deaths have taken the lives of 72 mainland billionaires over the past eight years. (Do the math.) Which means that if you’re one of China’s 115 current billionaires, as listed on the 2011 Forbes Billionaires List, you should be more than a little nervous.

Xi keeps China on high alert for ‘black swan’ events: Xinhua
China must be on guard against “black swan” risks while fending off “gray rhino” events, President Xi Jinping said on Monday, adding that the economy faces deep and complicated changes, state news agency Xinhua reported.

China should boost banks’ active support for economy: central bank official
Encouraging China’s banks to actively increase support for the real economy, rather than relying on authorities’ orders to boost lending, is the key to improving the supply of credit in the economy, a central bank official said on Monday.


Brexit: Trouble in paradise for Britain’s overseas territories?
Andrew Connelly – Al Jazeera
London – In 1999, Mike Lupton-Christian from Yorkshire, England – was made redundant and decided to move more than 14,000km away to his wife’s homeland of the Pitcairn islands – a tiny South Pacific outcrop between New Zealand and Chile.

It will be hard to wipe Brexit blot from asset landscape; Messy political saga is hitting sterling, stocks and UK’s economic reputation
Michael Mackenzie – FT
Every month Bank of America surveys fund managers for their views on an array of asset classes. Rather like the seasons, investors’ preferences and fears come and go, but one opinion has held sway among professional custodians of money for some time: steer clear of the UK.

Draghi Running Out of Time to Sort ECB Top Jobs as Brexit Looms
Nicholas Comfort and Carolynn Look – Bloomberg
Supervisory vice chair Lautenschlaeger’s term ends next month; Some want the non-renewable term extended to ease disruption
Mario Draghi is running out of time to say whether he’ll shake up the responsibilities of his top officials to ensure smooth leadership in the supervision of the region’s banks.

The real problem with Brexit: Britain can’t decide what kind of country it is
Alex Massie – The Washington Post
Sherlock Holmes was fond of declaring that a tricky, seemingly impenetrable case was “a three-pipe problem,” demanding a lengthy period of quiet contemplation before the key to its unlocking could be found. Sometimes the solution to these cases would appear, intuitively, baffling or even absurd. But, as Holmes reminded Dr. Watson, “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.” The great detective, however, was never tasked with solving a riddle as complex and apparently unresolvable as Brexit.

Ireland Rules Out Time-Limited Backstop: Brexit Update
Kitty Donaldson , Alex Morales , and Ian Wishart – Bloomberg
Theresa May returns to Parliament to explain what she’s going to do next. She’s ditched cross-party talks and will instead seek to do what the European Union has long rejected — rewrite the Irish backstop.


Bill Gates: The Best Investment I’ve Ever Made; Global health groups that buy and distribute medicines are a sure bet for saving lives, but their government funding is now in danger, and even the biggest philanthropies can’t fill the gap
Bill Gates – WSJ
Technology is a boom-or-bust business, but it’s mostly busts. I’ve always assumed that 10% of my technology investments will succeed—and succeed wildly. The other 90% I expect to fail.

Airports rally around unpaid TSA workers with offers of free food, services
Harriet Baskas – CNBC
As the partial government shutdown slogs on, the Transportation Security Administration says an increasing number of its officers—who aren’t being paid during the furlough – are facing financial difficulties, with some not showing up for work.

As Americans Drink Less Alcohol, Booze Makers Look Beyond the Barrel; Brewers and liquor companies seek nonalcoholic alternatives as beer volumes fall and growth in wine, spirits slows
Saabira Chaudhuri and Jennifer Maloney – WSJ
Americans are increasingly laying off the booze, prompting the world’s biggest brewers and liquor companies to push beyond their traditional fare and roll out teas, energy drinks and nonalcoholic spirits.

John Lothian Newsletter

So you want to know what’s happening in the financial markets?We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Newsletters

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

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