NFX Basis Point Value Contracts; One quarter hubris, three quarters details
John Lothian – JLN
The hubris is mine, not Nasdaq’s. Over 20 years ago I came up with the idea for an innovative new futures contract that would improve hedging and engage speculators in new ways in fixed income trading. The idea was basis point value futures.
Today, Nasdaq announced just that: a new U.S. Treasury futures product that builds on their cash Treasury market and allows customers to use “the dollar value of one basis point” to more accurately hedge a portfolio of cash Treasurys. The proper name of the contracts is: U.S. DV01 TREASURY FUTURES.
I have shared this idea with many people over the years, always with a disclaimer that it would take some people at a higher pay grade or education level to make it work. And so the braintrust at Nasdaq did the hard work of talking to clients, regulators and brokers and is giving it a try.
For the rest of the commentary, click HERE
Hits & Takes
According to a recent Gallup poll, in the U.S., a record-low 47 percent of the populace is extremely proud to be American. How does it break down? More men are proud than women, more whites than non-whites, more older people than younger people, more non-college grads than college grads, and more conservatives than liberals (by a wider margin). Happy Fourth of July! ~SD
CME Group reported record monthly ADV in June for its ag options complex, hitting 393,000 contracts per day, up 24 percent from the prior quarter. Electronic options in ags was 304,000, up 28 percent, also a record.~JK
FIA IDX 2018 – Nasdaq looks to grow into sell-side tech provider
Nasdaq is looking for a new client base – the sell side. Given its broad technology reach, the company believes it has the products and infrastructure that banks and brokers need in today’s regulatory and trading environment. Speaking to JLN at the FIA IDX event in London, Carl Slesser, head of product management, banks and brokers at Nasdaq, said such firms are more open to outsourcing or partnering with companies like Nasdaq.
Trump goes to war with corporate America; The president’s widening trade war is pushing longtime GOP allies to the front lines of a fight against the Trump administration.
Ben White and Megan Cassella – Politico
President Donald Trump is now at full-scale war over trade policy with some of the Republican Party’s staunchest allies in big business, including executives at iconic American brands such as General Motors and Harley-Davidson who previously shied away from criticizing an often irascible president.
***** I dislike the rhetoric of “war” versus something more civil like “commercial and political difference of opinions.”
Sports are not markets, predictions ain’t investment
Dan McCrum – FT
Tournaments have a place in economics. One of the insights popularised by Freakonomics back in 2005 was the idea that some jobs are tournament-like. Chicago drug gangs and sports and entertainment industries offer winner-take-all rewards, and chief executive pay is going that way too.
****Bu-bu-but that’s not what my buddy Frankie No-Toes says…~SD
From Executive Suite to Jail: One German CEO’s Tales of Prison
Karin Matussek – Bloomberg
Ex-top manager recalls when the door shut for the first time; Former Bertelsmann head says humility is key for Audi CEO
One moment you’re the globetrotting head of a corporation with an army of subordinates to execute your every order, the next you’re behind bars and required to file requests for items as banal as toilet paper.
***** Freedom is a precious thing.~JJL
Monday’s Top Three
Our top read stories of the day were led by the FT’s New capital rules spark trader retreat from listed derivatives. Second was Institutional Investor’s Here’s Why CTA Strategies Are Failing Investors. Third was Bloomberg’s Key Passages From Satoshi Nakamoto Excerpt on Bitcoin Beginnings
128,984,431 pages viewed; 23,173 pages; 213,824 edits
Nasdaq Launches U.S. Treasury Futures Product
Nasdaq announced it will launch U.S. DV01 Treasury Futures, a new interest rate risk product trading on the Nasdaq Futures Exchange (NFX). U.S. DV01 Treasury Futures, or “the dollar value of one basis point,” will allow clients to hedge against the price sensitivity of a portfolio of cash market U.S. Treasuries across the yield curve from 2-year to 30-year maturities. The new product will be available for trading on Thursday, July 19, 2018, pending regulatory approval.
Cboe Europe, TP ICAP to open EU bases ahead of Brexit
Philip Stafford – FT
Cboe Europe, the stock exchange, and TP ICAP, the interdealer broker, plan to set up EU bases to secure access to the trading bloc amid uncertainty over the terms of Britain’s departure next year.
SEC commissioner becomes champion for ordinary shareholder; Robert Jackson Jr is a lonely voice in a pro-corporate Washington
Sujeet Indap – FT
In the Trump era, CEOs and Masters of the Universe seem to have the run of Washington. But in recent months, ordinary shareholders are finding a rare advocate with influence in the guise of a young law professor.
Bitcoin Futures Killed the Bitcoin Rally (and Will Keep It from Returning), Economists Say
Kevin Kelleher – Fortune
Predicting the future direction of Bitcoin and other cryptocurrencies has often proved to be a fool’s errand. One explanation cited by some economists for this year’s collapse in digital currency prices also suggests that a major Bitcoin rally may not return for a while.
Coinbase Adds 10 Customers for Its New Crypto Custody Service
Olga Kharif and Benjamin Bain – Bloomberg
Coinbase Inc., one of the world’s largest cryptocurrency exchanges, said 10 hedge funds and family offices have begun using the custody service it debuted last week that seeks to safeguard digital tokens in a manner similar to traditional securities.
** And see JLN’s Chicago is Crypto-fuel For the Coinbase Rocket
Trump may use New Deal-era agency to aid farmers; Roosevelt’s Commodity Credit Corp could help soyabean growers cope with Chinese tariffs
Gregory Meyer – FT
The Trump administration is exploring the use of a New Deal-era agency to salve financial wounds US farmers have suffered from its trade battle with China.
****SD: Consider this: according to its website, CCC crop year commodity loans of less than one year in 2016 had interest rates ranging between 1.5 and 1.75 percent. In June, the CCC’s interest rate on the same loan was 3.25 percent.
World’s first ‘integrity rating’ agency launched; Sigma Ratings to publish data focused on 500 financial groups in 16 emerging markets
Patrick Jenkin – FT
A former US government counter-terrorism expert and an emerging markets healthcare lawyer are poised to launch a new rating agency for conduct risk, as the world’s banks struggle to avoid doing business with terrorists, drug dealers and other organised criminals.
Fed Offered Goldman, Morgan Stanley Path Around Stress-Test Failure
Liz Hoffman and Lalita Clozel – WSJ
Federal Reserve officials called executives at Goldman Sachs Group Inc. and Morgan Stanley 10 days ago with an unusual offer.
The two Wall Street titans had flunked a portion of the Fed’s stress test, which simulates an economic crisis. Passing would require cutting almost in half the combined $16 billion they had hoped to pay out to shareholders, according to people familiar with conversations between the Fed and both banks.
Michael Dell on Going Back Under Wall Street’s Spotlight; CEO denies new tax law had any impact on Dell Technologies’ reverse-merger plan
Jay Greene – WSJ
When Dell Inc. closed the biggest technology merger in history nearly two years ago, the company’s namesake founder said the new entity would enjoy its freedom away from the glare of Wall Street and its obsession with quarterly earnings.
A Cheaper Cup of Joe Is Brewing as Coffee Falls to 29-Month Low
Marvin G Perez – Bloomberg
Futures slump as Brazil’s output goes up, currency weakens; Starbucks, Nestle may benefit from declining bean costs
As Brazil’s football team gains in the World Cup, one of the nation’s main commodity exports is suffering.
Glencore Slumps as U.S. Orders Documents in Corruption Probe
Thomas Biesheuvel and Franz Wild – Bloomberg
Stock plunges as much as 13% after subpoena from U.S. DOJ; Request relates to Glencore’s business over past decade
Glencore Plc tumbled the most in two years as U.S. authorities demanded documents relating to possible corruption and money laundering.
Record setting year for the Russell Shuffle
Ron Bundy – FTSE Russell Blog
The end of June is a very exciting time, but not because the schools are closed and the beaches are open. Around here, it’s time for the Russell Shuffle – as some pundits call it – which means rebalancing Russell US Indexes’ entire platform. This year’s narrative was clearly about breaking records. Indexes representing more than $30 trillion in US market capitalization and tracked by more than $9 trillion were rebalanced on Friday, June 22, making it the largest Russell Reconstitution in our more than 30-year history. In addition, 1.2 billion shares changed hands in less than a single second via the Nasdaq closing cross on Friday, which was also a record, and we hit some other milestones, as well.
China central bank seeks to reassure after renminbi tumble; Traders cite central bank support for currency as state media criticise ‘irrational overreaction’
Gabriel Wildau – FT
China’s renminbi suffered one of its worst intraday falls on record on Tuesday before the central bank appeared to intervene to stabilise the market.
Exchanges, OTC and Clearing
Nasdaq launches US interest rate futures contract
Joe Rennison – FT
Nasdaq is moving forward in its attempt to revive its ailing Treasury trading business, launching a futures contract designed to help investors protect against movements in US interest rates.
***** Story from [https://jlne.ws/2u1NyV|The Trade too]].~JJL
Actual Cleared Volumes vs. Mandated Cleared Volumes: Analyzing the US Derivatives Market
Encouraging the clearing of standardized derivatives has been a major priority for policy-makers. This has primarily been pursued through the implementation of clearing mandates, but other incentives also exist – netting and capital benefits, and the rollout of margining requirements for non-cleared derivatives, for example. As a result, the majority of interest rate derivatives (IRD) traded notional is now cleared.
Amsterdam adds to exchange Brexit spoils with Cboe win
Simon Jessop, Carolyn Cohn, Huw Jones – Reuters
Chicago-based Cboe Global Markets (CBOE.O) will open a European Union stock trading venue in Amsterdam in time for Britain’s departure from the bloc next March, adding to the Dutch city’s Brexit spoils.
Most CME ag block trades occur in nearby contracts -U.S. CFTC
Julie Ingwersen – Reuters
During the first three months in which the CME Group allowed privately negotiated “block trades” in agricultural futures and options, 75 percent of those trades occurred in highly liquid nearby contracts, the U.S. Commodity Futures Trading Commission said in a report on Monday.
CME Group Averaged 18.4 Million Contracts Per Day in Second Quarter of 2018, Up 12 Percent from Second Quarter of 2017
CME Group reached average daily volume (ADV) of 18.4 million contracts during the second quarter of 2018, up 12 percent from the second quarter of 2017. June 2018 ADV reached 17.8 million contracts, up 8 percent from June 2017. Open interest at the end of June was 115 million contracts, an increase of 2 percent from the end of June 2017, and up 6 percent from year-end 2017.
LME to strengthen scrutiny of DRC-sourced cobalt; Fears grow over use of child labour in the electric car supply chain
Henry Sanderson – FT
The London Metal Exchange is intensifying its scrutiny of companies that source their cobalt from mines in the Democratic Republic of Congo, amid growing fears over the use of child labour in the electric car supply chain.
OCC Cleared Contract Volume Up Six Percent in June
OCC, the world’s largest equity derivatives clearing organization, announced today that total cleared contract volume in June reached 409,115,041 contracts, up six percent compared to June 2017 volume of 387,597,223. OCC’s year-to-date average daily cleared contract volume is up 22 percent with 21,012,628 contracts compared to 17,174,603 contracts in 2017.
June Volume Reaches Top Ten All Time
Actual Cleared Volumes vs. Mandated Cleared Volumes: Analyzing the US Derivatives Market
LCH adds JP Morgan as first US bank to CDS clearing service; JP Morgan is using LCH CDSClear to act as a clearing broker in credit default swaps for Swedish pension fund AMF.
Hayley McDowell – The Trade
JP Morgan has gone live with LCH CDSClear as the first US investment bank to offer client clearing of credit default swaps (CDS) with the service.
Block trades or central limit order book? EnLight-ment and Improve-ment may be the solution.
There seems to be a trend that clients appear to be using block trades in ever greater frequency, while exchanges appear to want to push everything onto a central limit order book. A classic contradiction that needs urgent resolution?
A. Introduction of three Single Stock Futures; B. Withdrawal of admission of seven Single Stock Futures and two equity options
Partnership Program gains traction
Eurex Clearing continues to receive broad market support for its Partnership Program. So far, 29 market participants from the U.S., the U.K., Asia and Continental Europe have joined the program to back the joint objective of building a liquid alternative to clear Euro-denominated OTC interest rate derivatives in the EU27.
High number of IPOs and ETF listings in the first half of the year; Trading revenues have been significantly higher since January than in the previous year
There were significantly more IPOs and listings of new Exchange Traded Funds (ETFs) in Deutsche Boerse’s cash markets in the first six months of the year than in previous years. The trading volume of the cash market platforms Xetra , Frankfurt Stock Exchange and Tradegate Exchange , at EUR 906.7 billion in the first half of the year, was around 25 percent higher than in the same period of the previous year at EUR 726.6 billion.
J.P. Morgan goes live with client clearing at LCH CDSClear
J.P. Morgan is the first US bank to offer client clearing through CDSClear; AMF is live clearing both EUR and US CDS products; Builds on LCH SA’s growing CDS clearing business
LCH, a leading global clearing house, today announced that J.P. Morgan has gone live as CDSClear’s first US bank to offer client clearing. As a result, Swedish pension fund AMF is now clearing European and US credit default swaps through CDSClear, using J.P. Morgan Securities Plc as its clearing broker. This development is the latest achievement for CDSClear, which began offering client clearing in 2017.
Bond Connect Celebrates First Anniversary
The Bond Connect Company Limited (BCCL) today (Tuesday) marked the first anniversary of Bond Connect, a mutual bond access programme between Hong Kong and Mainland China, with a forum and awards gala held at the Hong Kong Exchanges and Clearing Limited’s (HKEX) Connect Hall.
Nasdaq Welcomes 151 New Listings in First Half of 2018
Nasdaq (Nasdaq:NDAQ) announced today that it welcomed a total of 151 new listings in the first six months of 2018 – including 93 initial public offerings (IPOs), raising a total of approximately $15 billion in the U.S. market. With a 69 percent win rate, Nasdaq has extended its IPO leadership to 18 consecutive quarters in the U.S.
Trading Overview in June 2018 & First Half of 2018 (January to June); Japan Exchange Group released Trading Overview in June 2018 & First Half of 2018 (January to June).
Cash Equity Market – In the first half of 2018, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 3.1141 trillion.
Derivatives Market – In the first half of 2018, total derivatives trading volume was 186,643,888 contracts, the third-highest record over the same period.
Vienna Stock Exchange: Equity Turnover Up 3.7% At HY1 2018 And 50% In Five-Year Comparison
In the first half of 2018, the Vienna Stock Exchange achieved an equity trading volume of EUR 37.06 billion. A particularly robust first quarter increased trading and turnover by 3.7% yoy (HY1 2017: EUR 35.72 billion). In a five-year comparison, turnover was 50% higher. At an average monthly trading volume of EUR 6.18 billion, Vienna currently ranks 11th in a ranking of 22 European stock exchanges.
Nasdaq is going after an exchange behemoth with a new futures product that’ll take advantage of a $1 trillion shift in the economy
Frank Chaparro – Business Insider
US Treasurys are heating up, and now Nasdaq is launching a new product to capitalize on what could be a $1 trillion shift in the market.
Personal Loans Surge to a Record as Fintech Firms Lead the Way
Hannah Levitt – Bloomberg
LendingClub, Social Finance push a ‘core banking product’; Goldman Sachs among established banks with an online lender
Heather Turner and her husband needed a few thousand dollars to jump-start the adoption of a teenager from Ukraine, and their timing was good: Lenders led by online firms have opened the spigot for personal loans, even if it comes at a steep price.
Oracle chooses Brussels for European fintech innovation programme
Andrew Ross – Information Age
Oracle says it plans to dedicate additional European Staff and resources to develop “mutually monetizable relationships” with fintech and digital banking innovators.
Rik De Deyn, senior innovation director at Oracle, said: “At Oracle, we realise that in Europe, results-driven digital innovation is thriving because of the historical roots of banking. We are choosing Brussels as our fintech centre for mainland Europe because of its excellent location.”
Abu Dhabi and Hong Kong sign fintech regulatory agreement
Nik Pratt – Funds Global Asia
Abu Dhabi Global Market (ADGM), the emirate’s international financial centre, has signed a cooperation agreement with the Hong Kong Monetary Authority (HKMA) to jointly promote their respective fintech sectors.
Bermuda to create new class of banks to encourage fintech
The Government of Bermuda is to amend the Banking Act to create a new class of bank specifically to cater to local fintech and blockchain companies.
Illegal Crypto Stock Sales Lead SEC to Settle With Nevada Men
By Chris Dolmetsch – Bloomberg
Two Nevada men agreed to settle a lawsuit by securities regulators that accused them of profiting from illegal sales of a Hong Kong company that surged more than 900 percent last year.
Survey Shows 40% of Canadians Have Sold Their Cryptocurrency
A recent study investigating the investments habits of Canadians found that 40% of Ontario’s resident investors have sold their cryptocurrency holdings.
Brokers Could Bring Billions to the Crypto Markets
Viraj Shah – [blokt] – Blockchain, Bitcoin & Cryptocurrency News
The democratic, decentralized setup of digital currencies has kept brokers at bay. While Wall Street has been skeptical of the potential of digital currencies, a telltale sign of newfound interest could be the advent of brokerage services. The high barriers to entry and potential security risks have deferred institutional and traditional investors from dabbling in the crypto markets. As intermediaries help structure the industry, it could lower the bar for entry and lessen these risks, helping to attract billions of dollars of new money and giving a much-needed push to digital currencies, which have been experiencing falling valuations for almost six months now.
Blockchain Voting Notches Another Success – This Time in Switzerland
David Meyer – Fortune
The most high-profile use of blockchain technology, which records information in ledgers distributed across many computers, is for cryptocurrencies such as Bitcoin. But there’s increasing interest in using the blockchain to record votes, too.
India’s top court refuses to lift ban on cryptocurrency exchanges
Nupur Anand – Quartz India
India’s supreme court has refused to grant any interim relief to cryptocurrency exchanges against the Reserve Bank of India’s (RBI) crackdown on them.
Institutional money stands at the gates of cryptocurrency; Experts are predicting that institutional money will soon be flowing into cryptocurrencies, but most are still just watching with a keen interest, so what is putting them off?
Jon Watkins – The Trade Crypto
‘Cryptomania’ has swept the world. In their relatively short lifespans, digital currencies have attracted phenomenal retail interest from novice investors, been tipped as a replacement for fiat and have propelled Bitcoin to become a household name worldwide.
Coinbase has been quietly working on a new program to police its markets, and it’s hired a former NYSE exec to lead the effort
Frank Chaparro – Business Insider
Coinbase, the cryptocurrency exchange operator, is building out a platform to better monitor its markets. The San Francisco-based firm has brought on Peter Elkins, a former executive at the New York Stock Exchange, to lead the efforts. Elkins, who previously was head of market surveillance at the Big Board, is currently building out a team for the so-called Coinbase Trade Surveillance Program, Elkins told Business Insider in an interview.
The 3 Types of Cryptocurrency Traders that are Kicking Your Butt
Anthony Xie – Traders Magazine Online News
In a fair and regulated environment, investors have equal access to information. Winners and losers are determined by whoever can make a better prediction.
Trump’s Ineptitude Is No Joke; The administration’s missteps continue unabated.
Jonathan Bernstein – Bloomberg
It’s hard to imagine a better quick story summing up the Donald Trump administration than the one that broke Sunday night about a bill the White House was preparing to, as Jonathan Swan at Axios put it, “declare America’s abandonment of fundamental World Trade Organization rules” by giving the president authority to unilaterally break those rules.
A Morgan Stanley Star Wants You to Back His Political Movement; Will Americans embrace a new party founded by bankers?
Sonali Basak, Max Abelson – Bloomberg
Eric Grossman doesn’t look like he would want to do anything drastic. The top lawyer at Morgan Stanley is a 51-year-old homeowner in the New York suburbs with twin sons and a seat on the firm’s management committee. He’s another man in a power suit in a midtown Manhattan bank.
Trump’s Oil Tweet Was a Show of Farce; His own policies have helped lift prices, and blustering won’t solve it.
Liam Demming – Bloomberg
President Donald Trump indulged in a little “energy dominance” this weekend. In the process, he showed who really has the whip hand.
If Faith in Democracy Ebbs, Danger Rises; In today’s divisive political climate, signs of a decline in confidence in democracy itself are starting to appear
By Gerald F. Seib – WSJ
Important as civility in public life is, something even more important appears to be imperiled in today’s charged political climate: faith in democracy itself.
CFTC Staff Issues Report Assessing CME Agricultural Block Trades
The Commodity Futures Trading Commission’s (CFTC) Market Intelligence Branch (MIB) issued a report today that analyzes agricultural block trading in the grains, oilseeds, and livestock markets at the Chicago Mercantile Exchange (CME).
Federal judge awards FDIC $625 million from PwC, in largest ever auditor liability award
A federal judge awarded the Federal Deposit Insurance Corporation the maximum damages possible, $625.3 million, on Monday for PricewaterhouseCoopers’ negligence in auditing Colonial Bank.
CFTC Charges Operator of Commodity Trading Fund with Defrauding Fund Participants
The Commodity Futures Trading Commission (CFTC or Commission) today filed a civil enforcement action in the U.S. District Court for the Eastern District of New York, charging Defendant Harris Bruce Landgarten of Old Brookville, New York, with defrauding participants in a commodity pool that he operated, the Tradeanedge Members Fund (TMF). The CFTC Complaint also charges Landgarten with providing his pool participants false account statements and with commingling pool funds with non-pool funds.
Glencore subpoenaed by US justice department; Shares fall 12% after miner told to produce documents on Nigeria, Congo and Venezuela
Neil Hume, David Sheppard and Henry Sanderson in London- FT
Glencore has been ordered to hand over documents and records to US regulators related to its operations in Nigeria, the Democratic Republic of Congo and Venezuela dating as far back as 2007, sending its shares tumbling 12 per cent.
SEC opens investigation into Facebook data breach; Regulator joins FBI, Justice Department and Federal Trade Commission in probing group
Tim Bradshaw in Los Angeles – FT
The US financial regulator is probing Facebook’s public disclosures about its massive data leak to Cambridge Analytica, opening yet another front in the social network’s global regulatory battles.
SEC, FBI Question Facebook Over User Data; The SEC and FBI join the Justice Department and Federal Trade Commission in probing how Cambridge Analytica purchased data on 87 million Facebook users without their consent
By Georgia Wells – WSJ
The federal investigation into how Facebook Inc. FB 1.56% has handled information about its users is getting bigger.
ESMA denies pension funds extended clearing exemption; Pension funds will have to begin clearing OTC derivatives contracts on 17 August 2018, despite calls for a third extension.
By Joe Parsons – The Trade
Pension funds will no longer be spared from mandatory clearing of OTC derivatives from August after Europe’s regulatory watchdog refused to extend their exemption from the ruling.
ESMA publishes the responses to its Consultations on securitisation repositories
The European Securities and Markets Authority (ESMA) has published the responses received to its Consultations on securitisation repositories.
ESMA issues clarifications on the clearing obligation for pension scheme arrangements
The European Securities and Markets Authority (ESMA) has issued today a statement on the clearing obligation for pension scheme arrangements (PSAs), with the objective to avoid, to the extent possible, disruption to certain PSAs who may face potential challenges clearing their OTC derivative contracts on 17 August 2018, when the current, and final, exemption from the clearing obligation under EMIR expires.
ESMA Publishes 2017 Annual Report ESMA
The European Securities and Markets Authority (ESMA) has published its 2017 Annual Report, which sets out ESMA’s objectives, activities and key achievements during the course of 2017.
Reminder: FINRA Data Feed Test IP Addresses
Beginning Monday, July 9, 2018, FINRA will introduce dedicated test broadcast IP multicast channels for evening format testing for its data feedsóBTDS, ATDS, 144A, SPDS, SPDS-144A, TDDS 2.0 and BBDS, and will discontinue disseminating test data via the production data feed channels. The new channels are provisioned in the existing FINRA network for all approved direct data recipients. The test data stream will be supported via the “A (Primary)” and “B (Back-Up)” multicast groups. To receive streaming data via the new multicast groups direct data recipients should ensure their network providers have provided access.
Declare Your Financial Independence This 4th of July
This week, Americans will celebrate the 242nd Anniversary of the day our founding fathers declared the country’s independence. Why not make this the year you declare your own independenceóyour financial independence?
Investing and Trading
ETF Industry Has Reached Maturation Without Maturing
Jared Dillian – Bloomberg
Blackrock Inc., the top issuer of exchange-traded funds in terms of assets under management, will close 16 ETFs this month. Even though ETFs get shuttered all the time these days, I was mildly amused by the names of some of these funds, such as the iShares Edge MSCI Min Vol EM Currency Hedged ETF. The closing of that the one will surely upset those who are a sucker for a good Venn diagram of emerging markets, factor investing and currency hedging.
Dell Deal Is as Good as It Gets for VMware; Tech giant’s plan to return to public market among the least-bad options
Dan Gallagher – WSJ
Dell Technologies Inc. going public again may have been inevitable. That doesn’t mean it was ever going to be easy.
It’s Beginning to Look a Lot Like an Oil Shock; The market is out of Trump and Saudi Arabia’s control.
Mark Gongloff – Bloomberg
Nymex crude-oil futures fell a bit today, but have lately rallied to their highest levels in nearly four years, more than doubling from the bottom of a crash a couple of years ago. Prices aren’t catastrophically high yet – at about $74 a barrel, they’re still much lower than the $100 or so of earlier this decade, when the economy was on shakier ground. (And if you want society to swear off fossil fuels, then $74 isn’t high enough.)
Where Were You During the Great T-Bill Massacre of 2018?; Surprising four-week auction leads market commentary.
Robert Burgess – Bloomberg
Nothing scares big investors more than the notion that the U.S. could hold a bond auction and nobody showed up. After all, Treasuries are the world’s safest investment, backed by the full faith and credit of the U.S. The securities, especially Treasury bills, are as good as cash. But on Monday, investors ó and the Treasury Department ó got a whiff of what disaster could look like if investors decided U.S. debt wasn’t worth the paper it was printed on.
Futures Wash Fears Away, Markets Look to the Green: Taking Stock
By Brad Olesen – Bloomberg
And just like that, we’re bouncing. S&P futures are picking up where the index left off into the close yesterday and markets worldwide look to the green (with the exception of the Hang Seng) after a rough-ish day Monday. Canada is set to join the fray today after its holiday Monday, and given the resource and energy-heavy concentration, I’m sure many of the stocks were happy to skip yesterday’s action.
Vanguard Group eliminates trading fees on almost all ETFs – including funds from most of its rivals; Vanguard Group’s online brokerage platform will be the first to offer commission-free trading on most ETFs, more than 1,800.
Eric Rosenbaum – CNBC
There has been a lot of talk in the world of exchange-traded funds that giants like Vanguard Group, BlackRock’s iShares and Charles Schwab are headed in the direction of trading without any management fee at all. We’re not there yet, but Vanguard Group is making a major move related to ETF fees that no other firm has yet made. Starting in August, investors using Vanguard’s online brokerage platform will be able to trade all ETFs on a commission-free basis, including ETFs from rivals iShares, Schwab and State Street Global Advisors.
As Dalio Steps Back, Two More Bridgewater Billionaires Rise
Tom Metcalf – Bloomberg
Greg Jensen and Bob Prince each own about 5% of the hedge fund; Bridgewater is planning to adjust its partnership structure
Ray Dalio is the first to admit that Bridgewater Associates is a tough place to work. But for those able to navigate the unorthodox culture — defined by Dalio’s mantra of radical transparency — the rewards are worth it.
Deutsche Bank Bid to Collect $320 Million From Vik Drags On
Aine Quinn – Bloomberg
Resort owner appealing order forcing him to come to U.K.; Vik refused to pay debt since losing $8 billion 2013 suit
Deutsche Bank AG has been trying to collect hundreds of millions from Norwegian billionaire Alexander Vik since he lost an $8 billion lawsuit against the lender in 2013.
Bank of America Sees a Replay of 1998 in Summer Pain Trades
Cecile Gutscher and Yakob Peterseil – Bloomberg
U.S. growth, flattening curve, tumbling EMs bear 90s hallmark; Deleveraging risks ahead for tech and credit markets: BofA
Bank of America Corp. sees a foreboding parallel in the current direction of markets: 1998.
MUFG to Add 100 Private Bankers at Venture With Morgan Stanley
Takahiko Hyuga – Bloomberg
Will move staff from lending unit, brokerage chief Araki says; Seeking to tap Morgan Stanley’s expertise via staff exchanges
Mitsubishi UFJ Financial Group Inc. plans to add 100 private bankers to its securities venture with Morgan Stanley and tap the Wall Street firm’s expertise to expand its business serving rich Japanese.
S&P 500 Firms Declared Record Dividend Payouts Last Quarter
Wendy Soong – Bloomberg
Record $124B cash distribution declared; 89 boosted payments; 10 companies announced dividend increases on accelerated basis
Positive earnings, results from a second round of the Federal Reserve stress tests, and tax reform contributed to 89 companies in S&P 500 to boost dividends in the second quarter versus 67 firms a year ago. Firms declared a total regular cash distributions of $124 billion vs $112 billion in the second quarter of 2017 — an 11 percent increase. Almost 83 percent of S&P 500 firms overall declared a dividend last quarter.
PwC ordered to pay $625m over Colonial Bank collapse; US FDIC wins largest ever damages award against an accounting firm
Alistair Gray in New York – FT
PwC has been ordered to pay $625m over its role auditing a US bank before its collapse in 2009, the largest damages award ever made against an accounting firm.
Societe Generale Reaches An Agreement With Commerzbank To Acquire Its Equity Markets And Commodities Activities – The Transaction Includes Commerzbank’s Investment Products, Flow Products, And Asset Management Businesses Worldwide, Including Associated Market Making, Sales And Structuring Capabilities
Societe Generale is announcing that it has reached an agreement to acquire Commerzbank’s Equity Markets and Commodities business (EMC), a leading European manufacturer, distributor and market maker of structured and flow products as well as asset management solutions. With a state of the art technology platform, it benefits from significant franchises in diversified and complementary segments. The activities in the scope of this transaction are based in Frankfurt, London, Hong Kong, Paris, Luxembourg and Zurich. The transaction excludes the Cash Equity brokerage and commodities hedging businesses of Commerzbank.
Chinese Money Should Play by the Rules; China needs to join a global effort to prevent a wave of debt crises.
Heidi Crebo-Rediker – Bloomberg
Global worries over trade wars, central bank rate hikes and geopolitical instability have hammered emerging-market debt in recent months. The fact is, over the past decade, many developing and low-income countries have simply borrowed too much. They borrowed from the markets, from banks and from other countries. In particular, they borrowed from China, which has averaged more than $100 billion in annual financing commitments since 2010.
China Set for Record Defaults, and Downgrades Tip More Pain
Total so far this year is approaching full tally for 2016; Regulators still seen intervening in case of systemic risk
China is zooming to a record year of corporate-bond defaults, with the 2018 total already more than three-quarters of the previous high even before an expected economic slowdown bites.
JPMorgan Warns a Trade War May Trigger China Corporate Defaults
Alfred Liu – Bloomberg
Escalation would weaken wider economy, hurt credit quality; Smaller banks most vulnerable to any trade war, Ulrich say
An escalation of trade tensions could add to defaults in China’s financial system, which is already in the midst of a deleveraging campaign, according to JPMorgan Chase & Co.
China to Cancel More U.S. Soy Shipments as More Tariffs Loom
Some 1.14 million tons are due to be shipped by end-August; China may suffer soybean shortage in 4Q, 1Q if dispute lasts
Chinese companies are expected to cancel most of the remaining soybeans they have committed to buy from the U.S. in the year ending Aug. 31 once the extra tariff on U.S. imports takes effect from Friday.
China Bank’s Capital Almost Wiped Out as Loan Rules Tighten
Guiyang Rural’s capital adequacy ratio falls below 1 percent; Raises new doubts about health of smaller Chinese lenders
A surge in bad loans has nearly wiped out the capital of a Chinese rural bank, according to a local ratings firm, raising fresh doubts about the financial health of the nation’s smaller lenders.
China issues U.S. travel warning amid trade tensions
China’s embassy in Washington has issued a security advisory to Chinese nationals traveling to the United States, the latest such warning as trade tensions escalate between the two countries.
Former Malaysia Prime Minister Najib Arrested in 1MDB Probe
Anuradha Raghu and Anisah Shukry – Bloomberg
Najib to be detained overnight, anti-corruption official said; Arrest made in connection with SRC International: task force
Former Malaysian leader Najib Razak was arrested in connection with an investigation into scandal-hit state fund 1MDB and was expected to be charged on Wednesday in Kuala Lumpur, according to the task force investigating the case.
Italian Bonds Lure Buyer in Shape of $1.6 Billion Hedge Fund
Marco Bertacche and Chiara Remondini – Bloomberg
Hedge Invest reopens long positions in Italian, Greek debt; Implosion of European Union is ‘highly unlikely’: Lanza
Italy’s sovereign bonds, the worst performers in the euro region this year, have found one ally as investors come to terms with the country’s first populist government.
China’s Foreign Investment Door Opens, But Only Barely; Fancy taking on a state-owned oligopoly? Didn’t think so.
David Fickling – Bloomberg
When is a loosening of foreign investment rules not really a loosening of foreign investment rules? When China’s doing it in the face of a brewing trade war.
Kenya Fund Managers Warn New Transaction Tax May Curb Investment
Adelaide Changole – Bloomberg
Kenyan banks have sued Treasury to stop implementation of tax; Treasury imposed 0.05% fee on 500,000-shilling transactions
Kenyan fund managers slammed a new tax on financial transactions, saying it risks inhibiting trading and reducing the country’s attractiveness to investors.
Inside the Dutch Effort to Win Business From Post-Brexit Britain
Will Hadfield, Viren Vaghela and Ruben Munsterman – Bloomberg
Almost every trading venue has picked Amsterdam as its hub; Visiting firms get meetings with regulators, rivals, realtors
At the arrivals hall of Amsterdam’s Schiphol airport, drivers bearing placards jostle with relatives to greet the 68 million passengers who pass through every year. For a select group of visitors, the Dutch government has lent a helping hand arranging the chauffeur service.
U.K. Lawmakers Ask BOE, Treasury for Assessment of Brexit Deal
David Goodman – Bloomberg
Treasury committee request analysis before parliament votes; Publications may evoke memories of pre-Brexit vote forecasts
U.K. lawmakers have asked the Bank of England and the Treasury to publish assessments on the impact of Brexit before parliament comes to vote on any deal.
One Of The Web’s Most Prolific Online Marketing Writers Has Been Promoting His Clients In Articles For Forbes, Entrepreneur, And Inc. Magazine
Jon Christian – BuzzFeed
Jayson DeMers is a prolific writer for some of the web’s most prestigious business publications. He’s published more than 700 articles for Forbes and over 300 for Entrepreneur, and has seen his work republished by Business Insider, NBC News, and Fox News. He’s also written for Inc. and HuffPost, and penned blog posts for Mashable, Time, TechCrunch, and even the Wall Street Journal.
ADM to buy French animal nutrition business Neovia for $1.8 billion
Sybille de La Hamaide, Tom Polansek – Reuters
Archer Daniels Midland Company (ADM) is in exclusive talks to take over French animal feed business Neovia for 1.5 billion euros ($1.8 billion) as part of the U.S. farm giant’s strategy to expand in the fast-growing animal nutrition sector.