G7 warns on ‘serious risks’ posed by Libra and other digital coins

Jul 18, 2019

First Read

MarketsWiki Education World of Opportunity 2019 Concludes in Chicago Wednesday
Sarah Rudolph – John Lothian News

JLN’s two-day MarketsWiki Education World of Opportunity concluded on Wednesday as another 12 industry veterans took the stage to help industry interns prepare for a potential career in the financial field – or any field, really. There was some advice applicable to any profession, such as “know what your goals are,” “find something you’re passionate about and submerge yourself,” and “never stop learning,” as well as some information specific to trading options and futures.

Appropriate to an event held in Chicago, there was a lot of Chicago boosterism, as well as some Chicago history. John McPartland, a market executive with the quant firm Hidden Road Partners and a recent retiree from the Chicago Fed, started the day off speaking about the 1987 crash and how Chicago’s markets were the only major ones that stayed open, and thus were blamed for the crash. General Motors’ pension plan had sold S&P Futures all day that day, and Gordon Binns, the pension fund leader, later told a court, “We saved pensioners $330 million that day.” Eventually people realized that what he said was true and Chicago’s staying open had buffered the crash rather than caused it.

To read the rest of this report, go here.

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Hits & Takes
JLN Staff

Longtime CME Group board member David J. Wescott passed away suddenly on July 16, 2019. Jeff Carter shared the news with me at the MarketsWiki Education World of Opportunity event. Our condolences to his family, friends and colleagues.~JJL

Wescott was highly respected and one of the longest serving directors on the board of the CME. He served as president of the Wescott Group Ltd since 1991 and managing partner of the Dowd/Wescott Group since 2006.~JJL

I first encountered Wescott when I was part of a firm owned by the late Bud Frazier that was introduced to First Options of Chicago by Wescott’s firm.~JJL

Thank you to all the speakers at MarketsWiki Education World of Opportunity. We will have some great videos to share with you in the coming weeks. Thank you to Illinois Tech for hosting us yesterday and for John Bilson, dean of the Stuart School of Business at Illinois Tech, who referred to me at one of the “heroes” of our industry.~JJL

Thank you to our sponsors: FTSE Russell, OCC, Barchart, CME Group, The IFM, Trading Technologies and the Stuart School of Business at Illinois Tech. We greatly appreciate your support. Thank you to all the firms who donated swag to give away, including BOX, CME Group, Cboe, The IFM and Foley & Lardner.~JJL

Lastly, thank you to the JLN team for all their hard work, including Nancy Ashburn for all her organizing and execution skills for this event. She even hired her daughter Audrey to help. Robby Lothian helped as well. And the rest of the JLN Team, Mike Forrester and Patrick Lothian on the cameras and sound, Jeff Bergstrom with the IT support, Sarah Rudolph for her recaps and Spencer Doar for being the master of ceremonies at the series.~JJL

Here is a job listing for a supervisory risk analyst (risk analytics) job in the CFTC’s Division of Clearing and Risk.~JJL

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Chairman Tarbert Announces Key Office Appointments; Jaime Klima to Serve as Chief of Staff and Chief Operating Officer of the CFTC
CFTC
U.S. Commodity Futures Trading Commission Chairman Heath P. Tarbert announced the following appointments to key positions in his Office:
bit.ly/2O2Liuy
*****”Jaime, Charlie, Tom, Matt, Dan, Andrew, Chelsea, Melissa, and Anna are superb at what they do,” said Chairman Tarbert. “Together they bring diverse experience in financial services regulation, and I am thrilled to have each of them join my team.”

*****A hat tip to Chairman Heath Tarbert for naming four women to his senior staff and using the word “diverse” to describe them. His chief of staff is Jaime Klima. We can hope for some inclusion of more less represented people in the division director positions to be named.~JJL

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The CFTC’s New Enforcement Manual: Its Key Content and Use for Practitioners in CFTC Investigations
Part of the FIA Law & Compliance Division webinar series
FIA
Please join the FIA Law & Compliance Division on July 18 for a webinar addressing the CFTC Division of Enforcement’s recently published first Enforcement Manual. The Manual is intended to serve as a general reference for Enforcement Staff in their investigation and prosecution of potential violations of the Commodity Exchange Act and Commission regulations and to provide greater transparency for the public into the Staff’s operations. Lawyers in Steptoe’s Financial Services Group will discuss the notable aspects of the Manual, compare it to the manuals used by the Securities and Exchange Commission and the Department of Justice, and comment on use of the CFTC’s Manual by practitioners handling CFTC investigations. They also will explore how the Manual fits within the Division’s broader efforts to provide guidance to the industry and promote self-reporting and cooperation with its investigations.
bit.ly/2O0OcQr

**** Today!!!~JJL

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R.J. O’Brien Appoints Simon Prangnell Head of New France Affiliate, Adds to Staff in Paris to Accommodate European Growth
RJO
London-based R.J. O’Brien Limited (RJO Limited) today announced the appointment of Simon Prangnell to head the firm’s new affiliate R.J. O’Brien France S.A.S. Prangnell, who has extensive experience in listed derivatives, institutional brokerage and leadership at major financial institutions, joined the firm this month as Managing Director, France.
/prn.to/32BXGEP

*****That is totally the job I wanted.~JJL

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Asia’s ‘Fort Knox’ Said to Be on Sale as Owner Fights Tycoon
Chanyaporn Chanjaroen, Hugo Miller, and Ranjeetha Pakiam – Bloomberg
Singapore gold and art store cost $74 million but loses money; Founder Yves Bouvier has been fighting five-year legal battle
Asia’s “Fort Knox,” a private, maximum-security vault in Singapore, is for sale.
/bloom.bg/2O2k3QK

***** I can’t wait for the James Bond movie about it.~JJL

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For $15K, He’ll Fake Your Exchange Volume – You’ll Get on CoinMarketCap
Anna Baydakova – Coindesk
Gotbit inflates trading volumes on obscure cryptocurrency exchanges for a fee and has about 30 token projects as clients; The firm programs bots to trade tokens back and forth with each other, creating the illusion of active markets so the assets can get listed on CoinMarketCap. Its co-founder says exchanges are aware of this manipulation but are not interested in stopping it; While it’s rare to hear market manipulators talk openly about their trade, there are other businesses like this out there, experts say.
To cryptocurrency professionals trying to legitimize their industry, market manipulation is a scourge. To 20-year-old Alexey Andryunin, it’s a living.
bit.ly/32Jzl06

*****That is a steal of a price for inflating volume. The people I was going to use charge so much more.~JJL

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Wednesday’s Top Three
Our top story of the day on Wednesday was the Boerse Zeitung Q&A with EEX’s CEO Peter Reitz, We are a globally operating commodities exchange. Second was Reuters’ Wall Street finds blockchain hard to tame after early euphoria. Third was The Trade’s Outsourced trading: The future of the buy-side desk? Honorable mention to JLN’s MarketsWiki Education World of Opportunity 2019 Day One Held Tuesday in Chicago

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Lead Stories

G7 warns on ‘serious risks’ posed by Libra and other digital coins; Group says without regulations cryptocurrencies may destabilise global economy
Victor Mallet in Chantilly – FT
Planned cryptocurrencies such as Facebook’s Libra will need to be tightly regulated or they could destabilise the global economy and risk being used for money-laundering and the financing of terrorism, according to a working group set up by the G7 group of major western economies and Japan.
/on.ft.com/2NZqCTX

Bond Vigilantes Lose Their Sway Over Governments
Alan Crawford – Bloomberg
Bill Clinton’s political adviser, James Carville, once said he’d like to be reincarnated as the bond market, since “you can intimidate everybody.” Those days of cowing even presidents may be over.
/bloom.bg/2O2H0Ds

New York City Gears Up for Weekend Heat Wave; Temperatures likely will hit triple digits, raising fears of another blackout
Katie Honan and Alexa St. John – WSJ
New York City is expected to get its first heat wave of the summer in the coming days. Temperatures likely will hit triple-digits this weekend, raising fears of another blackout like last week’s outage.
/on.wsj.com/2O0zqco

Japan Has FATF Green Light to Create ‘SWIFT Network’ for Crypto: Report
Daniel Palmer – Coindesk
Japan is said to be leading the creation of an international cryptocurrency payments network similar to banking network SWIFT.
bit.ly/2NXZJ2O

Facebook rejects lawmaker demands to halt cryptocurrency; Fiery hearing comes as bill considered to ban big tech from operating digital currencies
Kiran Stacey and Hannah Murphy – FT
Facebook has rejected US lawmaker demands to halt its plans to launch a digital currency, despite two days of bruising hearings in Washington where the scheme was attacked as a threat to users’ privacy, the banking system and national security.
/on.ft.com/2O3bZ2d

Smart Money Said ‘Skip Bitcoin, Bet on Blockchain.’ Not Any More
Olga Kharif – Bloomberg
Venture funding in blockchain startups may tumble 60% in 2019; Meanwhile, Bitcoin’s price has more than doubled this year
As cryptocurrency prices tumbled across the board last year, venture capitalists focused their attention on the promise of the underlying technology, the ledger known as blockchain. That, many said, was the smarter bet.
/bloom.bg/2O3hC0n

FCA eyes curbs on buying high-risk financial products on internet; Andrew Bailey rails against technology groups in the wake of LCF scandal
Caroline Binham – FT
The City of London watchdog is eyeing curbs on retail investors buying high-risk financial products on the internet after a series of scandals including London Capital & Finance.
/on.ft.com/2YVv7QD

G7 pushed to back $255m financial inclusion fund; Greater access to digital bank accounts in developing world will particularly help women
David Pilling – FT
Finance ministers from the G7 will be asked to fund a $255m initiative to improve financial inclusion in the developing world, particularly for women, through increasing access to digital money transfers and digital bank accounts.
/on.ft.com/32JuagG

Markets need to wake up to the risk of US dollar intervention; Trade wars are now conducted by presidential tweet, so why not currency wars?
Katie Martin – FT
Investors are, belatedly, catching up with the real risk that US authorities will try to weaken the dollar.
/on.ft.com/2Y5oeyR

Scotland Is Now Generating So Much Wind Energy, It Could Power Two Scotlands
David Nield – ScienceAlert.com
Seeing countless renewable energy records broken and milestones passed has been a constant source of encouraging news for our planet. Now, we have yet another impressive stat to celebrate: in the first half of 2019, Scotland generated enough energy from wind power to supply its homes twice over.
bit.ly/2ObvWDM

Ex-CBOE director pleads guilty to fraud; Former Connecticut investment manager Alvin Wilkinson is accused of collecting about $13 million from 30 people, including friends, acquaintances and former colleagues, but then using some of the money to pay off new investors in a Ponzi strategy.
Lynne Marek – Crain’s Chicago Business
A Connecticut investment manager and former Chicago Board Options Exchange director has pleaded guilty to a fraudulent trading scheme that drew in Chicago-area investors and bilked them of millions of dollars.
bit.ly/2Yca2UI

Influencers Seek Wall Street’s Help to Manage Newfound Wealth
Jasmine Teng – Bloomberg
YouTube personalities can earn millions in ad-based income; ‘This is pretty much first-generation wealth,’ an adviser says
Jenn Im started making YouTube videos as a hobby nine years ago, a way to express her love for turning thrift-store finds into stylish outfits.
/bloom.bg/2O1RgMh

Madoff Trustee Strikes $860 Million Deal With Kingate Funds
Erik Larson – Bloomberg
The funds lost $750 million in principal in Ponzi scheme; They were among the fraudster’s biggest offshore “feeders”
The trustee liquidating Bernard Madoff’s defunct investment-advisory business said he had reached an $860 million settlement with a pair of offshore funds that shunted money to the con man’s company for years.
/bloom.bg/2Oi2n3R

Rothschild buys stake in UK equity research house Redburn; Anglo-French bank’s move reflects pressure from EU markets rules
George Hammond and Philip Stafford – FT
Rothschild & Co has acquired a minority stake in UK equity research house Redburn, in a rare vote of confidence in European analyst research, which has been hit hard by last year’s introduction of major EU legislation.
/on.ft.com/2JBSSYB

Exchanges, OTC and Clearing

MarketAxess adds former BlackRock trading head to board of directors; Richard Prager retired as global head of trading, liquidity and investments platform from BlackRock earlier this month.
Hayley McDowell – The Trade
BlackRock’s former global head of trading, liquidity and investments platform has been elected to serve on the board of directors at fixed income electronic trading provider MarketAxess.
bit.ly/2NZs5JX

2019 Full-Year Financial Results Webcast Details and Key Dates
ASX
bit.ly/2O0vLLG

Uniphar lists on Euronext Dublin
Euronext
Euronext Dublin today welcomes Uniphar, a diversified healthcare services group to Euronext Growth. Headquartered in Dublin, Uniphar is a diversi?ed international healthcare services business meeting the requirements of over 200 multinational pharmaceutical and medical technology manufacturers. With a workforce of more than 2,000, the Group is active in Ireland, the UK and the Benelux. The Company’s vision is to improve patient access to pharmaco-medical products and treatments by enhancing connectivity between manufacturers and healthcare stakeholders.
bit.ly/2O1j7Mi

Fintech

Former Thomson Reuters MD named CEO of Rapid Addition; Mike Powell spent more than 17 years at Thomson Reuters, most recently overseeing the data feed and platform business under the Elektron brand.
Hayley McDowell – The Trade
Electronic trading technology provider Rapid Addition has named the former managing director for the Thomson Reuters global enterprise division as its new chief executive officer.
bit.ly/2O2IP3g

Thiel-Backed Bank Valued at $3.5 Billion Amid U.S. Launch
Stephan Kahl – Bloomberg
Smartphone bank extends latest funding round by $170 million; Valuation brings N26 up to par with Klarna Bank, TransferWise
A German smartphone bank backed by billionaires Peter Thiel and Li Ka-shing has raised new funds at a valuation of $3.5 billion, making the company one of Europe’s highest valued non-listed fintech firms.
/bloom.bg/2O1fXrU

Maven Wave Launches “Fixed Price, Fixed Time” Data Migration; Chicago-Based Consulting & Technology Firm Will Demo New Data Migration Approach at Google Cloud Summit Chicago
PR Newswire
Maven Wave announces its “fixed price, fixed time” data warehouse migration offering, which moves traditional on-premise data warehouse and data lake environments to a fully operational Google Cloud Platform (GCP) data platform with a predetermined cost and timeline. This offering includes a predefined GCP platform architecture, comprehensive migration plan and production GCP data platform with multiple data sources and dashboards.
/yhoo.it/2JBEBLv

Cryptocurrencies

Facebook’s Crypto Annoys Everyone
Matt Levine – Bloomberg
A giant American company has decided to get into cryptocurrency. It has, with great fanfare but not a lot of specificity, announced plans for its own stablecoin, a cryptocurrency that would be useful in making payments and transferring money but that would not fluctuate in value the way Bitcoin does. These plans are at the very early stage, but the company is big and good at its job and has plenty of ability to hire smart engineers, so there’s reason to think they can work out.
/bloom.bg/2XNHy4C

Venezuelan Petro Against US Sanctions: History and Use of the Crypto
Samuel Haig – Cointelegraph
For the entirety of cryptocurrency’s short history, Venezuela has been seen to be among the most striking example of the need for the utility. The South American country has hosted escalating political tension for years, as skyrocketing hyperinflation, electricity blackouts and shortages of vital food and medicine intensified popular discontent.
bit.ly/2XNHBNQ

Making sense of chaos? Algos scour social media for clues to crypto moves
Tom Wilson, Simon Jessop – Reuters
After months of relative calm in cryptocurrency markets, bitcoin exploded back into life in April with its sharpest price jump in over a year – but few people could convincingly explain why.
/reut.rs/2xPZn3o

Doubts over Facebook’s Libra swirl at G-7 and US Congress
Ryohei Yasojima and Alex Fang – Nikkei Asian Review
Finance and central bank chiefs from the Group of Seven major economies agreed Wednesday to “act quickly” in response to Facebook’s plans to introduce a digital currency. French Economy and Finance Minister Bruno Le Maire revealed the G-7 consensus on the social media company’s Libra coin at a news conference after the first day of meetings. Le Maire added that nations’ sovereign right to issue currencies should not be infringed.
/s.nikkei.com/2OgQ1sL

Facebook needs to drop Libra and buy Square, Jim Cramer says
Tyler Clifford – CNBC
Facebook’s Libra is “clearly doing more harm than good,” CNBC’s Jim Cramer says. “Instead, just take some of your money, you want to get into payments, just go buy Square [for] $70 billion … Square Cash is going to be Facebook Cash,” the “Mad Money” host says. “If [Facebook would] simply bring in some unassailable outside counsel with real credibility … then maybe the government would allow them to self-regulate again,” he says.
/cnb.cx/30BkvXp

Avelacom Adds Gemini To Provide Enhanced Connectivity For Growing Crypto Markets
Mondovisiones
Avelacom, the high-performance global connectivity and IT infrastructure provider for the financial services industry, has added Gemini Trust Company, LLC, a digital asset exchange and custodian, to its list of cryptocurrency exchange tech vendors in Equinix’s NY5 data center. The partnership will support both firms’ clients by providing increased connectivity options to Gemini.
bit.ly/32r2Tzg

Facebook Pressed on Protections for Cryptocurrency Users; House lawmakers pursue regulatory concerns in second day of hearings on Libra
Dave Michaels and Paul Vigna – WSJ
House lawmakers asked Facebook Inc. FB -1.00% how it would protect users of its cryptocurrency, underscoring the political hurdles the company needs to clear before it can issue the digital cash.
/on.wsj.com/2OhVgIH

When bitcoin bros talk finance
Jemima Kelly
We were so distracted by Trump’s “I’m not a fan of bitcoin” tweets, and the cryptotohysteria that followed, over the weekend that we managed to miss quite a priceless tweet from another great world leader.
/on.ft.com/2O2gSIA

Coinbase launches tool that analyses ‘trading signals’; Exchange scrutinises trading activity of top cryptocurrency holders
Martin Coulter – FT
Coinbase, the cryptocurrency exchange, has launched a tool offering customers insights based on the trading activity of its top users.
/on.ft.com/2O1JamR

Stablecoins like Libra must be held to highest standards: G7
Francesco Canepa – Reuters
Stablecoins like Facebook’s Libra can foster financial inclusion but they must be held “to the highest regulatory standards” to ensure that they aren’t used to launder money and that users are protected, a Group of Seven taskforce on the issue concluded.
/reut.rs/2NXxG3p

Is Facebook a Bank? Congress Pushes for Answers on Crypto Foray
Kurt Wagner and Julie Verhage – Bloomberg
House members grilled Facebook exec on oversight for Libra; Important questions unanswered, including who will regulate
After surviving a two-day battering on Capitol Hill, now comes the hard part for Facebook Inc.: turning its 12-page white paper into a legitimate cryptocurrency in the face of deep skepticism from central banks, regulators and politicians of all stripes.
/bloom.bg/2O3pI9h

Swiss Crypto Broker Bitcoin Suisse Applies for Banking and Securities Licenses
Daniel Kuhn – Coindesk
Bitcoin Suisse, a crypto-broker and pioneer of Switzerland’s “Crypto Valley,” has taken anticipatory steps to comply with a “maturing” regulatory environment.
bit.ly/2Oi5kRZ

Politics

The strength of the dollar is not born in the USA; The Trump administration may try to force the dollar down, but probably without success
Bhanu Baweja – FT
US growth and bond yields have converged towards those of the rest of the world this year. But there has been no reversal of the US dollar’s 2018 strength, merely a slowing of its appreciation.
/on.ft.com/2O3hKwR

Do the Republicans Even Believe in Democracy Anymore?; They pay lip service to it, but they actively try to undermine its institutions.
Michael Tomasky – NY Times
A number of observers, myself included, have written pieces in recent years arguing that the Republican Party is no longer simply trying to compete with and defeat the Democratic Party on a level playing field. Today, rather than simply playing the game, the Republicans are simultaneously trying to rig the game’s rules so that they never lose.
/nyti.ms/2O1Zq7i

Facebook Crypto Plan Draws Fresh Fury From House Democrats
Benjamin Bain and Robert Schmidt – Bloomberg
Company executive refuses to commit to moratorium for Libra; Republicans offer defenses, say progress shouldn’t be stifled
Facebook Inc. took a beating for a second straight day over its controversial cryptocurrency plans as Democratic lawmakers argued the proposal posed vast privacy and national security risks.
/bloom.bg/32CseGO

House Rebuffs Democrat’s Bid to Impeach Trump Over Tweets
Billy House and Erik Wasson – Bloomberg
Pelosi says committee investigations are the ‘serious path’; Texas lawmaker Green has tried to impeach Trump twice before
The House blocked a Democratic member’s bid to impeach President Donald Trump amid resistance from Speaker Nancy Pelosi and other Democratic leaders.
/bloom.bg/2O2SbvU

Trump Expressed Concern About Pentagon Cloud-Computing Contract
Jennifer Jacobs , Naomi Nix , and Steven T. Dennis – Bloomberg
Pentagon poised to give JEDI contract to Amazon or Microsoft; President frustrated he was unaware of Republican concerns
President Donald Trump recently demanded more information about how the Pentagon crafted a massive cloud-computing contract it’s poised to award to Amazon.com Inc. or Microsoft Corp., in order to decide whether he should intervene.
/bloom.bg/2O1Sozv

Regulation

FINRA Announces Final Results of Mutual Fund Waiver Initiative; Total of 56 Settlements Reached with Member Firms Resulting in $89 Million in Restitution to Eligible Charitable and Retirement Accounts
FINRA
FINRA announced that it has reached settlements with 56 member firms and obtained a total of $89 million in restitution for nearly 110,000 charitable and retirement accounts as a result of its mutual fund fee waiver initiative. All of the firms, including the two firms who agreed to settlements1 today, failed to waive mutual fund sales charges for the eligible accounts and failed to reasonably supervise the sale of mutual funds offering sales charge waivers.
bit.ly/32yTwxx

Reminder – Final Weekend Testing Opportunity – NYSE Pillar Migration – July 20
FINRA
NYSE is providing the final weekend testing opportunity with OATS support for the NYSE Tape A Pillar Technology Migration on July 20, 2019.
bit.ly/32Aw8zV

ESMA advises on credit rating sustainability issues and sets disclosure requirement
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets’ regulator, has published today its technical advice on sustainability considerations in the credit rating market and its final guidelines on disclosure requirements applicable to credit ratings.
bit.ly/32xFqwp

Madoff Investor Kingate to Pay Back $860 Million; Settlement wraps up one of the largest remaining disputes in liquidation of Bernard Madoff’s Ponzi scheme
Andrew Scurria – WSJ
One of the largest offshore fund managers that channeled cash to Bernard Madoff will return $860 million in stolen money under a settlement with the liquidators cleaning up after his Ponzi scheme.
/on.wsj.com/2O2mfrs

FCM and IB Members—FinCEN updates list of FATF-identified jurisdictions with AML/CFT deficiencies
NFA
On July 12, 2019, the Financial Crimes Enforcement Network (FinCEN) issued an Advisory announcing that the Financial Action Task Force (FATF) had updated its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member FCMs and IBs should review this Advisory to ensure that their AML programs have the most current information on FATF identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly. A copy of the Advisory is available on FinCEN’s website.
bit.ly/32z0faL

Investing and Trading

Investors Want Municipal Bonds, but Issuance Is Rare; The 2017 tax overhaul and economic strength filling government coffers discourage offerings
Britton O’Daly – WSJ
Investors are flooding into municipal bonds, highlighting how a global bond rally and a lingering slowdown in borrowing by state and local governments has boosted demand for their debt.
/on.wsj.com/2NZdOgv

The U.S. Dollar Is Unlikely to Lose Its Top Spot to Libra or the Yuan; According to one economist, it “doesn’t have to be great, it just has to be the least worst one.”
Yalman Onaran – Bloomberg
The U.S. gets perks from the dollar’s lofty status in international trade, starting with the ability to borrow more cheaply. So the dollar has long faced wannabe competitors. The euro was created partly to chip away at its dominance, and China has been pushing for the yuan to be used more widely. Neither currency has dislodged the greenback from its perch.
/bloom.bg/2O2fqWE

A $338 Billion Manager Says Now Is Time to Protect Stock Profits
Abhishek Vishnoi , Ruth Carson , and Lilian Karunungan – Bloomberg
Deutsche Bank Wealth cuts global shares to 40% from above 50%; Investor accelerating shift to bonds, low-volatility assets
A $338 billion money manager says equity investors best quit while they’re ahead this year and move to safer holdings.
/bloom.bg/2O0riZq

ECB Studies Revamping Inflation Goal in Twilight of Draghi Era
Bloomberg News
European Central Bank staff have begun studying a potential revamp of their inflation goal, according to officials familiar with the matter, Bloomberg News reports.
/bloom.bg/2O4m3b8

Risk Is Ramping Up in Property CLOs Revived After the Crisis
Adam Tempkin – Bloomberg
Kroll, Moody’s note weaker credit metrics in recent deals; Risky collateral and unidentified assets worry some investors
A real estate financing tool revived from the pre-crisis era is growing riskier.
/bloom.bg/2O0rgAF

Americans too often don’t understand this simple truth about investing
Catey Hill – MarketWatch
Americans feel at home in the real estate market. When asked their preferred way to invest money they won’t need for more than 10 years, Americans’ No. 1 choice is real estate, according to a survey of more than 1,000 adults from personal finance firm Bankrate.
/on.mktw.net/2O3jWV7

Ex-Banker Builds Billion-Dollar Fortune as Legal Pot Sweeps U.S.
Alexander Sazonov and Craig Giammona – Bloomberg
Boris Jordan’s 31% Curaleaf stake worth more than $1 billion; NYU graduate is capitalizing on spreading legalization of weed
A former Credit Suisse banker best known for his role in privatizing Russian state assets after the fall of communism is capitalizing on another transformative moment, this time in the U.S.
/bloom.bg/32C0IsH

Stock Bulls Shudder as the Dow Theory Is Tested; An ominous sign for equities leads market commentary. Plus, a bounceback for bonds, Dalio on devaluations and more.
Robert Burgess – Bloomberg
Even though U.S. stocks have rebounded to new highs this month, it’s been hard to find anything close to animal spirits. And Wednesday’s weakness in equities – although mild, with the Dow Jones Industrial Average falling less than 0.5% – demonstrated why investors are still holding higher-than-average cash balances in a clear sign of caution.
/bloom.bg/32wmRbW

Institutions

Former JPMorgan Banker Pleads Not Guilty in ‘Sons and Daughters’ Bribery Case; Prosecutors allege that Catherine Leung Kar-cheung offered to employ the son of a potential client
Joanne Chiu – WSJ
A former executive at JPMorgan Chase JPM -0.98% & Co. pleaded not guilty to bribery charges in a Hong Kong court on Thursday, after prosecutors alleged she persuaded her colleagues to hire the son of a potential client in 2009.
/on.wsj.com/2O0nU0x

Epstein Bids for ‘Gilded Cage’ That Housed Madoff, Strauss-Kahn
Patricia Hurtado – Bloomberg
U.S. says financier is flight risk, should remain in jail; Judge could issue ruling quickly; cell or massive mansion?
It certainly isn’t unheard of for the well-heeled and criminally accused to await trial in their luxurious New York residences instead of cells with concrete beds. Just remember Bernard Madoff or Dominique Strauss-Kahn.
/bloom.bg/2NXq9BF

Epstein’s Donations Will Be Reviewed by Ohio State University
Janet Lorin – Bloomberg
Ohio State University plans to review donations made by Jeffrey Epstein and any organizations related to him.
/bloom.bg/32y8pA6

More Questions About How Jeffrey Epstein Got Island-Owning Rich; Federal disclosure documents offer only a peek into how the accused sex trafficker accumulated wealth and how contributions flowed through his charities.
Joe Nocera – Bloomberg
Ever since the release of the movie “All the President’s Men,” journalists and investigators have taken to heart the advice Bob Woodward got from his famous source Deep Throat: “Follow the money.” But few people have made that as difficult as Jeffrey Epstein, who today sits in jail, accused of sex-trafficking underage girls.
/bloom.bg/2O1pv6e

Epstein’s Foreign Passport Stamps Contradict His Bail Defense
Chris Dolmetsch – Bloomberg
Epstein’s lawyers say he had passport in case he was hijacked; Government is seeking to have Epstein jailed until his trial
A foreign passport found in Jeffrey Epstein’s Upper East Side mansion has entry stamps for France, Spain, the U.K. and Saudi Arabia in the 1980s, prosecutors said in a court filing to counter a defense argument that there is no evidence he ever used it.
/bloom.bg/2ObA72O

Regions

Sanctions on Russia and North Korea Put Tiny Latvia in U.S. Cross Hairs; The former ABLV Bank building in Riga, Latvia. The United States Treasury caused the bank, Latvia’s second largest, to shut down last year by exposing various dubious practices.
Jack Ewing – WSJ
One was a dodgy investment adviser who used a pyramid scheme to bilk unsuspecting Russians out of $10 million. Another was a Taiwanese businessman who was secretly helping North Korea buy precision tools for its nuclear weapons program. Yet another was a corrupt Ukrainian politician spiriting millions of embezzled dollars out of his country.
/nyti.ms/2O2n8jM

Irish regulator probes 182 potential ‘closet tracker’ funds; The Central Bank of Ireland criticises fund boards for poor governance and lack of controls
Siobhan Riding – FT
The Irish financial regulator has stepped up its scrutiny into a potential mis-selling scandal and is investigating nearly 200 investment funds over concerns that they may have been falsely advertised as actively managed funds while doing little more than tracking an index.
/on.ft.com/32xCS1j

Why sentiment wields an outsized influence in China’s markets; Financial system must be restructured to reduce the real economy’s overdependence on bank lending
Liu Jun – FT
Everyone is talking about liquidity. From the stock market crash in the last quarter of 2018, to the recent turmoil triggered by the freezing of redemptions on a fund run by Neil Woodford, a star UK stockpicker, investors are worrying about the risks of not getting their money back.
/on.ft.com/32xCHDb

China’s debt tops 300% of GDP, now 15% of global total: IIF
Reuters
A key gauge of China’s debt has topped 300% of gross domestic product, according to the Institute of International Finance (IIF), as Beijing steps up support for the cooling economy while trying to contain financial risks.
/reut.rs/2O2sLyf

American billionaire calls Modi government “pathetic and corrupt” over its bitcoin stance
Ananya Bhattacharya – Quartz
India’s tough stance on cryptocurrencies has irked the American billionaire and venture capitalist Tim Draper.
bit.ly/2O4sqLA

China Is Drafting Urgent Plan to Resolve Hong Kong Chaos, SCMP Says
Karen Leigh and Dominic Lau – Bloomberg
Use of Chinese military force has been ruled out, it reports; Long-term strategy may lead to change in how it oversees city
Chinese officials in charge of Hong Kong affairs are working on an urgent strategy to solve the city’s political chaos and have ruled out the use of military force, the South China Morning Post reported, citing unidentified people familiar with the discussions.
/bloom.bg/32r9g5E

Is China the World’s Loan Shark?; Developing countries owe Beijing a lot more money than is commonly realized. This is how empires start.
Mihir Sharma – Bloomberg
China isn’t just the world’s largest exporter of goods: It’s now the world’s largest exporter of capital, too. Of course, these two facts are linked. China earns so much from being the world’s factory, and the spending of its households is so constrained, that it needs to find somewhere to park the difference. That’s the basic imbalance underlying the Belt and Road Initiative, China’s big push into the developing world.
/bloom.bg/32ra7mS

Brexit

How Brexit created uncool Britannia; Brexit has not just tarnished the nation’s global image, it is harming individual Britons too
Simon Kuper – FT
In any international setting, one of the first things people notice about you — sometimes the first thing — is your nationality. It can determine how they treat you. Some nationalities are more admired than others.
/on.ft.com/2O3bdlP

U.K. Faces Recession in No-Deal Brexit, Watchdog Warns
Andrew Atkinson – Bloomberg
OBR sees GDP falling 2% by end-2020, bigger budget deficit; Hammond says hit could be worse if hard Brexiteers succeed
A no-deal Brexit could plunge the British economy into recession, hammer the pound and house prices and add tens of billions of pounds to government borrowing, according to the U.K fiscal watchdog.
/bloom.bg/32BgOmi

UK ministers could resign in battle over suspending parliament: BBC reporter
Reuters
Some British cabinet ministers could resign on Thursday to vote to block Theresa May’s successor as prime minister from suspending parliament, the political editor of BBC’s Newsnight program said.
/reut.rs/2O0zusE

Miscellaneous

As Dark Meat Takes Off, Breeders Aim for Smaller Chicken Breasts
Leslie Patton and Lydia Mulvany – Bloomberg
In shift, chicken thighs are gaining popularity in U.S.; Producers worry that white meat can get bland and dry
These are dark days for white meat. For decades, the chicken breast has been America’s darling. Now everybody, it seems, is doubling down on thighs.
/bloom.bg/2O1Pta1

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