NYSE’s Tech Upgrade Aims to Speed Up Trading; New Yorker running LSE ready to go the distance

Aug 5, 2019

First Read

The Highest Paid Grip in Chicago and Parts Beyond
John J. Lothian

Friday I was the highest paid “grip” in Chicago as I helped drag JLN’s video and lighting equipment to the Wrigley building in Chicago on Michigan Avenue for a video shoot with American Financial Exchange CEO Richard Sandor and Wedbush Executive Vice President Robert Fitzsimmons. JLN Producer Mike Forrester did all the hard work on the shoot. I just helped schlep the equipment and listened intently.

The shoot was in preparation for the launch of Ameribor on August 16, 2019, which happens to be the 42nd anniversary of the launch of the most successful futures contract in the 20th century, the 30-year U.S. Bond futures at the Chicago Board of Trade. Sandor picked this date intentionally.

The geniuses behind that launch were then-CBOT Senior Economist Richard Sandor and his political counterpart, CBOT Chairman Les Rosenthal

To read the rest of this commentary, go here.

(Click for larger image)

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Hits & Takes
JLN Staff

LME Week will take place this year from Sunday, October 27 to Friday, November 1st in London. The London Metal Exchange is offering a 10% discount for the LME Metals Seminar with early bird tickets, ending on Friday, August 30. More information can be found here.~SR

The Wall Street Journal has an editorial titled “The Killers in Our Midst,” noting that nearly all mass shooters have been young men alienated from society.~JJL

The Streetwise Professor’s latest commentary is titled “Pork Wednesday: A Tale of Gilded Age LaSalle Street, With a Heavy Dose of Irony.” It is the story about when a pork corner collapsed at the Chicago Board of Trade in 1893.~JJL

Note to Paul Chou, the chief executive of LedgerX, don’t threaten to sue your friends. The CFTC has been your friend so far. It is important to keep it that way.~JJL

Benjamin Cox was suspended for three weeks and fined $50,000 by CME Group for spoofing. SG Americas Securities was fined $6,000 by CME Group for failing to maintain information in the Exchange Fee System.~SD

The countdown clock is at 11 days and counting until the launch of the AFX’s Ameribor on the CFE.~JJL

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Share Trading Obligations Get Messy
JohnLothianNews.com
The best trading environments feature the best liquidity. But a no-deal Brexit could force some trading into inferior pools of liquidity. In this video, Cboe Europe President Mark Hemsley describes how share trading obligations could alter the profile of European equity trading.
Watch the video »

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CFTC’s Gorfine to Depart Agency
CFTC
The U.S. Commodity Futures Trading Commission announced today that Daniel Gorfine, the agency’s first Chief Innovation Officer and Director of LabCFTC, will depart in mid-August to return to the private sector. Mr. Gorfine also served as the Designated Federal Officer of the CFTC’s Technology Advisory Committee.
/jlne.ws/31ge3Wq

*****Thank you to Dan Gorfine for his service. He really helped define the role for LabCFTC and showed how a regulator can be a leader in the technology world.~JJL

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Apple’s stock takes a ‘gut punch’ from Trump’s tariff threat
Tomi Kilgore – MarketWatch
New tariff plan wipes out $44 billion in market cap, as analyst sees as much as $3 billion hit to earnings
Shares of Apple Inc. sank again Friday, as President Trump’s plan for new tariffs on China-made goods offers a conundrum to the technology giant, which has to decide whether to eat the extra costs or pass them on to consumers.
/jlne.ws/31gctDY

*****Adding a tax to Apple products can’t be good for anyone.~JJL

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Has the Jobs Report Become Irrelevant?
Market reaction to the latest figures shows just how little the current employment situation matters to either monetary policy or investors.
Robert Burgess – Bloomberg Opinion
Once the top dog of economic data points, the state of the labor market was little more than an afterthought to Federal Reserve Chairman Jerome Powell on Wednesday when he rattled off the list of factors that could influence monetary policy going forward, taking a backseat to trade, manufacturing activity and the economy outside the U.S.
/jlne.ws/2ZsIh7R

*****There are bigger fish to fry than a jobs report when we are at full employment.~JJL

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8chan cast out by Cloudflare after El Paso shooting; Internet forum used by extremists predicts it will be back online shortly
Martin Coulter – FT
The internet forum 8chan, which was used by the suspects of the El Paso and Christchurch mass shootings to announce their intentions, has been forced offline after its security provider withdrew services.
/jlne.ws/2OFG5Ja

*****This is the digital equivalent of breaking up the crowd. The crowd always finds a new place to meet.~JJL

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Friday’s Top Three
Empress trees absorb an average of 103 tons of carbon a year per acre. That ability to capture carbon was the subject of our top read story on Friday from Bloomberg We Already Have the World’s Most Efficient Carbon Capture Technology. Second was CoinDesk’s What Happened: Why the First Physical Bitcoin Futures Haven’t Launched. In third was an update from Crain’s Chicago Business about Cboe’s plans to move its Chicago HQ.

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MarketsWiki Stats
160,779,301 pages viewed; 23,873 pages; 221,051 edits
MarketsWiki Statistics

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CryptoMarketsWiki Coin of the Week:

CryptoMarketsWiki Website»

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

Recently updated pages include
Grayscale Investments
Coinbase
Algorand
Ripple

CryptoMarketsWiki Stats

1,197 pages; 10,674 edits
CryptoMarketsWiki Statistics

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Lead Stories

NYSE Aims to Speed Up Trading With Core Tech Upgrade; The exchange’s technology-overhaul project, called Pillar, has faced difficulties in prior rollouts
Alexander Osipovich – WSJ
A troubled technology overhaul at the New York Stock Exchange is about to face its biggest challenge yet. For the past four years, the NYSE has been replacing outdated systems that underpin its markets. The project, called Pillar, is designed to turbocharge the Big Board’s stock and options exchanges and help it regain market share from more tech-savvy rivals.
/jlne.ws/2yEZFuA

New Yorker running LSE is ready to go the distance; Investors hope Schwimmer can turn UK exchange into global heavyweight
Cat Rutter Pooley and Laura Noonan – FT
David Schwimmer did not panic when plans for the boldest acquisition in the London Stock Exchange’s long history were revealed by the Financial Times. Instead, the chief executive of one of the City of London’s oldest institutions went for a run.
/jlne.ws/2yD6dJV

Prepare for no-deal Brexit now, says EU finance watchdog; Banks and brokers warned not to expect more help from Brussels
Jim Brunsden – FT
The EU’s financial regulation chief has urged banks and brokers to finish their preparations for a no-deal Brexit, warning they should not expect further help from Brussels to cushion the impact of the UK leaving the bloc.
/jlne.ws/2OFhPH8

NYSE floor traders are facing job extinction
By John Aidan Byrne – NY Post
The New York Stock Exchange’s fabled floor traders, fearing steeper job losses in their already diminished ranks, are an endangered species.
/jlne.ws/2yFMLw8

US index funds less likely to hold companies to account, study finds; Report says rise of index investing shifts power from investors to corporate managers
Jennifer Thompson – FT
US index funds vote against management at investee companies less frequently than their actively managed counterparts when it comes to shareholder proposals on contentious issues such as executive pay, research has found.
/jlne.ws/2OFH3oM

Illiquidity will amplify magnitude of next bear market; Nuanced forces are at play and the Woodford saga may be the tip of the iceberg
Amin Rajan – FT
“Global market liquidity can freeze like the water in Davos,” said UBS chief executive Sergio Ermotti at the 2019 World Economic Forum in Switzerland.
/jlne.ws/2OCsrXp

Paul Myners: regulators have failed to act on liquidity risk; ‘An investment fund cannot be used like an ATM. The maturity mismatch is high,’ says former City minister
Owen Walker – FT
Paul Myners’ living room befits a man who, by his admission, has “10 or 11 jobs”. His long dining table is piled high with reports and briefings from multiple chairmanships and his role as a combative cross-bencher in the House of Lords.
/jlne.ws/2yAoo35

No one wins in the rabbit-hole world of negative interest rates; Hiding money in vaults might not be the ultimate intention but it’s a cheaper option
Patrick Jenkins – FT
It emerged last week that UBS is planning to charge its wealth clients, those with more than SFr2m ($2m) of deposits with the Swiss bank, a negative interest rate. Credit Suisse is thinking of doing the same. Other private banks already do this.
/jlne.ws/2yQshRH

HSBC chief executive John Flint ousted after less than 18 months; Board of one of the world’s biggest banks appoints Noel Quinn as interim CEO
David Crow, and Henny Sender and Don Weinland – FT
HSBC chief executive John Flint has been ousted after less than 18 months in the job having lost the confidence of the bank’s board of directors in an abrupt move for a company famed for its conservatism.
/jlne.ws/2yBE2LD

****Reuters here.

Premature Launch of Bitcoin Futures Turns Ugly for LedgerX Exchange
By Olga Kharif and Benjamin Bain – Bloomberg
Exchange CEO blasts CFTC for ‘breaking the law’ over Twitter; LedgerX had announced launch of physically-settled futures
The bragging rights to become the first cryptocurrency exchange to allow small investors to buy derivatives that pay out with Bitcoins are still up for grabs.
/jlne.ws/2yGdFnO

Deutsche Bank faces $1.1 billion bill to exit derivatives
Matt Scuffham – Reuters
Deutsche Bank has set aside over 1 billion euros ($1.1 billion) to cover the cost of offloading derivatives in its ‘bad bank,’ or capital release unit, three sources at the bank told Reuters.
/jlne.ws/2YCYNB5

Buy-Side’s 2019 US Commission Pool Dropped 42% From 2015 As Passive Management, Unbundling Hit US Institutional Equities Business Hard, Says TABB Group 2019 Equities Benchmark Study
Mondovisione
The reallocation of active to passive asset strategies, unbundling, streamlining funds’ execution infrastructure and increased volatility of US equities from 2018 into 2019 have significantly challenged buy-side head and senior traders. As a result, investment managers have told TABB Group they have significantly reduced their U.S. commission pool by 42% from 2015 peaks through 2019 and 27% from 2017.
/jlne.ws/2yzINoK

Is Trend-following Convexity Gone Forever?
Price Action Lab Blog
Is trend-following and especially managed futures convexity gone forever? We will try in this brief article to answer this question but first we will offer a simple definition of convex returns without any mathematical obfuscation.
/jlne.ws/31lPDeb

Big Oil’s Big Bet on Natural Gas Has Been a Big Headache
Bloomberg
The world’s biggest oil companies have been steadily shifting investments toward natural gas, driven by an emerging globally traded market and environmental concerns. But right now they’re taking a hit as prices tank.
/jlne.ws/31eVMIV

Deutsche Bank Tech Issue Causes Six-Hour Email Outage in U.S.
Sonali Basak, Kiel Porter and Jake Rudnitsky – Bloomberg
Deutsche Bank AG, which has been working to improve its technology, faced a systems outage in which email was unavailable for thousands of employees on Friday.
“Earlier today, we experienced an email outage that impacted DB employees in the Americas region. We have since resolved the issue and restored access for employees,” Deutsche Bank spokesman Troy Gravitt said in a statement. Trading was not affected, he said.
/jlne.ws/31ekYiO

Piles of Dirty Money Have Europe’s Banks Racing to Keep Up; Lenders are facing a labor crunch as they automate the fight against ill-gotten funds.
Ruben Munsterman, Edward Robinson – Bloomberg
For decades, increasing reliance on technology and automation has meant one thing for workers: fewer jobs. In a fast-growing corner of the finance industry, it’s doing the opposite as banks across Europe struggle to fill positions in units employing tech to combat money laundering.
/jlne.ws/2yDzHHw

UK watchdog says ‘rolling bad apple’ bankers still an issue
Huw Jones – Reuters
People in financial services jobs that have a black mark against their name at one company can still move easily to another firm and become a “rolling bad apple” despite efforts by Britain’s finance watchdog to improve conduct in the industry.
/jlne.ws/2yBYlbE

When the Market Meets Morality; Rev. Robert A. Sirico has spent decades defending capitalism from the left. Today the attacks come from the right too.
William McGurn – WSJ
Like most parish priests, the pastor of Sacred Heart of Jesus Catholic Church has plenty to do keeping the pews full and his school afloat. But as co-founder and president of the Acton Institute for the Study of Religion and Liberty, the Rev. Robert A. Sirico has another, equally demanding ministry: preaching the virtues of economic freedom.
/jlne.ws/2yIt9aA

Exchanges, OTC and Clearing

Cboe shrugs off LSEG’s Refinitiv acquisition as chief rules out large-scale mergers; Ed Tilly says Cboe does not need large-scale mergers, upon announcing plans to launch a new data platform.
Hayley McDowell – The Trade
Cboe Global Markets’ chief executive has shrugged off news of the London Stock Exchange Group’s (LSEG) move to acquire Refinitiv, stating that Cboe does not need large-scale mergers and acquisitions.
/jlne.ws/2OFqzgE

Eurex figures rise with the temperature: Eurex Exchange up by 18 percent in July
Eurex
Eurex, Europe’s largest derivatives exchange and part of Deutsche Bˆrse Group, saw an overall increase year-on-year in July. The number of traded contracts reached 130.0 million compared to 109.9 million in July 2018. This is an increase of over 18 percent.
/jlne.ws/2OGKH1N

KEX rolls out ‘mini’ futures designed to help investors hedge six base metals during Asian trade
Enoch Yiu, South China Morning Post via Yahoo
The operator of the Hong Kong stock exchange will launch US dollar-denominated “mini” futures for six base metals on Monday, reflecting the second batch of products launched within a month, as the exchange presses ahead with its strategy to become a leading Asian asset management centre within three years.
/jlne.ws/2T6oPvq

HKEX Rolls Out USD London Metal Mini Futures to Expand LME Trading in Asian Time Zone
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Monday) the introduction of six US dollar-denominated London Metal mini futures contracts – aluminium, zinc, copper, nickel, tin, and lead. These will provide additional options for investors with exposure to base metals denominated in US dollars in the Asian time zone and complement HKEX’s existing RMB futures products.
https://jlne.ws/2OFQLYB

Moscow Exchange Expands FX Market Offering
MondoVisione
On 5 August 2019, Moscow Exchange launched trading in the US Dollar/Japanese Yen (USD/JPY) currency pair. Trades will be settled same day (T+0), next day (T+1) and on T+2 after the trade date. ?vernight and tom-next swaps will be also available.
/jlne.ws/2yF5KXM

Fintech

How the Accused Capital One Hacker Stole Reams of Data From the Cloud; ‘Dude so many people are doing it wrong’; Paige Thompson allegedly exploited a weakness well-known among cybersecurity professionals
Robert McMillan – WSJ
The woman who allegedly pulled off one of the largest-ever bank-data heists appeared to have exploited a vulnerability in the cloud that security experts have warned about for years.
/jlne.ws/2yDuUGb

Market split on BoJo’s fintech factor
Alex Hamilton – bobsguide
With investment in UK fintech firms increasing year-on-year, market participants are debating just how new prime minister Boris Johnson might affect the industry. “I believe the new PM is increasing the level of risk and, in the short-term, reducing the level of return. That’s a double-whammy. So, it’s highly likely that investment in fintech will be hit if there’s a hard exit from the EU,” said Tony Craddock, director general of the Emerging Payments Association, over email.
/jlne.ws/33nustY

Tug of War: ING’s Legrand Digs Into the Bank’s Innovation Program
With BenoÓt Legrand firmly in the driver’s seat, the last four years have seen ING push to transform its IT landscape and approach to innovation.
Josephine Gallagher – WatersTechnology
Behind closed doors and within the four walls of a bank, there is a constant tug of war. It’s a battle of resources between what is crucial to business operations and regulatory requirements, and what can propel the institution into the future. In most cases, it is a losing fight for innovation. But when Ralph Hamers, CEO of ING, approached BenoÓt Legrand in 2015, he asked for his help with transforming the bank’s technology infrastructure and modernizing its approach to fintech.
/jlne.ws/2T5yUsx

As Japan frets about dearth of AI talent, Daikin develops own program
Tetsushi Kajimoto – Reuters
There’s a sense of panic within Japan Inc and the government – the world’s No. 3 economy doesn’t have enough experts in artificial intelligence and it’s time to do something about it.
/jlne.ws/2OB7w6T

Nyca Partners raises $210M to invest in fintech startups
Kate Clark – TechCrunch
Nyca Partners, a firm with investments in financial technology businesses including PayRange, Trellis, Affirm and Acorns, has collected another $210 million for its third venture capital fund. Located in New York, Nyca’s debut fund closed on $31 million in 2014. Its second fund, a similarly focused fintech effort, raised $125 million in 2017.
/jlne.ws/2T5ckjA

Cryptocurrencies

Bitcoin’s Computing Power Sets Record as Over 100K New Miners Go Online
Wolfie Zhao – Coindesk
The total computing power now dedicated to securing the bitcoin blockchain has set yet another record. According to data from mining services operator BTC.com, the average bitcoin mining hash rate over th last two weeks has reached 71.43 quintillion hashes per second (EH/s), up from 64.49EH/s on July 23. The threshold was breached as bitcoin adjusted its mining difficulty at block height 586,672 on Monday 2:52 UTC – that is a 6.94EH/s, or 10.78 percent jump since mid July.
/jlne.ws/2OGQvsi

Litecoin Just Halved Its Crypto Rewards for Miners
Wolfie Zhao – Coindesk
Litecoin (LTC), currently the fourth-largest cryptocurrency by market capitalization, has just reduced its block reward for miners by half.
/jlne.ws/2OGRo46

Blockchain start-up R3 brushes off Brexit and doubles down in London
Ryan Weeks – Financial News
R3, the blockchain provider backed by some of the world’s largest banks, has brushed off the ongoing Brexit uncertainty by taking new office space and preparing for a hiring spree in the UK capital.
/jlne.ws/31gfrIC

IBM and other companies launch new blockchain network for supply management
Gertrude Chavez-Dreyfuss – Reuters
International Business Machines Corp (IBM.N) announced on Monday a new blockchain network aimed at improving manual and cumbersome supply chain management.
/jlne.ws/2yGIOqY

Apple Card will not allow purchase of cryptocurrencies
Stephen Nellis – Reuters
The Apple Inc (AAPL.O) credit card being launched with Goldman Sachs Group Inc (GS.N) will not allow the purchase of cryptocurrencies with the card, according to a customer agreement posted to Goldman’s website on Friday.
/jlne.ws/33dwXPe

Lenovo, Glaxo, Nokia: Big Names Join New IBM Blockchain
Ian Allison – Coindesk
IBM has launched a new blockchain project called Trust Your Supplier (TYS), with big name firms Anheuser-Busch InBev, GlaxoSmithKline, Lenovo, Nokia, Schneider Electric and Vodafone already on board.
/jlne.ws/2yG1185

Crypto-Currencies Are Poised To Radically Change Finance … And Reshape Nations
Kurt Cagle – Forbes
In the 18th Century, a venture begun in England established an outpost in the New World around Hudson Bay. The Hudson Bay Company was given license by the crown to exploit the bounty of the Northernmost parts of North America, and eventually a trading network was built out, trading fur, woods, and mineral resources. This network manifested itself primarily through a series of forts that protected general stores, extending as far south and west as Oregon, along the Pacific Coast, forts that would in time become cities like Portland, Vancouver, Toronto and so forth.
/jlne.ws/2yCPVkb

Meet the ICO Pumper Who Makes His Living Manipulating Crypto Markets
Anna Baydakova – Coindesk
Alexey Andryunin, a 20-year old college student from Moscow, became a sensation after he quite openly told CoinDesk how his company was helping little-known token projects get traction via inflated trading volumes.
/jlne.ws/2OHutFH

Opinion: Bitcoin buyers are only fooling themselves ó again
By Gary Smith – MarketWatch
Money is the lynchpin of modern economies. We do not need to grow our own food, make our own clothes, and build our own furniture. We can specialize in what we do well and use the money we are paid to buy what we want.
/jlne.ws/2yDDS6j

Politics

Putin’s Pledge to Ditch the Dollar Is Slowly Becoming a Reality
Andrey Biryukov – Bloomberg
Euro closes in on dollar as top currency for exports to EU; India agreed to pay Russia in rubles for defense sales
Russia is acting on a pledge by President Vladimir Putin to shrink the role of dollar in international trade as tensions sour between Washington and Moscow.
/jlne.ws/2yFHXac

China Hits Back at Trump by Weakening Yuan, Halting Crop Imports
Malcolm Scott, Kevin Hamlin and Tian Chen – Bloomberg
Yuan plunges beyond 7 per dollar for first time since 2008; Beijing asked state-owned firms to suspend U.S. crop purchases
China responded to Donald Trump’s tariff threat with another escalation of the trade war on Monday, letting the yuan tumble to the weakest level in more than a decade and asking state-owned companies to suspend imports of U.S. agricultural products.
/jlne.ws/2yIkpkM

China Signals No Surrender to Trump’s Latest Tariff Threat
Shawn Donnan – Bloomberg
China wasted very little time in signaling on Monday that President Donald Trump isn’t the only one who can escalate a trade war. As the Chinese currency slumped below 7 to the dollar for the first time in a decade, officials in Beijing were telling state buyers to halt purchases of U.S. farm products.
/jlne.ws/2yEi0b1

UK’s Labour calls for investigation into finance minister Javid over Deutsche role
Reuters
Britain’s opposition Labour Party on Monday called for Prime Minister Boris Johnson to investigate his finance minister Sajid Javid’s role in financial misconduct during his previous career in finance before entering politics.
/jlne.ws/2yKmzjT

Andrew Bailey warns Boris Johnson: hands off the Bank of England
John Collingridge and Emma Dunkley – The Sunday Times
The favourite to be the next governor of the Bank of England has fired a shot across Boris Johnson’s bows, warning politicians not to interfere in its running.
/jlne.ws/2yDEn0b

Regulation

50 Billion: The New Magic Number for Initial Margin Rules
Jack Callahan – CME Group OpenMarkets
A number of financial firms required to post initial margin on uncleared derivatives received some welcome news in July. The next phase of the initial margin rules – applying to firms that have derivatives portfolios with over $8 billion in notional outstanding – was modified so that the majority of these market participants would have another year before they had to comply.
/jlne.ws/2ywbAKZ

Former Melbourne financial adviser permanently banned from providing financial advice
ASIC
ASIC has permanently banned former financial advisor Robert Shane Michael of Bentleigh, Victoria, from providing financial services for engaging in misconduct which included dishonestly borrowing money from his clients’ SMSF accounts and using them for his own personal expenditure.
/jlne.ws/2OFQYuR

New CFTC Talks Episode Explores Effects of Capital Rules
CFTC
A new episode of CFTC Talks, available today, looks at the effect bank capital rules have had on the competitive landscape of derivatives clearing. Drs. Richard Haynes and Lihong McPhail, of CFTC’s Office of the Chief Economist, discuss their paper, When the Leverage Ratio Meets Derivatives: Running Out Of Options?
/jlne.ws/2OWdwaT

Investing and Trading

Jerome Powell’s Off-the-Cuff Approach Leaves Investors on Edge; Fed communication faces challenges during period of heightened economic uncertainty and market sensitivity
Nick Timiraos and Daniel Kruger – WSJ
The highly uncertain U.S. economic outlook is complicating Federal Reserve Chairman Jerome Powell’s effort to bring a more plain-spoken approach to communicating with the public.
/jlne.ws/2yImFIM

The MBA students gaining practical investment management experience; Business schools are supporting investment funds that have a focus on social objectives
Andrew Jack – FT
From his base in Silicon Valley, Jordan Lee took a surprising decision in early 2019. He opened the books of his start-up company to detailed scrutiny from an unusual group of potential investors: MBA students from Dartmouth College with only $25,000 to offer.
/jlne.ws/2OF04YE

Renewable energy is good money, not just good for the earth; Rise of electric vehicles makes solar and wind better long-term investments than oil
Mark Lewis – FT
Climate change has been framed as an ethical issue for years now, with mixed success. But now the calls for socially responsible investing to save the planet are increasingly being reinforced by cold economic logic.
/jlne.ws/2yCVyPv

What Does ‘Premium-Priced Bonds’ Mean?; Yields have come down so much that there are many bonds trading at higher than face value
Simon Constable – WSJ
Investors may increasingly find bond-market strategists referring to “premium-priced bonds.” Individuals would do well to understand the terminology because it may help them make better investments.
/jlne.ws/2OE8TSp

Vegans May Soon Have an ETF; The ETF will seek to avoid companies whose activities directly contribute to animal suffering or environmental destruction. Some analysts are skeptical.
Tanzeel Akhtar – WSJ
Investors who identify as passionate vegans and environmentalists may soon have an exchange-traded fund that invests according to those principles.
/jlne.ws/2OB6QOT

The Problem With Inflation: It Often Doesn’t Exist; Neither the Fed nor investors seem worried about inflation, and they are probably right
Jon Sindreu – WSJ
For more than a decade, the world’s central banks have scrambled to bring inflation up to their targetsóusually 2%. The task is thankless, not least because inflation is often a meaningless concept.
/jlne.ws/2OCGr3f

Institutions

Corporates seek tools to reduce pension plan risk
Shirley Zhang – FTSE Russell
Global market volatility and low interest rates have greatly impacted the funded status of corporate defined benefit plans over the past decade. Particularly in the last year, wide swings in equity markets have become less predictable, making funded status volatility a greater cause for concern. As such, many plan sponsors are seeking solutions that hedge against risk and volatility while protecting any improvements in funded status. There are three main sources of funded status volatility and FTSE Russell has identified solutions that can help plan sponsors address each of them.
/jlne.ws/31fXbz4

An Outside Hedge Fund Is Driving Steve Cohen’s Gains; As the hedge-fund billionaire’s returns have dropped, he’s bet big on ex-employee Gabe Plotkin
Rachael Levy – WSJ
Billionaire Steven A. Cohen’s hedge fund is up about 10% this year. But a significant part of that return has come from a money manager who doesn’t work at Mr. Cohen’s fund.
/jlne.ws/2yD9Uj1

Barclays reins in bonuses in push to hit profit target; Bank sets aside 23% less for awards in first half as chief Jes Staley squeezes pay
David Crow – FT
Barclays cut the amount it set aside for bonuses by 23 per cent in the first half of the year as chief executive Jes Staley exerts a tighter grip on pay in a push to hit the bank’s profitability target.
/jlne.ws/2yCqRKg

HSBC to Cut Thousands of Jobs to Control Costs After Flint’s Exit
Stefania Spezzati and Harry Wilson – Bloomberg
HSBC Holdings Plc confirmed its plans to eliminate jobs, axing more than 4,000 posts and warning that senior executives will be a focus of the cutbacks.
/jlne.ws/2yEX8AA

World’s Biggest Banks Sink to Record Lows as China Pain Spreads
Bloomberg News
China’s big four lenders sink to lowest-ever valuations; Concern is growing they’ll be asked to help smaller peers
Stock investors have never been so downbeat on the world’s biggest banks. China’s “big four” state-owned lenders, which together control more than $14 trillion of assets, tumbled to record-low valuations on Monday amid mounting concern that Beijing will encourage them to bail out smaller peers. Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, lost $11 billion of market value last week after injecting capital into a troubled regional bank as part of a government-orchestrated rescue.
/jlne.ws/2yDzT9I

Barclays confirms gain of around $20 billion in Deutsche Bank prime balances; Jes Staley said Barclays has gained roughly $20 billion from Deutsche Bank as it targets growth of prime brokerage business.
Hayley McDowell and Joe Parsons – The Trade
Barclays has confirmed it has gained roughly $20 billion in prime brokerage balances from Deutsche Bank, as the investment bank looks to expand its hedge fund services.
/jlne.ws/2OGqCsE

Fidelity to shift billions of retirement assets into international stocks
Tim McLaughlin – Reuters
Fidelity Investments plans to take money out of the hands of some of its best U.S. stock pickers and shift billions of dollars into portfolios focused on international markets.
/jlne.ws/2yG09Al

Mitsubishi UFJ completes acquisition of First State Investments; In £2.2bn deal
Anna Fedorova – Investment Week
Mitsubishi UFJ Trust and Banking Corporation (MUTB), a wholly owned subsidiary of Mitsubishi UFJ Financial Group (MUFG), has completed the acquisition of First State Investments from Commonwealth Bank of Australia for $2.7bn (£2.2bn).
/jlne.ws/2yED1lP

The Downside of Knowing a Lot About Your Mutual Fund; A George Mason professor says more mutual-fund disclosure may be a case of too much information
Derek Horstmeyer – WSJ
Often investors assume that more is better when it comes to disclosure of the portfolios and trading activity of the mutual funds they hold. Transparency, they believe, can only help them in making investment decisions that can maximize their personal returns.
/jlne.ws/2OFsUbq

Money Is Pouring In to Low-Volatility Funds; Investors keep waiting for a stock-market downturn
Gerrard Cowan – WSJ
Low-volatility funds are proving popular as many cautious investors keep preparing for a still-unseen, but long-anticipated, market downturn.
/jlne.ws/2OFStsZ

Some Closed-End Funds Seem to Have Permanent Premiums; They trade above their net asset value for months or more. What does that mean for investors?
Nick Ravo – WSJ
Among the stock market’s many anomalies is the persistent premium over net asset valueó20% to 80% or more in many casesóthat often exists for a small number of closed-end mutual funds. For example, Gabelli Utility Trust (GUT) has had an NAV floating around $5 a share for the past year but has been trading between $6 and $7.
/jlne.ws/2OWfckH

Regions

China Turns Back to Brazilian Beans After Trade War Escalation
Bloomberg News
For now, Chinese buyers don’t plan to cancel U.S. cargoes; Soy premium at Brazilian ports jumped amid higher demand
Chinese buyers are turning to Brazilian soybeans after another escalation of tensions between the U.S. and China.
/jlne.ws/31c4reZ

Lagarde’s ECB Must Modernize
Marcel Fratzscher – Project Syndicate
As the nominee to succeed European Central Bank President Mario Draghi in November, Christine Lagarde may be hoping that her job will be somewhat easier than that of her predecessor. Yet the opposite is likely to be true. Though Draghi was tasked with guiding the ECB through years of crises, Lagarde will have to pursue eurozone reforms at a time of deepening polarization among member-state governments. It will take all of her skills as a political mediator, crisis manager, and effective communicator to safeguard the ECB’s independence and effectiveness.
/jlne.ws/31eEDz3

Japanese pension funds put record amounts into alternatives; Allocation to domestic government bonds falls to 18.3%
Chris Flood – FT
Allocations to alternative investments among Japanese pension funds have overtaken their exposures to domestic bonds for the first time in a shift driven by Tokyo’s radical measures to stimulate growth and inflation.
/jlne.ws/2OE4fDX

Egypt Takes Significant Steps To Deepen Its Money, Derivatives, And Capital Markets
Mondovisione
The Central Bank of Egypt has made significant headway in furthering the development of its money, derivatives, and capital markets. One of the significant steps taken which will lay the foundation for the enhancement and the improved efficiency of the market, is the introduction of a risk-free interest rate benchmark. This move is in line with the international movement towards developing risk free rates as the -IBOR benchmarks are being phased out.
/jlne.ws/2yu5F9l

Hong Kong’s Richest Lose $19 Billion as Protests Batter Stocks
Venus Feng and Pei Yi Mak – Bloomberg
City’s equity market has declined for nine consecutive days; Li Ka-shing’s net worth dropped by about 9% in the sell-off
Hong Kong’s wealthiest people are starting to feel the pain from nine weeks of protests that have jammed the financial hub’s streets, weighed on economic growth and battered local stock prices.
/jlne.ws/2yEXXJG

Turkish central bank hikes reserve requirement on forex deposits
Reuters
Turkey’s central bank increased the reserve requirement ratios on forex deposits and participation funds by 100 basis points for all maturity brackets, in a move to support financial stability, it said on Monday.
/jlne.ws/2yGvu5Y

How a shadow banking crisis sent India’s autos sector into a tailspin
Swati Bhat, Nupur Anand – Reuters
Sudhir Gharpure and his sales team sat chatting at a big Maruti Suzuki (MRTI.NS) dealership on the outskirts of Mumbai some two hours after its doors were opened on a recent Saturday morning – not a single customer was in sight.
/jlne.ws/2OGMAvp

‘Miracle’ needed for quick EU-Swiss treaty deal, Swiss minister says
Reuters
It would take a “miracle” for Switzerland and the European Union to clinch a quick deal over a stalled partnership treaty that has disrupted cross-border share trading and strained bilateral ties, Swiss Foreign Minister Ignazio Cassis said.
/jlne.ws/2OF3ZEQ

Brexit

EU ponders fund managers’ passporting activities after Brexit; Concerns emerge over ‘dangerous development’ in Ucits framework
Siobhan Riding – FT
Many global fund managers have made fortunes by scooping up hundreds of billions of euros’ worth of investor capital from across Europe.
/jlne.ws/2OGNSXs

Hedge funds bet against UK asset managers as no-deal Brexit looms; Groups including Steve Cohen’s Point72 increase short position in Schroders and Jupiter
Attracta Mooney – FT
Steve Cohen’s hedge fund has made bets against Schroders and Jupiter, the British-listed asset managers, as the UK’s investment industry contends with fallout from the Woodford crisis and fear of a no-deal Brexit.
/jlne.ws/2yBEcmd

EU must change its negotiating terms for Brexit, says Barclay
Reuters
The European Union’s chief Brexit negotiator, Michel Barnier, must go back to the bloc’s leaders to change the terms of the talks because Britain’s parliament will not accept the current deal, British Brexit minister Stephen Barclay said on Sunday.
/jlne.ws/2yGj6mK

Edinburgh festival performers refuse sterling payments due to Brexit; Artists ask to be paid in euros and dollars as pound continues to fall amid no-deal risk
Frances Perraudin – The Guardian
Increasing numbers of artists are asking to be paid in dollars and euros instead of sterling because of Brexit uncertainty, the director of the Edinburgh international festival has said.
/jlne.ws/2yIrjqc

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