Global Bond Markets Go ‘Mad’ as Everything Rallies at Once

Mar 28, 2019

First Read

Hits & Takes
JLN Staff

Yesterday’s CFTC Technology Advisory Committee meeting established it as the most dynamic and effective of the CFTC’s advisory committees. Each of the presentations was well researched and well presented, with good participation from the TAC members in the discussions that followed.

Additionally, the appointment of Richard Gorelick of DRW (and formerly of RGM) was well received by the TAC. Gorelick, an attorney, has been an active member of the TAC and this opportunity may presage an eventual opportunity for him to become a CFTC Commissioner himself some day. It is not without precedent, as former TAC member Chris Giancarlo went on to become a CFTC commissioner and chairman.~JJL

Bloomberg’s Guy Johnson summed it all up in the wake of Theresa May’s Parliamentary defeat: “Everything has been rejected.” If you missed the clarity provided in yesterday’s JLN video, check out Garry Jones’ on point overview of the Brexit issue – Brexit: Fine in Five Years, but a Mess Right Now.~SD

In light of NCAA bracket action resuming, check out RCM Alternatives’ newly released “Semi-Annual Managed Futures Rankings.” A teaser: RCM’s top three managers with more than $100m in AUM are 1) PIMCO’s Commodity Alpha Fund, 2) Man AHL’s AHL Evolution, and 3) Blue Diamond’s Non-Directional Strategy. (I’ll note that Blue Diamond is a bit different in that it solely focuses on equity volatility.) ~SD

Miles Hayward, head of Mako Financial Markets, is taking a six-month sabbatical to raise money for the Wooden Spoon children’s charity of rugby as part of an Everest Rugby Challenge. In April 2019 he will attempt (with a team of 30) to play the highest game of rugby ever played. This aims to be the highest altitude game of full contact and mixed touch Sevens rugby at 6,500m – Everest advance base camp. Donate to the Wooden Spoon HERE~JJL

Manuel Bento, Director of Euronext’s Technology Center in Porto, has won #CIONET’s CIO of the Year Award in the category Financial Services.~JJL

The NFA will host a free #webinar on Thursday, April 24, at 11:00 a.m. CT to to educate investors about how to avoid financial scams and the importance of conducting thorough due diligence as part of #MSW2019. Register HERE.~JJL

Cboe just celebrated the 15th anniversary of the Cboe Futures Exchange, which launched on March 26, 2004.~JJL

The second annual FFK Fun Run aims for more runners (and silly dressers) at the iconic Queen Elizabeth Olympic Park in London on June 13. The ambitious goal: raise £3.0 million to benefit disadvantaged young people around the world. More information is HERE.~JJL


FX Futures, Japanese Equity Repo and Marine Fuel – Michael Syn, SGX

Japan is the second biggest securities borrowing market in the world. Given the general wealth of the populace and a low-yield environment, there is a high demand for structured products and plenty of trading desks occupy their time attempting to replicated those payouts. SGX already offers long-dated dividend futures and equity options; to address the final piece of the puzzle, it will soon be rolling out equity repo futures.

That’s a new interest rate product and a first for Asia, but it’s far from the only thing on SGX’s plate. In this far ranging interview with SGX’s Head of Derivatives Michael Syn, he talks about the drastic change coming to marine fuel standards in 2020 and why SGX, as a shareholder in the Baltic Exchange, is focused on the future of freight. Syn also paints an upbeat picture for continued impressive growth in its FX futures complex.
Watch the video »

****I could listen to Michael Syn read the phone book.~SD


CFTC Staff Issues Research Report on Impact of Automated Orders in Futures Markets
The Commodity Futures Trading Commission’s (CFTC) Market Intelligence Branch in the Division of Market Oversight (DMO) issued a report today that analyzed the entering of orders manually and automatically in commodity futures markets in the United States to determine how technological change is affecting futures trading. DMO staff used internal CFTC transactional data for 30 futures contracts during the period January 2013 – December 2018, and examined what effects, if any, the manual and automated order placement mechanisms had on these markets.

***One of the CFTC’s findings – “Although the level of automation increased steadily each year, historical volatility of end-of-day prices did not exhibit the same trend.” If you missed the CFTC’s last study on block trades in ags, you should check that out, too. (These studies are pretty quick, easy reads.)~SD


Everything you need to know about Hirevue interviews, according to its chief psychologist
Beecher Tuttle – eFinancialCareers
Scripted video interviews are all the rage these days at investment banks and other financial firms. If you want to get in front of a live person as a junior candidate, you’ll likely first need to put on a suit and tie and film yourself answering pre-recorded questions through an automated system. And if the firm is utilizing AI-driven platforms like HireVue – and many do – you’ll be assessed and scored by predictive analytics software before a human ever lays eyes on your performance.

****I know I can pass a Blade Runner’s empathy test as I’m not a replicant, but I’m not sure I could get past an interview analyzed by a robot to see if I’m empathetic. This is not the 21st century Ridley Scott prepared me for.~SD


Sponsored Content

Acuiti: Last chance to sign up to take part in the April report

Acuiti provides free operational performance analytics to senior professionals in the derivatives market.

To sign up and get a free copy of the Acuiti Derivatives Insight Report, visit


‘Doomsday vault’ at risk due to climate change
Zack Budryk – TheHill
Climate change is threatening the “doomsday vault” that holds emergency copies of the world’s crop seeds, CNN reported.
The vault is located just outside Longyearbyen, the world’s northernmost town, located on an island in Norway’s Svalbard archipelago. It contains nearly 1 million packets of seeds with origins in nearly every country.

***** Just when you thought you found a safe place, this happens.~JJL


Special Report: CFTC Approves Brexit-Related Rule on Swaps Transfers, Extends Swaps Relief to Smaller Banks
The Commodity Futures Trading Commission held an open meeting on March 25 to vote on two swap-related rulemakings. The first measure, which was approved unanimously, was an interim final rule to address Brexit-related uncertainty regarding margin requirements for the transfer of uncleared swaps.

***** FIA on the spot in DC.~JJL


Wednesday’s Top Three
So, can you retire from the business without going into witness protection? Seems so. Our top story of the day was The Wall Street Journal’s SEC Grants $50 Million Award to Two JPMorgan Whistleblowers. Second was the legal filing for Jitesh Thakkar, Defendant Jitesh Thakkar’s Motion to Dismiss the Indictment with Prejudice. Third was Bitcoin Exchange Guide’s blog post Kraken Exchange Announces Launch of Both Spot and Futures Trading. Pretty sure you can’t retire off that quite yet.


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Lead Stories

Global Bond Markets Go ‘Mad’ as Everything Rallies at Once
Sid Verma – Bloomberg
Austrian century bonds trounce junk in inverted yield era; Fed stokes ‘lowflation’ bets sweeping through markets
Whether you call it “Japanification,” a dash for safety or a bet on the Fed’s new normal, bond bulls are charging into some of the most notorious corners of developed debt markets.

More Than a Third of China Is Now Invested in One Giant Mutual Fund; 588 million users of Alipay have parked cash in Ant Financial’s flagship Tianhong Yu’e Bao fund
Stella Yifan Xie – WSJ
The world’s biggest money-market fund, overseen by China’s Ant Financial Services Group, drew 114 million new investors last year despite regulatory pressure to shrink.

Swedbank Fires CEO Over Money Laundering Allegations
Niklas Magnusson and Frances Schwartzkopff – Bloomberg
The board of Swedbank AB fired Chief Executive Officer Birgitte Bonnesen, amid allegations the bank was used to launder billions of dollars in Russian money on her watch.

Chicago’s hometown hedge fund grows faster in New York; HQ or not, Gotham towers over Citadel’s future
Lynne Marek – Crain’s Chicago Business
Citadel CEO Ken Griffin says he’s having second thoughts about moving the hedge fund firm’s headquarters to New York from Chicago, but Citadel’s center of gravity already is shifting toward the center of global finance.

Euroclear appoints Goldman to assess exits for shareholders; Options for EUR5.9bn settlement house include listing or private equity sale
Javier Espinoza and Philip Stafford – FT
One of the world’s biggest securities depositories, Euroclear, has appointed Goldman Sachs to assess options that will allow its shareholders to sell their stakes, according to three people familiar with the matter.

Deutsche Bank’s Running Tab of Investigations
Nicholas Comfort, Sam Dodge and Demetrios Pogkas – Bloomberg
Lax money-laundering controls, market rigging, selling toxic securities—Germany’s Deutsche Bank has been investigated for all of these practices since the 2008 financial crisis, running up $18.3 billion in fines and legal costs, more than any other European bank. Regulators and prosecutors have raided the bank’s Frankfurt headquarters, subpoenaed documents and grilled executives in dozens of probes on three continents.

The Future Is Female in China’s Wealth Management Industry
Alfred Liu – Bloomberg
Global finance firms turn to Asian women for top regional jobs; Behind the change is clients’ preference for local knowledge
Amy Lo manages money for some of the richest people in China. She has an expanding clientele, as new billionaires turn up weekly in China. Lo in January started co-managing UBS Group AG’s private banking business in the world’s fastest-growing region for wealth, after working at the Swiss bank for more than two decades.

“Leftover Treasure” Powers China’s Huge Mutual Fund
The name Ant Financial Services Group implies small, but the operator of the world’s biggest money-market fund is anything but.

A Huge Options Trade Is Betting Markets Are Wrong on Fed Cuts
Edward Bolingbroke – Bloomberg
Total of $30 million plowed into eurodollar put-option wager; Position would benefit if Fed refrains from easing this year
There may be a new eurodollar whale in town. About $30 million has been plowed into an options bet that the market has gone too far in pricing in Federal Reserve cuts this year.

Here Are the Manager Finalists for the 2019 Hedge Fund Awards
Stephen Taub – Institutional Investor
Last year was brutal for hedge funds. The industry posted its worst aggregate performance since the 2008 financial crisis, and nearly two-thirds of all hedge funds lost money in 2018. But a few funds finished the year with gains — an impressive feat given the market backdrop.

Nodal tries to rev up market for trucking futures with world first; Launch of freight futures contracts reflects demand to hedge costs in $700bn US market
Gregory Meyer – FT
Trucks are set to join oil tankers and dry-bulk ships as tradable commodities, as a US-based exchange launches the world’s first futures contracts based on the price of hiring a vehicle.

Goldman Sachs fined £34m by FCA for misreporting transactions; UK watchdog’s largest fine of its kind follows similar penalisation of UBS
Caroline Binham – FT
Goldman Sachs’s London unit landed a £34.3m fine from the UK financial watchdog for misreporting over 220m transactions over a 10-year period.

***FCA press release here and Reuters here.

U.S. Is a Rich Country With Symptoms of a Developing Nation; The country is backsliding based on a host of troubling metrics.
Noah Smith – Bloomberg
The other day I was late to dinner, but it wasn’t my fault. Traffic was backed up throughout the city of San Francisco, because chunks of concrete had started falling from the upper deck of the Richmond-San Rafael Bridge. Unfortunately, this wasn’t a particularly unusual occurrence — in 2016, the Bay Bridge was shut after concrete chunks began to fall from the walls of a tunnel. Nor are such issues limited to bridges — the $2.2 billion Transbay Transit Center was closed in late 2018 when cracks were discovered in the beams.

Supreme Court Buttresses SEC’s Power, Rules Against Banker
Greg Stohr – Bloomberg
Breyer says Congress targeted ‘all manner’ of securities fraud; Court’s ruling will also bolster suits by private investors
The U.S. Supreme Court reinforced the Securities and Exchange Commission’s powers, upholding sanctions against an investment banker found to have duped investors about a startup company’s financial condition.

Supreme Court Considers Reducing Regulatory Agency Power
Greg Stohr and Jennifer A Dlouhy – Bloomberg
Court mulls toppling precedent requiring deference to agencies; Justices divide along ideological lines during argument
The U.S. Supreme Court’s conservative justices expressed doubts about a precedent that business groups and the Trump administration say gives federal agencies too much power to change regulations without notice.

Stiff Winds Blow Power Prices Below Zero Across U.S. Plains
Chris Martin – Bloomberg
Warmer, sunny weather eliminating heating needs in Midwest; Negative power prices stretched from New Mexico to Nebraska
Warm and windy spring days are brutal for electricity producers on the Great Plains.

Wall Street Bonuses Aren’t Really Bonuses; Deferred profit-sharing is the better way to think of the annual payouts.
Barry Ritholtz – Bloomberg
Each year about this time, Wall Street celebrates a kind of madness that has nothing to do with college basketball. It is bonus season, and the enthusiasm is understandable, given the widespread participation in the estimated bonus pool of $27.5 billion for workers in New York’s financial industry.

Singapore Exchange buys 20 percent stake in forex trading platform for $25 million
SINGAPORE (Reuters) – Singapore Exchange Ltd, which is positioning itself as a multi-asset bourse, acquired a 20 percent stake in an upstart foreign exchange trading platform, BidFX, for $25 million, with an option to take a majority interest in the company.

Exchanges, OTC and Clearing

CME Group Foundation Awards $1.88 Million to Support Early Math Education in Disadvantaged Communities Across Illinois
CME Group
CME Group Foundation will award $1.88 million in new grants to support early math education programs for young children from low-income communities in Illinois. These grants will be used for programs throughout the next two school years.

A Cost Comparison of S&P 500-Related Options
CME Group
When it comes to trading S&P 500 options, there are multiple products available to investors and a multitude of factors to consider before choosing the optimal product. This report focuses on transactional liquidity and compares the relative execution quality between two of the most liquid S&P 500-related options products: CME’s options on E-mini S&P 500 futures (ES) and CBOE’s options on the S&P 500 cash index (SPX). The analysis to follow shows that, on average, ES options can offer superior execution relative to SPX options by between 0.04 to 0.15 index points. In dollar terms, ES options offer cost savings of $4 to $15 per contract.

Tokyo Mulls One-Share Minimum in Bid to Woo Millennials’ Cash
Shoko Oda – Bloomberg
Buying Nintendo Co. shares in Tokyo today would mean a minimum investment of about 3.15 million yen ($28,500). What if the entry cost is the same as a $300 Switch console?

Boerse Stuttgart, Axel Springer and develop a joint offering for the digital financial world
Axel Springer SE
Boerse Stuttgart Group and Axel Springer SE with its portal will be working together in future. The partners want to use blockchain technology to provide investors with direct and easy access to digital assets such as crypto currencies, thereby setting a benchmark for this new market underway.

SET Gears Up Towards Collaborative Digital Asset Platform For Thailand’s New Opportunities
The Stock Exchange of Thailand (SET) is developing a “Collaborative Digital Asset Platform” for the Thai capital market. Today, SET engaged stakeholders by organizing a special forum gathering over 100 stakeholders to exchange ideas on the digital asset ecosystem development. The prototype of the platform will be ready later this year.

Nasdaq, Inc.; Tabcorp: Tabcorp Launches Merged Pools, Powered by Nasdaq’s Longitude Technology
New Trio bet type has been created within the Trifecta pool
Nasdaq announced Tabcorp has officially launched its new Trio betting type for pari-mutuel customers. Powered by Nasdaq’s Longitude merged pool technology, Trio allows customers to select three horses to finish first, second and third in any order.

Powernext granted Recognised Overseas Investment Exchange status in the United Kingdom
Powernext has been granted the status of Recognised Overseas Investment Exchange (ROIE) for the United Kingdom by the British Financial Conduct Authority (FCA), effective on 26 March 2019.

CME Group Expands Ferrous Metals Offering with New U.S. Midwest Hot-Rolled Coil Steel (Platts) Futures Contract
CME Group Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand its metals offering with the introduction of a new U.S. Midwest Hot-Rolled Coil Steel (Platts) Futures contract to begin trading on April 15, 2019.

You’ve asked for it: Cloud Prisma Margin Estimator with new features based on high client demand
Last August, we have launched our free-of-charge open access margin estimation service that enables clients to margin their listed derivatives portfolios under the Prisma margin methodology. After a very successful introduction, we now start phase two of our new service by providing clients with the ability to simulate margins of OTC interest rate swap portfolios. This service includes the possibility to cross-margin ETD and OTC portfolios, thereby allowing the user to simulate margin optimization.

Letter to Shareholders – ASX Interim Dividend

Intercontinental Exchange Releases 2019 Corporate Responsibility Report
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today released its annual Corporate Responsibility Report. The report complements Intercontinental Exchange’s enhanced corporate citizenship website which provides timely information and resources that are meaningful to stakeholders as issues related to environmental, social and governance topics continue to evolve.

SMU team triumphs at NUS-SGX Stock Pitch Challenge 2019
A team from Singapore Management University (SMU) has emerged as this year’s winner at the NUS-SGX Stock Pitch Challenge finals, held yesterday evening at Singapore Exchange (SGX).

CME Group Foundation Awards $1.88 Million to Support Early Math Education in Disadvantaged Communities Across Illinois
CME Group
CME Group Foundation will award $1.88 million in new grants to support early math education programs for young children from low-income communities in Illinois. These grants will be used for programs throughout the next two school years.

3rd Medium-Term Management Plan

OSE to Perform Proof of Concept Testing for Derivatives Trading Information
As recent years have seen the diversification of data and the growth of alternative data, Osaka Exchange, Inc. performs proof of concept (the PoC), in cooperation with a range of parties concerned, regarding the feasibility of using new data and service that are expected to contribute to the development of securities markets.

arrowhead Upgrade(to be launched on 5th November, 2019)
Tokyo stock exchange Inc. will upgrade arrowhead on 5th November 2019 along with some improvement of trading rules and enhancement of system functionalities. For details, please refer to the following page.


TORA’s Cloud-Based OEMS is Adopted by Schonfeld; $26B asset manager replaces legacy platform with TORA OEMS after two-year, head-to-head evaluation
TORA – provider of the industry’s most advanced cloud-based order and execution management system (OEMS), today announced that Schonfeld Strategic Advisors, LLC, a global, multi-manager platform which manages an aggregate gross market value in excess of $26 billion, has implemented the TORA OEMS in its Asian Offices.

Wall Street is losing its battle against encrypted apps like WhatsApp and WeChat as it tries to police employee communications — and even regulators are stumped
Dakin Campbell – Business Insider Prime
Wall Street is losing its grip on employee communications amid a proliferation of encrypted messaging apps, according to remarks made by bankers and enforcement officials at a conference panel in Phoenix.
The encryption of popular apps like WhatsApp, WeChat, and Signal puts the messages largely beyond the reach of compliance staff and enforcement authorities unless they get access to the phone.

Thasos’ real-time ‘foot traffic’ data streams now available on Open:FactSet Marketplace
Thasos, an alternative data intelligence firm that transforms location information from mobile phones worldwide into real-time, objective and actionable insights, is to offer geolocation data on FactSet’s Open:FactSet Marketplace (OFM).

Business Leaders Love AI. That Doesn’t Mean They Use It; Executives who say they’ve adopted the technology may be responding to hype and the fear of missing out.
Leonid Bershidsky – Bloomberg
Microsoft has unveiled the results of a survey of business leaders on the topic of artificial intelligence. The findings are surprising: German and Russian entrepreneurs and executives appear to come out ahead of those from the U.S. and other advanced European economies when it comes to adopting the technology. Mostly, however, this and several other studies confirm a frustrating problem: The AI hype is making it impossible to figure out how much businesses really need it and are using it.

In perspective (part I): The times they are a-changing
The world is on its way to a new paradigm. We see fundamental changes in many areas without knowing what the new status quo will look like. But it is also times like these that allow us to explore new opportunities – together with our clients and our regulators.


HSBC Exec Urges CFTC to Make More ‘Positive Noise’ About Blockchain
Nikhilesh De – Coindesk
A banker from HSBC urged the U.S. Commodity Futures Trading Commission (CFTC) to make more “positive noise” about distributed ledger technology (DLT), in order to encourage adoption by hesitant businesses.

Compliance officers wary of switch to ‘Wild West’ crypto sector
Anna Irrera, Tom Wilson – Reuters
After almost three decades in senior compliance roles at large financial firms including Bank of New York Mellon’s Pershing and Goldman Sachs Group Inc, Jeff Horowitz made an unconventional career move.

Quadriga’s Former Lawyer Says Founder Rid the Crypto Exchange of ‘Law And Order’ Folks
Doug Alexander – Bloomberg
Attorney Christine Duhaime says firm was terminated in 2016; Says Duhaime Law was recently the target of an extortion plot
She was a lawyer who once helped Vancouver crypto exchange QuadrigaCX get its regulatory footing until its chief executive decided to dump “law and order” folks.

Coincheck Owner Monex Group Announces Major Management Changes
Adrian Zmudzinski – Cointelegraph
The Japanese broker that acquired the hacked cryptocurrency exchange Coincheck in April 2018 has announced major changes in its management structure. The news was revealed in a press release published on March 27.

Lightning Offers Growth Path for Emerging-Market Crypto Exchanges
Leigh Cuen – Coindesk
While leading cryptocurrency exchanges like Coinbase and Binance feverishly add new tokens, smaller exchanges serving emerging markets are pivoting toward retail applications of the lightning network’s bitcoin scaling solution. The latest is Singapore-based exchange Zebpay, which now offers lightning wallet options for users who want to send lightning-enabled payments to external wallets.

Why Mark Zuckerberg and Jack Dorsey Are Warming to Blockchain
Michael J Casey – Coindesk
That line belongs to Preston McAfee, an economist whose job history includes senior positions at tech giants such as Microsoft, Google and Yahoo. As he explained to an audience at the SXSW conference in Austin, Texas, recently, it refers to software engineers’ tendency to favor centralization as the most efficient design principle for any computing system. The point, he said, is that decentralized networks, such as those based on blockchain models, can often enable more positive overall social outcomes despite the relative inefficiency of their command-and-control architecture.

New York Grants Its 18th BitLicense to Crypto ‘Prime Broker’ Tagomi
Nikhilesh De – Coindesk
The New York Department of Financial Services (NYDFS) has awarded its latest BitLicense to crypto brokerage startup Tagomi Trading LLC. Announced Wednesday, this is the 18th such license issued since the NYDFS finalized its controversial regulatory regime for virtual currency businesses in 2015. Tagomi has also been granted a traditional state money transmission license, according to an NYDFS press release.

Nvidia “never had plans for cryptocurrency” ahead of its doomed fling with miners
Jacob Ridley – PC Games
Nvidia CEO Jen-Hsun Huang has confirmed that the company “never had plans for cryptocurrency”, despite its massive impact on the company’s financials and inventory.

Blockchain Exchange Secures $50 Million in Diamonds for ETF Launch
Yogita Khatri – Coindesk
Blockchain-based trading platform CEDEX says it has now secured a supply of more than 6,000 diamonds ahead of its launch of a diamond exchange-traded fund (ETF).

Blockchain specialist R3 deploys new strategy focusing on expansion; Jesse Edwards, one of R3’s co-founders who spearheaded its initial fund-raising scheme, has left the consortium.
Joe Parsons – The Trade
Blockchain technology vendor R3 has laid out a new strategy where it will focus on exploring joint ventures and potential acquisitions, as well as scouting out seed-stage investments.

Marco Polo Blockchain Built on R3’s Corda Sees First Live Trades
Marc Hochstein – Coindesk
The first two real-world transactions have been conducted on Marco Polo, the trade finance blockchain built on R3’s Corda platform.

Kraken Ramps Up Security With Enforced 2FA and Dedicated Lab
Yogita Khatri – Coindesk
Cryptocurrency exchange Kraken has introduced two new initiatives aimed at enhancing client and industry security. Firstly, the firm’s recently appointed chief security officer, Nicholas Percoco, announced in a blog post on Tuesday that the exchange has launched compulsory two-factor authentication (2FA).


Warren Takes Aim at Farm Programs That Brought You ‘Got Milk?’
Lydia Mulvany – Bloomberg
Federally mandated program rigged against family farms: Warren; Payments into checkoffs should be voluntary, candidate says
As part of her presidential platform, Elizabeth Warren is not just taking on big agriculture corporations like Bayer AG and Tyson Foods Inc. She’s also going after checkoff programs, which do marketing campaigns for commodities.

Trump Accuses FBI Officials Who Investigated Him of Treason
Justin Sink – Bloomberg
Spoke on Fox News in first interview since Mueller probe ended; Says other presidents shouldn’t face similar probes in future
President Donald Trump said former FBI employees Peter Strzok and Lisa Page committed treason when they took steps to investigate his possible ties to Russia during the 2016 campaign.

Trump Promised to Bring Back $4 Trillion in Offshore Cash. He Missed by $3.3 Trillion
Laura Davison and Jeff Kearns – Bloomberg
Trump said as much as $4 trillion would be invested in U.S.; Corporations hesitant to bring all their offshore cash back
Corporate America brought $664.9 billion of offshore profits back to the U.S. last year, falling short of the $4 trillion President Donald Trump said would return as a result of the 2017 tax overhaul.


Opening Statement of Commissioner Brian Quintenz before the CFTC Technology Advisory Committee
Good morning and welcome to our third meeting of the Technology Advisory Committee (TAC or Committee). Before we begin, I would like to thank all of the Committee and subcommittee members for volunteering to participate and share their expertise with us. In particular, I would like to take a moment to recognize the new TAC Chair, Richard Gorelick, for his willingness to lead and giving so generously of his time to advance this Committee’s important work. Richard has a long and distinguished history as a participant in the derivatives market, has been an astute and consistent source of feedback to the CFTC across multiple advisory committees, as well as in two of this TAC’s subcommittees, has been a long-time member of FIA’s Principal Traders Group, and has testified before Congress on derivatives market structure. Richard, thank you for continuing to provide us the benefit of your expertise and now, your leadership.

U.S. Supreme Court backs SEC, safeguards investor-protection laws
Andrew Chung – Reuters
The U.S. Supreme Court safeguarded investor-protection laws on Wednesday in a ruling against a New York investment banker who the Securities and Exchange Commission banned from the industry.

CFTC Approves Comparability Determination for Australia Uncleared Swap Margin Rules for Substituted Compliance Purposes; Australia is deemed comparable with all aspects of Margin for Uncleared Swaps
The Commodity Futures Trading Commission (CFTC) today unanimously approved a comparability determination finding the margin requirements for uncleared swaps under the laws of Australia and the regulations of the Australian Prudential Regulation Authority (APRA) comparable in outcome to those under the Commodity Exchange Act (CEA) and CFTC regulations.

‘Mind the gap’ – consumers confusing different types of financial advice
ASIC today released new research revealing many consumers confuse ‘general’ and ‘personal’ advice exposing them to greater risk of poor financial decisions.

Proposed Rule Change to Establish a Corporate Bond New Issue Reference Data Service
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to enhance the collection and dissemination of new issue reference data for corporate bonds and charge associated fees.

Statement of Chairman J. Christopher Giancarlo on Australia Comparability Determination: Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants
Today I am pleased to announce that the Commission has issued a decision concluding that the Australian margin rules are comparable to the CFTC rules. As a result, Australian firms may rely on compliance with Australian margin rules to satisfy CFTC requirements.

Statement of Commissioner Dan M. Berkovitz on Comparability Determination for Australia: Margin Requirements for Uncleared Swaps
I support today’s Comparability Determination for Australia: Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants (“Australia Determination”).

Reminder: April 1 effective date for NFA’s Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System
In January 2019, NFA issued a Notice to Members announcing the adoption of an Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System (Interpretive Notice). The Interpretive Notice requires commodity pool operator (CPO) Members, which have the ability to control customer funds, to implement an internal controls framework designed to:

Investing and Trading

Half of Older Americans Have Nothing in Retirement Savings
Ben Steverman – Bloomberg
The bad news is that almost half of Americans approaching retirement have nothing saved in a 401(k) or other individual account. The good news is that the new estimate, from the U.S. Government Accountability Office, is slightly better than a few years earlier.

Why Are Economists So Bad at Forecasting Recessions?; Professional forecasters feel safer in a crowd. There’s not much incentive to stick one’s neck out.
Simon Kennedy, Peter Coy – Bloomberg
In 1966, four years before securing the Nobel Prize for economics, Paul Samuelson quipped that declines in U.S. stock prices had correctly predicted nine of the last five American recessions. His profession would kill for such accuracy.

Draghi Says ECB May Need to Soften the Impact of Negative Rates
Carolynn Look and Piotr Skolimowski – Bloomberg
ECB president says officials may ‘need to reflect’ on matter; Central bank under Draghi cut deposit rate below zero in 2014
Mario Draghi said the European Central Bank is ready to soften the impact of negative interest rates if they are found to harm the transmission of its monetary policy.

Why Stephen Moore’s plan for the Fed would ‘scare the hell’ out of investors
Matt Egan, CNN Business
Stephen Moore wants the Federal Reserve to immediately slash interest rates — a startling step that would likely reinforce Wall Street’s fears that a recession is brewing.

Bond Trading Is Only for the Brave in This Shock Rally; Invest at your own risk after a rapid dovish shift among central banks.
Brian Chappatta – Bloomberg
It’s bad enough writing about another steep plunge in bond yields across the globe and prognosticating about the market’s next move. It’s almost certainly worse to be putting money on the line.

What’s behind the big bond rally?; Dovish central bankers and lukewarm economic data have driven debt markets higher
Robin Wigglesworth and Colby Smith – FT
The 2019 bond market rally is gaining momentum, pushing down yields and lifting the value of the fixed income universe by roughly $1.6tn since just the beginning of March. Why are debt markets on fire, and what does it say about the health of the global economy?


RJO Futures Offers Orion Multi-Trader with dxFeed Data
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, today announced that its private client division, RJO Futures, is offering Orion Trading Systems’ flagship platform, Orion Multi-Trader powered by dxFeed’s data.

Barclays Management Shakeup Is a Win for Bramson; The activist investor may not have got his way yet, but he has managed to put CEO Jes Staley on a tighter leash.
Elisa Martinuzzi – Bloomberg
In the tug of war that pits Barclays Plc Chief Executive Officer Jes Staley against activist shareholder Edward Bramson, the bank’s surprise management rejig shows the investor has pulled harder.

***See below, too.

Barclays’ Top Investment Banker Throsby Makes Surprise Exit
Stefania Spezzati and Harry Wilson – Bloomberg
CEO Staley takes more control as management team shaken up; McGrath, Dainton, Currie to report directly to Staley
Barclays Plc Chief Executive Officer Jes Staley took direct control of the lender’s investment bank in a shakeup that led to the unexpected departure of Tim Throsby, one of his top lieutenants.

Ex-Goldman Trader’s Hedge Fund Is Said to Return Clients’ Cash
Suzy Waite , Bei Hu , and Nishant Kumar – Bloomberg
Morgan Sze’s Azentus Capital said to convert to family office; He will continue to invest about $40 million of his own money
One of Asia’s best known hedge-fund managers is returning investors’ money and turning his firm into a family office, according to people familiar with the matter.

JPMorgan Asset Likes Offshore Yuan Debt as Index Inclusion Looms
Gregor Stuart Hunter – Bloomberg
Dim Sum bonds should also benefit: JPMorgan Asset Management; Some lack access to China’s $12 trillion-plus onshore market
JPMorgan Asset Management is positioning for the coming inclusion of Chinese domestic debt in a key global benchmark by betting on the relatively small market for yuan bonds traded offshore.

JPMorgan to Cut Hundreds of Jobs After Staffing Review
Michelle Davis – Bloomberg
JPMorgan Chase & Co. is dismissing hundreds of workers in its asset and wealth-management division after a periodic review of staffing, according to a person briefed on the matter.

INTL FCStone Know-Risk Platform Now Open to Broader Market
Innovative cloud-based commodity management software celebrates 15 years
INTL FCStone Inc.
INTL FCStone Inc. (NASDAQ: INTL) today announced that Know-Risk™, its award-winning system for commodity price and inventory management, is being opened up broadly to the market after a 15-year track record of success serving more than 200 clients across multiple countries and languages – including multiple Fortune 500 companies.

Deutsche Bank considers further cost cuts after weak quarter one: Handelsblatt
Deutsche Bank is considering fresh cost cutting after a weak first three months of the year, German business daily Handelsblatt reported, citing people familiar with the matter.

Deutsche Bank discusses raising up to EUR10bn for Commerzbank deal; Proposed equity raising would aim to end debate over lender’s capital levels
Stephen Morris and Olaf Storbeck – FT
Deutsche Bank is discussing plans to raise as much as EUR10bn in fresh equity as part of a potential merger with Commerzbank, a move designed to end the debate over whether Germany’s largest lender has enough capital.


It’s Erdogan Against the Markets After JPMorgan Watershed; With Turkey in recession, its leaders have taken a starkly anti-market turn.
Kerim Karakaya , Cagan Koc , and Asli Kandemir – Bloomberg
The last time Turks went to the polls, the country’s paramount leader for the past 16 years vowed to tighten his grip on the economy. With another national campaign — this time for municipal offices — nearing its climax, he’s rolling out the same playbook.

Pakistan’s Emerging-Market Status Just Got Into Big Trouble
Faseeh Mange – Bloomberg
Nation’s weight in index has dropped to about 3 basis points; Despite the slip, MSCI is in no hurry to demote Pakistan
Pakistan’s inclusion in the MSCI Inc.’s emerging-market indexes has come under a cloud as the nation’s stocks fall below the market-size threshold.

Hong Kong’s Ripe for the Virtual Banking Wave; Customers in the city are both digitally savvy and frustrated with the established operators.
Nisha Gopalan – Bloomberg
The world is littered with startups that have struggled to become genuine challengers to traditional banks despite chalking up plenty of customers. Hong Kong may be different.

Saudi Arabia’s $69 Billion Plastics Bet Weakens Its Oil Hedge; Aramco’s purchase of a big stake in Sabic hints at where Riyadh sees crude going in the future. The answer isn’t especially appealing for either side.
David Fickling – Bloomberg
It’s not every day that the world’s biggest oil company buys the most profitable chemicals business. Saudi Arabian Oil Co., better known as Saudi Aramco, will pay 123.4 riyals a share for the 70 percent stake of Saudi Basic Industries Corp. held by the Public Investment Fund, the country’s sovereign wealth fund, the suitor said in a statement Wednesday.

UK ‘like an emerging market’, warns veteran fund manager; Mark Mobius sees developing country parallels with ‘terrible’ debt and volatile currency
Colby Smith – FT
The UK increasingly resembles an “emerging market” and risks a currency crash should it leave the EU without a deal next month, according to one of the pioneers of investing in developing economies.

Investors Scramble for Liras as Turkish Swap Rates Touch 1,000%
Constantine Courcoulas and Cagan Koc – Bloomberg
Cost of borrowing currency offshore surges 40-fold in 3 days; Bonds and stocks tumble as traders seek other sources of lira
Investors dumped Turkish bonds and stocks on Wednesday after the nation orchestrated a currency crunch to prevent the lira from sliding days before an election that will test support for President Recep Tayyip Erdogan’s rule.

Turkey burns through foreign reserves to shore up lira; New data show a $10bn drop in holdings in March, sending currency down 5%
Laura Pitel, Adam Samson and Alice Woodhouse – FT
Turkey has burnt through at least a third of its foreign reserves this month in an effort to stem a plunge in the lira ahead of local elections at the weekend, spooking investors and sending the currency down by as much as 5 per cent on Thursday.

US funds pull out of Chinese groups involved in Xinjiang detention; Washington ratchets up scrutiny of how capital markets are used to fund crackdown on 1m Uighurs
James Kynge and Demetri Sevastopulo – FT
Large US investment funds have sold their equity stakes in Chinese surveillance company Hikvision, as scrutiny mounts in Washington over how western capital markets are being used to fund the mass detention of millions of Muslim Uighurs in China.


Brexit is destroying a British stereotype that has existed since World War II
Guy Woodward – Quartz
Since the 2016 EU referendum, Britain’s reputation in European centers of power has undoubtedly suffered. The painful progress of Brexit negotiations and the inability of the British government to marshal support for the withdrawal agreement in the febrile and fractious House of Commons has baffled many senior European politicians.

Brexit Stalemate Deepens as U.K. Fails to Agree on a Way Forward
Robert Hutton, Alex Morales, and Tim Ross – Bloomberg
May must decide on Thursday whether to bring her deal back; Parliament rejects other options before more votes on Monday
Britain’s political standoff over Brexit escalated further, with even Theresa May’s announcement that she’ll quit as prime minister doing nothing to move closer to a resolution.

John Lothian Newsletter

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Past Newsletters

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