MarketAxess Breaks Into Treasury Trading With Acquisition

Aug 14, 2019

First Read

Hits & Takes
JLN Staff

Yesterday, John Lothian News issued a Special Report about the upcoming launch of Ameribor futures on the Cboe Futures Exchange and a product of the American Financial Exchange, or AFX.

Wholesale electricity prices are surging in Texas as the state faces a heatwave. Prices touched $9,000 a megawatt hour yesterday. Prices had already jumped 36,000% on Monday to average $6,537 a megawatt hour across the Texas power grid.~SD

The FIA reported that global derivatives volumes were 2.88 billion contracts in July, up 0.5% compared to June.~SD

In case you missed this announcement earlier this month: SEC Chairman Jay Clayton will participate in a roundtable with Main Street Investors in Chicago this Thursday, August 15, as part of the SEC’s investor education efforts. It will take place at the U.S. Securities and Exchange Commission, Chicago Regional Office at 175 W. Jackson Blvd. from 10:30 – 11:30 a.m. CT. Go here for more info and to register. ~SR

I am on the road in Missouri, dropping Robby Lothian off at Mizzou and visiting my other son, Tim Lothian.~JJL



From Opera to Blockchain: An Inside Look Into Diverse Crypto Careers
In this video from MarketsWiki Education’s World of Opportunity event in Chicago, Lexy Prodromos, business development manager at Bloq, talks about following your interests wherever they take you. She first studied opera when she went to college before attending law school. It was in law school that blockchain technology came across her radar. Attending Consensus, the New York blockchain mega-conference, solidified her interest in the field.
Watch the video »


Yield Curves Invert in U.S., U.K. as ‘Doom and Gloom’ Spreads
John Ainger and Greg Ritchie – Bloomberg
Rate on 30-year Treasuries also slides to a record low; Inversion typically signals that a recession is on the horizon
The stream of investors seeking refuge in the safest parts of the market has triggered yet another recession warning, with yield curves inverting from the U.S. to the U.K.

***** They had me at “doom.”~JJL


Hong Kong for International Business: Stick a Fork in It
Dan Harris – China Law Blog
Not sure why nobody has just come out and said this yet, but Hong Kong as an international business and financial center is no more. I take no comfort in saying this because I have many friends in Hong Kong and I’ve always loved going there, but Hong Kong’s special position is over. Kaput. Fini. Terminado. Done. Over. No more.

***** When they stick a chopstick in it, then it will be done.~JJL


Sponsored Content

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Tuesday’s Top Three
Our top story by a long shot yesterday was the FT’s piece Why the good times are unlikely to last for exchange groups. Second was The Wall Street Journal’s Former NYU Business School Standout, New to Wall Street, Charged With Insider Trading. And third was the John Lothian News Special Report on The Launch of Ameribor Futures. If haven’t seen it, it is a comprehensive package of video and print interviews and stories about the new contracts, which are set to launch on August 16th.


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Lead Stories

MarketAxess Breaks Into Treasury Trading With Acquisition; Corporate bond-trading marketplace buys LiquidityEdge platform for $150 million
Matt Wirz – WSJ
MarketAxess Holdings Inc., the dominant online corporate bond-trading marketplace, is expanding into the $16 trillion market for U.S. government bonds with the acquisition of LiquidityEdge, a platform that controls about 5% of electronic Treasurys trading.

****The Financial Times here. and The Trade here.

A military crackdown in Hong Kong would be a tragic error; Armed intervention would harm China’s long-term economic interests
The Editorial Board – FT
The clashes at Hong Kong airport are an ominous moment. Demonstrations are intensifying. The behaviour of a violent fringe of protesters is increasingly out of control, with the airport occupation degenerating into attacks on two mainlanders accused of being “spies”. Carrie Lam, chief executive, has warned the city is nearing the “abyss”. Noises from the mainland are ever more threatening ó with talk of “terrorism” in Hong Kong, and video aired of Chinese troops gathering across the border.

U.S. 30-Year Yield Falls to Record Low and Curve Warns of Recession
Benjamin Purvis – Bloomberg
U.S. 30-year yields fell to their lowest level ever as investors sought shelter amid a fraught geopolitical backdrop and concern increased about the impact of the escalating global trade war on economic growth.

America’s Student-Loan Burden Is Getting Severe; New York Fed data show that as the balance grows, households are either able to pay on time or default.
Brian Chappatta – Bloomberg
There’s some good news and bad news about the state of Americans’ finances embedded in the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.

ECB Warns Banks to Speed Their Preparations for a No-Deal Brexit
Silla Brush and Alexander Weber – Bloomberg
The European Central Bank blasted banks for slow-walking their Brexit preparations, telling them they must move additional staff and resources to the European Union in case Britain leaves without a deal on Oct. 31.

The Death of Trading: Why More Big Banks Think the Business Is a Losing Bet
By Rey Mashayekhi – Fortune
The news last month that Deutsche Bank was axing its global equities trading operationsóand cutting roughly one-fifth of its total workforce in the processóshook the banking world to its core.

Tumbling renminbi helps push Chinese into bitcoin, say traders; Trading volumes rise sharply after the People’s Bank of China allows currency to drop
Henny Sender – FT
A recent run-up in the price of bitcoin has been attributed to many factors: aggressive monetary easing by central banks, plans by Facebook to develop its own digital tokens, and market manipulation via Tether, another crypto asset. But another force may be giving bitcoin a lift: demand from Chinese investors.

Algos Keep Losing to Human Traders in $900 Billion Steel Market
Catherine Ngai and Joe Deaux – Bloomberg
As automation reshapes financial markets around the world, there’s still one place where handshake deals are the norm and using technology means bcc-ing bids and offers over email.

Wall Street signs up to build sports betting platforms
Robert Clark, Armughan Khawaja and Declan Harty- S&P Global Market Intelligence
A mix of Wall Street’s biggest trading companies are pushing further into the sports-betting industry, a space that has long drawn comparisons to the financial markets. Today, sports wagering is undergoing a wave of change driven by loosening regulations in the U.S. and a transformation in how bets occur. That, industry participants say, has created a rush of new opportunities for financial services companies to deploy their trading knowledge and technologies in the evolving sports-betting business.

Argentine Vote Slams U.S. Bond Funds
Matt Wirz – WSJ
Yield-seeking investors everywhere are getting singed this week by the meltdown in Argentina’s markets following the victory of a populist candidate in the South American nation’s presidential primary election. Argentina’s 8.75% dollar-denominated bond due in 2024 traded Tuesday for about 45 cents on the dollar, down from 73 cents before populist presidential candidate Alberto Fernandez soundly defeated pro-business incumbent Mauricio Macri in a primary election on Sunday, according to data from IHS Markit.

Barclays no longer banking Cryptocurrency exchange Coinbase: sources
Tom Wilson, Lawrence White – Reuters
Barclays is no longer providing banking services to cryptocurrency exchange Coinbase, sources familiar with the matter told Reuters, ending a relationship that started in March last year as the exchange expanded in Europe.

Switzerland Is Held Captive By Its Big Neighbor; With the ECB set to cut rates, the Swiss will have little choice but to go even deeper into negative territory. The SNB is a price-taker, not a price-maker.
Marcus Ashworth – Bloomberg
Switzerland is one of the richest places on the planet but it isn’t all sunshine and alpine flowers when you’re encircled by the world’s biggest trading bloc: the European Union. While the Swiss are pretty nimble in managing this unfortunate state of affairs, there are limits to what they can do.

The Good, the Bad and the Ugly of Low Rates for European Banks
Nicholas Comfort – Bloomberg
Clients less likely to default, reducing soured-debt coverage; Alternatives to lending income can be more volatile businesses
Europe’s bankers greeted the news with a collective groan: The negative interest rates that had eaten into incomes for the last half a decade are set to continue and even worsen in the years ahead.

Exchanges, OTC and Clearing

MarketAxess to Acquire U.S. Treasuries Trading Operator LiquidityEdge
Globe Newswire
MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, has entered into an agreement to acquire LiquidityEdge, a leading provider of an electronic U.S. Treasuries marketplace. The acquisition is valued at $150 million, including $100 million in cash and $50 million in MKTX stock, subject to customary purchase price adjustments.

TOCOM July 2019 Market Summary
The Tokyo Commodity Exchange announced today that July 2019 average daily volume was 85,667 contracts, down 14.6 % from June and down 0.1% from July 2018. Volume increased for some of TOCOM’s most active contracts, such as Platinum Standard, which grew 11.8% from the prior month to 12,616 contracts, while RSS3 Rubber increased 9.7% to 5,513 contracts. Other contracts saw declines, such as Gold Standard, which was down 20.0% to 43,172, Gold Rolling Spot, which decreased 27.8% to 6,430 and Dubai Crude Oil, which fell 11.6% to 9,751 contracts.

Tokyo Commodity Exchange: Points To Be Considered For Products Transfer
Following the scheduled business integration with Japan Exchange Group, Inc. in October 2019, each product currently listed on the Precious Metals (excluding Gold Physical Transactions), Rubber and Agricultural Product & Sugar (excluding Raw Sugar – currently listing discontinued) market divisions of TOCOM are planned to be transferred to Osaka Exchange, Inc. (OSE) in July 2020.

SET Welcomes The First Hang Seng Index Derivative Warrants In Thailand
The Stock Exchange of Thailand (SET) will list the first Hang Seng Index (HSI) derivative warrants (DW) issued by Macquarie Securities (Thailand) Limited. The first eight series of the international index DW will start trading on August 14.

GC Pooling Cheapest-To-Deliver Basket – bridging the gap between the futures and the funding & financing markets
With its GC Pooling Cheapest-To-Deliver (CTD) Basket Eurex Repo introduced new trading opportunities to customers as of 12 August. We spoke to Manan Wagishauser, Business & Product Development, Eurex Repo, about the background of this new product and what opportunities it offers to our clients.

MGEX Achieves a Top-10 Record Breaking Day
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports the 9th highest volume day in the history of the Exchange on Monday, August 12th with 26,857 contracts.

Presentation by HKEX Chief Executive Charles Li and Group Chief Financial Officer John Killian on 2019 Interim Results Announcement

Condensed Consolidated Financial Statements For the six months ended 30 June 2019 (Unaudited)

HKEX 2019 Interim Results

Intercontinental Exchange and Magellan Midstream Partners Announce Launch of Dock Capacity Auction at Multiple Marine Facilities in Houston for the ICE Permian WTI Futures Contract
Intercontinental Exchange, Inc. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, and Magellan Midstream Partners, L.P. (NYSE: MMP) announced the addition of dock capacity auctions for ICE Permian WTI crude oil futures contracts (HOU) at Magellan’s terminals in Galena Park and Seabrook.


Sterling Trading Tech Launches New Market Data Entitlement System
Sterling Trading Tech
Sterling Trading Tech (STT) an innovative leader of professional trading technology solutions announced their new market data entitlement system, The Sterling Entitlement Manager (SEM).

Bloomberg Acquires RegTek.Solutions to Expand Regulatory Reporting Services
Bloomberg today announced that it has acquired RegTek.Solutions, a leading provider of global regulatory reporting software solutions. The acquisition will expand the range of regulatory reporting services offered by Bloomberg, and deliver a fully integrated and comprehensive service that supports compliance with current and upcoming regulatory reporting requirements across multiple jurisdictions around the world.

Drawbridge Partners Introduces DrawbridgeConnect Platform
Drawbridge Partners
Drawbridge Partners, a premier cybersecurity services firm specializing in the needs of hedge fund and private equity managers, today announced the launch of DrawbridgeConnect, an automated management platform which allows firms the ability to manage all aspects of their cybersecurity program. Complementing Drawbridge Partners’ current services offering, the platform allows firms to ensure regulatory compliance and satisfy investor demands. Users can extract data in real time to evidence their cyber risk posture to current and potential investors.

Koch’s Massive Tech Bet: ‘Do It or We’ll End Up in the Dumpster’; A $139 billion industrial behemoth looks toward the future.
Tom Maloney – Bloomberg
It’s not quite what you’d expect from a Koch. Certainly not before the gray-haired Rotary Club in Wichita, Kansas.

German fintech N26 appeases regulators as it eyes future IPO; $3.5bn online bank is fixing customer service and security problems, says chief
Tobias Buck and Olaf Storbeck – FT
On the first day of every month, a queue begins to form outside the Berlin headquarters of online bank N26 ó new recruits, waiting to join the fast-growing ranks at one of Europe’s most valuable fintech companies.

AI Startup Boom Raises Questions of Exaggerated Tech Savvy; SoftBank-backed startup offers ‘human-assisted’ artificial-intelligence; current, former employees say company inflates its tech expertise
Newley Purnell and Parmy Olson – WSJ
Startup says it uses artificial-intelligence technology to largely automate the development of mobile apps, but several current and former employees say the company exaggerates its AI capabilities to attract customers and investors.


Bitcoin Draws Premium in Argentina and Hong Kong Amid Sell-Off
Olga Kharif – Bloomberg
The turmoil in Argentina and Hong Kong is prompting local investors to pay a premium for Bitcoin, with the leading cryptocurrency proving to be less of a refuge for everyone else than advertised.

SEC Files Emergency Action Against Organizer of ‘Fraudulent’ $15 Million ICO
Daniel Kuhn – Coindesk
The U.S. Securities and Exchange Commission (SEC) is seeking to freeze the assets of Reggie Middleton, organizer of the $14.8 million Veritaseum (VERI) initial coin offering (ICO). According to an emergency action filed Monday in the U.S. District Court for the Eastern District of New York, Middleton conducted a fraudulent and illegal ICO in 2017 and manipulated the securities’ value afterward.

Google Cloud Partners With Enterprise Blockchain Platform Cypherium 1391
Max Boddy – Cointelegraph
Ubiquitous tech behemoth Google cloud wing is entering into another partnership with a blockchain platform, Cypherium. Cypherium announced the new partnership in a press release shared with Cointelegraph on Aug. 13. Cypherium describes its product, Cypherium Enterprise, as an enterprise-focused blockchain platform with a focus on scalability and decentralization. As a result of this partnership, Google Cloud customers will have access to Cypherium’s blockchain solutions, as per the announcement.

Winklevoss-Backed Flexa Expands Crypto Payments Service to Canada
William Foxley – Coindesk
Payment solution Flexa is going international with a Canadian market launch. Flexa, which launched the U.S. edition of its SPEDN cryptocurrency wallet in mid-May, announced its Canadian expansion in an official blog post. Backed by cryptocurrency exchange Gemini, Flexa’s international movement is preceded by support for cryptocurrencies litecoin and zcash and the launch of an Android beta mobile app.

North Korea is funding its weapons program with stolen cryptocurrency
MIT Technology Review
Hacking has become a central strategy for Kim Jong-un’s regime to generate revenue and soften the blow of economic sanctions. A new report from the United Nations, seen by the Associated Press, outlines the considerable breadth of the operation, which it says is being used to fund the development of weapons of mass destruction.

Four Benefits of Accepting Donations in Cryptocurrency
Julia Sakovich – Coinspeaker
Cryptocurrencies are able to revolutionize a great range of various spheres and sectors. And charity is not an exception. Cryptocurrencies are hailed by their more enthusiastic proponents as a panacea. A cure-all for exorbitant merchant fees, costly remittance, data fraud, supply chain tracking, and even global warming. If you can see past the exuberance and focus on the facts, however, you’ll find that cryptos yield a number of clear advantages over existing systems, with some industries particularly suited to the benefits afforded by digital assets and blockchain technology.

SEC Guidance Gives Ammo to Lawsuit Claiming XRP Is Unregistered Security
Nikhilesh De – Coindesk
A new amended complaint against Ripple draws on the SEC’s framework for digital assets to outline how XRP might be a security – likely the first federal case to do so. The filing also cites California advertising law, in addition to federal securities law, to argue that investors were misled by Ripple’s promotion of XRP. While the case is a year old and has not yet received class-action status, the new complaint is the first that Ripple must respond to with a substantive answer. Ripple has until mid-September to file its response.

European blockchain company Bitfury launches artificial intelligence unit
Gertrude Chavez-Dreyfuss – Reuters
European blockchain company The Bitfury Group, valued recently at more than $1 billion, has launched its artificial intelligence (AI) division, the company’s top official told Reuters in an interview.

Barclays cancels banking deal with Coinbase – Report
The Block Crypto
U.K.-based financial services giant Barclays has reportedly stopped providing banking services to cryptocurrency exchange Coinbase.

R3 to launch new office in Dublin following expansion plans; Dublin will be R3’s second European office and is set to open in 2020 as part of the vendor’s rapid expansion plans.
Joe Parsons – The Trade
Blockchain technology specialist R3 is planning to open a new office in Dublin, its latest expansive move after announcing it would double staff in London.


U.S. Farmers Stung by Tariffs Now Face a $3.5 Billion Corn Loss
Isis Almeida, Mike Dorning and Mario Parker – Bloomberg
Latest USDA report sparks biggest corn futures rout since 2013; Best opportunity to sell corn may now be behind, CoBank says
American farmers already stung by President Donald Trump’s trade wars now face billions of dollars in potential losses as controversial data from the U.S. government snuffs out a rally in corn.

U.K. Gears Up for Brexit-Driven Election That Boris Johnson Can’t Call
Robert Hutton – Bloomberg
Prime Minister Boris Johnson’s staff talk about an imminent general election as though it were a fact, and on Tuesday, a Conservative politician accidentally published a draft email about his “GE2019 team.”

Bid to Prosecute Boris Johnson Dealt Blow by London Judge
Jonathan Browning – Bloomberg
A London judge dealt another blow to an attempt to privately prosecute Prime Minister Boris Johnson, refusing to allow an appeal to the U.K.’s highest court.

Trump’s New Farm Tariffs No Match for China’s Retaliatory Duties
Bloomberg News
China imports more American farm products than it exports; Textile exports to the U.S. may keep falling on new tariffs
President Donald Trump’s new tariffs on Chinese agricultural products are likely to hurt the Asian nation a lot less than the retaliatory duties Beijing already imposes on the U.S.

Trump Plans to End Methane Curbs That Oil Companies Want to Keep
Jennifer A Dlouhy – Bloomberg
EPA plan would end oversight of methane leaks at oil wells; Move risks undermining climate sales pitch for natural gas
The Trump administration is readying a plan to end direct federal regulation of methane leaks from oil and gas facilities, even as some energy companies insist they don’t want the relief.

Waning of American Power? Trump Struggles With an Asia in Crisis; The Trump administration has taken a hands-off approach to conflicts – from Kashmir to Hong Kong to the rivalry between Japan and South Korea – as Asian officials escalate the battles.
Edward Wong – NY Times
For two and a half years, President Trump has said he is finally doing in Asia what he asserts his predecessor, Barack Obama, failed to achieve with a strategic pivot: strengthen American influence and rally partners to push back against China.


SEC Obtains Freeze of $8 Million in Assets in Alleged Fraudulent Token Offering and Manipulation Scheme
The Securities and Exchange Commission announced fraud charges against a Brooklyn individual and two entities under his control who allegedly engaged in a fraudulent scheme to sell digital securities to investors and to manipulate the market for those securities. On Aug. 12, 2019, the court entered an emergency freeze to preserve at least $8 million of the $14.8 million the defendants raised in 2017 and 2018 in an offering of digital securities.

Fidelity battles IRS in court over coal tax credits
Tim McLaughlin – Reuters
Fidelity Investments’ courtroom battle with the IRS over disallowed tax credits drew to a close on Tuesday when lawyers clashed over whether the mutual fund giant was a bonafide partner in the production of chemically treated coal. U.S. Tax Court Judge David Gustafson said he may deliver his decision in the case as early as Wednesday. The outcome of the trial is being closely watched by Wall Street firms and other U.S. corporations because the production of chemically treated, or refined coal, generates more than $1 billion a year in tax credits.

U.S. SEC to consider new guidance on investor use of proxy advisors
Jessica DiNapoli – Reuters
The U.S. Securities and Exchange Commission (SEC) on Tuesday said it would hold a meeting next week on whether to publish new guidance regarding the responsibilities of investors when relying on so-called proxy advisors.

FCA confirms delay to online payment anti-fraud rules; UK watchdog pushes back implementation of new regulations by 18 months
Nicholas Megaw i- FT
The Financial Conduct Authority has agreed to delay enforcement of new online payments regulations by 18 months, but rejected proposals to give even more additional time to particularly unprepared sectors like the travel industry.

Investing and Trading

Bonds Meet the Four Criteria for Defining a Bubble; The good thing, though, is that there’s presently no catalyst to burst it. Also, trade wars and Argentina.
John Authers – Bloomberg
There has been a tendency since the financial crisis to label any market that is rallying or deemed overvalued to be in a “bubble.” The word has become overused and debased. But if we treat it rigorously, the bubble concept is still vital in navigating financial markets. And the rigorous treatment reveals that bonds really are in a bubble.

Inaccurate earnings guidance is on the rise
Mushir Shaikh and Rachel Stone – S&P Global Market Intelligence
Earnings guidance has become a key indicator for investors and analysts, but the forecasts S&P 500 companies present to the market are getting less and less accurate. An S&P Global Market Intelligence analysis found that 16.75% of the index’s member companies that issued quarterly EPS guidance in 2018 went on to report results within their guided range. The percentage of companies with results within their guided range has declined on an annual basis every year since at least 2014.

Bizarre Pot Stock Moves May Be Linked to Blockbuster ETF Trades
Kristine Owram – Bloomberg
ETFMG Alternative Harvest ETF boosted holdings of CannTrust; CannTrust spiked as other weed companies slumped late Friday
Sharp moves by several pot stocks in the final minutes of trading last week may be the result of trades by the largest cannabis exchange-traded fund.

Male-dominated firms do worse than diverse rivals, Morgan Stanley finds
Oscar Williams-Grut – Yahoo Finance
The stock price of more gender diverse companies tends to do better than male-dominated rivals, according to Morgan Stanley (MS).

Bunge to move headquarters to centre of US farm belt; Crop processor’s relocation to result in $35m-$45m in restructuring charges
Gregory Meyer – FT
The global agribusiness Bunge plans to move its headquarters 1,000 miles west from suburban New York to the St Louis, Missouri area, in the heart of the US farm belt.


Danske’s Richest Clients Are Given a Guarantee on Negative Rates
Frances Schwartzkopff – Bloomberg
Bank says it won’t follow UBS and charge for excess deposits; Danish banks have spared private clients from negative rates
Danske Bank A/S, hampered by negative interest rates for longer than any European peer, promised wealthy depositors it will resist a trend to pass the burden on to them.

A Hedge Fund, a Bond Default and a College’s Fight to Survive
Amanda Albright – Bloomberg
Troubled dorm project could trigger accelerated debt payments; Historically black college is latest facing fiscal troubles
The fate of a Florida college founded by a black civil rights activist may be in the hands of a California hedge fund.

Star fund manager Michael Hasenstab lost $1.8bn in a single day; Emerging market bond guru was big loser from Argentina’s market slump
Colby Smith, Robin Wigglesworth- FT
Bond funds run by Michael Hasenstab, one of the fixed income market’s biggest investors, lost nearly $1.8bn in a single day during the stampede out of Argentine assets that followed the drubbing of President Mauricio Macri in the weekend primary elections.

Goldman Sachs rivals circle after top banker jumps to Elliott; Steven Barg joins activist hedge fund which he used to advise companies on how to beat
Lindsay Fortado, Ortenca Aliaj, James Fontanella-Khan and Arash Massoudi – FT
Competitors of Goldman Sachs’ market-leading activist defence advisory business have seized on an opportunity to snatch away corporate clients, after the head of the unit quit to join the hedge fund Elliott Management.

Greta Thunberg’s influence grows as young activist heads for US; Teenager is an inspiration for climate movement but also a lightning rod for criticism
Leslie Hook and Victor Mallet – FT
When Greta Thunberg started a solo climate protest outside Sweden’s parliament building last year, no one imagined it would spark a global movement that led to her being nominated for a Nobel Peace Prize.

H2O backing helped Windhorst settle suit tied to ex-Putin minister; London-based asset manager has been one of the biggest lenders to the German entrepreneur
Cynthia O’Murchu, Robert Smith and Max Seddon – FT
Financing from H2O Asset Management helped Lars Windhorst settle a lawsuit from a vehicle linked to the former energy minister of Russian president Vladimir Putin.

Time to buy battered European banks, says fund manager; Algebris founder cites ‘massive value’ and says shares have fallen too far
Laurence Fletcher – FT
A big sell-off in European bank stocks has gone on long enough, according to fund manager Davide Serra, who says the sector now offers “massive value” to long-term investors.

Warren Buffett Is a Huge Backer of U.S. Banks; Holdings in financial-services stocks have grown to represent about a fifth of Berkshire Hathaway’s market capitalization
Nicole Friedman – WSJ
Warren Buffett ‘s Berkshire Hathaway Inc. BRK.B 0.80% holds nearly $100 billion in financial-services stocks, underscoring the size of the billionaire investor’s ongoing bet on the future of the U.S. economy.

Commerzbank creates new capital markets division incorporating FICC; The newly formed group is led by Roman Schmidt, who took over the FICC business at Commerzbank earlier this year.
Jon Watkins – The Trade
Commerzbank has grouped its fixed income, currencies and commodities (FICC) and corporate finance businesses under a new umbrella of capital markets.


What Markets Are Telling Argentina’s Next Leader; Even before the fall election, Alberto Fernandez should embrace the current president’s economic agenda.
Mac Margolis – Bloomberg
Monday’s panic over Argentina’s weekend election results ó the peso fell 15% and the S&P Merval stock index suffered its second worst rout in 70 years ó may have been a bit overwrought. It was a primary election, after all, and the winning opposition candidate, Alberto Fernandez, has denied any intention to default on Argentina’s debt. But it sends an important message to Fernandez, and his running mate, former President Cristina Fernandez de Kirchner: Before the October election, they must convince stakeholders in Argentina’s economy that they understand the need to carry on with incumbent President Mauricio Macri’s economic reforms, if by another name.

German Economic Reversal Piles Pressure on Merkel for Stimulus
Piotr Skolimowski – Bloomberg
GDP declines 0.1%, led by drops in exports, construction; Euro-area economic growth slows to 0.2% in second quarter
Germany’s economy shrank in the second quarter, ramping up pressure on Chancellor Angela Merkel to unleash fiscal stimulus as manufacturers reel from a U.S.-China trade war.

On the Brink of Blackouts, Texas Makes Case for Power Plant Boom
Chris Martin and Naureen S Malik – Bloomberg
Texas is signaling that it needs another power plant build-out; Power hit $9,000 ceiling on Tuesday, generators’ shares gained
It may be time to start building power plants in Texas again. The state’s generators made a killing this week as unrelenting heat sent electricity prices skyrocketing to unprecedented levels, briefly blowing past a $9,000 a megawatt-hour price ceiling. That put producers more than two-thirds of the way toward profits that the state’s power market monitor says could touch off a power plant build-out. And the region’s only halfway into the cooling season.

China’s Slumping, So What’s Up With Coal?; Blame the trade war and Xi Jinping’s creed of self-reliance for this spending boom. Prices will suffer.
David Fickling – Bloomberg
While China’s industrial sector crashes, one corner is booming. Oddly enough, it’s probably bad news for participants.

In Hong Kong, a protest boom for some businesses starts waning
Vimvam Tong, Felix Tam – Reuters
John Lam’s safety equipment shop has been spared the global downdraft shaking Hong Kong’s economy. In times of crisis, businesses providing basic necessities tend to fare better.

Currency manipulation charges against China are unfounded; Trade tensions with the US have inevitably put the renminbi under pressure
Liu Guoqiang – FT
On August 6, the US Treasury department designated China as a currency manipulator, dealing a fresh blow to the world economy and global financial markets that are already grappling with multiple uncertainties. This move has not only violated international rules; it also contravened domestic law in the US. It is a worrying development.


Brexit: Hammond says PM’s demands ‘wreck’ chance of new deal
The ex-chancellor says removing the Irish border ‘backstop’ is a “wrecking tactic”
Former Chancellor Philip Hammond has accused the PM of trying to wreck the chance of a new Brexit deal, by making demands the EU could never accept.

Hammond Warns Johnson He’ll Fight a No-Deal Brexit in Parliament
Robert Hutton- Bloomberg
Former chancellor says bar to EU negotiations is too high; Is joined by 20 other Tories in telling PM to change course
Philip Hammond warned Prime Minister Boris Johnson he’ll work through Parliament along with other former Cabinet ministers to try to stop the U.K. leaving the European Union without a divorce deal.


It’s Been 40 Years Since Our Cover Story Declared ‘The Death of Equities’; And people never tire of reminding us of the bull market that followed.
Peter Coy – Bloomberg
We’re still getting grief for a cover story that appeared in BusinessWeekóthe ancestor of Bloomberg Businessweekófour decades ago. On Aug. 13, 1979, the headline on the cover was “The Death of Equities: How Inflation Is Destroying the Stock Market.” Three years after that article appeared, the stock market hit bottom and then began a remarkable resurgence. The total return on the Standard & Poor’s 500-stock index since its 1982 low, with dividends reinvested, has been nearly 7,000%. Not bad for a corpse.

‘Billions’ Portrayal of Cayuga Spurs Lawsuit Against Showtime
Bob Van Voris – Bloomberg
In the hit Showtime series “Billions,” it seems, everybody’s somebody. Ruthless hedge fund titan Bobby Axelrod evokes Steven A. Cohen, the billionaire founder of SAC Capital Advisors. U.S. Attorney Chuck Rhoades is a Preet Bharara type. And then there’s the Cayuga nation, cryptically standing in for … the Cayuga nation.

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Clearinghouse Urges Faster Trade Settlement Amid GameStop Scrutiny

Clearinghouse Urges Faster Trade Settlement Amid GameStop Scrutiny

First Read $29,776/$300,000 (9.9%) ++++ ++++ Hits & Takes John Lothian & JLN Staff Maureen Downs has been re-elected as the chair of the NFA Board of Directors. Also, Don Thompson of JP Morgan is to serve as vice chair. Also, elected to two-year terms as...

Japan Exchange Appoints Hiromi Yamaji as Head of Tokyo Bourse

Japan Exchange Appoints Hiromi Yamaji as Head of Tokyo Bourse

First Read $29,676/$300,000 (9.9%) Gabriella Kusz and Patrick Troy ++++ Hits & Takes John Lothian & JLN Staff The artist who deposited an illegal charging bull sculpture in lower Manhattan has died at the age of 80. Arturo Di Modica, the Sicilian-born sculptor...

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