First Read

JLN Team Arrives in London for MarketsWiki Education Events
By John J. Lothian

Doug Ashburn, Patrick Lothian, RJ Roxas and I have landed in London for this week’s MarketsWiki Education World of Opportunity events at Nasdaq’s offices in the Woolgate Exchange. Jim Kharouf will be following tomorrow.

JLN Managing Editor Sarah Rudolph is leading efforts back in Chicago, with the help of CIO Jeff Bergstrom and Associate Editor Spencer Doar.

We have surpassed the number of sign-ups for last year’s events in London and still have some room for a few more, but not many.

Thank you to all who helped get the word out. We greatly appreciate all your your help. Thank you also to our great lineup of speakers. I can’t wait to hear them all.

Have a great week, wherever you are.


Cubs World Series tickets would be most expensive in history
Bloomberg via Crain’s Chicago Business
Tickets to see the Chicago Cubs play a World Series game at Wrigley Field — if they get there — could cost at least $3,000. And that’s for the cheap seats.

**JK: This story has just jinxed the Cubs, again.


My Plan to Prevent the Next Crash
By Hillary Clinton – Bloomberg View
Seven years after the financial crash, despite important new rules signed into law by President Barack Obama, there are risks in our financial system that could still cause another crisis. Banks have paid billions of dollars in fines, but few executives have been held personally accountable. “Too big to fail” is still too big a problem. Regulators don’t have all the tools and support they need to protect our economy. To prevent irresponsible behavior on Wall Street from ever again devastating Main Street, we need more accountability, tougher rules and stronger enforcement. I have a plan to build on the progress we’ve made under President Obama and do just that.


Igor Gensler Helps the Wicked Witch of the West Wing Create Son of Frankendodd
The Streetwise Professor
Hillary Clinton has announced her program to reform Wall Street. Again.
The actual author of the plan is said to be my old buddy, GiGi: Gary Gensler. Gensler, if you will recall, was the Igor to Dr. Frankendodd, the loyal assistant who did the hard work to bring the monster to life. Now he is teaming with the Wicked Witch of the West Wing to create Son of Frankendodd.

**JK: And just who then, are the flying monkeys?


Rick Tomsic, Tradovate – Building with Vision

“You don’t need 20 years in an industry to have vision. Some of the best ideas come from a unique vantage point. Your vantage point… it’s not jaded. You don’t know how futures technology may be used. You may look at it from a fresh alternative.”

The first step down an unknown path takes guts. But if you’ve calculated your risks, you have a chance for outsized rewards. For Rick Tomsic, CEO of Tradovate, that step meant leaving an established position in a managerial program for an eat what you can kill broker gig. A step further down the road and Tomsic occupied a 12 foot by 12 foot office in a house sporting a gigantic satellite on its roof, sweating buckets due to the large monitors while working his 10 phone lines. But it was what he needed to do to fulfill his eventual goal of building trading technology. In this video, Tomsic imparts the need to maintain your drive by both having fun and maintaining your vision.

Watch the video at »

Sold-Out Hamilton Takes the Singing to the Street
Interest in the smash hit is creating buzz for other Broadway shows, too.
Dimitra Kessenides – Bloomberg
The hottest Broadway show not on any stage is a free, five-minute performance running two to three times a week about two hours before curtain on the sidewalk outside the Richard Rodgers Theatre in New York. There, Lin-Manuel Miranda, the creator of and a lead actor in the rap musical Hamilton, MCs an impromptu performance with guests from his own and other Broadway hits, past and present. “Thank you for coming!” he shouts before introducing his guests. “We’ll be here hopefully for a nice long time, thanks to you, so come back.”

***JK: Word to Hamilton’s motha…


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Notre Dame gets $20 million for global investing institute
Crain’s Chicago Business
University of Notre Dame’s Mendoza College of Business received a $20 million gift for the creation of an Institute of Global Investing, the university announced today.

**JK: Just how long was it before the donors said they went to Notre Dame?


MarketsWiki Education London 2015

Bridging the Week by Gary DeWaal: Spoofing; Politics; Non-Public Information Sharing; Inadequate Disclosures
Alleged spoofing occupied center stage in financial services last week. The Securities and Exchange Commission charged a trader — Eric Oscher — and his firm with spoofing after the trader made complaints to the New York Stock Exchange of spoofing by other traders, while both parties to a criminal case alleging spoofing by Michael Coscia on CME Group exchanges and ICE Futures Europe in 2011 fine-tuned their arguments in anticipation of the commencement of his trial later this month. Meanwhile, a US presidential candidate offered her vision of enhanced regulation of financial services firms and markets, including imposing a transaction tax on firms with excessive levels of order cancellations.


Lead Stories

UK start-up claims blockchain breakthrough in payment processing
Financial Times
A UK start-up has claimed a breakthrough in the financial services industry’s attempts to turn the technology behind bitcoin into a large-scale workable model by processing more than a billion potential payments a day.

Why Do High-Frequency Traders Cancel So Many Orders?
By Matt Levine – Bloomberg
The issue of high-frequency traders who cancel a lot of their orders seems to have been in the news a bit recently, so let’s kind of reason it out from first principles.

Central bank cavalry can no longer save the world
In 2008 central banks, led by the Federal Reserve, rode to the rescue of the global financial system. Seven years on and trillions of dollars later they no longer have the answers and may even represent a major risk for the global economy.

Bond Funds Have Been Borrowing to Boost Returns; The objective: equity-like returns on fixed-income investments.
Tracy Alloway – Bloomberg
For more than two decade, Bill Gross did the seemingly impossible, according to Bill Gross.

UK start-up claims blockchain breakthrough in payment processing
Philip Stafford – FT
A UK start-up has claimed a breakthrough in the financial services industry’s attempts to turn the technology behind bitcoin into a large-scale workable model by processing more than a billion potential payments a day.

Ethical investment can be surprisingly unethical
John Plender – FT
The ESG fund universe covers a very wide spectrum, warns John Plender
Every defined contribution pension plan has a small group of members who want their fund’s investments to reflect their own ethical values. Unfortunately, no two ethically conscious members have the same view of what constitutes an unethical investment worthy of being screened out; nor, again, of what amounts to constructive environmental, social and governance behaviour that can readily be counted in.

Barclays chief says EU banking champion needed to compete with US
Financial Times
The chairman of Barclays has said European investment banks should consider merging to create a regional champion to compete with US rivals, highlighting the anxieties of senior bankers in Europe about their sector’s future.

Fed should not raise interest rates just yet: China Finmin
Now is not the right time for the United States to raise interest rates, given the global economic situation, China’s Finance Minister Lou Jiwei said in an interview published in the China Business News on Monday.
Speaking on the sidelines of the annual meeting of the World Bank and International Monetary Fund in Lima, Lou said developed economies were to blame for the global economic malaise because their slow recoveries were not creating enough demand.

Former UK Treasury chief Geoffrey Howe dies at 88
Gregory Katz, Associated Press
Former British Treasury chief Geoffrey Howe, a prominent figure in Margaret Thatcher’s government who helped bring about her downfall after they parted ways over policy toward Europe, has died at 88.

What Exxon knew about the Earth’s melting Arctic
LA Times
Back in 1990, as the debate over climate change was heating up, a dissident shareholder petitioned the board of Exxon, one of the world’s largest oil companies, imploring it to develop a plan to reduce carbon dioxide emissions from its production plants and facilities.

Watershed moment for female fund employees
Madison Marriage and Sophia Grene – FT
Columbia Threadneedle has become the first fund company to voluntarily disclose the gender breakdown of its workforce in a sign that the investment industry is heeding the example of technology giants Google, Facebook and Amazon.

What Really Caused The Great Recession
Tim Worstall – Forbes
It’s entirely possible that there’s no policy measure that I and Dean Baker would agree upon. However, there is one subject that he has been correct about for some years now. What actually caused the Great Recession? The answer being that no, it wasn’t the banks falling over: that was a symptom, not a cause. The importance of this point is that if we misunderstand what caused the recession then of course we will be misdiagnosing how to make sure that there isn’t another one. And the truth is, as Baker says, that the recession was caused by the crash in the housing market.

US banks build defences against downturn
Ben McLannahan in New York – FT
Wall Street’s biggest banks are beginning to build their defences against downturns, signalling an end to the steady thinning of reserves that has helped boost profits in the past five years.

UBS: Lowest quality high-yield issuers signal downside-growth risk
Sam Ro – Business Insider
A dark corner of the bond market is sending a warning sign about the economy.
“If our analysis is correct, today’s elevated level of US investment-grade and high-yield credit spreads will persist, and default rates may rise materially through 2016,” UBS’s Stephen Caprio said on Wednesday. “The implication for the US economy is that wide credit spreads and ascending downgrade and default risks will increase borrowing costs for US corporates. This signals a downside growth risk to the US economy.”

And now, a brief rant about historic valuation
Joshua M. Brown – The Reformed Broker
Sorry, have to get this off my chest.
One of the dumbest things I’ve seen this entire summer (no small feat) is this thing where Deutsche Bank says that the combination of stocks, bonds and real estate haven’t been as overvalued as they are now in 200 years.

Larry Tabb Says “Hillary’s Plan To Save Wall Street Could Harm Main Street”
While many of the planks in Hillary Clinton’s plan to avoid the next crash on Wall Street have already been rolled out as part of Dodd-Frank or are in the process of being implemented, her proposal shared yesterday on Bloomberg View includes a few wild cards. Depending on how they are implemented, they could have very negative impacts not just on the financial markets, our pensions and retirement plans – but on Main Street as well.

Hillary Clinton’s Excellent Idea For A Wall Street Bank Levy
It’s somewhat unusual for me to find anything palatable in the various economic offerings from the Democratic Party so when we do find one such let me praise it. And so we shall: Hillary Clinton’s proposal for a bank levy on the biggest of the Wall Street Banks is an excellent idea. No, not because it sticks it to The Man, not because Wall Street should get theirs and get it good. Rather because we’ve a macroeconomic problem here, one of systematic risk being posed by those very large banks. And the way to deal with such problems is through the use of a Pigou Tax. Which is just what is being proposed.
We might actually have something here which is both good economics and good politics. A rare combination that is.

Fuld a Big Bore After Avoiding Lehman During Student Talk
Charlie Gasparino – Fox Business
Former Lehman Brothers Chief Executive Dick Fuld has no problem discussing his long career on Wall Street, as long as he can side step what most people view as the defining moment of his career: Fuld’s role in the firm’s 2008 bankruptcy.

The financial habits Americans struggle with most
By Jonnelle Marte, Washington Post
The rules that financial pros say people should follow if they want to build wealth are usually straightforward — pay your bills on time, have cash on hand for a rainy day and invest money for your future.


Regulators to Allow Banks to Continue Using External Credit Ratings for Measuring Risk; Basel Committee’s Stefan Ingves says supervisors will follow path of simplification rather than increasing complexity
The Basel Committee on Banking Supervision will continue allowing banks to use external credit ratings for measuring the risk level of loans to determine their regulatory capital needs, backtracking on a 2014 proposal to which banks had objected.

Hong Kong’s SFC chairman says no room for delay in OTC derivatives reform
South China Morning Post
There is no room for delay in the implementation of over-the-counter (OTC) derivatives reforms proposed by the Securities and Futures Commission and Hong Kong Monetary Authority, SFC Chairman Carlson Tong Ka-shing said on Monday.

Investor Alert: Investment-Related Radio Programs Used to Defraud
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to provide investors with an overview of fraudulent schemes that may be carried out through radio programs.
Many people listen to radio programs that discuss investments. Some of these programs address general topics, such as which types of stocks, bonds, or funds might make good investments. Others may provide commentary and analysis about particular companies, investment products, or financial trends.

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans

    • BATS: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc. (Release No. 34-76120; File No. SR-BATS-2015-83; October 9, 2015); see also Exhibit 5


  • FINRA: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend the TRACE Pilot Program in FINRA Rule 6730(e)(4) (Release No. 34-76121; File No. SR-FINRA-2015-037; October 9, 2015)
  • ICC: Notice of Filing of Proposed Rule Change Related to the ICC Rule Enforcement Process for Missed Submissions (Release No. 34-76122; File No. SR-ICC-2015-015; October 9, 2015)
  • ICC: Order Approving Proposed Rule Change to Provide for the Clearance of Additional Western European Sovereign Single Names (Release No. 34-76111; File No. SR-ICC-2015-013; October 8, 2015)
  • NASDAQ: Order Granting Approval of Proposed Rule Change Relating to the Listing and Trading of the Shares of the AltShares Long/Short High Yield Fund of ETFis Series Trust I (Release No. 34-76126; File No. SR-NASDAQ-2015-095; October 9, 2015)
  • NASDAQ: Order Approving Proposed Rule Change to Adopt a Kill Switch for NOM (Release No. 34-76123; File No. SR-NASDAQ-2015-096; October 9, 2015)
  • NSCC: Notice of Filing of Proposed Rule Change to Permit Trades in Eligible Fixed Income Securities Scheduled to Settle on Day After Trade Date To Be Processed for Settlement at National Securities Clearing Corporation (Release No. 34-76112; File No. SR-NSCC-2015-005; October 8, 2015); see also Exhibit 5
  • NYSE: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Sections 902.03, 902.04, 902.05 and 902.06 of the Listed Company Manual to Increase Certain of the Fees Set Forth Therein (Release No. 34-76110; File No. SR-NYSE-2015-44; October 8, 2015); see also Exhibit 5
  • NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1, Amending the Exchanges Fee Schedule to Eliminate the Sponsor Fee In Connection with Listing a New Derivative Securities Product on the Exchange (Release No. 34-76124; File No. SR-NYSEArca-2015-91; October 9, 2015); see also Exhibit 5
  • NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services (Release No. 34-76114; File No. SR-NYSEArca-2015-89; October 8, 2015); see also Exhibit 5
  • NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Several Rules to Address Certain Order Handling Obligations on the Part of Its Floor Brokers (Release No. 34-76063A; File No. SR-NYSEArca-2015-81; October 1, 2015); see also Exhibit 5
  • OCC: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Concerning the Requirement for Clearing Members to Participate in Operation Testing (Release No. 34-76108; File No. SR-OCC-2015-015; October 8, 2015)

Exchanges & Trading Facilities

BATS Global Markets (BATS) today reported September data and highlights including record market share in its U.S. options and U.S. exchange-traded fund (ETF) trading businesses.

Exchanges and trading venues: could be directive’s biggest beneficiaries
Tim Cave – Financial News
With greater transparency, more competition and a level playing field, all central tenets of Mifid II, public exchanges and trading venues could be among the biggest beneficiaries of the directive.

ETF Securities and ISE ETF Ventures launch new ETF on Xetra
ETF offers first-time access to companies in the cyber security sector
Deutsche Boerse
Xetra/Börse Frankfurt: A new ETF from the ETF Securities product family, in partnership with ISE ETF Ventures, has been tradable on Xetra and Börse Frankfurt since Monday.

SGX reviewing companies’ compliance with Corporate Governance Code
Singapore Exchange (SGX) is carrying out a review of how listed companies abide by the “comply or explain” requirement for principles and guidelines of the Singapore Code of Corporate Governance (CG Code).

BSE shelves plans for commodity bourse
Business Standard News
Stock exchange BSE has dropped its plan to set up a separate commodity bourse and instead has sought regulator Sebi’s approval to start a separate segment on its platform for trading in commodities.

Euronext extends the segment for Spotlight Options to France
The FINANCIAL — As part of its strategy to develop its derivatives segment, Euronext introduces on October 12 the first “Spotlight Options” on the Paris market. The dedicated segment for spotlight optionsbenefits from a unique market model designed by Euronext to give more visibility to underlying assets, such as medium and smaller sized companies and newly listed stocks. Eight new “Spotlight Options” have been admitted to listing with immediate effect, following the companies’ successful IPOs on Euronext in Paris: Coface, Elior, Elis, GTT, Numericable Group, Tarket, SPIE and Worldline.

Hedge Funds & Managed Futures

Bill Gross suit throws up battle of Pimco bonus pool

Investing May Be Cheaper, but Fees Still Hurt
By TIM GRAY – NY Times
Mutual fund expenses can take a big bite out of shareholders’ returns. That bite, on average, is shrinking, but academic and industry experts say it could — even should — be diminishing faster: Plenty of investment companies still charge a lot, and many consumers still opt for pricey funds.

A Timely Reminder of Bonds Funds’ True Value
The Federal Reserve’s decision not to raise its target interest rate drew plenty of attention last quarter, but the real news for bond investors was what actually did happen.

Dear Jeb: Gold won’t make America great again
By Matt O’Brien, Washington Post
At a campaign event on Wednesday, Jeb Bush was asked whether we should return to the gold standard. “I don’t know,” he replied, before clarifying that “I don’t think so,” but then concluding that “I don’t know for sure.”

Citigroup’s Morse Says Commodities Drop Hasn’t Hit Bottom
Cristiane Lucchesi – Bloomberg
Ed Morse, Citigroup Inc.’s global head of commodities research, said the worst slump in commodities prices in a generation isn’t over.

Banks & Brokers

JPMorgan again wins dismissal of whistleblower lawsuit in U.S.
Oct 9 JPMorgan Chase & Co on Friday won the dismissal of a U.S. whistleblower lawsuit filed by a former vice president who claimed the bank ignored red flags about a client’s potential fraud, even after authorities exposed the massive Ponzi scheme operated by longtime JPMorgan client Bernard Madoff.

Former Lehman Trader Loses Bid for a ‘Double-Dip’ Bonus of $83 Million; Bankruptcy judge labels Jonathan Hoffman’s argument ‘pure nonsense’
A bankruptcy judge largely rejected a “double-dip” bid by a former Lehman Brothers bond trader for an $83 million bonus he claimed he was owed following the investment bank’s 2008 collapse, with the judge calling his request “pure nonsense.”

Mack the Knife Makes a Killing
Baron Rothschild famously advised investors 200 years ago to “buy when there’s blood in the streets, even if the blood is your own.”

Credit Suisse Said to Weigh Stock Sale of Up to $8.3 Billion
Jeffrey Voegeli, Ruth David – Bloomberg
Credit Suisse hasn’t made final decision on size of sale
Bank said to plan sale after presenting strategic review
Credit Suisse Group AG is considering selling stock in an offering that may raise 6 billion Swiss francs ($6.2 billion) to 8 billion francs, people with knowledge of the discussions said.

UBS hedge fund switch a blow for Caymans
Sophia Grene – FT
UBS has shifted a fund of hedge funds onshore to Ireland from the Cayman Islands, delivering another blow to the reputation of the Caribbean tax haven as the domicile of choice for international hedge funds.

Clearing & Settlement

The US$27 billion yuan future and option business is free from mandatory clearing, for now
South China Morning Post
The financial industry has three weeks to give its responses to the latest consultation by the Hong Kong Monetary Authority and the Securities and Finance Commission on a proposal governing the trading of over-the-counter derivatives, which is expected to be submitted to the Legislative Council in January next year.

LME; revamped and resurgent but with a troubled heart?
By Andy Home, Reuters
It’s been three years since Hong Kong Exchanges and Clearing (HKEx) bought the London Metal Exchange (LME) and there is a sense that the makeover of the venerable old lady of metals trading is finally starting to bear fruit.
The warehousing demons that have so exercised the new management team since the acquisition have been tamed, if not fully laid to rest.

LBMA asks for bids to provide gold trading, clearing services
By Clara Denina, Reuters
The London Bullion Market Association (LBMA) said on Friday it has formally asked exchanges and technology firms to bid for services such as a gold exchange or a clearing platform to make the London market more transparent and liquid.
“This is to investigate opportunities for greater market transparency through, for example, trade reporting and also increased trading efficiency via enhanced IT solutions,” the LBMA said in a release.

Northern Trust chooses Clearstream for its fund custody business
Deutsche Boerse
Clearstream’s one-stop shop solution for third party funds processing was key decision criteria

Indexes & Products

FTSE Russell And Johannesburg Stock
Press Release
FTSE Russell, the global index provider, today announces the launch of the FTSE/JSE Responsible Investment< Series, developed as a result of the expanded partnership between FTSE Russell and Johannesburg Stock Exchange (JSE), announced earlier this year. These indexes are available from today.
FTSE Russell and JSE have seen a significant increase in the number of institutional investors wanting to integrate ESG considerations into their investments. As a result, the businesses are collaborating to develop a suite of tools for the market to aide ESG integration. The new index series will initially comprise the FTSE/JSE Responsible Investment Benchmark and a Top 30 Index, containing the top thirty companies as ranked by the FTSE ESG Ratings. The launch builds on the existing FTSE/JSE Africa Index Series.

Russia ETF Rewards Resolute Investors as Stock Volatility Surges
U.S. investors brave enough to put money into one of the most volatile stock markets are reaping some of the biggest profits in the world.

Exchange-traded funds are safe again, money managers say
What happened with volatile exchange-traded funds in the August market meltdown in the United States and China? Are they still safe?
Professional money managers say yes, ETFs are safe to invest in. But then again, most pros weren’t hurt by widespread halts in trading among exchange-traded funds.


Dow Jones discloses data breach
Dow Jones & Co disclosed on Friday a breach of its systems that put payment card and contact information of about 3,500 individuals at risk.

SunGard wins Award for financial planning technology
SunGard has received an award for its WealthStation CompAct solution in the “Technology – Financial Planning” category in the first Industry Awards, which recognizes firms for innovation and leadership in support of financial advisor success. Selected by a judging panel of independent industry experts, SunGard accepted the award on September 24 in New York City.

itBit Bankchain to launch with delivery versus payment ledger for gold
By Ian Allison – IB Times
Fintech trust company itBit recently hosted a roundtable where it announced the initial focus of its Bankchain initiative would be a distributed ledger system for the gold and precious metals marketplace.

Fix Trading Community Creates Digital Currency Working Group
Yessi Bello Perez- Coindesk
Fix Trading Community, a global industry trading body, has announced the creation of a digital currency and blockchain technology working group.

Orc Group AB: Orc Adds Connectivity to Asian-based FEX Global
Press Release
Orc, the global market leader in electronic trading technology for listed derivatives, today announced an extension to its trading and electronic execution offering with market access to FEX Global Pty. Ltd. (FEX). This connectivity offering will enable exchange participants to trade on the new execution venue upon its expected launch in 2016.

DME selects Elysian Technology for auctions business
CPI Financial News
The Dubai Mercantile Exchange (DME), the premier international energy futures and commodities exchange in the Middle East, has selected London-based Elysian Systems Ltd as the technology provider for its new commodity auction business.
DME will employ Elysian’s market-leading auction software capacity to host spot auctions for physical energy products and other commodities in the Middle East and elsewhere.


Rogue trader Kweku Adoboli fights deportation to Ghana
Lindsay Fortado – Financial Times
Kweku Adoboli, the UBS rogue trader, is fighting to stay in the UK after an immigration tribunal ruled that he should be deported to his home country of Ghana.
The 35-year-old, who was convicted in 2012 of causing the biggest unauthorised trading loss in UK history while working as a trader for the Swiss bank, came out of prison four months ago.

Former Irish banker arrested in Massachusetts
Federal agents arrested former Irish banking executive David Drumm, who is at the center of an Irish banking scandal, on an extradition warrant Saturday, according to the US Marshals Service and the US Attorney’s Office.

Environmental & Energy

Oil Exports Should Be Paired With Clean Energy Tax Breaks
NY Times
The oil industry and its friends in Congress, mostly Republicans, want to get rid of restrictions on exports of crude oil that were established 40 years ago during the energy crisis. President Obama and most Democratic lawmakers are rightly opposed to such measures, at least in their current form.

Cargill asks Indonesia to help end deforestation
Avantika Chilkoti – FT
Cargill’s chief executive has called on the Indonesian government to support efforts to end deforestation linked to the palm oil industry — adding to growing pressure on Jakarta to intervene as illegal tree felling adds to the region’s smog problems.

International capital flows, sectoral resource allocation, and the financial resource curse
Gianluca Benigno, Nathan Converse, Luca Fornaro, VOX
In the aftermath of the Global Crisis, policymakers have adopted policies to limit, or at least manage, capital inflows. This column explores episodes of capital inflows coupled with weak productivity growth, in other words, the financial resource curse. The findings show that once access to foreign capital subsides, the initial boom gives way to a recession. Both investment and employment in the manufacturing sector drop, and the larger the decrease of labour in manufacturing, the sharper the following contraction.

Can China Pressure the U.S. Into Cap And Trade? — The Motley Fool
The Motley Fool
Cap and trade shouldn’t be the political football it’s become today. It’s a conservative idea with market based incentives that would make it more economical to build clean energy where such energy is cheap and cheaper to burn fossil fuels where that’s the cheapest form of energy. But the concept has become politicized and politicians have taken an easy out by suggesting that the U.S. can’t fight climate change on it’s own (i.e., without China) so why try?

Lessons from shale industry will reshape global oil market
Spencer Dale – FT
The US shale revolution has changed the oil market for good.


Apple reportedly blocks access to Apple News in China
By Dante D’Orazio, The Verge
It appears Apple is choosing to outright block its news app in China rather than implement a system to censor stories that would earn it the ire of Beijing. A source has confirmed to The New York Times that the company has blocked users in China from accessing Apple News, which offers an iOS-optimized way to read stories from around the web.

China Bolsters Panda Bond Diplomacy Ahead of IMF Yuan Decision
China is expanding the small part of its credit market open to foreign borrowers as it seeks to win global reserve status for its currency.
HSBC Holdings Plc and BOC Hong Kong Holdings Ltd. each issued 1 billion yuan ($158 million) of panda bonds last month, taking the number of foreign issuers of onshore notes in the Chinese currency to just five since the nation first allowed such securities in 2005. The latest sales come just weeks before the International Monetary Fund is expected to decide whether the yuan meets requirements for inclusion among reserve currencies in its Special Drawing Rights basket.

Meet the mum-and-pop investors of China’s stock market
Lucinda Shen – Business Insider
The Chinese stock markets were hit by a $2.8 trillion market rout earlier this year that Wall Street analysts say will reverberate through the global economy for months to come.

China targets automated share trading
Patti Waldmeir – Financial Times
China’s securities regulators are taking aim at automated trading in shares, part of Beijing’s campaign to restrain stock market volatility by intensifying pressure on the financial industry.

LMEWEEK-Chinese banks press on with LME trading despite downturn
Eric Onstead – Reuters
Chinese banks and brokers will keep seizing opportunities to expand trading onto the London Metal Exchange (LME), filling gaps left by Westerners withdrawing from commodities and unfazed by a downturn in the world’s biggest metals consumer.

Frontier Markets

Banker Grapple With How to Help Emerging Markets
Dealbook – NY Times
After a week of discussions here, bankers and policy makers agreed that stemming the rush of investments from emerging markets was one of the most important challenges facing the global economy. But there was little agreement on how to actually do that.
On official panels, in closed-room sessions and over drinks in Lima restaurants, market participants struggled to come to grips with the persistent flows of money escaping emerging-market stocks and bonds in search of safer investment shores.

What if the Emerging-Market Move Isn’t a Head Fake?
Investors love trends they can latch on to; turning points are more difficult to navigate. So, while investors have welcomed a sudden bout of stabilization in emerging markets, it could still prove disruptive.

Emerging-Market Stocks Exorcise Yuan Ghost as Fed Fuels Rebound
Emerging-market stocks headed for the highest level since China’s surprise devaluation of the yuan two months ago as investors speculated the government of the world’s second-largest economy will take steps to bolster economic growth. Russia’s ruble led currencies higher.

UN and World Bank seek bond markets funds for refugee hosts
Financial Times
The UN and World Bank have launched a push to raise billions of dollars in the bond markets and dramatically increase economic assistance to Middle Eastern countries hit by a wave of people fleeing conflicts in Syria and Iraq.

Turkey’s central bank caught between markets and politics
Dan Bogler – Financial Times
he weekend’s deadly bomb blasts in Ankara are not only a human tragedy but a political one as well. Rather than uniting Turkey’s leaders in condemnation of the horrific attack on a peace rally, they have sparked tit-for-tat accusations, with the government blaming “terrorists” — code for the Kurdish minority — while Selahettin Demirtas, leader of the pro-Kurdish HDP party, has called the administration “murderers” who have blood on their hands.

How to Invest in Frontier Markets?
With greater efficiency and transparency and the rising availability of passively managed, index tracking products such as ETFs, it is increasingly difficult for hedge funds to deliver unique value to investors. Traditionally, hedge fund managers have promised higher returns at lower risk, diversification, and/ or access to new asset classes and esoteric derivatives. The appeal however has been recently waning given lack-luster hedge fund performance in the last decade. Consequently, private and institutional investors are looking for greater justification for why they should invest in hedge funds (Is the Black Box Hedge Fund Model Doomed?).


Nobel in Economics Given to Angus Deaton for Studies of Consumption
Prof. Angus Deaton, a British economist, was awarded the Nobel Memorial Prize in Economic Science on Monday for improving the accuracy of basic economic gauges, including measures of income, poverty and consumption.
Professor Deaton, 69, of Princeton, is best known for his insight that economic averages such as measures of national income could be misleading, because they concealed important variations among individuals.

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