Goldman’s Next Step For Post-Blankfein Era; Buy-side voluntary clearing

Jul 16, 2018

Goldman’s Next Step For Post-Blankfein Era; Buy-side voluntary clearing

Jul 16, 2018

Spencer Doar

Spencer Doar

Associate Editor

First Read

Hits & Takes
JLN Staff

Since I will not be at the final day of MarketsWiki Education World of Opportunity on August 2, the JLN team will take turns introducing the speakers that day. Sarah Rudolph, Spencer Doar, Jeff Bergstrom and summer intern Robby Lothian will take turns. I will be in a hospital bed recovering from hip replacement surgery.~JJL

For the first time in over 10 years, I will not be attending Boy Scout summer camp. My hip to be replaced the next week is too much to handle while living in a tent for a week.~JJL

To all my European friends. I love you.~JJL

CME’s S&P 500 Total Return Index Futures had a record day on Thursday with 22k traded.~SD

According to DataTrek Research, “truckload shipping costs rose 9.4% year-over-year in June 2018.” That number is closest to 2008 levels. ~SD

Performance engineer Bob Van Valzah released the third part of his blog series on shortwave trading – see our lead stories section. You can find his related presentation – Why your transatlantic trades are getting picked off – from the 2018 STAC summit in New York here. ~SD

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Trump Was Asked Who the Biggest U.S. Foe Is. He Mentioned the EU First.
Margaret Talev – Bloomberg
Continues president’s notable shift away from long-term allies; Europe’s Tusk says its ‘fake news’ that Europe, U.S. at odds
President Donald Trump named the European Union as a “foe” of the U.S. in an interview, days after a contentious meeting with NATO allies, but a top European official said the suggestion was “fake news.”
/jlne.ws/2uByLRD

***** It is easy for someone without friends not to understand who is a friend and who is a foe.~JJL

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Never Trumpers Will Want to Read This History Lesson; In the 1850s, disaffected Democrats made the wrenching choice to leave their party to save American democracy. Here’s what happened.
Joshua Zeitz – Politico
“I was educated a Democrat from my boyhood,” a Republican delegate confided to his colleagues at Iowa’s constitutional convention in 1857. “Faithfully, I did adhere to that party until I could no longer act with it. Many things did I condemn ere I left that party, for my love of party was strong. And when I did, at last, feel compelled to separate from my old Democratic friends, it was like tearing myself away from old home associations.”
/jlne.ws/2uDX6pY

***** Fascinating read of history repeating itself.~JJL

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Nikkei Index Options & Futures

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America’s Values Must Guide White House Diplomacy; That’s why the Trump-Putin summit is so risky.
Michael R. Bloomberg – Bloomberg
Never in my lifetime can I remember a week when a president of the United States did more to insult our closest allies and flatter our biggest adversaries. Alienating friends who share our values while ignoring a hostile power’s intrusions into U.S. sovereignty is diplomacy at its most incompetent and counterproductive ó and Americans in both parties must demand that it stop.
/jlne.ws/2zJhg7H

****** You don’t have to have a title to be a leader, and Mike Bloomberg is a good example of this.~JJL

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How to Listen to What the Market Is Trying to Tell You
Bloomberg
For years, it was pretty quiet in markets. Stocks kept making new highs and volatility drifted to fresh lows. That’s changed in recent months and there’s now plenty to keep investors busy, including fears of a trade war and signs that the economy be nearing the end of its cycle. On this week’s episode of the podcast, we speak with Peter Borish, a veteran investor and trader (and former Odd Lots guest), who is currently chief strategist at the Quad Group. He talks about how he approaches trading in the current environment and the indicators that he tracks in order to understand what the market is trying to tell us.
/jlne.ws/2uBrx0c

******Sometimes the market whispers, and sometimes it yells. Listen up!~JJL

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Bridging the Weeks by Gary DeWaal: June 25 – July 13 and July 16, 2018 (Attempted Manipulation; Curious About Digital Assets; Whistleblowing; SARs; Obstruction)
Gary DeWaal, Katten Muchin Rosenman
A commodity merchandising firm was fined US $6.55 million by the Commodity Futures Trading Commission and the Chicago Board of Trade combined for attempting to manipulate the prices of wheat futures contracts. However, its transaction activity may have constituted ordinary commercial conduct. But that was not sufficient to avoid the regulators’ wrath. Separately, the Financial Industry Regulatory Authority asked member firms voluntarily to disclose details regarding their, their associated persons’, and their affiliates’ activities related to digital assets. But the nature of activities FINRA is curious about is very broad, and includes such persons’ futures activities. As a result, the following matters are covered in this week’s edition of Bridging the Week:
/jlne.ws/2zHNtMZ

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Friday’s Top Three
Our top story on Friday was the long and cringe-worthy story by Huffington Post about HSBC’s Mike Picarella and his colleagues in Inhuman Resources. Second went to a piece that remained in the top three for a full week, the February story from John Lothian News, FCMs Big And Small Suffer Major Losses On Latest Black Monday and the related David Silverman Commentary on February 5: We are a “master and slave to the system”. Third went to the CFTC’s announcement CFTC Announces Its Largest Ever Whistleblower Award of Approximately $30 Million

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MarketsWiki Stats
129,641,187 pages viewed; 23,192 pages; 214,138 edits
MarketsWiki Statistics

Lead Stories

Goldman Said Poised to Take Next Step Towards Post-Blankfein Era
Sam Mamudi and Marcus Wright – Bloomberg
David Solomon set to be named as CEO this week, Times says; Move brings the end of Blankfein’s 12-year tenure nearer
Goldman Sachs Group Inc. is poised to take another step in the slow exit of Lloyd Blankfein, its longstanding chief executive officer.
/jlne.ws/2zHyPFc

****SD: David Solomon moonlights as DJ D-Sol.

Buy-side voluntary clearing set to take off; Regulation and collateral costs have made the cleared derivatives market much more attractive for the buy-side. Joe Parsons asks what else will it take for them to voluntarily take part?
Joe Parsons – The Trade
The seismic shift in the derivatives market post-financial crisis has seen not only a change in the way the products are traded and cleared, but also in the nature of relationships throughout the process.
/jlne.ws/2zKyz8y

EU Rules Want Light. Traders Like Dark, Periodically
Viren Vaghela, Silla Brush – Bloomberg
Europe’s push for more transparency in stock trading, which ushered in new limits on so-called dark pools, has led to a surge in what are known as periodic auctions. They’re advertised as a more transparent way of trading stocks, but they share some of the characteristics of dark pools, like the anonymity prized by investors buying or selling big blocks of stock who worry that too much sunshine costs them too much.
/jlne.ws/2uEH1jR

Dog Days of Summer Are Here as Traders Give Up Acting on Tweets
Ksenia Galouchko – Bloomberg
As a heatwave takes hold across Europe, the region’s stock traders are heading for the beach. Market turnover in the region’s equities dropped to the lowest in six months last week as investors gave up trying to predict President Donald Trump’s next tariff threat. European stock volatility also declined, falling to the lowest since June 15, when Trump approved slapping duties on $50 billion of Chinese goods.
/jlne.ws/2zErVAC

U.S. Tries to Rein In High-Speed Trading in Farm Patch; Starting on Aug. 1, the Agriculture Department will change how it releases crop and livestock reports
Alexander Osipovich – WSJ
The U.S. government is taking steps to protect agricultural markets from high-frequency traders – a move some say will make little difference down on the farm.
/jlne.ws/2zEZvqo

VC Firm Social Capital Set Out to Fix Capitalism. Now It’s In Turmoil; Staff have departed and investors have expressed dismay, but CEO Chamath Palihapitiya says the firm hasn’t wavered from its goals.
Lizette Chapman and Sarah McBride – Bloomberg
Seven years ago, Social Capital made its debut as one of the hottest venture funds in Silicon Valley, the brainchild of a former Facebook Inc. executive with some grandiose ideas about backing startups that might help humanity. Now, after a flood of prominent departures from the firm and a failed expansion strategy, a number of investors have lost confidence in the remnants of the leadership team and its ability to make good on its initial promises.
/jlne.ws/2zIIc7J

Shortwave Trading, Part III – Fourth Chicago Site, East Coast, Patent, Regulation, and Farmer Kevin Mystery
Bob Van Valzah – Sniper In Mahwah
I’ve heard that years ago, there was a stable business selling microwave data radios to local governments for networking their offices. Then the traders discovered microwave and everything changed for the radio vendors. Their new customers weren’t so much concerned about the costóthey just wanted the lowest-possible latency in the radios and repeaters.
/goo.gl/bV8Vvz

****SD: If you haven’t been following, catch up with Part I and II.

Never Mind the VIX, Anxiety Is Everywhere in U.S. Stock Market
Lu Wang – Bloomberg
Investors seeking safety in options market, defensive shares; Low correlation means pockets of losses don’t spread
The Nasdaq 100 is at a record, stocks have just strung together two straight weeks of gains and one of the best earnings seasons in a decade is at hand. Bears vanquished? Not entirely.
/jlne.ws/2uD8eUe

Wall Street’s Summer Calm May Depend on Selective Vision
Conrad De Aenlle – NY Times
Wall Street has been in a remarkably relaxed mood lately, especially when you consider that only a few months ago, Federal Reserve rate increases and Trump administration trade policies helped to set off a steep decline in stock prices.
But investors seem to be focusing on a more benign development: an increase in profits resulting mainly from the reduction in corporate income tax rates late last year.
/nyti.ms/2LcAmEF

Offices of the future: inside fund managers’ glitzy new HQs; London companies swap tired facilities for rooftop gardens, pools and music rooms
Owen Walker – FT
London’s property market may be going through a rough patch but at several City fund managers, staff are busy emptying their desk drawers ready to move within the capital.
/jlne.ws/2uCdiYR

How the Supreme Court Unleashed Business; Lewis Powell’s appointment in 1971 marked a sea change for corporate America. It’s his seat that Brett Kavanaugh now hopes to fill.
Justin Fox – Bloomberg
The November 1971 Senate Judiciary Committee confirmation hearings for Lewis F. Powell Jr. were a placid affair. Republican President Richard Nixon had nominated Powell for the Supreme Court at the same time as William H. Rehnquist, who as a lawyer in private practice in Phoenix in the 1950s and 1960s had been a vocal opponent of civil rights legislation. Powell ó a longtime partner at the law firm now known as Hunton Andrews Kurth in Richmond, Virginia, a member of multiple corporate boards of directors, including that of tobacco giant Philip Morris (now Altria Group Inc.), and a former president of the American Bar Association ó was by comparison an uncontroversial choice. The legislative director for the AFL-CIO summed up the perceived contrast in his testimony to the committee, calling Rehnquist a “right-wing zealot” and Powell “thoughtful, scholarly and moderate.”
/jlne.ws/2uBr4es

Exchanges, OTC and Clearing

HKEX’s Response To The Three Types Of Hang Seng Composite Index Constituents Not Included For Stock Connect’s Southbound Trading
Mondovisione
The Stock Exchange of Hong Kong (SEHK), a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), has noted the announcement and news release by the Shanghai Stock Exchange and the Shenzhen Stock Exchange on 14 July on inclusion arrangements for eligible securities under Stock Connect’s Southbound Trading. HKEX has the following three-point response.
/jlne.ws/2uD6Tga

China excludes Xiaomi shares from Stock Connect programme; Stock hit as bourses bar trading-link purchases of Hong Kong-listed dual-class shares
Emma Dunkley and Don Weinland in Hong Kong – FT
Shares in smartphone maker Xiaomi fell by almost a tenth on Monday after mainland Chinese investors were barred from buying into Hong Kong-listed companies that issue dual-class shares.
/jlne.ws/2zKKRxK

Every tenth German would bury his gold in the garden; Study shows where Germans store the popular precious metal
Deutsche Bˆrse Group
The Germans are actually playing it safe: more than half would store their gold in a safe deposit box. But almost one in ten even buries it in the garden. This is the result of a representative survey by Kantar-Emnid on behalf of Deutsche Bˆrse Commodities.
/jlne.ws/2zKMKuk

Chief Executive Charles Li discusses latest Stock Connect development
HKEX
HKEX Chief Executive Charles Li responded to media questions after a listing ceremony in Hong Kong this morning regarding the announcement by the Shanghai and Shenzhen stock exchanges last Saturday that excludes companies that use weighted voting rights from Stock Connect’s Southbound trading.
/jlne.ws/2uGvoZY

SGX RegCo reprimands Dapai International Holdings Co. Ltd., Executive Chairman Chen Xizhong, former CEO Chen Yong and former CFO Lawrence Lam Pong Sui
SGX
Public reprimand: Breach of Listing Rules
/jlne.ws/2zLiHTm

CME Group Achieves International Average Daily Volume of 4.2 Million Contracts in Q2 2018, Up 13 Percent from Q2 2017
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it achieved quarterly international (defined as outside of the US) average daily volume (ADV) of 4.2 million contracts during the second quarter of 2018, up 13 percent over the same period last year.
/jlne.ws/2uCjLD6

Pimco criticises LCH over SOFR plan; Senior official calls on CCP to follow CME and use SOFR for margin interest and discounting immediately
Robert Mackenzie Smith – Risk.net
A senior Pimco official has criticised LCH’s decision to stick with Fed funds as the discount and margin interest rate for secured overnight financing rate (SOFR) swaps in the short term, claiming it will create a “bastard contract” that will generate more problems for legacy products.
/jlne.ws/2uDM57Z

Fintech

Duco Expands into Singapore, Wroclaw and Edinburgh; The London-based data engineering company is opening three new offices.
Jamie Hyman – Waters Technology
The London-based data engineering company’s new locations will be open by September. The expansion follows a $28 million funding round in January this year.
/jlne.ws/2uC9zKQ

Eventus Systems Launches New Website Highlighting RegTech Solutions for Capital Markets
Markets Insider
Eventus Systems, Inc., a provider of innovative regtech software solutions for the capital markets, has just launched a new, enhanced website, www.eventussystems.com.
/read.bi/2NUnHIn

How Amy Hood Won Back Wall Street and Helped Reboot Microsoft; She re-imagined the CFO job and played a key role in persuading employees, customers and investors to believe in the company again.
Dina Bass – Bloomberg
Clad in jeans and a gray sweatshirt, Amy Hood stands before a room of 140 Microsoft recruits. The feeling in the air is a bit like the first day of school, and new hires are taking selfies outside in front of a big Microsoft logo.
/jlne.ws/2uxDyUe

To Tokyo and Beyond: TT Infrastructure Enhancements to Supercharge Your Trading
Tim Murphy, VP of Service Management – TT Talk
When we set out to build the trading infrastructure for the TT platform several years ago, our goal was to engineer a network of colocated data centers that would provide our customers with an easier way to access the global marketsóno matter where our customers are basedóand achieve superior execution performance. While many would say we’ve already achieved this goal, it’s really a moving target. Technology doesn’t stand still, so there’s always something new that we can leverage to further enhance our offering.
/jlne.ws/2uE9x53

Cryptocurrencies

Bitcoin Was Russian Hackers’ Currency of Choice, U.S. Says
Lily Katz – Bloomberg
Digital coin allegedly used for payments during election; 12 intelligence officers indicted by U.S. special counsel
For years, Bitcoin believers have tried to distance the digital coin from the perception that it’s only used for criminal activity. New insights into Russian meddling in the U.S. election aren’t helping.
/jlne.ws/2uD8r9Y

Hong Kong launches blockchain-based trade finance
Don Weinland – Financial Times
Hong Kong’s de facto central bank will go live next month with a blockchain-backed trade finance platform set to link up with 21 banks, including HSBC and Standard Chartered.
The launch of the system, designed by China’s Ping An Group, will be one of the first and largest examples of a government-led project aimed at upgrading the $9tn global trade finance industry.
/on.ft.com/2LgA9Uf

Robinhood’s Plan to Win the Crypto Exchange War? Kill Trading Fees
Marc Hochstein and Christine Kim – Coindesk
As a new entrant into the cryptocurrency field, Vlad Tenev, co-CEO of online investment brokerage Robinhood, is following a time-honored business strategy: Undercut the competition. Except he’s taking it to an extreme.
/jlne.ws/2zIdZ8N

Blockchain Wunderkinds: Solving Peripheral Problems, Missing the Big Picture
Streetwise Professor
Ethereum wunderkind Vitalik Buterin delivered a rant against centralized crypto exchanges:
/jlne.ws/2uBkLr1

Coinbase to explore the addition of 5 new crypto-coins to its platform, as bitcoin slips
Mark DeCambre – MarketWatch
Coinbase, the most popular digital-currency platform in the U.S., late Friday said it is exploring adding five new cryptocurrencies to its suite of offerings, which currently includes bitcoin and Ethereum’s Ether.
/jlne.ws/2zEno14

Global regulators start monitoring crypto assets
Huw Jones – Reuters
Global regulators have published a framework for “vigilantly” monitoring risks from crypto assets like bitcoin and ether, even though they don’t pose a major risk to financial stability for now.
/jlne.ws/2zI2xtX

Bitcoin Rises as Biggest Asset Manager Studies Crypto Technology
Todd White – Bloomberg
Leading digital token heads for largest increase in two weeks; BlackRock says it is studying technology behind crypto assets
Bitcoin headed for its largest increase in two weeks on Monday, as BlackRock Inc. became the latest big name to signal an interest in the technology underpinning digital currencies.
/jlne.ws/2uA3I91

Fujitsu’s new blockchain offering: really cheap or really expensive?
Jemima Kelly – FT
Fujitsu, the Tokyo-based IT conglomerate, has been long blockchain for some time. As early as 2015, the company was trialling the technology for cross-border settlements; in 2016 it said it had developed tools for securely sharing documents via the power of the distributed ledger; and in 2017, it built ConnectionChain, a blockchain system for connecting… blockchains.
/jlne.ws/2zJHiYz

Financial Stability Board outlines crypto-assets monitoring framework; FSB report says crypto markets do not currently pose a material risk to global financial stability.
John Brazier – The Trade
The Financial Stability Board (FSB) has published a report outlining its monitoring framework for the financial stability implications of global crypto-asset markets.
/jlne.ws/2uAcRyn

Politics

U.S. and Allies Consider Possible Oil-Reserve Release
Benoit Faucon and Timothy Puko – WSJ
As oil prices climb, President Donald Trump has implored Saudi Arabia and OPEC to pump more oil.
If that doesn’t help curb prices, U.S. and Western officials are discussing another option, according to people familiar with the matter: an emergency release of stockpiled oil around the world.
/on.wsj.com/2JkYB1R

Mueller Charges 12 Russians on Hacking Before Trump-Putin Summit
Tom Schoenberg and Greg Farrell – Bloomberg
Allegations involve Clinton campaign, Democratic emails; Mueller offers deep look at Russian intelligence operation
The U.S. special counsel brought election meddling directly to Vladimir Putin’s doorstep just days before the Russian leader plans to meet with President Donald Trump, charging 12 Russian military intelligence officers with computer attacks meant to undermine the Democratic Party.
/jlne.ws/2uBuNZu

Boris Johnson, Donald Trump and the Rise of Radical Incompetence; Like America’s president, Brexiteers resent the very idea of governing as complex and based in facts.
William Davies – NY Times
“I am increasingly admiring of Donald Trump. I have become more and more convinced that there is method in his madness.” These comments, subsequently leaked, were made last month by Boris Johnson, who was then Britain’s foreign secretary. Never one to discount praise, Mr. Trump reportedly expressed an interest in meeting his “friend” Mr. Johnson during his visit to London this week, noting that Mr. Johnson has been “very, very nice to me, very supportive.”
/jlne.ws/2zIvq95

Trump’s trade war rattles Republicans in an election year; GOP worries about the impact of US trade wars in hard-fought congressional districts
Courtney Weaver – FT
Iowa’s Chuck Grassley has blasted it as potentially “catastrophic”. Tennessee’s Lamar Alexander has attacked it as “a big mistake”. Texas’s John Cornyn has warned that the escalating battle could “escalate out of control”.
/jlne.ws/2uD1C8p

Welcome to Scotland? No Love Lost in Trump’s Ancestral Home
Rodney Jefferson and Justin Sink – Bloomberg
Scottish leaders snub president, who’s staying at his resort; Protesters gather with signs like ‘We Shall Over Comb’
It’s not the kind of greeting Scotland’s tourist brochures advertise, let alone for world leaders.
/jlne.ws/2zHANW6

Trump Lies So Much That Journalists Now Measure Things Like ‘Dishonesty Density’
David Boddiger – Splinter
Only with someone like Donald Trump as president would journalists have to come up with scientific indicators to measure and describe the extent of the president’s dishonesty and untrustworthiness.
/jlne.ws/2zIRwZe

What Game Theory Says About Trump’s Trade Strategy; Under one scenario, the tensions with China could lead to changes in the global economy that favor the U.S.
Mohamed A. El-Erian – Bloomberg erg
Financial markets were of two minds last week about the impact of mounting trade tensions between China and the U.S. On the one hand, the escalating tit-for-tat tariffs still affect only a relatively small part of the two countries’ economies. The consensus baseline remains that the measures should not have a significant and lasting downward impact on the economy and stocks and, ultimately, may help bring about trade that is still free but fairer.
/jlne.ws/2uEz1zl

The Trump Doctrine – coherent, radical and wrong; The US president’s worldview puts economics ahead of ideals and values
Gideon Rachman – FT
Since the end of the second world war, there has been a remarkable consensus within the US establishment about foreign policy. Republicans and Democrats alike have supported a global network of American-led alliances and security guarantees.
/jlne.ws/2zI2LRB

Regulation

BoE’s query of non-Big Four auditor for Goldman attacked
Caroline Binham – Financial Times
Parliamentarians from three different select committees have fired a broadside at the Bank of England over a seeming reluctance to allow banks to use auditors outside the Big Four.
The chairmen of the joint committees scrutinising the collapse of Carillion, the outsourcing group, wrote to the BoE’s Prudential Regulation Authority laying out that the PRA’s apparent position is at odds with wider moves ó including through EU legislation ó to try to break the monopoly of the Big Four accounting firms.
/on.ft.com/2Lcab0L

Convicted Trader Cries Foul at Nickname That Got Lost in Translation
Gaspard Sebag – Bloomberg
Former Barclays swaps trader spoke in interview before verdict; Said he wasn’t willing to gamble with his life in London court
Until a month before his London fraud trial began, Philippe Moryoussef felt confident he would prevail in court.
/jlne.ws/2zS7WPh

FCA floats ban on exit fees for online investment platforms; Financial watchdog raises concern on difficulty in switching services
Kate Beioley – FT
The UK financial watchdog could ban online investment platforms like Hargreaves Lansdown from charging exit fees after raising concerns they make it too difficult for customers to switch away from their services.
/jlne.ws/2zJHjvJ

Rise of green investing triggers rethink on disclosure; Demand grows for more nuanced scrutiny of ESG opportunities amid standardisation push
Kate Allen – FT
As the market for environmental and social investing becomes more prominent, investors are rethinking how they assess the non-financial effects of the companies they back ó a process set to swell the pool of green assets available.
/jlne.ws/2zKKZNK

Steve Young’s private equity firm accused of covering up fraud
Josh Kosman – NY Post
NFL great Steve Young is feeling the heat – and this time, it’s not from a 300-pound defensive lineman. The private equity firm the Hall of Fame quarterback co-founded in 2007 – eight years after he retired – stands accused of covering up a massive fraud at one of its companies.
/jlne.ws/2uD6ytQ

ESMA defines standards for the implementation of the Securitisation Regulation
ESMA
The European Securities and Markets Authority (ESMA) has issued today a first set of technical standards under the Securitisation Regulation (SR) containing both draft regulatory and implementing standards (RTS/ITS).
/jlne.ws/2uxGkc6

FINRA Warns Firms of Regulator Impersonators
FINRA
Recently, FINRA has received reports of member firms receiving telephone calls from persons claiming to work for FINRA in an attempt to deceive firms into revealing confidential information. FINRA is notifying firms that these individuals may be impersonators. Firms that receive telephone calls or emails purportedly from someone at FINRA requesting any type of informationóconfidential or otherwiseóshould use caution and verify the identity of the caller or sender before providing any information or responding to an email.
/jlne.ws/2zPdIBc

FCA proposes actions to improve competition in the investment platform market
UK FCA
Competition is working well for most consumers using investment platforms, according to interim findings of the Financial Conduct Authority’s market study into investment platforms, published today.
/jlne.ws/2uDIvuz

Investing and Trading

U.S. oil boom delivers surprise for traders – and it’s costly
Julia Payne, Devika Krishna Kumar, Dmitry Zhdannikov – Reuters
The world’s biggest oil traders are counting hefty losses after a surprise doubling in the price discount of U.S. light crude to benchmark Brent WTCLc1-LCOc1 in just a month, as surging U.S production upends the market.
/jlne.ws/2zKgvva

As Marijuana Goes Mainstream, Investors Rush In
Ken Belson – NY Times
The cannabis industry is growing and, naturally, investors are taking notice.
With 30 states and the District of Columbia having legalized the use of the drug for medicinal or recreational use, the stock prices of the companies that grow, process and sell marijuana have been rising.
/nyti.ms/2Jm3GXI

Colombia’s coffee is in danger. These scientists are fighting to save it; Cenicafe, dubbed the NASA of coffee, is leading the fight against fungi and pests threatening the crops of the 500,000 family-run farms in Colombia.
Andrew Wight- NBC
Deep in the Andes mountains, the Cenicafe research institute is ground zero for an evolutionary and economic arms race to keep coffee flowing from Colombia into the cups of consumers across the world.
/jlne.ws/2uCZJZg

BlackRock CEO Fink Says Tariff War Could Spur Broad Market Rout
Annie Massa and Erik Schatzker – Bloomberg
Market having ‘hard time digesting’ globalization, trade; Investors pulled $22.4 billion from the firm’s equity products
BlackRock Inc. Chief Executive Officer Larry Fink said that intensifying global trade tensions may spur a broad market downturn and a slowdown in the U.S. economy.
/jlne.ws/2uE37CZ

How activist investing is changing
FT
Last year more than $62bn was deployed by activist investors on their campaigns, double the amount spent in 2016. And activism is changing. In the US, the number of proxy fights has fallen to a five year low. So why are campaigns becoming less confrontational?
/jlne.ws/2zET8Da

Long-term investors are not the enemy for European company chiefs; With buyout funds on the prowl there is a benefit in engagement
Tawhid Ali and Andrew Birse – FT
For too long equity investors have been reluctant to engage with European management teams. European chief executives have not made it easy, but with buyout funds on the prowl, it’s time for a constructive dialogue to begin.
/jlne.ws/2uyx5bu

University of Oxford launches first algo trading course; Algorithmic trading programme will look at trading systems, the rules driving algo trading success and building trading models.
Hayley McDowell – The Trade
The first algorithmic trading programme has been established by the University of Oxford’s business school aimed at teaching traders about systematic trading strategies.
/jlne.ws/2uyz3so

Institutions

Profit Gains at JPMorgan, Citigroup Reflect a World in Growth Mode
Emily Glazer and Christina Rexrode – WSJ
Loan growth helped JPMorgan Chase and Citigroup Inc. post double-digit profit increases in the second quarter, reflecting solid economic fundamentals in the U.S. and abroad.
/on.wsj.com/2JlOB8o

Wells Fargo’s loan book shrinks, profit misses estimates
Imani Moise – Reuters
Wells Fargo & Co (WFC.N) said on Friday its loan book shrank and it raked in less fee revenue than a year ago, factors that contributed to lower-than-expected quarterly profit and sent its shares lower.
/reut.rs/2Jj91Pq

How a Tiny Bank From the Ozarks Got Big and Outpaced Wall Street’s Real Estate Machine; An Arkansas bank has become one of America’s top construction lenders. Does it know something the giants don’t?
Peter Robinson – Bloomberg
George Gleason isn’t one of those chief executives who make the job look easy. Rather, he’ll tell you (and tell you) it’s hard. Not up-at-dawn hard. Up-at-midnight hard. That’s when he got out of bed to write the remarks for his bank’s first-quarter earnings statement, finally hitting “send” one March morning at 5:30 from a hotel room in Washington, after a full week of client meetings on the road. Gleason, who runs Bank of the Ozarks, an institution in Little Rock with $22 billion in assets, even makes being interviewed look hard. In response to an emailed list of questions, he composed five pages of answers in red, then referred to the printout frequently when we met at the bank’s headquarters in April. “I should have numbered these pages,” he said.
/jlne.ws/2uB7Oxp

Own goal: how AC Milan’s Chinese owners lost control to a US hedge fund; Complex debt arrangement in acquisition of club became key to ownership
Rachel Sanderson,, James Fontanella-Khan, Robert Smith and Murad Ahmed – FT
Li Yonghong looked victorious as he held up an AC Milan shirt outside the San Siro, the Italian club’s home ground and one of the great cathedrals of European football.
/jlne.ws/2zJkKah

How Goldman Sachs Lost the World Cup; The investment bank’s sophisticated model to predict game results didn’t even come close.
Leonid Bershidsky – Bloomberg
Goldman Sachs’ statistical model for the World Cup sounded impressive: The investment bank mined data about the teams and individual players, used artificial intelligence to predict the factors that might affect game scores and simulated 1 million possible evolutions of the tournament. The model was updated as the games unfolded, and it was wrong again and again. It certainly didn’t predict the final opposing France and Croatia on Sunday.
/jlne.ws/2zPvDHA

How a $139 Billion Fund Is Trading the Trade War
Ruth Carson – Bloomberg
AMP Capital started buying long-end U.S. debt six weeks ago; “The best is probably behind us,” Ilan Dekell says of growth
In a bid to beat the trade war, a $139 billion Australian investment manager is using 30-year Treasuries as its weapon of choice.
/jlne.ws/2zP1CIi

Banks Are Facing a Squeeze From Trump’s Trade War
Alfred Liu and Emily Cadman – Bloomberg
Trade finance revenue already at lowest level in eight years; ‘Very challenging’ for banks in Asia trying to grow business
For banks that finance trade in Asia, the tariff war between the U.S. and China couldn’t come at a worse time.
/jlne.ws/2uEVA6Y

Big Banks Reshape Lobbying Game; New Bank Policy Institute will represent JPMorgan, Bank of America and 46 others
Lalita Clozel – WSJ
Big banks are revamping their lobbying approach as Trump-appointed regulators set out to ease rules put in place after the financial crisis.
/jlne.ws/2zIQ8pA

Deutsche Bank Surprises With Profit Beat Welcomed by Investors
Steven Arons – Bloomberg
Bank says both net income and revenue better than expected; Shares jump most in more than two years after early results
Deutsche Bank AG surprised investors with second-quarter earnings that were higher than analysts had expected, driving one of Europe’s worst-performing bank stocks up the most in more than two years.
/jlne.ws/2uzKQqB

Deutsche Bank profits surpass market expectations; German lender releases bumper second-quarter results 9 days ahead of schedule
Laura Noonan – FT
Deutsche Bank made twice as much money as analysts expected in the second quarter of the year, offering a reprieve for the lender and a boost to new chief executive Christian Sewing after an unrelenting run of bad news.
/jlne.ws/2uzM9G1

Regions

Trump Is Misjudging China’s Resolve on Trade; You can’t defeat an opponent you don’t understand.
Michael Schuman – Bloomberg
Donald Trump’s strategy in his trade war with China boils down to inflicting sufficient economic pain to eventually force Beijing’s leaders into concessions the president wants ó whatever those may be. That’s the obvious purpose of the tariffs he plans to impose on another $200 billion of Chinese-made goods.
/jlne.ws/2zEV6n2

How Venezuela Became China’s Money Pit; Beijing is reportedly throwing good money after bad to the Latin American producer, but it has its reasons
Spencer Jakab – WSJ
The world oil market is notoriously quick to react to headlines, but a seemingly significant one last week from the owner of the world’s largest reserves didn’t cause so much as a blip.
/jlne.ws/2uDTlkx

Finnish Newspaper Targets Trump And Putin With Giant Billboards Lauding Free Press
Willa Frej – Huffington Post
President Donald Trump and Russian President Vladimir Putin were welcomed to Helsinki, Finland, with a potent message about the importance of press freedom ahead of their bilateral summit.
/jlne.ws/2uBXSE4

Germany: We can no longer fully rely on U.S. White House
Reuters
Germany’s foreign minister said on Monday Europe could not rely on Donald Trump and needed to close ranks after the U.S. president called the European Union a “foe” with regard to trade.
/jlne.ws/2uDXy7z

China Can Hit U.S. Tech Where It Hurts in Tariff Response
Gerrit De Vynck, Ian King and Mark Gurman – Bloomberg
Apple, Nvidia, Broadcom get more than 20% of sales from China; China has used boycotts, regulation against others in the past
President Donald Trump’s latest move to ratchet up tariffs on Chinese goods raises the specter that China could strike back by tripping up U.S. companies doing business in the Asian nation — and tech is especially vulnerable.
/jlne.ws/2zI1rOJ

China Stocks at Record Lows Make Case for $941 Billion Fund
Bloomberg News
CIC said to seek approval to invest in domestic market; Senior wealth fund executive cited ‘good opportunities’
China’s sovereign wealth fund has expressed a desire to invest in the domestic market as stock valuations have hit multiyear lows, underscoring how coming home may bring it new opportunities to boost returns.
/jlne.ws/2zEwwCZ

Frontier funds can rival ESG. Let’s pay them more attention; Doubt over MSCI index puts spotlight on sector with high returns since 2010
Steve Johnson – FT
Making money ó both for itself and, on occasion, even for customers ó is no longer enough for the asset management industry.
/jlne.ws/2uBgG6b

Brexit

British Leader’s Brexit Plan Imperiled by Conservative Hardliners; Some Conservative Party lawmakers seek a harder break with the European Union than Prime Minister Theresa May proposes
Will Horner – WSJ
The future of British Prime Minister Theresa May’s Brexit plan hangs on a kernel of hard-liners within her own Conservative Party devoted to ending the influence of the European Union in the U.K.
/jlne.ws/2zL8jek

Theresa May rules out second Brexit referendum; UK prime minister says there will not be a new vote under ‘any circumstances’
Jim Pickard – FT
Downing Street has ruled out a second referendum on Brexit under “any circumstances,” in a blow to those pushing for Britain to remain in the European Union.
/jlne.ws/2zF6ZcY

Miscellaneous

A Crisis Management Guru Bungles a Crisis
David Segal – NY Times
When Sir Alan Parker was appointed chairman of Save the Children U.K. in 2008, he must have seemed like the perfect choice. As the founder and head of Brunswick Group, one of the most successful corporate public relations firms in the world, he had connections with chief executives, celebrities and media moguls as well as politicians on both sides of the political divide. Charming and boyishly effusive, he earned millions leading a business that now has 1,000 employees in 14 countries, all of them shaping narratives for companies in the public eye.
/jlne.ws/2uD7OgC

Arsenal Gets Entangled in Suspected Fraud at Chinese Carmaker
Bloomberg News
Carmaker asks police to investigate person posing as employee; Person struck unauthorized advertising deals: carmaker BYD
London soccer club Arsenal got entangled in a suspected fraud involving a Chinese carmaker, which says it was duped by a person posing as an employee who signed unauthorized contracts with advertising partners.
/jlne.ws/2uyv7rC

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

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

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