Euronext launches formal offer for Oslo Bors; Equities vet makes big bet on bond-trading automation

Jan 14, 2019

First Read

Hits & Takes
JLN Staff

There was a big snowstorm in Alpine parts of Europe that left record amounts of snow and isolated some communities. In the US, a monster snowstorm centered in the middle of the country dumped lots of snow as well. My son Tim reported 14 inches of snow had fallen in Columbia, MO as of Saturday morning and it was still snowing.~JJL

According to a MarketWatch article, Wall Street bankers are grappling with the end of the corporate dress code. That is code for going long Dockers.~JJL

Brokertec, one of the largest platforms for trading U.S. government paper electronically between primary dealers, had an outage of trading on Friday.~JJL

Quartz has an article about the risks of a cashless society, especially to the poor, elderly and homeless. How to do you give a homeless person a few bucks if you don’t carry any cash?~JJL

There were 33 episodes of The Spread on 2018. Below you will find our second of 2019.~SD

The more I think about the issues to be discussed at the Rates Evolved conference in New York on January 24, the more excited I get. I am lucky enough to even be on one of the panels. Ten JLN readers can get a 20% discount for the conference using THIS CODE.~JJL

It has been 16 years since John J. Lothian & Company, Inc. was incorporated and it started charging for the John Lothian Newsletter. We ask you to pay for a yearly subscription if you find the newsletter valuable to you. If you read it regularly, then we think you find it valuable. If you continue to read it year after year, we think you find it valuable. If you have multiple subscribers at your firm, we think you find it valuable. If you forward the newsletter to others, we think you find it valuable. There are many ways this newsletter can be valuable to you. We ask you share some of that value back with us in the form of a paid subscription. You can see the payment options on the John Lothian News website.~JJL

Thank you to all the readers who have paid for their 2019 JLN subscriptions so far.~JJL

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Walter Shipley, Former Chase Manhattan Chairman, Dies at 83
Hailey Waller and Stephen Miller – Bloomberg
Newark native led Chase Manhattan Bank and Chemical Bank; Crafted landmark bank mergers leading to what is now JPM
Walter V. Shipley, the former chairman and chief executive officer who led the friendly merger of Chemical Banking Corp. with Chase Manhattan Corp. to create the biggest U.S. bank and predecessor of what is now JPMorgan Chase, has died. He was 83.
/bloom.bg/2VRroSX

***** Would he be the Father of Too Big to Fail?~JJL

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The Spread – Transitions – 1/11
JohnLothianNews.com

In this episode of “The Spread” we deal with a number of transitions.

Watch the video and see the stories referenced here »

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Purdue hits startup milestone with 200+ startups, $350 million funding in five years, nine acquired for $2.3+ billion
Purdue University
Purdue University hit a milestone in startup creation in 2018 with 223 startups, more than $350 million in funding and investments generated and more than 300 new jobs, officials announced today (Jan. 10).
bit.ly/2VZUmQO

***** My alma mater is doing its best to grow the economy.~JJL

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Costco is selling a $90 tub of mac-and-cheese that weighs 27 pounds and lasts 20 years
Yoni Blumberg – CNBC
College students and survivalists rejoice: Costco is selling a 27-pound tub of mac-and-cheese with a shelf life of two decades for $89.99.
/cnb.cx/2VQPOfn

****** Another sign of Armageddon?~JJL

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Bridging the Week: January 7 – 11 and January 14, 2019 (Freedom of Speech; Cryptoasset Regulation Gaps; Cybersecurity)
Gary DeWaal – Bridging the Week
A well-renowned think tank sued the Securities and Exchange Commission claiming that the SEC’s prohibition against respondents contesting allegations in enforcement settlements violates the freedom of speech guarantee under the First Amendment to the US Constitution. The same prohibition also exists at the Commodity Futures Trading Commission. Separately, two European regulators warned that EU rules do not capture all cryptoasset activity, and there are gaps that should be addressed to enhance consumer protection.
/goo.gl/Nasmjc

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Economists Get Serious About the Harm From Monopolies; Dominant companies are a drag on growth and wages. The question is what to do about it.
Noah Smith – Bloomberg
The big story at the annual American Economic Association meeting in Atlanta earlier this month was about the economics profession dealing with its gender problem. But after that, the second-most-interesting debate in economics right now is over antitrust and monopoly power.
/bloom.bg/2VRLGfd

*****They are clearly tired of paying for the high rates on Boardwalk and Park Place.~JJL

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Friday’s Top Three
The top read story from Friday was about then and now, in Quartz’s The richest families in Florence in 1427 are still the richest families in Florence. Second was the FT’s Norwegian watchdog censures Nasdaq for failure to supervise power traders. Third was Predata’s forecast for 2019 in The Yearly Foreword

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Lead Stories

Euronext launches formal offer to buy Oslo Bors for EUR625m
Philip Stafford – FT
Euronext has raised the pressure on the board of rival Oslo Bors in its efforts to secure a EUR625m takeover of the Norwegian exchange by offering to buy out the 49.5 per cent of shares it does not control.
/on.ft.com/2VQZOW8

***** Here is the Reuters version of this story.~JJL

Equities veteran makes big bet on bond-trading automation; Chris Concannon, former president of Bats Global Markets, makes switch to MarketAxess
Philip Stafford – FT
Automated trading in debt markets is set to “explode” in coming years amid an influx of new entrants and a rotation away from stocks, according to a high-profile equities executive lured to corporate bond trading venue, MarketAxess.
/on.ft.com/2VRHFaB

Wall Street Struggles With the Bad Kind of Volatility; Investors’ retreat from risk has hurt liquidity in financial markets, leaving automated programs free to fuel wild market swings
Telis Demos and Gunjan Banerji – WSJ
Financial markets’ wild and woolly fourth quarter likely won’t translate into strong trading results at the nation’s largest banksóthe latest sign of the changes sweeping the business of buying and selling securities since the financial crisis.
/on.wsj.com/2VPXkaq

Deutsche Bank to Intensify Outside Talks Over Strategy
Birgit Jennen and Steven Arons – Bloomberg
Deutsche Bank AG held frequent talks with the government and its main domestic competitor over the past months as concern mounted that Germany’s largest lender may not be able to emerge from its crisis without outside help.
/bloom.bg/2VTsPQH

U.S. shutdown sends grain traders, farmers hunting for data
P.J. Huffstutter, Tom Polansek – Reuters
When the U.S. Department of Agriculture announced a slew of key farm reports would not be released on Friday due to the partial government shutdown, the phones at crop forecaster Gro Intelligence blew up.
/reut.rs/2Fpm4k1

Farm Country Stood by Trump. But the Shutdown Is Pushing It to Breaking Point.
Jack Healy and Tyler Pager – NY Times
In Georgia, a pecan farmer lost out on his chance to buy his first orchard. The local Farm Service Agency office that would have processed his loan application was shut down.
/nyti.ms/2VUr71x

The Next American Car Recession Has Already Started; The collapse of the sedan market has left Detroit automakers with too many plants.
Keith Naughton, David Welch and Gabrielle Coppola – Bloomberg
These should be boom times for Detroit. Unemployment is at a half-century low, gasoline is cheap and auto sales in the U.S. were near record levels last year. Yet American automakers are closing factories, cutting shifts and laying off thousands of workers. The industry is behaving like a recession has arrived.
/bloom.bg/2VS8ZW4

The World Has Loads of Sustainable Palm Oil… But No One Wants It
Anuradha Raghu – Bloomberg
Certified variety costs more and buyers won’t pay premium; Only half of the sustainable output is actually being sold
The world’s biggest growers of palm oil say they’re stepping up efforts to produce the contentious commodity more sustainably, but consumers are unwilling to pay more for environmentally friendly supply.
/bloom.bg/2VZMTBg

Brexit takes toll on Britain’s financial sector, outlook weak
Huw Jones – Reuters
Uncertainty over Brexit and the economy have led demand for Britain’s financial services to shrink for the first time in five years, with no immediate sign of an improvement, a survey by business group CBI and PwC showed.
/reut.rs/2VRXwpJ

Danske Bank Growth Engine Is at Risk Due to Laundering Case
Frances Schwartzkopff and Niklas Magnusson – Bloomberg
CEO of Danske’s Swedish business says confidence is ‘damaged’; Clients are waiting to see findings of criminal investigations
Danske Bank A/S’s money-laundering scandal threatens to undermine its growth engine.
/bloom.bg/2VKGMR0

Markets Take the Lead When It Comes to Factoring in Recession
Liz McCormick, Sarah Ponczek and Molly Smith – Bloomberg
Investors debate implications of recent moves of asset prices; Rebound in high-yield debt, U.S. stocks muddies deliberations
Many financial markets are already signaling that the U.S. is more likely than not hurtling toward recession. But will they prove prescient or overly fretful?
/bloom.bg/2VSw1w7

Here’s Why Libor’s End Is a Headache for Switzerland
Catherine Bosley – Bloomberg
For markets to continue to rely on benchmarks that were widely rigged is pretty clearly a bad idea. But coming up with a good replacement can be hard. That’s been the case in a number of countries looking to phase out Libor as an interest-rate benchmark in the wake of rate-manipulation scandals. But the stakes are especially high in Switzerland, whose central bank has been using a Libor rate as its main monetary policy target.
/bloom.bg/2QKqOCM

U.S. Federal Reserve may need to backstop repo market: BAML
Reuters
Extreme volatility in a key funding market for banks as 2018 came to a close should serve as evidence that the U.S. Federal Reserve ought to be prepared to serve as a backstop to prevent the market from seizing up, Bank of America Merrill Lynch analysts said on Friday.
/reut.rs/2VRPQ6N

Exchanges, OTC and Clearing

Euronext announces the launch of its cash tender offer for Oslo B¯rs VPS
Euronext
Euronext, the leading pan-European exchange, today published the offer document for its previously announced all-cash tender offer to acquire all issued and outstanding shares of Oslo B¯rs VPS Holding ASA (“Oslo B¯rs VPS”) for NOK 6.24 billion (EUR625m[1]). The offer document is available at: sebgroup.com
bit.ly/2VQ4KdM

Euronext faces competition for Oslo Bors as potential buyers emerge; Oslo Bors said today that its board of directors has met with other potential buyers after receiving interest from parties other than Euronext.
Hayley McDowell – The Trade
Norwegian stock exchange operator Oslo Bors has said that its board of directors has met with potential buyers after inviting bids to compete with Euronext’s EUR625 million offer last week.
bit.ly/2FvI90v

Equity Index Highlights – January 2019 edition
Eurex
The story of 2018 was the long-awaited mean reversion of equity market volatility, driven by geopolitical tensions. Volatility showed an early blip in Q1 which quickly petered-out as markets rallied to mid-year highs. In Q4, a repeat bout in volatility occurred as the major index benchmarks retreated into red territory. Overall, almost every major asset class stumbled in 2018. This was not the consensus at the beginning of the year. Hopefully, clients were able to enhance and protect their portfolio returns by the well-timed use of derivatives.
bit.ly/2VTOybf

Equity index derivatives: Introduction of futures and options on the STOXXÆ Europe Select 50 Index
Eurex
Effective 14 February 2019, the following measures of Eurex Clearing will come into effect:
bit.ly/2VTzKcE

Fintech

Banks brace for next wave of digital shake-up; Open banking is yet to provide a flood of innovation but its architects are sticking at it
Nicholas Megaw – FT
When British banks were forced to open up their customer data to rival lenders and digital upstarts a year ago, would-be innovators promised a flood of new products that would herald the biggest shake-up in retail banking for decades.
/on.ft.com/2VV7ypM

Fintech firms want to shake up banking, and that worries the Fed
Pete Schroeder – Reuters
The U.S. Federal Reserve is wary of giving “fintech” firms such as OnDeck Capital Inc (ONDK.N) or Kabbage Inc. access to the country’s financial infrastructure, putting the central bank at odds with other regulators looking to bring them into the fold.
/reut.rs/2QJF66N

Algomi Eyes Next Round of Growth
Rob Daly – MarketsMedia
Seven months into his role as CEO of bond-market infrastructure provider Algomi, Scott Eaton prepares his firm to switch gears from a development focus to increasing the market penetration of its market surveillance platform Algomi ALFA. Scott Eaton, Algomi “I was brought in by the board to bring a bit of discipline and a bit of focus,” he told Markets Media in an interview late last year.
/goo.gl/EiJ6yk

Cryptocurrencies

Tezos Foundation Strengthens Governance And Management Teams
Tezos
The Tezos Foundation is expanding its leadership team. Attorney at Law Ulrich Sauter, an experienced expert for financial products, fintech, corporate governance, and compliance, has been appointed as General Counsel of the Tezos Foundation. Additionally, Eelco Fiole, investment executive and adjunct professor for finance ethics, has joined as Chief Financial Officer. Blockchain and tech entrepreneur
bit.ly/2TMvxWD

Whither the Price of Bitcoin?
David Andolfatto and Andrew Spewak – St. Louis Fed Economic Research
What are the long-run prospects of Bitcoin as an investment? The bullish case is that Bitcoin will appreciate indefinitely due to its capped supply and an ever-growing demand. The bearish case is that Bitcoin’s price will fall to zero, as it’s an intrinsically worthless asset. We think the future price path is more likely to remain bounded between these two extremes.
/goo.gl/Vbv2bM

This Is the Plan to Turn Bitcoin Into a Currency That People Actually Use
Joe Weisenthal and Tracy Alloway – Bloomberg
Bitcoin is now over 10 years old, and by all accounts it’s exceeded anything people could’ve imagined for it. But even at its recent peak, there was very little active use of Bitcoin in normal commerce. On this week’s episode, we speak with Bitcoin maximalist Pierre Rochard of Bitcoin Advisory on why he’s still a believer in the currency, and the technological developments being done to make it useful for normal spending.
/bloom.bg/2VTK8Bb

ICOs continue to raise money via SEC back door
Francine McKenna and Katie Marriner – MarketWatch
The number of initial coin offerings getting through the back door at the Securities and Exchange Commission skyrocketed last year, as the securities regulator sent mixed messages about the future of investment contracts based on digital assets.
/on.mktw.net/2FtxiUO

Tokenized Securities: Curb Your Enthusiasm
Noelle Acheson – Coindesk
With so much buzz around tokenized securities, compounded by strong progress from platforms and issuers, it’s worth looking at the hurdles still ahead, and what they mean for investors.
bit.ly/2VUSY1V

Bitcoin Traders in Denmark Are Targeted in Tax-Data Campaign
Nick Rigillo – Bloomberg
Trading in Bitcoin and other crypto-currencies will soon be exposed to a good deal more scrutiny in Denmark. The country’s tax agency has won permission to start collecting information relating to the trade of crypto-currencies conducted via three exchanges between 2016 and 2018, according to a statement on the agency’s website on Monday.
/bloom.bg/2VUGY0n

Bittrex Launches OTC Trading Desk With 200 Cryptocurrencies
Nikhilesh De – Coindesk
U.S. crypto exchange Bittrex is launching an over-the-counter (OTC) trading desk. The new service, which will allow approved clients to “quickly and conveniently trade assets,” will support nearly 200 cryptocurrencies already offered by the exchange, the company announced Monday. According to the exchange, the OTC desk will provide “guaranteed pricing” for major trades, “typically $250,000 or greater.”
bit.ly/2VMB94Z

Japan’s Financial Regulator May Approve Crypto ETFs: Report
Yogita Khatri – Coindesk
Japan’s Financial Services Agency (FSA) is apparently open to approving crypto exchange-traded funds (ETFs). A Bloomberg report on Monday, citing a person “familiar with the matter,” said that the FSA is currently ascertaining institutional interest in ETFs that track cryptocurrencies and could ultimately give them the go ahead.
bit.ly/2VOsxuJ

Chinese Mining Giant Bitmain Is Closing Another Overseas Office
Wolfie Zhao – Coindesk
China-based cryptocurrency mining giant Bitmain has decided to close yet another overseas office – this time in Amsterdam – as part of its ongoing business adjustments.
bit.ly/2VUP49h

Bitcoin Will Still Bite the Dust
Kevin Dowd – Coindesk
Back in August 2014, I discovered that the bitcoin mining industry had the industrial structure of a natural monopoly. A natural monopoly is a market in which production is most efficient with a single producer.
bit.ly/2VS9hwn

Blow To Bitcoin As International Bank Makes Stark Warning
Billy Bambrough – Forbes
Bitcoin has struggled over the last 12 months, as both the bitcoin price and development stalls, with a so-called crypto winter gripping the sector, stifling investment and interest from the traditional financial industry.
bit.ly/2VSgUmg

Stories From Alternative Crypto Sources

The Bitcoin Whales Are Back, Traders Should Expect Increased Volatility
Viraj Shah – Blokt
bit.ly/2RtNhck

Russian Parliament to Discuss Crypto Bill Within Two Months, Official States
Ana Berman – Cointelegraph
bit.ly/2TINS6S

Politics

In defence of the fund industry … and how I helped save Reagan’s skin; Paul Schott Stevens talks about shaping lawmakers’ perception of asset management
Siobhan Riding – FT
Paul Schott Stevens is used to fending off attacks. The night before our meeting, he had been in a heated debate over whether mutual funds posed a risk to the wider financial system.
/on.ft.com/2VQMl0e

Why Autocrats Love Emergencies; Crises ó real and imaginary ó loosen normal constitutional constraints.
Steven Levitsky and Daniel Ziblatt – NY Times
Crises are a time-tested means of subverting democracy. From Get˙lio Vargas and other better-known dictators in the 1930s to Indira Gandhi and Ferdinand Marcos in the 1970s and on to Vladimir Putin and Recep Tayyip Erdogan more recently, autocratic-minded leaders have long used national emergencies ó some real, some fabricated ó to claim extraordinary powers. One of our greatest concerns about Donald Trump’s presidency has always been that he would exploit (or invent) a crisis in order to justify an abuse of power. Recent events have given this concern new immediacy.
/nyti.ms/2VRErUx

F.B.I. Opened Inquiry Into Whether Trump Was Secretly Working on Behalf of Russia
Adam Goldman, Michael S. Schmidt and Nicholas Fandos – NY Times
In the days after President Trump fired James B. Comey as F.B.I. director, law enforcement officials became so concerned by the president’s behavior that they began investigating whether he had been working on behalf of Russia against American interests, according to former law enforcement officials and others familiar with the investigation.
/nyti.ms/2VQVAhe

Here are 18 reasons Trump could be a Russian asset
Max Boot – Washington Post
On Friday, the New York Times reported that “in the days after President Trump fired James B. Comey as F.B.I. director, law enforcement officials became so concerned by the president’s behavior that they began investigating whether he had been working on behalf of Russia against American interests.” That investigation may well be continuing under the auspices of special counsel Robert S. Mueller III. We don’t know what Mueller has learned. But we can look at the key, publicly available evidence that both supports and undercuts this explosive allegation.
/wapo.st/2VS3R4g

US government shutdown puts clamp on Wall Street dealmakers; IPOs and takeovers face delays if regulators remain closed or understaffed
Eric Platt, Nicole Bullock and Shannon Bond – FT
The longest US government shutdown in history is hampering Wall Street dealmakers, threatening to delay initial public offerings and takeovers that require national security clearance or approval from competition watchdogs.
/on.ft.com/2VPxi73

Brussels braced for request to delay Brexit by three months
Bruno Waterfield – The Times
Brussels expects Britain to ask for an extension to Article 50 to allow Brexit to be delayed if the House of Commons rejects Theresa May’s deal tomorrow, The Times has learnt.
bit.ly/2VKD2iq

Tax Cut Is Better (for Companies) and Worse (for Everyone Else); Corporate America is saving more than expected, but taxpayers are on the hook for it.
Stephen Gandel – Bloomberg
President Donald Trump and the Republicans’ tax cut is proving to be vastly more generous for corporate America, and vastly more expensive for taxpayers, than expected. Worse, the Trump Slump is erasing the bump the stock market received from the tax cuts. And evidence is mounting that the promised economic boost isn’t materializing. The administration’s signature political achievement is being eclipsed by disarray over trade, immigration and a government shutdown.
/bloom.bg/2QOFJvE

Trump’s Risking Financial Disaster for America; How the president’s Iran policies could unravel the U.S. position as the world’s banker.
Jarrett Blanc – Politico
President Donald Trump’s Iran policy has been reckless as regards Iranóit all but invites Tehran to return to an unconstrained nuclear program, and it reduces U.S. credibility to bargain on other contentious issues. But it has been far more reckless on the far more consequential matter of America’s relationships with allies and partners and especially the U.S.’s central role in the world financial system. Iran can be a problem, but it is not worth gambling the economic and political benefits the U.S. receives as the world’s banker.
/politi.co/2VKQKBU

Regulation

Halifax Investment Services licence suspended
ASIC
ASIC has suspended the Australian financial services (AFS) licence held by Halifax Investment Services Pty Ltd (Halifax) until 10 January 2020.
bit.ly/2VOMNw6

Singapore to launch $55 mln grant to boost equity listings
Reuters
The Monetary Authority of Singapore (MAS) said on Monday it would offer grants worth S$75 million ($55 million) next month as part of the city-state’s plans to shore up listings in its equity market.
/reut.rs/2QJRhAl

Malaysian finance minister: It’s ‘reasonable’ to ask Goldman Sachs for $7.5 billion over 1MDB ‘agony’
Kelly Olsen – CNBC
Malaysian Finance Minister Lim Guan Eng said Monday that the $7.5 billion his country is seeking from American investment bank Goldman Sachs over the 1Malaysia Development Berhad scandal is an “extremely reasonable” amount.
/cnb.cx/2QMRra0

China is still reportedly dragging its feet in opening its market to Visa, Mastercard
Evelyn Cheng – CNBC
The People’s Bank of China has not yet formally acknowledged applications from Visa and Mastercard to process yuan payments, the Financial Times reports, citing sources. Acknowledging the applications, made more than a year ago, would kick off a 90-day window in which the central bank must make a decision, the report says. The inaction comes as the U.S. and China are engaged in negotiations on how to resolve trade issues, including that of foreign access to the Chinese market.
/cnb.cx/2QMTwD0

Watchdog orders Deutsche Bank to re-examine 20,000 risky customers by June
Reuters
Germany’s financial markets watchdog is requiring Deutsche Bank to re-examine the files of about 20,000 risky clients by the end of June as part of its “know your customer” process, a person familiar with the matter said on Wednesday.
/reut.rs/2QLbGVS

U.S. warns German companies of possible sanctions over Russian pipeline
Michael Nienaber – Reuters
The United States has warned German companies involved in the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick with the project.
/reut.rs/2QLKWED

Ex-Standard Chartered banker prepares to plead guilty in Iran case; Emerging markets lender under investigation for alleged sanctions breaches
Stephen Morris, Cynthia O’Murchu and David Crow – FT
A former Standard Chartered employee is preparing to plead guilty to criminal charges in the US over alleged sanction breaches involving Iran-linked companies, according to people briefed on the matter.
/on.ft.com/2VTG5EY

Investing and Trading

What Amazon’s Rise to No. 1 Says About the Stock Market; The biggest companies are still the most dominant. The biggest companies today make up less of the overall market than those in the past. And the biggest companies can still be toppled.
Jason Zweig – WSJ
On Jan. 7, Amazon.com Inc. AMZN -0.95% became the world’s largest company by market capitalization. Its rise might make you think today’s biggest technology companies are turning into unstoppable juggernauts of growth, or that turnover at the top is only accelerating.
/on.wsj.com/2VUJHH9

Newmont to buy Goldcorp in $10bn gold mining tie-up; Combined company would challenge rival Barrick as world’s biggest gold producer
Henry Sanderson – FT
US gold miner Newmont Mining will acquire Canada’s Goldcorp in a $10bn deal that would create a gold miner to challenge rival Barrick Gold as the world’s largest producer, the companies revealed on Monday.
/on.ft.com/2VQLvk6

Goldman Outlines ‘Where to Invest Now’ in U.S. Equities
Joanna Ossinger – Bloomberg
High-quality stocks and those forecast to hike margins favored; There’s potential for strong upside given historical precedent
U.S. stocks could deliver big gains in 2019 if history is any guide, and some companies have more potential to outperform than others, according to Goldman Sachs Group Inc.
/bloom.bg/2VS19fl

Slowing Earnings Growth, Gloomy Forecasts Add to Stock Market’s Woes; String of lowered estimates raises investors’ concerns that biggest U.S. companies are losing momentum
Akane Otani – WSJ
The U.S.’s biggest public companies are warning that their earnings may not be as strong as they hoped this year, intensifying pressure on a bull market that has struggled to regain its footing.
/on.wsj.com/2VSrvxF

Investors Need More and Better Data on Sustainability
Graham Macmillan and Robert G. Eccles – Barron’s
Imagine a world in which investors didn’t have access to a company’s financial performance, or a set of accounting standards making apples-to-apples comparisons possible. In that world, how could investors make informed decisions?
bit.ly/2VMDRrb

America’s richest are losing confidence in the stock market
John Aidan Byrne – NY Post
The rich and famous want out of this volatile market. America’s wealthiest people have lost investing confidence ó and they may be right on the verge of a flight to the safety of CDs and other cash products as market losses mount, with a staggering $13 trillion estimated by ET Intelligence Group to have vanished in equities worldwide in 2018.
/nyp.st/2VPLNI1

Gundlach Warns U.S. Economy Is Floating on ‘an Ocean of Debt’
Hailey Waller and James Ludden – Bloomberg
DoubleLine boss rejects Trump’s claim of record GDP growth; Bond guru tells Barron’s U.S. stocks expected to drift lower
Jeffrey Gundlach said yet again that the U.S. economy is gorging on debt.
/bloom.bg/2VRdHUg

Institutions

Vanguard Won’t Let Investors Trade These Popularóbut ControversialóProducts; The fund giant says it will no longer allow new purchases on about 400 funds and securities
Gunjan Banerji and Dawn Lim – WSJ
Vanguard Group will no longer allow individual investors to make new trades on certain investments that seek to magnify bets, pouring cold water on strategies that became popular after the last financial crisis.
/on.wsj.com/2VUcb3M

Blackstone to Start Growth-Investing Business; Private-equity firm hires General Atlantic’s Jon Korngold to run the platform
Miriam Gottfried – WSJ
Blackstone Group LP hired away a General Atlantic executive to launch a business that will invest in fast-growing companies.
/on.wsj.com/2VQXbU5

How 2019 will pan out for the asset management industry; A tricky year for GAM, one head rolling at SLA and pressure on index providers
Owen Walker – FT
January is notable for two things: people aborting their attempts at sobriety and journalists making forecasts for the year ahead, so setting themselves up for failure. With that in mind, here are my asset management predictions for 2019.
/on.ft.com/2VUbK9E

Wells Fargo: repairing a damaged brand; Can the bank once seen as the best-managed in America recover its premium valuation after a series of scandals?
Robert Armstrong and Laura Noonan – FT
Tim Sloan thinks that Wells Fargo is “the best bank in the world”. After more than two years as chief executive of the scandal-riven lender, he is quick to provide evidence ó deposit growth, loan growth, returns ó to show that while the bank has been wounded by controversy, it is now returning to its feet.
/on.ft.com/2VR0z1q

GAM, Schroders and BlackRock hedge funds among worst performers in 2018; Declines for stock markets and rising US interest rates fuel widespread difficulties
Chris Flood – FT
Hedge funds run by GAM, Schroders and BlackRock delivered significant losses in 2018 as declines for stock markets globally and rising US interest rates led to widespread difficulties for alternative managers.
/on.ft.com/2VOniv3

Ex-Barclays executives deny fraud charges ahead of major trial; John Varley becomes most senior banker to face a British court in a criminal case since the financial crisis
Jane Croft – FT
Four former Barclays executives have appeared in court on Monday to deny fraud charges ahead of a high profile criminal trial expected to start next week.
/on.ft.com/2VUaaoe

Lloyds Banking Group accused of ‘gaming’ overdraft charges; UK bank set to raise fees and make system more complex as watchdog prepares overhaul
Nicholas Megaw – FT
Lloyds Banking Group has been accused of “gaming the system” by making its overdrafts more expensive and complicated for most of its customers, just months before the fee structure it uses is set to be banned.
/on.ft.com/2VKFfKK

‘Bad bets’ see Bill Gross’s Janus Henderson fund fall below $1bn; Portfolio manager once revered as the ‘bond king’ has struggled to retain clients
Owen Walker – FT
Bill Gross, once renowned as the world’s “bond king”, has seen assets in his investment fund drop below $1bn following client withdrawals and a sustained period of poor performance.
/on.ft.com/2VPy9oh

Hedge fund leverage risk comes under scrutiny; Regulators look at whether businesses could imperil stability of financial markets
Chris Flood – FT
Two decades after the near-collapse of Long-Term Capital Management threatened to demolish Wall Street, regulators are still struggling to understand whether hedge funds could endanger the stability of financial markets.
/on.ft.com/2QMJ6mV

Regions

How Aging Japan Defied Demographics and Revived Its Economy
Greg Ip – WSJ
Because demographics are supposed to be destiny, Japan was long ago consigned to stagnation with its aging population and rock-bottom birthrate.
/on.wsj.com/2FvDw6e

US clash over EU privacy rules stymies European funds; SEC is not registering continental asset managers over concerns about GDPR
Laurence Fletcher – FT
US concerns over EU data protection rules are hindering the ability of European hedge funds to raise money from investors in America, say people familiar with the matter.
/on.ft.com/2VQ27IW

Paschi Drops After ECB Says It Has Capital, Profit Issues
Sonia Sirletti – Bloomberg
State-controlled bank said to seek covered bond sale soon; Failing to complete part of bond issue last year hit capital
Banca Monte dei Paschi di Siena SpA dropped in Milan trading after the European Central Bank highlighted weaknesses in the Italian lender’s capital and profitability.
/bloom.bg/2VRr5HN

European Investment Bank Sued Over $69 Million Biomass Loan
Jeremy Hodges – Bloomberg
First time ClientEarth has taken a bank to court in the EU; NGO alleges that its right to a review was denied by bank
The European Investment Bank is being sued in the region’s second-highest court over a Spanish loan that climate lawyers contend will damage the environment.
/bloom.bg/2VQJNiG

Australia’s Westpac says banks may face problems hitting new capital targets
Reuters
Australia’s big banks may struggle to raise the amount of extra capital they require under new rules proposed by the country’s banking regulator, a senior executive at Westpac Banking Corporation (WBC.AX) said in an interview published on Monday.
/reut.rs/2QNvXtY

Spain’s CNMV Updates Scam Warning List, Adds 23 Entities
Celeste Skinner – Finance Magnates
The 23 entities are operating in Spain without the proper authorisation, the regulator said. Scams are ever-present in the financial markets and, more specifically, the foreign exchange (forex) and cryptocurrency industries. This fact has been highlighted this Monday morning by the National Securities Market Commission (CNMV), a Spanish regulator, which has made a significant update to its warning list – adding 23 entities which are operating in the country without authorisation.
bit.ly/2Fu7NTf

Brexit

Brexiters’ delusions on trade die hard; Proponents of ‘Global Britain’ underestimate just how hard it is to do deals
Gideon Rachman – FT
The freedom to do our own trade deals” is a mantra for ardent Leavers as they explain their determination to vote down Theresa May’s Brexit deal. Their objection is that the May deal could trap Britain in a permanent customs union with the EU, making it impossible to negotiate new trade deals with other countries.
/on.ft.com/2VPBXpz

EU’s Assurances Fall Short of What May Wanted: Brexit Update
Tim Ross , Kitty Donaldson , Ian Wishart , and Alex Morales – Bloomberg
Keir Starmer, Labour’s Shadow Brexit Secretary, confirmed that the EU’s letter will do nothing to win over the U.K.’s official opposition to supporting May’s deal.
/bloom.bg/2VPajsQ

Remainers unite to call for second Brexit poll – on Theresa May’s deal or staying in EU
Christopher Hope – Telegraph
Pro-EU MPs will raise the stakes on Monday in the battle over Brexit by publishing draft legislation to force a second referendum that could reverse the result of the 2016 vote.
bit.ly/2VTrEAM

Brexit Knocks the Wind Out of the U.K. Economy; Slowly and surely, the uncertainty over Brexit is taking a toll.
Therese Raphael – Bloomberg
Britain didn’t leave the European Union on June 23, 2016; it merely voted to start the process. That, in turn, created uncertainty, but not a change in legal status, regulation or tariffs. Leaving on March 29 without a deal will change all this dramatically. But what kind of trade deals Britain might strike ó with the EU, its largest trading partners, and others – is unclear.
/bloom.bg/2QI2Gkh

Singapore hedge fund bets on Brexit Britain with move to London; Orchard Global completes £2.5bn fundraising as it shifts HQ to UK capital
Laurence Fletcher – FT
A $5bn-in-assets hedge fund is moving its headquarters from Singapore to London, in a boost for the financial hub threatened by Brexit.
/on.ft.com/2QMXjjz

Miscellaneous

Hedge-Fund-Backed Media Group Prepares Bid for Gannett; Digital First Media has taken 7.5% stake in USA Today publisher, seeks other bids
Cara Lombardo – WSJ
A hedge-fund-backed media group known for buying up struggling local papers and cutting costs is planning to make an offer for USA Today publisher Gannett Co. GCI 0.52% , according to people familiar with the matter.
/on.wsj.com/2VSgzjC

Vail Shows Slippery Slope for Businesses Catering to Wealthy; Are families heavily exposed to the stock market cutting back on impulse spending?
Justin Lahart – WSJ
Vail Resorts MTN -12.72% caught an edge in the early part of the ski season. That might have had more to do with conditions off the slope than on it.
/on.wsj.com/2QMVGCt

Utility Company PG&E Plans Bankruptcy Filing Over California Wildfires
Amie Tsang – The New York Times
Pacific Gas and Electric Company, which has been struggling with a financial crisis stemming from California’s historic wildfires, intends to file for Chapter 11 bankruptcy protection by the end of the month, according to a regulatory filing.
/nyti.ms/2FsezJI

John Lothian Newsletter

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