Japanification – Investors fear malaise spreading globally; Wall Street Preps for End of LIBOR

Aug 27, 2019

First Read

Hits & Takes
JLN Staff

The uber talented Spencer Doar has given his notice to John Lothian News and accepted a position in the financial services industry in public relations. We are sorry to see Spencer go, but happy for him and this next chapter of his career. We wish him the very best and look forward to seeing him around the industry for years to come.~JJL

Spencer started with JLN based on a referral from then CME Group CEO Phupinder Gill. We hired him as an intern and he stuck around and continued to grow and develop into a highly skilled reporter, on camera talent and storyteller.~JJL

John Lothian News has reached a verbal agreement with Eurex to shoot our Industry Leaders video series in their booth space at the FIA EXPO in Chicago in October. Please contact me if your organization wishes to participate in the series.~JJL

John Lothian News will also be conducting a man on the street series during EXPO where we visit different exhibit hall booths and interview company’s representatives right in their booths. We are seeking firms interested in participating in this and sponsors for the series.~JJL

Last night my two Scouts BSA troops held a court of honor for the Scouts to be recognized for rank advancement and merit badges they have earned. The girls of Troop 117G earned 72 merit badges and they boys of Troop 117B earned 29. Five girls earned the rank of First Class, which normally takes a year of active Scouting to get. These girls did it in six months. Some of the girls attended three different Scout summer camps. They are loving Scouting.~JJL

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The Power of “Money Talk”
MarketsWiki Education
In this video from MarketsWiki Education’s World of Opportunity event in Chicago, Women’s Money Lab Co-Founder Nancy Kaplan emphasizes how crucial it is, in particular for women, to talk about money and to establish money goals. It has been shown that talking about debt and money is more difficult for people than talking about other typically taboo topics like drugs.
Watch the video »

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Maybe Warren Buffett Is Warning Us About Something; He’s been awfully quiet about stocks, but his mountain of cash sends a distressing signal.
Mark Gongloff – Bloomberg
“If you can’t say something nice, don’t say anything at all” is advice Warren Buffett seems to be applying to the stock market.
/bloom.bg/2Zh7GW5

**** This also popped up on my news search and seems in line with the article above: Insiders are selling stock like it’s 2007. ~JB

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CFTC Commissioner Dan M. Berkovitz Seeks Energy and Environmental Markets Advisory
Committee Associate Member Nominations and Public Comment on Committee Priorities
CFTC
U.S. Commodity Futures Trading Commission Commissioner Dan M. Berkovitz, sponsor of the Energy and Environmental Markets Advisory Committee (EEMAC), is seeking nominations for EEMAC Associate Members through a formal request for submissions in the Federal Register. Commissioner Berkovitz is also inviting the public to submit potential topics for future EEMAC meetings. The deadline for both submissions is September 20, 2019.
bit.ly/2ZnkslW

*****Do you know someone who should serve and is willing?~JJL

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Column: Are the Fake News Media trying to crash Trump’s economy? Oh, yes. We certainly are.
Rex Huppke – Chicago Tribune
As a member of the news media in good standing, I would like to apologize for desperately trying to tank the American economy by accurately reporting on what’s happening with the American economy.
bit.ly/2ZkLaM3

*****This was the subject and article I wanted to write. Right on the mark.~JJL

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Monday’s Top Three
Our top story of the day was the speculative piece from A-Team Insight Would ICE Really Buy Bloomberg?. Second was the reprint of John Lothian’s 2002 column Lunch with the New CME Chairman Terrence Duffy. Third was The Wall Street Journal piece about CFTC Chairman Heath Tarbert and CFTC commissioners Dan Berkovitz and Rostin Benham in Judge’s Order Puts New CFTC Chairman in Unusual Position

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CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.

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Lead Stories

Japanification: investors fear malaise is spreading globally; Rise in negative-yielding debt accelerates over summer
Robin Wigglesworth – FT
Fears over recession are once again stalking markets, but many investors and analysts are more worried about a deeper, more structural shift: that the world economy is succumbing to a phenomenon dubbed “Japanification”.
/on.ft.com/2Nz9LWs

Wall Street Prepares for the End of a Crucial Benchmark
Lananh Nguyen and Alex Harris – Bloomberg
Reference rate’s phase-out still more than two years away; Yet firms already building out specialized transition teams
Libor is dying, warn global regulators, and there’s nothing banks can do to stop it. Their only choice is to prepare for the end. That’s where Jason Granet comes in. Plucked from Goldman Sachs Group Inc.’s asset-management unit last year, he now leads a group of bankers and lawyers working day in and day out to ready the lender for the fateful day — still more than two years away — when the world’s most important reference rate is set to be phased out.
/bloom.bg/2Zm0lVl

Eurex Group sees 235,000 ESG futures traded since launch; Eurex Group introduced ESG futures in Europe in February this year, and shortly after rolled the derivatives out in the US.
Hayley McDowell – The Trade
Eurex Group has traded 235,000 environmental social government (ESG) futures and recently hit EUR782 million in open interest in Europe, just six months after the derivatives were launched.
bit.ly/2ZeMXlI

The Paradox of the Pre-Trade Cost Model
Quantitative Brokers
QB’s clients are very interested in pre-trade transaction cost estimates, with good reason: As financial markets get more efficient and alpha signals get more fleeting, transaction costs are often one of the largest determinants of investment success. A good understanding of likely costs for a proposed trade can be an important ingredient in making and adjusting trade decisions. Questions such as “how large a trade can we do”, or “what time horizon should we set”, or even “does this trade have a strong enough alpha to overcome the transaction costs” can all be systematically evaluated using a good pre-trade cost model.
bit.ly/2zsQNbv

Energy data firm Genscape sold to Verisk for $364m; Sale is part of move by Daily Mail and General Trust to narrow portfolio
Gregory Meyer – FT
Genscape, a US company that helped lift the curtain on opaque energy markets, is being sold by owner Daily Mail and General Trust in the latest deal to consolidate the business of commodity flows data.
/on.ft.com/2NvM7tX

Ordinary savers should be allowed to invest in private equity; SEC should ease restrictions and permit retail clients to use funds of funds
Hal Scott – FT
Despite all the attention that is paid to the ups and downs of the big stock indices, private markets are where much of the action is.
/on.ft.com/2NBbSZU

Digital Currency Execs: Bakkt’s Imminent Launch Signals Institutional Participation In Crypto
Tanzeel Akhtar, Benzinga
Digital Currency Execs: Bakkt’s Imminent Launch Signals Institutional Participation In Crypto
Bakkt, a subsidiary of New York Stock Exchange owner Intercontinental Exchange, has finally announced a launch date for its physically delivered Bitcoin Futures: Sept. 23.
bit.ly/2Zm3VPa

MarketAxess Boosts Streaming Liquidity
GlobalTrading
Chris Concannon, president and chief operating officer of MarketAxess, said streaming liquidity has a place in the corporate bond market as the electronic fixed income venue provider acquired LiquidityEdge, an electronic venue for trading US Treasuries.
MarketAxess last week announced an agreement to buy LiquidityEdge for $150m.
bit.ly/2zlL4Ex

Teaser Rates Come to Crypto as Binance Starts Lending Business
Olga Kharif – Bloomberg
Exchange guarantees returns as high as 15% for limited period; Offer is for 14-day period on BNB, Tether and Ethereum Classic
Binance is guaranteeing returns as high as 15% to customers who lend their cryptocurrencies, the latest move by the largest digital exchange to cement its dominant market position.
/bloom.bg/325FfHy

Nominations now open for The TRADE’s Rising Stars of Trading and Execution 2019; Nominations for this year’s Rising Stars awards are now open and will run until 7 October, with winners announced on 21 October.
John Brazier – The Trade
The TRADE’s Rising Stars of Trading and Execution Awards returns for its fifth year, recognising the most promising up-and-coming talents in trading.
bit.ly/2ZkGTrZ

The World’s Best-Performing Hedge Fund Is Up 278% This Year
David Ramli – Bloomberg
Vanda has average annualized return of 40% since inception; Chong invests in often volatile exchange-traded futures
Three years ago, Chong Chin Eai watched Donald Trump’s shock election victory roil markets. His months-old Vanda Global Fund Ltd., founded with $24 million from friends and family, was down more than 50%. At his nadir, Chong considered using his own savings to cover investors’ losses and shut up shop.
/bloom.bg/2ZmEayk

SEC’s Jackson Says He’ll Stay for Now as Successor Talk Heats Up (1)
Bloomberg Law
SEC Commissioner Robert Jackson isn’t ready to leave the agency just yet, even though work to find his successor is well underway.
bit.ly/2ZkAJbw

Exchanges, OTC and Clearing

Prosecutors raid Deutsche Boerse offices over share-trading scam
Public prosecutors on Tuesday raided offices of German exchange operator Deutsche Boerse (DB1Gn.DE) as part of a broader investigation into a fraudulent share-trading scheme, Cologne public prosecutor’s office said. A Deutsche Boerse spokesman confirmed that offices of its Clearsteam subsidiary were searched, adding that the investigation was focused on both clients and staff.
/reut.rs/30BtvME

*****This is significant news, but this is a short story with more details needed. Thus, we underplayed this story in the Exchange section rather than sharing it higher in JLN.

Argus to launch Singapore bunker fuel derivative contract on CME
Reuters
Oil price reporting agency Argus is launching a Chicago Mercantile Exchange (CME) listed Singapore marine fuels future contract on Monday, catering primarily to suppliers and end-users of the fuel.
/reut.rs/2zqd9KZ

Unscheduled adjustment in MDAX; Axel Springer SE leaves the index / changes take effect on 29 August
Deutsche Boerse Group
STOXX Ltd. announced an unscheduled change in the MDAX index on Monday. With the acquisition of Axel Springer SE by Traviata II S.‡.rl, the free float is reduced to 5 percent. According to the Guide to the DAX Equity Indices , the shares of Axel Springer SE are therefore removed from the MDAX index.
bit.ly/2ZkCXHK

Fintech

Whatfore Art Thou Use of Alt-data?
Bill Kelly – AllAboutAlpha
Shakespeare’s Juliet once famously asked “what’s in a name?” If you know the play, she was talking about roses and how they would smell as sweet, even if they had an alternative name. Would her modern-day self not ask the same about data? And what makes today’s alt-data different from plain old data, such as the Cuneiform writings developed by the Sumerians of Mesopotamia circa 3500 BCE?
bit.ly/2zkFlyK

JPMorgan Details Next-Gen FX Trading Algos
Victor Golovtchenko – Finance Magnates
With the ever growing electrification of the foreign exchange market, the use of machine learning tools is gathering speed and changing the landscape once more. While early versions of algorithms have been mostly comprised of buy and sell orders with relatively straight forward parameters, the evolution of a truly quantitative approach towards market making is making strides in the eFX space.
bit.ly/2zoLOsE

TRADERS Q&A: Arturs Ivanovs, FIC Network
GlobalTrading
Of the various well-established asset classes that could integrate blockchain technology the easiest, fixed income has received the greatest attention in the past couple of years. Traders Magazine’s sister publication IntelAlley caught up with Arturs Ivanovs, founder & CEO of FIC Network, to discuss the bond market’s reaction to the new technology.
bit.ly/2zkeenD

ASX, Digital Asset and VMware sign blockchain technology agreement; ASX, Digital Asset and VMware are looking to extend the use of blockchain technology in financial services in Australia and New Zealand.
Hayley McDowell – The Trade
The Australian Securities Exchange (ASX) has teamed up with Digital Asset and VMware to explore the wider applications of blockchain technology across financial services.
bit.ly/2ZkLzyd

Cryptocurrencies

Binance enters into crypto lending space, offers interest-earning opportunities for BNB, ETC and Tether
Yogita Khatri – The Block
The world’s largest cryptocurrency exchange Binance has ventured into lending space, according to an announcement Monday. The new offering, dubbed “Binance Lending,” allows holders of BNB token, Ethereum classic (ETC) and Tether (USDT) stablecoin earn interest on their funds. The service will be available on a first-come, first-served basis, starting from 6:00am UTC on Aug. 28 to 12:00am UTC on Aug. 29.
bit.ly/30zMVBy

Overstock loses investor in tZERO following founder Patrick Byrne’s departure
The Block
In an investor call on Monday with shareholders, Overstock Interim CEO Jonathan Johnson provided an update on the status of Makara Capital’s potential investment tZERO, the firm’s security token exchange. According to Johnson, Makara has informed Overstock that “it will not be investing in tZERO right now, but it remains excited about what tZERO is building and we will revisit it investments decision as tZERO progresses.”
bit.ly/30CVRWK

In first, Swiss regulator issues banking license to two blockchain firms
The Block
Switzerland’s Financial Market Supervisory Authority (FINMA) has issued banking and securities dealers’ licenses to two new blockchain firms – SEBA Crypto and Sygnum. The regulator announced the news on Monday, saying that this is the first time it has issued such licenses to “pure-play blockchain service providers. The licenses will allow SEBA Crypto Sygnum to provide services to institutional and professional customers.
bit.ly/30CG4Y5

Judge Recommends Ruling in Favor of Kleiman in Craig Wright Case
Nikhilesh De – Coindesk
Craig Wright must turn over half of his bitcoin holdings and intellectual property to the estate of Dave Kleiman, a judge ruled Monday. The ruling applies to holdings and IP from before 2014. Magistrate Judge Bruce Reinhart recommended that plaintiffs be awarded 50 percent of the bitcoin that Wright held prior to Dec. 31, 2013, as well as 50 percent of the intellectual property that Wright owned prior to Dec. 31, 2013, according to an individual familiar with the case.
bit.ly/2U7lYD6

Roger Ver – Backed CoinFlex Exchange Is Taking Aim at BitMEX Futures Market
William Foxley – Coindesk
A cryptocurrency exchange claiming to settle bitcoin futures contracts physically just landed $10 million in financing from Polychain Capital and Bitcoin.com chairman Roger Ver, among others. The exchange, CoinFlex, launched in February of this year and says it is the first exchange to close futures contracts in bitcoin as opposed to a cash settlement. Speaking with the South China Morning Post, CoinFlex CEO Mark Lamb said the bitcoin futures market needs physical settlement due to price manipulation.
bit.ly/30De5HE

Telegram’s 300 Million Users Could Soon Be Trading Bitcoin And CryptoóDespite Serious Security Warning
Billy Bambrough – Forbes
Bitcoin’s bull run so far this year, which has seen the bitcoin price climb some 200% since January, has been largely put down to some of the world’s biggest technology companies taking an interest in bitcoin and cryptocurrencies.
bit.ly/2NxA1QY

The Winklevoss twins say Wall Street is ‘asleep at the wheel’ with how it views bitcoin and other cryptocurrencies
Ben Winck – Business Insider
Cameron and Tyler Winklevoss ó of Facebook founding fame ó told CNN Wall Street is “asleep at the wheel” regarding cryptocurrency. When asked about governments’ fears around digital coins like Facebook’s upcoming Libra currency, Tyler said the concerns aren’t “a unique problem to bitcoin or crypto.” The twins launched the Gemini cryptocurrency exchange in 2015 with the goal of bringing regulation to the volatile assets.
bit.ly/33XL4IU

Former Morgan Stanley Asia FX spot and derivatives head joins crypto trading firm; Jeffrey Wang, a former Morgan Stanley trading executive, will lead business development and operations in the Americas for Amber Group.
Hayley McDowell – The Trade
Hong Kong-based cryptocurrency trading and technology specialist Amber Group has appointed a former Morgan Stanley executive to lead its business in the Americas region.
bit.ly/2ZjYL6b

Third-Biggest Crypto Coin Barely Causes a Ripple Amid Rally
Olga Kharif – Bloomberg
Ripple’s selling of XRP weighs on price, prompting a petition; Company disputes increase in sales, saying it’s scaling back
Amid the astonishing recovery this year by most of the world’s biggest cryptocurrencies, one stands out.
/bloom.bg/2ZgZGEF

Loom Launches ‘CryptoZombies’ Tutorial to Get Coders on Facebook’s Libra
Brady Dale – Coindesk
Want to learn how to work with Facebook’s Libra blockchain? Do it with zombies. The team at Loom is releasing a new, free CryptoZombies course. It’s designed so that anyone can learn the basics of working with the Libra codebase that Facebook has already released.
bit.ly/2ZmLlqg

Politics

Trump and the Art of the Flail; Protectionism is worse when it’s erratic and unpredictable.
Paul Krugman – NY Times
The “very stable genius” in the Oval Office is, in fact, extremely unstable, in word and deed. That’s not a psychological diagnosis, although you can make that case too. It’s just a straightforward description of his behavior. And his instability is starting to have serious economic consequences.
/nyti.ms/2ZkKEOh

A Primer on the Future of Fannie, Freddie; What to expect from the Trump administration’s housing-finance overhaul
Andrew Ackerman – WSJ
The Trump administration is close to releasing a blueprint for overhauling Fannie Mae and Freddie Mac two companies that back half of the nation’s $10 trillion mortgage market. The firms have been in government conservatorship since the 2008 financial crisis, and administration officials say it is time to return them to the private sector.
/on.wsj.com/2ZjXlbR

After 24 Hours, China Still Unaware of Calls Mentioned by Trump
Bloomberg News
China declined to confirm phone calls with the U.S. that President Donald Trump claimed happened over the weekend, during which Trump said China indicated it wanted to work toward a trade deal.
/bloom.bg/2ZnfBRK

In Trump’s Tweet-Speed Market, Facts Take Back Seat to Hope
By Liz McCormick, Sarah Ponczek, and Marton Eder – Bloomberg
President’s inconsistent comments on China whipsawed markets; But Treasuries have been steadfast with a recession warning
It wasn’t that long ago that U.S. markets felt simple. The rules were so straightforward they’d become cliches: Don’t fight the Fed. Don’t try to catch a falling knife. Buy — when there’s blood in the streets — and hold.
/bloom.bg/2ZraVKV

Trump Has Added an Element of Randomness to Markets; Investors have finally started to take the president’s Twitter feed seriously. Also, another recession indicator flashes red.
By John Authers – Bloomberg
Like many others who earn their living prognosticating markets, I try my hardest to keep from handicapping political developments and their influence on markets. But it’s no longer possible to avoid politics when commenting on markets. Blame Donald Trump’s Twitter feed.
/bloom.bg/2ZrbhRL

Trump’s Grifting Mocks the Rule of Law; Once again, the president is trying to use his office to enrich himself.
By Jonathan Bernstein – Bloomberg
It’s hardly a surprise at this point that Donald Trump is using his presidency for personal profit. In the most recent example, he’s been floating the possibility of hosting the Group of Seven summit at one of his golf clubs next year, complete with high-profile presidential endorsements of the supposed virtues of the site. As Greg Sargent says, this is the “one bedrock principle, one unshakable constant in Trump’s conduct, from which he will never waver.”
/bloom.bg/2ZkO4AB

Trump Shifts Tone on China But Not Tactics as Deal Grows Distant
By Shawn Donnan, Jennifer Jacobs, and Josh Wingrove – Bloomberg
President misreads statement from China, analysts say; Shrugs off criticism that his trade wars causing uncertainty
President Donald Trump left the G-7 summit on Monday taking a softer tone toward China, just days after spooking financial markets with another escalation in their trade war. Yet amid all the soothing words, Trump made it clear that he wasn’t abandoning his rough and tumble tactics to force a trade deal on China.
/bloom.bg/2ZnB1OP

Trump’s Tweets Are Giving the Market Whiplash and That’s the Point
By Randall W. Forsyth – Barron’s
“You cannot be serious!” John McEnroe’s famous rant still resonates as the U.S. Open begins this week at the Billie Jean King National Tennis Center in Queens. His antics upset the propriety that then was the rule at Wimbledon and throughout the genteel game.
bit.ly/2ZiAJc0

Regulation

Reminder – Third CTCI Migration Production Test for TRACE and ORF
FINRA
FINRA currently supports three methods for the reporting of transactions to its TRACE and Over-The -Counter Reporting (ORF) products – FIX, Computer-to-Computer Interface (CTCI) and TRAQS. As announced in August 2018 beginning in early first quarter 2020, FINRA will no longer support the CTCI protocol (CTCI/TCP; CTCI/MQ) for both TRACE and ORF transaction reporting. Any client, including Service Bureaus, that currently utilizes CTCI and wishes to continue to deliver electronic transactions (i.e., not via TRAQS) needs to migrate to the FIX protocol by Monday, February 3, 2020.
bit.ly/326SKqB

Bundaberg financial adviser banned for four years
ASIC
ASIC has banned Bundaberg-based financial adviser Peter Goudie from providing financial services for four years. This follows an ASIC surveillance of Mr Goudie’s activities when he was an authorised representative of Risk and Investment Advisors Australia Pty Ltd and National Australia Bank-owned GWM Adviser Services Pty Ltd.
bit.ly/2Zkrt7c

Reminder – Third CTCI Migration Production Test for TRACE and ORF
FINRA
FINRA currently supports three methods for the reporting of transactions to its TRACE and Over-The -Counter Reporting (ORF) products – FIX, Computer-to-Computer Interface (CTCI) and TRAQS. As announced in August 2018 beginning in early first quarter 2020, FINRA will no longer support the CTCI protocol (CTCI/TCP; CTCI/MQ) for both TRACE and ORF transaction reporting. Any client, including Service Bureaus, that currently utilizes CTCI and wishes to continue to deliver electronic transactions (i.e., not via TRAQS) needs to migrate to the FIX protocol by Monday, February 3, 2020.
bit.ly/326SKqB

2019 Military Spouses Receive Fellowships to Conduct Financial Counseling
FINRA
Military service members and their families often face unique financial challenges complicated by frequent moves, cost of living adjustments and un- or underemployment of military spouses. In an ongoing effort to increase the financial capability of military families, the FINRA Investor Education Foundation awarded 2019 FINRA Foundation Military Spouse Fellowships to 50 military spouses seeking to earn the AFCÆ (Accredited Financial CounselorÆ) designation.
bit.ly/2ZkDQjy

New Zealand Financial Markets Authority: Bay Of Plenty Women Urged To Take Financial Investing Power Into Their Own Hands
Mondovisione
There is a large investing gap in New Zealand between men and women. As Mary Holm, one of New Zealand’s most trusted money experts says, “In many ways women are better investors than men. So how come we often end up with lower savings?”
bit.ly/2Zm52yr

Mifid redux? Esma insists on LEIs for repo collateral; Mifid-style ruling will bar firms from using securities without identifiers in financing transactions
Samuel Wilkes – Risk.net
European regulators are turning to an old trick to boost the adoption of legal entity identifiers (LEIs) – a ‘barcode for finance’, designed to improve trade reporting.
bit.ly/2Zksg8a

Australia plans more action against big banks on money laundering
Reuters
Australia’s big banks will face potential penalties within the next six months for breaching money laundering laws, Australia’s financial intelligence agency head said on Tuesday.
/reut.rs/2ZggPye

Investing and Trading

U.S. Glut in Natural-Gas Supply Goes Global; In a blow to producers, prices in Europe and Asia plummet to historic lows
Ryan Dezember – WSJ
More shale gas than ever is leaving U.S. shores. Unfortunately for the country’s beleaguered natural-gas producers, global prices for the fuel have never been lower.
/on.wsj.com/2ZhGA17

RBC, TD in talks to settle allegations that traders used confidential customer information to gain trading advantage; Financial penalties could run up to $1 million per breach
Barbara Shecter – Financial Post
Canada’s two biggest banks are attempting to settle new allegations their traders used confidential customer information to gain a potential advantage in foreign exchange transactions that took place between 2011 and 2013.
bit.ly/2Zk0l87

Three U.S. bond kings wield same strategy, get same result: lag their peers
Jennifer Ablan – Reuters
Three names dominate the U.S. world of bond investing – Jeffrey Gundlach, Dan Ivascyn and Scott Minerd. But funds run by these star investors are lagging their respective benchmarks this year.
/reut.rs/2ZkK039

Forget Stocks, Invest In Stock Exchanges
Jon Markman – Forbes
Digital transformation brings transparency, speed and a world of opportunity to entrepreneurial companies. Intercontinental Exchange, an operator of commodity and stock exchanges, reported spectacular financial results on Aug. 1, and managers have plans to disrupt other lucrative markets soon.
bit.ly/2Zh66nf

Now The ‘Stakeholders’ Want a Raise; Treating non-owners like owners could be expensive for shareholders.
By James Freeman – WSJ
Well, that didn’t take long. Last week this column warned about the consequences after CEOs of many of America’s largest public corporations vaguely agreed to serve “stakeholders” who may not actually own any stakes in the companies. Now at least one member of the Business Roundtable is being called upon to put money behind its new commitment to “deliver value” to people other than shareholders.
/on.wsj.com/2Zh73Ml

ADM has had its fill of ethanol; The CEO appears to have concluded he can’t wait around for the biofuel business to recover.
Joe Cahill – Crain’s Chicago Business
Is now the time to buy into ethanol? ADM hopes somebody thinks so. The Chicago-based agricultural processing giant, the largest ethanol producer until last year, is increasingly eager to exit the business. Once a growth driver, the corn-based fuel has become a drag on ADM’s financial performance.
bit.ly/2ZmmG5d

Institutions

Hedge Fund Performance Gains: Investor Flow Losses
AllAboutAlpha
Global hedge fund assets under management have stayed close to flat for months now. That’s one of the points made in the latest Eurekahedge report. As of July, the AUM is just a little under $2.3 trillion, or roughly where it has been since late last year.
bit.ly/2zrgOba

Slash European stock holdings, Norway’s $1tn oil fund advised; Norges Bank recommends shifting toward greater North American weighting
Richard Milne – FT
The world’s largest sovereign wealth fund should slash its investments in Europe and increase them sharply in North America, according to a recommendation from the managers of Norway’s $1tn oil fund.
/on.ft.com/2Nzal6A

World’s top wealth manager urges clients to sell stocks; UBS recommends customers trim positions as US-China trade dispute weighs on markets
Richard Henderson – FT
The world’s largest wealth manager has turned bearish on stocks, fearing that the latest escalation of the trade fracas between the US and China poses a heightened threat to global markets.
/on.ft.com/2Nz05Lu

Deutsche Bank revamps treasury unit to combat negative rates; German lender combines function with investment operations to put surplus cash to work
Stephen Morris – FT
Deutsche Bank is overhauling its treasury function to put its excess cash reserves to work as European lenders become increasingly squeezed by negative interest rates.
/on.ft.com/2NAgIqk

Norway Wealth Fund Wants to Add $100 Billion in U.S. Stocks
Sveinung Sleire and Mikael Holter – Bloomberg
Fund recommends dropping regional overweight on Europe stocks; Finance ministry says will decide in spring of next year
Norway’s wealth fund proposed overhauling how its holdings are placed across the globe, calling for a shift away from Europe in a move that would allow it to boost its U.S. holdings by as much $100 billion and take a larger chunk of the biggest technology companies.
/bloom.bg/2NzMdAx

Bank of Montreal profit falls short of estimates on higher provision for loan losses
Reuters
Bank of Montreal (BMO.TO) on Tuesday reported a third-quarter profit below market expectations, hurt by higher loan loss provisions.
/reut.rs/2ZgM8sG

Deutsche Bank allegedly hired children of Russian, Chinese officials to win work
Renae Merle, The Washington Post
Deutsche Bank had repeatedly failed to secure work with a Russian government entity when it was approached with a proposal: hire the daughter of a high-ranking official at the organization.
bit.ly/2ZjHPwF

Regions

‘I Would Be Shocked’: $14 Billion Illinois Bond Fight a Longshot
Shruti Singh and Romy Varghese – Bloomberg
Prices show ‘expectation that, ultimately, the suit will fail’; Yields on disputed Illinois bonds only about 0.3% above others
The municipal-bond market is putting long odds on a think-tank chief’s bid to have $14 billion of Illinois debt tossed out in court.
/bloom.bg/321hhgw

Emerging-Market ETF Flows on Brink of Turning Negative for Year
Aline Oyamada – Bloomberg
Investors withdrew $972.3 million in seventh week of outflows; Current sell-off has drained $12.3 billion from EM ETFs
Emerging-market exchange-traded funds flows are on the brink of turning negative for the year after investors extended a sell-off for a seventh consecutive week.
/bloom.bg/3244pGz

Singapore Seen Facing Tide of Distress as Trade War Hits Economy
Denise Wee – Bloomberg
Growth forecast cut to almost zero, recession fears loom; Local currency bonds face record S$12 billion maturing in 2020
Singapore firms are likely to see more soured debt as the trade-reliant economy takes a hit from U.S.-China tensions.
/bloom.bg/327J1A6

China’s clampdown on asset management lending sparks corporate defaults; Companies face pressure to repay borrowings on structured finance products
Don Weinland and Sherry Fei Ju – FT
A big source of easy financing for Chinese companies is coming under pressure, leaving in its wake a string of corporate defaults.
/on.ft.com/2NC15P0

Doubts surface over $10bn Indian foreign currency bond; Critics of proposed issue fear country will be exposed to economic risks
Amy Kazmin – FT
India’s prime minister Narendra Modi’s government delighted yield-hungry global bond markets in July, when it unveiled plans to raise $10bn with its first foreign currency-denominated sovereign bond ó an issue intended to broaden the pool of investors willing to buy Indian paper.
/on.ft.com/2NKKTLB

Default Claims Wipe 40% Off Firm That Once Towered Over Denmark
Christian Wienberg – Bloomberg
Investors just delivered a body blow to a company that was once Scandinavia’s biggest conglomerate. On Monday, the last remnant of the East Asiatic Company of Denmark lost more than 40% of its market value after a key creditor said it breached debt covenants. The development represents an existential threat to EAC, now called Santa Fe Group A/S, and has left in tatters what was once an icon of corporate Denmark.
/bloom.bg/2ZeKFTE

Brexit

U.K.’s Johnson Says He’s More Optimistic About Avoiding No-Deal Brexit
Max Colchester and Bojan Pancevski – WSJ
British Prime Minister Boris Johnson said he felt more optimistic about achieving a Brexit deal and not crashing out of the European Union after spending most of the past week touring Europe, meeting leaders and pitching his proposals to alter terms of the divorce agreement.
/on.wsj.com/329qe7R

Jeremy Corbyn steps up efforts to block no-deal Brexit; Labour hopes to unite opposition parties behind plan with ‘legal bite’
George Parker – FT
Jeremy Corbyn will hold talks with other UK opposition leaders on Tuesday to devise a plan to block a no-deal Brexit, amid signs that he will be forced to abandon hopes of toppling Boris Johnson and succeeding him as a caretaker prime minister.
/on.ft.com/2NzF1EH

No-deal Brexit is more likely than ever; With scarcely more than a week until parliament returns, opponents have not united behind a plan
Bronwen Maddox – FT
Boris Johnson will depart the G7 meetings in Biarritz claiming success. He’s not entirely wrong: there were overtures from his European counterparts that could, if he wanted, lead to a deal with them on the UK’s exit from the EU. To dismiss these possibilities would be a mistake but, as the British prime minister well knows, the chances of a new deal are small.
/on.ft.com/2Nz9CCo

Brexit Got a Lot More Complicated for EU Citizens; The government’s bid to end freedom of movement after Britain’s withdrawal from the bloc puts Europeans in the country at risk.
Yashmeen Serhan – The Atlantic
For the past three years, the more than 3 million European Union citizens living in Britain have been in a state of limbo.
bit.ly/2ZlcWrC

Miscellaneous

The Next Recession Will Destroy Millennials
Annie Lowrey – The Atlantic
The trade war is dragging on. The yield curve is inverting. Investors are fleeing to safety. Global growth is slowing. The stock market is dipping. The Millennials are screwed. Recessions are never good for anyone. A sputtering economy means miserable financial, emotional, and physical-health consequences for everyone from infants to retirees. But the next oneóif it happens, when it starts happeningóstands to hit this much-maligned generation particularly hard. For adults between the ages of 22 and 38, after all, the last recession never really ended.
bit.ly/2PevwgF

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