Judge’s Order Puts New CFTC Chairman in Unusual Position; Would ICE Really Buy Bloomberg?

Aug 26, 2019

First Read

Lunch with the New CME Chairman Terrence Duffy
John Lothian – John Lothian News

Before the CME went public in 2002, there was a change in leadership at the top. Terry Duffy ran for the job of chairman of the board against the incumbent, Scott Gordon. I was a fan of Gordon’s and then CME CEO Jim McNulty. McNulty was one of the reasons I started the John Lothian Newsletter. He had helped me find a job when I first graduated from Purdue University. He was for a short time one of my mentors. But then I started my career and he started traveling the world as an investment banker and I lost track of him.

After he was named CEO of the CME in 2000, I did not want to lose track of people like Jim McNulty anymore, so the newsletter was the way to keep in contact.

For the rest of the commentary and podcast, click HERE.~JJL


Hits & Takes
JLN Staff

I have found some pre-2003 commentaries of mine on the web. I am re-issuing them with background explanations and recording them as podcasts, as well as written pieces. Above is the first one, the commentary I wrote after the press met the new CME Chairman Terry Duffy in 2002.~JJL

Duffy has now outlasted CME CEOs McNulty, Donohue and Gill, as well as Jack Sandner and Leo Melamed, and had quite the run. Notice my predictions in the piece for both CME and for Duffy, including a reference to the importance of “stakeholders,” something that is just now getting more traction.~JJL

FIA Hall of Fame member George Gero is out of the hospital and starting physical therapy. He hopes to be back at work soon.~JJL

The Depository Trust & Clearing Corporation (DTCC)?held a Girls Who Code?Summer Immersion Program, and the girls graduated after seven weeks of learning new skills and building “sisterhood among one another and make new connections with women and men in tech at DTCC,” according to a LinkedIn post by DTCC’s Fikir Sanders.~JJL

Hey Deutsche Bˆrse, what is a dragonboat race? Inquiring minds want more to the story.~JJL

I tubed down the Fox River in Illinois over the weekend with the Scouts. My first time drifting down a river in a tube. There was no race and no dragons.~JJL

AP has some updates from the G7 summit, including: President Trump missed a discussion on climate and was two hours late to meet with Angela Merkel; there was a very British disagreement about pork pies; Brazilian President Jair Bolsonaro insulted Macron’s wife Brigitte; and G-7 countries have agreed to an immediate $20 million fund to help Amazon countries fight the wildfires.~SR

Another loser in the trade war: Maine lobsters. Year-to-date lobster exports to China are down 80% compared to 2018.~SD


The Spread – Getting Pronged: A Volcker Rule Update
In this episode of “The Spread,” we take a look at the importance of fly fishing, legal lingo and Twitter risk.
Watch the video »


Trump’s New Economic Message: Reelect Him Or It All Goes ‘Down The Tubes’
S.V. Date – HuffPost
Even as signs of an economic slowdown due to his trade war mount, President Donald Trump has a new message for Americans: If you don’t reelect me, you and the whole country will go broke.
“If we don’t win in 2020, everything that we have done – seriously, though ? everything that we have done, your 401(k)s, they are going to crash. The whole thing, it’s going to come down like a stack of cards,” Trump told a North Carolina rally audience last month.

***** Keep talking. Tell us more. Mr. Market knows best.~JJL


NASA reportedly investigating first allegation of crime committed in space
Danielle Garrand – CBS News
Astronaut Anne McClain is facing the first allegation of a crime committed in space, reports The New York Times. McClain’s estranged wife, Summer Worden, accused the astronaut of accessing her bank account while on a six-month mission aboard the International Space Station.

***** The first crime was stealing the moon from the moonmen.~JJL


Dating apps used to seduce gullible investors
Duncan Hughes – Financial Review
Women are being paid big commissions to use online dating sites to seduce gullible men into trading highly leveraged financial derivatives with the promise of friendship or romance, according to confidential analysis of pressure sales techniques.

**** “I like long walks on the beach and guaranteed 20% returns!”~SD


Friday’s Top Three
It’s hard to remember that Anthony Scaramucci was the guy behind the SALT hedge fund conference. And here he is in the top read item in JLN on Friday, the FT’s I dumped Donald Trump to save the liberal world order. From hedge funds to saving the world, on we go. Second was The Wall Street Journal’s Billionaire David Koch, Who Used His Wealth to Reshape U.S. Politics, Dies at 79. And third was Top law firm faces IRS crackdown for botched pay packages from the New York Post.


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Lead Stories

Judge’s Order Puts New CFTC Chairman in Unusual Position; Heath Tarbert and two other commissioners must answer questions about a provision in a settlement with Kraft Foods and Mondelez Global, judge says
Dylan Tokar – WSJ
A federal judge in Chicago has made an unusual demand of the new chairman of the Commodity Futures Trading Commission: Testify in front ofóand perhaps be cross-examined byólawyers for two companies that were recently penalized by the regulator.

Would ICE Really Buy Bloomberg?
Andrew Delaney – a-Teaminsight.com
The London Stock Exchange’s planned $27 billion acquisition of Refinitiv – the former Reuters – got us thinking: who’s left of the independent market data vendors, and who would buy them?

Deutsche Bank and UBS Explored European Banking Alliance; Deal talks in June never coalesced but show how far European lenders are willing to go to address a punishing banking environment
Jenny Strasburg – WSJ
Deutsche Bank AG DB -2.79% and UBS UBS -1.41% Group AG this year explored ways to combine their businesses, including talks as recently as mid-June to form an unusual alliance of investment-banking operations, according to people familiar with the discussions.

ASX ropes in cloud computing giant VMware for its blockchain-based settlement system
Yogita Khatri – The Block
ASX ropes in cloud computing giant VMware for its blockchain-based settlement system
The Australian Securities Exchange (ASX) has signed a deal with cloud computing giant VMware to ramp up the development of its blockchain-based equities clearing and settlement system.

Mark Carney calls for global monetary system to replace the dollar; New approach would alleviate influence of capital outflows, BoE governor says
Chris Giles – FT
Mark Carney, the Bank of England governor, has said that the world’s reliance on the US dollar “won’t hold” and needs to be replaced by a new international monetary and financial system based on many more global currencies.

**Reuters also has the story here and Bloomberg here.

The great global bond rally has turned investors into traders; As coupons shrivel and investors rely on rising prices, bonds are becoming stock-like
Michael Mackenzie – FT
August has once again delivered on its reputation for providing a profound market shock. And for once, the flightier areas of equities and currencies are not the culprits. Instead, the foundation blocks of global financial markets ó safe and boring government bonds ó have slumped to new record-low yields, many of them below zero.

Women run into a wall in the fight for front-office jobs; Progress in addressing imbalances in the financial industry remains painfully slow
Eva Szalay – FT
After a decade on Wall Street, Kristen Fanarakis left an exhausting job in foreign exchange sales because she had enough of being paid “a third and sometimes even a quarter of my male counterparts ó despite producing three times as much as they did”.

There is now a woman board member at every S&P 500 company
Maggie Fitzgerald – CNBC
Women now have a seat at the table of every S&P 500 company. The last company in the S&P 500 with an all-male board is adding its first female member.

Bonds with sub-zero yields are an urgent call to action; Governments should respond to consistent distress signals from the bond market
David Riley – FT
The fastest-growing asset class so far this year? Negative-yielding bonds that, if held to maturity, are guaranteed to impose a loss on investors. The stock of such bonds has almost doubled since the start of the year to about $16tn, or one-third of the global bond market.

Carney Urges Libra-Like Reserve Currency to End Dollar Dominance
Brian Swint – Bloomberg
Mark Carney laid out a radical proposal for an overhaul of the global financial system that would eventually replace the dollar as a reserve currency with a Libra-like virtual one.
Just a few months before he steps down as Bank of England governor, Carney offered his vision for the international economy at a time of sweeping change.

Banking bodies consider shorter trading day to attract more women; Equity trading is notoriously male-dominated, with market participants saying the aggressive trading floor culture makes it difficult to recruit and retain female traders
The Irish Times
European banking and asset management bodies are considering a push to boost the number of women joining the financial sector by cutting stock market trading hours.

Glasgow University Pledges Millions for ‘Reparative Justice’ for Slavery Ties
Palko Karasz – NY Times
The landmark sandstone building of the University of Glasgow stands on land that once belonged to a family of West Indian tobacco merchants who used slave labor on their plantations. Its rectors included Robert Cunninghame Graham, who owned and sold slaves on his plantation in Jamaica in the 18th century. Now, the university, one of the oldest in Britain, has acknowledged its links to historical donors who benefited from the slave trade and has promised to raise 20 million pounds, or about $24.5 million, over the next 20 years to research slavery and its impact around the world.

How Brazil and Vietnam are tightening their grip on the world’s coffee
Marcelo Teixeira, Phuong Nguyen, Julia Symmes Cobb – Reuters
A towering machine rumbles through the fields of Julio Rinco’s farm in the Brazilian state of Sao Paulo, engulfing whole coffee trees and shaking free beans that are collected by conveyor belts in its depths.

Vietnam Prefers Its Mobile Networks to Be Free of Huawei
John Boudreau and Nguyen Dieu Tu Uyen – Bloomberg
Communist leaders view China as an ongoing security risk; U.S. is pressing other countries to avoid Huawei, analyst says
Vietnam is intent on being the first Asean nation to provide a 5G network — without China’s tech powerhouse Huawei Technologies Inc.

Who Is Harry Markopolos’s Mystery GE Short Seller? No One Is Talking
Rick Clough – Bloomberg
Markopolos says it’s a midsize hedge fund based on East Coast; A lot could be riding on the short-selling firm’s identity
When Harry Markopolos dropped his bombshell report skewering General Electric Co., he revealed that he was working with a short seller to profit from the stock’s decline. More than a week later, that firm’s identity remains a mystery.

Exchanges, OTC and Clearing

Moscow Exchange announces results for the second quarter of 2019
Moscow Exchange
Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q2 2019. Exceptional performance of the Bond Market as well as strong growth of the Money Market and Depository & Settlement Services helped to deliver record high fee and commission income (F&C).

Derivatives market reports delivery order changes
Dear Derivative Market customers, Please be informed that starting September 2nd 2019 the delivery order for Moscow Exchange Derivatives market evening clearing session reports is changing:

ASX, Digital Asset and VMware join forces on DLT; VMware adds support and scale to ASX offering
The Australian Securities Exchange (ASX) has signed a three-party memorandum of understanding (MOU) with Digital Asset (DA) and VMware to work together on distributed ledger technology (DLT) initiatives in Australia and New Zealand.

Nasdaq plans day-ahead power market launch in Germany, France, Nordics
Lefteris Karagiannopoulos – Reuters
Nasdaq’s commodities exchange plans to launch its day-ahead auction market for electricity in Germany, France and the Nordics around April 2020, its head of European Commodities told Reuters on Thursday.


NZX Wealth Technologies Selected By Hobson Wealth Partners
NZX is pleased to announce that the NZX Wealth Technologies platform has been selected by Hobson Wealth Partners to provide platform technology services. Timing for migration is to be confirmed when contractual arrangements are finalised, but is expected to be 2020.

IPC and Cloud9 partner on open voice trading service; IPC and Cloud9 have combined their communications platforms to form an integrated voice trading solution.
Hayley McDowell – The Trade
Markets communication providers IPC and Cloud9 Technologies have teamed up to integrate their services and create an open voice trading solution.

Former ION Trading chief appointed CEO of currency trading firm OANDA; Gavin Bambury spent six years as CEO of ION Trading, before moving to eFX trading platform Integral as chief technology officer.
Hayley McDowell – The Trade
Forex and currency trading firm OANDA has appointed industry veteran and the former chief executive of ION Trading Group as its new CEO.

Big Tech and banks are vying for the same consumer
Devin Southard – Yahoo Finance
From posting on social media to calling an Uber, mobile devices are becoming the command center for guiding day-to-day activities. Financial institutions want to get in on the action as well, according to an industry insider.


Carney’s Libra Idea Shows How the Dollar Is Everyone’s Problem
Brian Swint and Matthew Boesler – Bloomberg
World central bankers ponder dilemma at Jackson Hole retreat; Desire to avoid total dollar’s dominance is ‘healthy’: Posen; Current and former central bankers in Jackson Hole, Wyoming, weren’t sure if Mark Carney’s idea for a virtual reserve currency is the answer, but they agree that the dollar’s dominance is a problem.

The BitMEX Insurance Fund is up 50% since the beginning of 2019; holds more than $300 million
The Block Crypto
The BitMEX Insurance Fund has increased to holding over 31,300 bitcoins or approximately $314 million. This means the fund managed by the derivatives exchange BitMEX holds nearly 0.15% of the total supply of bitcoins. The fund has experienced a 50.7% increase from its holdings since the beginning of 2019.

Facebook’s dream of a global cryptocurrency raises political stakes ó for the regulators themselves
Elizabeth Schulze, Saheli Roy Choudhury – CNBC
Facebook introduced its vision for a global cryptocurrency called Libra two months ago, and since then, regulators have piled criticism onto the project. They may have their own reasons.

25-Year-Old Bitcoin Seller Faces Life Sentence for Unlicensed Exchange
Wolfie Zhao – Coindesk
A 25-year-old man from Westwood, Los Angeles, has plead guilty to federal charges for having exchanged up to $25 million in cash and crypto without a license and anti-money laundering program. Kunal Kalra, also known as “Kumar,” “shecklemayne” and “coinman,” was indicted on Friday for allegedly trading cash and crypto for individuals including drug dealers, partially via his bitcoin ATM kiosk.

Ex-Morgan Stanley Asia Derivatives Head Joins Alumni Crypto Firm
Alastair Marsh – Bloomberg
Jeffrey Wang, who used to run foreign exchange spot and derivatives trading for Asia at Morgan Stanley, has joined a cryptocurrency firm run by his former colleagues, part of a growing cohort of ex-Wall Streeters taking a shot in the volatile world of digital assets.

Switzerland Meetings Didn’t Clear US Lawmaker’s Doubts on Facebook’s Libra
Wolfie Zhao – Coindesk
A U.S. lawmaker said her concerns with Facebook’s Libra cryptocurrency project remain after meeting regulators in Switzerland, where the social media giant’s Libra Association is headquartered. Congresswoman Maxine Waters (D-CA), who also heads the House Financial Services Committee, said in a statement on Sunday her recent meetings left her with doubts over “allowing a large tech company to create a privately controlled, alternative global currency.”

Don’t Worry, Overstock’s New CEO Is Already ‘Drunk on Bitcoin’s Kool-Aid’
Nikhilesh De – Coindesk
Digital retail platform Overstock.com’s new CEO is not planning any major changes to the company’s blockchain efforts after the departure of its founder.

Facebook’s key partners on its cryptocurrency Libra are refusing to publicly support it
Rob Price – Business Insider
Most of Facebook’s key partners on its cryptocurrency project Libra are refusing to publicly support it. Since announcing Libra in June 2019, there has been intense regulatory pushback on the initiatives. Key backers like Mastercard, Uber, and PayPal are ignoring inquiries as to whether they are still committed to Libra.

Binance Offers Lifetime VIP Membership to KYC Leak Victims
Liam Frost – Cointelegraph
Major cryptocurrency exchange Binance announced that it will offer a lifetime VIP membership to all its users affected by the recent Know Your Customer (KYC) images leak on the platform. According to the official blog, currently Binance is “actively contacting all potential victims with […] guidance on privacy protection and restitution,” and highly recommends “affected users to apply for new identification documents in their respective region.”

Thai SEC Warns Users Against Fake Overseas Crypto Exchanges
Rachel McIntosh – Finance Magnates
Thailand’s Securities and Exchange Commission (SEC) has issued a warning against a new kind of cryptocurrency scam that lures victims into investing with websites that claim to be legal cryptocurrency trading platforms based overseas.

The Faketoshi Circus: Even Bitcoin Can’t Escape the Politics of Money
Michael J Casey – Coindesk
In case you missed it, a new self-proclaimed Satoshi Nakamoto came out of the woodwork last week, this one brandishing a “proof” based on numerology and an obsession with BCCI, the scandal-ridden bank that collapsed in 1991.


Trump took a page out of the WWE’s playbook
Miranda Devine – NY Post
When you attend one of his rallies, as I did last week in New Hampshire, it is obvious that Donald Trump has modeled his presidential persona on WWE pro-wrestling. The banter, the jokes, the trash talking, the catch phrases, the crowd manipulation, the belligerent patriotism, the villain-slamming: It’s all straight out of a preordained WWE storyline.

Stakes Were Higher in 2008 but It’s ‘Way Weirder’ Trading Trump
Sarah Ponczek and Vildana Hajric – Bloomberg
He ‘can wreak havoc in really creative ways nobody thought of’; Four down weeks in the S&P 500 is starting to take its toll
Donald Trump’s trying to win a trade war, so don’t talk to him about 600 points in the Dow Jones Industrial Average. But for traders coping with the price impact of his tirades, it’s all they want to talk about.

G7: Trump’s demands for Russia’s readmission cause row in Biarritz
Julian Borger – The Guardian
Donald Trump has rowed with his fellow G7 leaders over his demand that Russia be readmitted to the group, rejecting arguments that it should remain an association of liberal democracies, according to diplomats at the summit in Biarritz.

Trump’s Sales Pitch: Hold G-7 at His Miami Doral Golf Resort
Jennifer Jacobs and Josh Wingrove – Bloomberg
U.S. President Donald Trump knows of a perfect location for next year’s Group of Seven summit in the United States: at Trump Doral golf resort in Miami.

World leaders believe ‘it’s pointless’ trying to show unity with Trump at G7
Macron is hoping to get out of Biarritz with no blood on the floor’
Michael D Shear and Jim Tankersley – The Independent
After they wooed him in Taormina, Italy, in 2017, Donald Trump snubbed world leaders by dropping out of the Paris climate accords. When they reached consensus in Charlevoix, Canada, a year later, Mr Trump abruptly refused to sign their joint statement and escalated his trade war with personal insults.

‘I hereby order’: Trump mocked for highly formal, meaningless decree
Luke O’Neil – The Guardian
Leaning further into a burgeoning economic war with China of his own design, Donald Trump on Friday levied a series of bizarre demands of American companies who do business in the country. They included an order for American firms to cease production in China.

Trump seems to think he’s an emperor – but we are not entertained;Commodus was mad and, at least the way Russell Crowe told it, it took a gladiator to bring him down. America has the polls
Lloyd Green – The Guardian
This week, Donald Trump ascribed to himself the roles of deity and the Chosen One, a first for an American president but definitely not for an emperor. Then, on Friday, he “ordered” US companies “to immediately start looking for an alternative to China”.

Trump Aides Say He Isn’t Ordering U.S. Companies Out of China; Remarks by Kudlow and Mnuchin on Sunday come in the wake of tweet by the president on Friday
Jessica Donati – WSJ
Aides to President Trump said Sunday he has no plans to invoke emergency powers and force companies to relocate operations from China, two days after his Friday tweet that they were “hereby ordered” to look for alternative locations.

Trump Says He Will Raise Existing Tariffs on Chinese Goods to 30%
Alan Rappeport and Keith Bradsher -NY Times
President Trump said he would increase taxes on all Chinese goods and demanded that American companies stop doing business with China as his anger toward Beijing and his Federal Reserve chair boiled over on Friday.

US government pension fund urged to reverse China investment; Senators say FRTIB is supporting Beijing’s military, espionage and security efforts
James Kynge and James Politi – FT
Senior US senators are demanding that one of America’s biggest government pension funds reverse a decision that is set to channel billions of US dollars into funding Chinese companies that they say support Beijing’s military, espionage and domestic security efforts.

China says it will take ‘more steps’ to protect interests if U.S. enacts tariffs
China’s said it is ready to take more steps to protect its interests if the United States moves ahead in enacting new tariffs.

Americans Have Shifted Dramatically on What Values Matter Most; Patriotism, religion and having children rate lower among younger generations than they did two decades ago, WSJ/NBC News survey finds
Chad Day – WSJ
The values that Americans say define the national character are changing, as younger generations rate patriotism, religion and having children as less important to them than did young people two decades ago, a new Wall Street Journal/NBC News survey finds.

The Machine David Koch Helped to Build ‘Will Endure’ After His Death
Tom Maloney and Tom Metcalf – Bloomberg
Next generation poised to inherit firm worth $137 billion; His nephew Chase runs Koch Industries’ venture-capital arm
David Koch’s death early Friday marks the end of an era in the worlds of business, politics, philanthropy and high society. For Koch Industries, the conglomerate he helped his brother Charles transform into the second-largest privately held U.S. company, the founding family retains firm control as a generational shift takes hold.

Majority of Americans ‘Angry’ at Political System, Poll Shows
Reade Pickert – Bloomberg
Mixed readings on economy; NBC-WSJ poll shows some anxiety; In CBS poll, 44% say Trump China trade approach won’t succeed
Amid an escalating trade war, fears of an economic downturn and a crowded field of Democratic presidential hopefuls, a majority of Americans are simply “angry” at the U.S. political system, a new poll showed on Sunday.


Japan’s Financial Services Agency: The Study Group On The Economic Value-based Solvency Framework
The purpose of an economic value-based solvency regulation is to properly evaluate insurers’ financial positions through economic value-based valuation of both their assets and liabilities. It is also expected to facilitate the enhancement of insurers’ risk management. The FSA has held dialogues with various stakeholders on the matter, keeping in mind the possibility of introducing a new regulation in line with the timeline of the development of the ICS (Insurance Capital Standard). In doing so, the FSA has also been conscious of the potential unintended consequences of a new regulation under the current economic environment.

Japan’s regulatory chief urges BOJ to consider impact of easing on banks
Takahiko Wada, Leika Kihara – Reuters
The Bank of Japan is responsible for deciding whether to ramp up stimulus to support the economy, but should weigh the impact its monetary policy will have on the banking sector, the country’s top financial regulator said on Monday.

Fifth Circuit Affirms Enron Broker Not Liable To Employee Stock Option Holders For False Or Withheld Information
Theanna Sedlock, Sheppard Mullin Richter & Hampton – Mondaq
Ending a more than 15-year-long legal battle, the Fifth Circuit on May 24, 2019, unanimously affirmed the dismissal of a proposed class action against subsidiaries of UBS AG, alleging violations of U.S. securities laws for their role as a broker of Enron’s employee stock option plan and for failure to disclose material information about Enron’s “financial manipulations.”

CFTC’s Market Risk Advisory Committee to Meet September 9 by Teleconference
The U.S. Commodity Futures Trading Commission’s Market Risk Advisory Committee (MRAC) will hold a public meeting on September 9 via teleconference. CFTC Commissioner Rostin Behnam is the sponsor of MRAC.

Consumers see value in financial advice, but lack of trust remains an issue
New ASIC consumer research released today reveals the barriers faced by consumers when considering financial advice.

ASIC approves AFCA rule change enabling the naming of firms
ASIC has approved changes to the Australian Financial Complaints Authority (AFCA) Rules to allow the scheme to name financial firms in published determinations.

Top EU regulator Farkas to head banking lobbying group AFME; EBA director Adam Farkas is in talks to become CEO of the Association for Financial Markets in Europe, Sky News learns.
Mark Kleinman -Sky News
One of Europe’s top banking regulators is in talks to head the trade body that leads the investment banking industry’s lobbying effort across the EU.

Investing and Trading

Private Credit Bets Big on Cannabis Companies as Banks Pass
Kelsey Butler – Bloomberg
Monroe Capital provides credit to accessories maker KushCo; In April MGG Investment issued a loan to Mile High to buy hemp
Private credit firm Monroe Capital LLC is betting on cannabis with its latest direct lending deal as banks hamstrung by regulations shy away from the industry.

SNB Eases Back on Interventions in Battle Against Stronger Franc
Catherine Bosley – Bloomberg
Swiss National Bank statistics indicate that it kept up currency interventions to weaken the franc last week, albeit at a slower pace.

Apple’s $44 Billion Drop Shows Growing Cost of Reliance on China
Debby Wu – Bloomberg
Tariffs from both sides take a bite out of Apple’s share price; Moving iPhone production out of China would take years
Apple Inc.’s reliance on China is looking increasingly like its biggest handicap. The world’s most influential consumer electronics company shed $44 billion of market value Friday after a pair of pronouncements from Beijing and Washington cast a spotlight on its massive Chinese production base, from which almost all of the world’s iPhones are made.

Fund Manager Who Beat 98% of Peers Says Stay Calm and Buy Stocks
Moxy Ying – Bloomberg
JPMorgan Asset’s Kwok sees value in Asia equity market; Kwok has been adding some technology, India financial stocks
Trade war? Yes. Global slowdown? Yes. Volatile market? Yes. But does that mean investors should cash out and run? Not this top-performing fund manager. She’s staying put.

The Bond Markets Are Begging for Infrastructure Spending; Government-financed public works projects could end the plague of negative-yielding debt.
Brian Chappatta – Bloomberg
Bond buyers worldwide, awash in negative-yielding debt, are crying out for fiscal spending. A seven-minute stretch in the German bund market proves it.

Central bankers face political shocks, and hope to avoid the worst
Howard Schneider, Ann Saphir – Reuters
Global central bank chiefs know their job is to keep the economy out of the ditch.

The Bond Market Is Wrong. Inflation Will Return, Someday; Central bankers aren’t entirely out of gas, especially in the U.S.
James Mackintosh – WSJ
The bond market thinks central banks are out of juice and inflation will stay below target for, well, ever. The longest-dated Treasurys are priced for inflation to average 1.6% for the next 30 years, and German bonds for just 1.3% inflation. Both are testing the lows of 2016, when the oil price crashed and investors feared deflation.

It’s Time to Start Worrying About the National Debt; Expecting economic growth to rescue the U.S. from unprecedented federal deficits is a dangerous gamble, as history shows.
Valerie Ramey – WSJ
For much of the 20th century, the U.S. government operated under the principle that it should finance its spending mostly by collecting taxes rather than by borrowing. While conventional wisdom favored running temporary deficits during emergencies, such as wars or recessions, no one argued that a fiscally responsible government should commit itself to running budget deficits so large and sustained that government debt would grow faster than the size of the economy.


Viking curbs investor redemptions to aid VC push; Hedge fund limits withdrawal window to once every two years for some clients
Miles Kruppa – FT
Viking Global Investors, one of the largest US stock picking hedge funds, is imposing more restrictive redemption terms on some of its longtime clients, as it pushes deeper into venture capital and other difficult-to-value investments.

Drought of IPOs in Hong Kong Coming to an End
Crystal Tse – Bloomberg
Shanghai Henlius starts gauging investor demand Monday for IPO; No major listing has completed in Hong Kong since mid-July
The summer IPO drought in Hong Kong is coming to an end. Shanghai Henlius Biotech Inc., a unit of billionaire Guo Guangchang’s Fosun group, started gauging investor demand Monday for a planned initial public offering, according to terms of the deal obtained by Bloomberg. The offering could raise at least $600 million, people with knowledge of the matter have said.

Trend Following CTAs Back With A Bang In 2019


German banks wade into negative rate debate; Idea of prohibiting the passing on of costs has been gaining political traction in Berlin
Martin Arnold – FT
German banks grappling with the burden of negative interest rates are fighting back against a proposal to ban them from passing on the costs to their retail depositors. They warn that such a move could unleash “dangerous instability” on financial markets.

China Merchants Bank shares tumble as investors fear escalating trade war could lead to US sanctions
Xie Yu – South China Morning Post
Shares of China Merchants Bank (CMB), a blue-chip stock in Hong Kong, tumbled on Monday, with investors shying away from risky assets that could face further headwinds as the trade war between China and the United States escalates once again.The Shenzhen-based lender, along with Bank of Communications (BOC) and Shanghai Pudong Development Bank (SPDB), was in June held in contempt of court by a US judge for refusing to comply with subpoenas in an investigation into North Korean sanctions…

Factbox: China’s tariffs on U.S. commodities and energy
In the escalating China-U.S. trade war Beijing on Aug. 23 retaliated with tariffs on about $75 billion worth of U.S. goods including imposing additional tariffs on crude oil for the first time.

Japanese bank SMFG to acquire $8.4 billion UK asset manager TT International; The acquisition marks the first overseas buy-side takeover for Japan’s Sumitomo Mitsui Financial Group.
Hayley McDowell – The Trade
Sumitomo Mitsui Financial Group (SMFG) has confirmed that it has reached an agreement to acquire London-based independent asset manager TT International.

Industry says UK laws deterring cannabis investment; Some investors fear prosecution under anti-money laundering legislation
Alice Hancock – FT
UK anti-money laundering laws are deterring investment in the cannabis industry in Europe, according to lawyers and industry executives.

In a World of Negative Yields, Singapore Still Pays Interest
Masaki Kondo – Bloomberg
The city state will auction 10-year notes on Aug. 28; Yield curve near flattest level ever poses challenge
Singapore is offering a rare opportunity to buy positive-yielding quality bonds in a world that’s rapidly turning negative.

Mooncakes Are Boosting the Demand for Palm Oil
Anuradha Raghu – Bloomberg
China’s escalating trade war with the U.S. as well as an upcoming autumn festival are stoking the Asian country’s appetite for a certain golden oil.

Australia’s big banks gear up for capital raising rush
Scott Murdoch – Reuters
Australia’s biggest banks are expected to cut dividend payments and tap bond markets for more funding to cope with tougher capital requirements as regulators look to safeguard the sector from future market volatility, according to analysts and bankers.


Government lawyers warn Boris Johnson Britain COULD still have to pay the full £39 billion Brexit divorce bill even if it leaves with No Deal
Jack Maidment – Daily Mail
Britain could still have to pay the full £39 billion Brexit divorce bill even if it leaves the European Union without a deal, it was claimed today as Boris Johnson embarked on his final day at his debut G7 summit.

Banksy ‘Brexit’ mural: Scaffolding appears over Dover EU piece
BBC News
A Banksy mural showing a star being chiselled from the EU flag has been mysteriously covered with white paint and scaffolding. The artwork appeared near Dover’s ferry terminal in May 2017 on a building that was due to be demolished.

Britain can easily cope with no-deal Brexit, claims Boris Johnson
Heather Stewart, Julian Borger – The Guardian
Britain could “easily cope” with a no-deal Brexit, which would be the fault of EU leaders’ “obduracy”, Boris Johnson claimed at the summit of G7 countries in France, as he continued to resist mounting pressure to spell out his own plans for breaking the deadlock.

Brexit: Boris Johnson says odds of striking deal ‘touch and go’
BBC News
Boris Johnson has said the chances of a Brexit deal are “touch and go” – having previously said the odds of a no-deal Brexit were “a million to one”. In a BBC interview at the G7 summit in France, he said it “all depends on our EU friends and partners”. When pressed on the chances, he said: “I think it’s going to be touch and go. But the important thing is to get ready to come out without a deal.”

Johnson acknowledges touch and go prospects for Brexit deal
Danica Kirka – Associated Press
BIARRITZ, France (AP) ó U.K. Prime Minister Boris Johnson acknowledged Sunday that the prospect of a Brexit deal was “touch and go,” as other European Union capitals grasp the problems Britain has with the withdrawal agreement.


Trump floated nuking hurricanes to stop them from hitting US: report
Chris Mills Rodrigo – The Hill
President Trump has floated dropping nuclear bombs into hurricanes to stop them from hitting the United States in meetings with Homeland Security and national security officials, Axios reported Sunday.

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