Who Regulates Bitcoin Trading?; China’s Oil Pricing Bid Will Fail; Senate Confirms Jackson, Peirce to SEC

Dec 26, 2017

First Read

Hits & Takes
JLN Staff

The JLN Staff is working from home this week, with the exception being Wednesday, when we will convene in our CBOT Building offices to map out our January schedule.~JJL

Jim Kharouf has officially stepped down as CEO of John J. Lothian & Company, Inc.~JJL

Want some fun map facts? The cartographic debate over the distortion of Africa came up again this week – The Economist has the details. Let’s just say when it comes to map making, there are a number of ways to skin a cat.~SD

The A Wealth of Common Sense blog has its 2017 Financial Market awards out for things like Best Fight (Asness vs. Arnott), Worst Market Narrative (Trump will tank the market) and Best Headline (Bitcoin Scam: Man Arrested After Making Over $1 Million Selling Chuck E. Cheese Tokens As “Bitcoins”). ~SD

My wife gave me a book of “Wit and Wisecracks” by Mark Twain for Christmas. The first entry is “Let us be thankful for the fools. But for them the rest of us could not succeed.” Well said! ~JJL

Last week’s installment of The Spread, JLN’s recap of notable options news, can be found here.~SD


A Step-by-Step Guide to Boosting Work Morale; A factory boss joins her employees on a strenuous set of Los Angeles stairs during lunch
Jen Murphy – WSJ
Some employees bond over drinks after work. Elizabeth Kaplan believes she can create a stronger connection by sharing a workout with colleagues.

***** Get ready for some joint exercise experiences.~JJL


London Zoo reopens after fire that killed aardvark, meerkats
Reuters Staff
London Zoo reopened on Sunday, a day after a fire that killed an aardvark and likely four meerkats and which left staff suffering from smoke inhalation and shock.

***** My son Tim was very sad to hear the story of the missing meerkats, as he spent 30 minutes visiting with them in 2016 during a visit to the London Zoo on his short stopover in London on his way to Germany.~JJL


The Crypto coin DopeCoin (DOPE) rose by 4.98% on December 24-25
Peter Erickson – BZ Weekly
It was good day for DopeCoin (DOPE), as it jumped by $0.00576305000000001 or 4.98%, touching $0.12157302. International Cryptocoin Experts believe that DopeCoin (DOPE) is looking for the $0.133730322 goal. According to 9 analysts could reach $0.318292510169517. The highest price was $0.12857102 and lowest of $0.10785146 for December 24-25. The open was $0.11580997. It last traded at BitTrex exchange.

****** The name of this crypto-coin says it all.~JJL


Friday’s Top Three
Only two of our three top stories pertained to cryptocurrencies. Top of the charts was Bloomberg’s Bitcoin Billionaires May Have Found a Way to Cash Out. Next we had Financial News’s take on Cboe’s beef with BME – Europe’s largest exchange fumes over new Spanish data fees. In third was the WSJ’s rundown of the crypto rout – Bitcoin Plunges 25% in 24 Hours in a Cryptocurrency Market Rout.

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Lead Stories

Who Regulates Bitcoin Trading? No U.S. Agency Has Jurisdiction; Futures regulators at the CFTC recently sounded an alarm on leveraged trading on unregulated exchanges, while the SEC cracks down on ICOs
Dave Michaels and Gabriel T. Rubin – WSJ
Investors are frantically trying to learn everything they can about bitcoinóand so are regulators.

China’s Bid to Dominate Oil Pricing Will Fail; Sorry, China, the oil market is very different from the one for iron ore
Nathaniel Taplin – WSJ
Oil markets are already among the world’s most volatileóprices can leap 3% overnight on news from Middle Eastern nations many investors couldn’t pinpoint on a map.

Senate Confirms Robert Jackson, Hester Peirce to Join SEC; SEC will have its full complement of five members once the new members are sworn in
Hester Peirce testified to the Senate Banking Committee at her nomination hearing in October.
Dave Michaels – WSJ
The Securities and Exchange Commission is on its way to a full slate of commissioners for the first time since 2015.

Psychics may hold the answer to Wall Street’s future
Kevin Dugan – NY Post
If you’re convinced that the “normal” techniques for calling the market just aren’t cutting it anymore, you might consider the paranormal. Psychic intuition and planet-based predictions get dismissed as hopelessly flaky fare on Wall Street, but that hasn’t stopped a slew of astrologers, spiritualists and old-school soothsayers from weighing in on what 2018 has in store for investors.

China to Overtake U.S. Economy by 2032 as Asian Might Builds
Fergal O’Brien – Bloomberg
CEBR publishes World Economic League Table and predictions; Report sees India overtaking both U.K., France next year
The growing importance of Asia’s major economies will continue in 2018 and beyond, according to a league table that sees the region dominating in terms of size in just over a decade.

Goodbye, George Bailey: Decline of Rural Lending Crimps Small-Town Business; Banks are closing branches and paring credit in rural America, focusing instead on booming urban markets; it’s ‘like a death sentence’
Ruth Simon and Coulter Jones – The Wall Street Journal
Danielle Baker wanted a $324,000 loan last year to expand the peanut-processing business she ran from the family farm. She had a longstanding relationship with the Roxobel branch of Southern Bank, and she thought Southern would help fund the peanut operation she had spun off, too.

Israel regulator seeks to ban bitcoin firms from stock exchange
Steven Scheer – Reuters
Israel’s markets regulator will propose regulation to ban companies based on bitcoin and other digital currencies from trading on the Tel Aviv Stock Exchange, he said on Monday.

Bitcoin rises 10 percent, recovers from last week’s brutal selloff
Vidya Ranganathan, Lisa Twaronite – Reuters
Bitcoin extended its recovery in holiday-thinned trading on Tuesday, rising 10 percent to be up more than a third from last week’s lows of below $12,000.

The digitalisation of everything: How the US economy is going digital at hyper speed
Mark Muro and Sifan Liu – London School of Economics and Politics
Software is eating the world, goes the quip. So rapid are the developments, in fact, that while the “digitalisation of everything” has become a hallmark of tech’s promise of individual and business empowerment so has it begun to prompt anxiety, including among workers who worry about their future in a world of brilliant machines. And yet, for all the evidence that big changes are underway, surprisingly little data exists to quantify the spread of digital adoption across industries and into local workplaces, labor markets, and regions. In the absence of such information, the digitalisation trend, as all-encompassing as it obviously is, remains diffuse and hard to pin down.

Exchanges, OTC and Clearing

Cboe Floods The SEC With Bitcoin ETF Petitions
Julio Gil-Pulgar – Bitocoinist.com
The Chicago Board Options Exchange (Cboe) has been successfully trading Bitcoin futures since December 10, 2017. As a result, Cboe is now trying to expand its participation in the cryptocurrency business. In effect, Cboe has just petitioned the U.S. Securities and Exchange Commission (SEC) to launch six Bitcoin-based exchanged traded funds (ETFs).

Suspension of the all derivatives night session trading on the business day preceding the launch date of the next derivatives clearing system
The night session for all derivatives trading on February 9, 2018 (the trading day of February 13, 2018), which is a business day preceding the launch date of the next derivatives clearing system at Japan Securities Clearing Corporation, will not be held at OSE.

Shenzhen Stock Exchange Sina Big Data 100 Index Released
On 22th December, 2017, SZSE Sina Big Data 100 Index (Abbreviation: Sina 100, Code: 399297) was released on Shenzhen Stock Exchange (“SZSE”).


What Is Bitcoin Good For?; Perhaps it’s a payment system. If so, it’s inferior to Visa and grossly overvalued.
Megan McArdle – Bloomberg
What is bitcoin good for? This may be a question you’ve asked yourself, looking at the recent run-up in prices. Why, exactly, would you want to pay $18,000 and change to get your hands on one?

American Express Is Getting Into Blockchain-Based Payments With Ripple
Reuters via Fortune
American Express has introduced instant blockchain-based payments using Ripple, a fintech startup, for U.S. corporate customers sending funds to U.K.-based businesses that bank with Santander U.K., the companies said on Thursday.

Chip Makers Aren’t Stacking Bets on Cryptocurrencies; Nvidia, AMD keep crypto-mining demand out of their forecasts
Dan Gallagher – WSJ
Cryptocurrencies have been a winning bet this year, but the chip makers who play a key role in the market are still playing their hands very cautiously.


FBI investigating Cyprus bank with Russian ties: report
Julia Manchester – The Hill
The FBI is probing a defunct bank in Cyprus that had been used by affluent Russians and has been accused by the U.S of money laundering, The Guardian reported on Sunday.

Games Companies Play, Tax-Cut Edition; By timing expenditures, companies can boost advantage of sudden change in corporate taxes, but they will wreak havoc on economic and profit statistics
Spencer Jakab – WSJ
Congratulations, chief executive of Major Corporation. After years of lobbying, Washington has passed the tax cut of your dreams.

We Should Feed The Poor Children Of The World. It’s Good Foreign Policy
William Lambers – Newsweek
If the Grinch who stole Christmas were president of the United States, you might expect him to take food away from hungry children. You would not expect the real president to do that.

Bitcoin, blockchain and the fight against poverty; ‘An economist believes that the key to fighting extreme poverty is to focus on property rights’
Gillian Tett – FT
It is nearly four decades since Sendero Luminoso, the brutal “Shining Path” Communist rebellion movement, started its campaign of bombings, assassinations and other terrorist attacks in Peru that went on until the 1990s. I first heard about it from a close friend who was working on an agricultural development project in the Andes when Shining Path swept into his remote valley, executing aid workers and government officials.

The South Will Rise Again Under GOP Tax Plan; Florida and Texas will become the new centers of finance and innovation.
Jared Dillian – Bloomberg
Loading up the wagon train and heading south. Photographer: David Knox
It’s hard to find controlled experiments in finance. But they exist. East and West Germany, North and South Korea, Chile and Venezuela. In crossing a border, you can immediately see the difference in economic output and financial well-being from one country to the next, based on variations in tax and regulatory policy.


Companies have up to a year for new U.S. tax bill reporting: SEC
Reuters Staff
U.S. financial regulators said on Friday that because the new tax bill could make timely financial reporting difficult, public companies can make reasonable estimates when uncertain of the impact of the new tax law in financial reports, and will have up to a year to report final numbers.

Regulators Propose Rollbacks to Offshore Drilling Safety Measures; BSEE says revisions could save industry $900 million; proposal includes changing enforcement of new minimum standard for ‘drilling margin’
Ted Mann – WSJ
Regulators in the Trump administration are proposing to roll back safety measures put in place after the 2010 Deepwater Horizon oil spill, a revision that would reduce the role of government in offshore oil production and return more responsibility to private companies.

ESMA will be closed as from 23 December and will re-open on 3 January 2018.
Until then we would like to extend to you our greetings for the season and wish you a very happy New Year!

Investing and Trading

What’s the true value of bitcoin? A Morgan Stanley analyst says it may be zero
Eric Brackett – Digital Trends
According to Coindesk, bitcoin is currently worth about $13,000, but Business Insider reports that Morgan Stanley’s James Faucette suggest the true value of bitcoin might be zero.

William Agee, ’70s C.E.O. Whose Star Was Dimmed, Dies at 79
Steve Lohr – NY Times
William Agee was 38 and a rising corporate star in 1976 when the Bendix Corporation, a large auto parts maker, made him one of the youngest chief executives of a major American company.

Why much of academic business research remains irrelevant for business
Mattia Fosci and Rob Johnson – London School of Economics and Politics
The idea that academia can and should play a more central role in society is hardly new – but it continues to rise up the agenda. A year ago, the UK government created a £4.7 billion Industrial Strategy Challenge Fund (ISCF) to support research and innovation in priority sectors, as part of a national push to increase research, development and commercialisation activities across the UK’s innovation system. With the industrial strategy white paper expected this month, the question of what role academia can play in the race to innovate has regained relevance. So far, the ISCF has pinned most of its hopes on the contribution of high-tech manufacturing and priority technologies, like robotics and artificial intelligence. The role of services, wider challenges of productivity, and inclusive growth – and the social, behavioural and management sciences that are so crucial to addressing these – is less clear.

Is Bitcoin Back? Cryptocurrency Passes $15,000 as Rebound Begins
Tugce Ozsoy – Bloomberg
Largest digital token poised to stem losses after 5-day drop; El-Erian: Question now is whether correction was ‘healthy’
Bitcoin rallied past $15,000 on Tuesday as traders of the world’s biggest digital currency sought to draw a line under its roller coaster five-day slump.

Opinion: Heed Warren Buffett’s warning: bitcoin is pure FOMO
Mitch Tuchman – MarketWatch
Cryptocurrency mania rests on greater fools
To the surprise of nobody, billionaire investor Warren Buffett isn’t interested in bitcoin, the electronic currency that has zoomed higher in value over the past few weeks.

When the bitcoin craze becomes a panic
Jeff Spross – The Week
It had to happen sooner or later. Digital cryptocurrencies have been on a rocket ride in 2017. The most famous, bitcoin, rose from under $1,000 at the start of the year to $5,000 in October. Then it blasted off to nearly $20,000 per bitcoin by mid-December. Other cryptocurrencies were carried along by the craze.

Long Island Iced Tea’s blockchain pivot is the height of mania; The cryptocurrency bubble stirs memories of the dotcom boom
Andrew Hill – FT
“Pivot” is a term regularly abused by entrepreneurs, as they cast wildly about for new ways to spend their investors’ money.


Hedge funds to cash in if shops come up short; Investors increase bets against retailers hit by weak Christmas
Alex Ralph – The Times
Hedge funds are poised to profit from any weak post-Christmas trading updates from high-street retailers, which account for half of the top ten most shorted stocks on the London Stock Exchange.

Steven Cohen Plans a New Hedge Fund. Investors Are Wary.
Matthew Goldstein – NY Times
Steven A. Cohen, the billionaire investor whose career was nearly derailed by a government crackdown on insider trading, is days away from once again being able to manage other people’s money.


Hold off on praising China’s new carbon-pricing market; China’s “cap” would transform 30 percent of all global emissions. But will it really be effective?
Eric Holthaus, Grist – Salon
This week, China announced it has launched a nationwide carbon-trading market, with the intent of slowing down its growing climate footprint and capping its emissions as soon as possible.

Don’t Expect Plain Sailing For Emerging Markets in 2018; The asset class had a terrific year in 2017, but investors shouldn’t overlook lurking risks for next year
Anjani Trivedi – WSJ
Emerging markets had a stellar 2017 and investors are increasingly confident about the future. Amid the euphoria, there are reminders about how quickly these markets can turn bad.

Using Billions in Government Cash, Mexico Controls News Media
Leer en espaÒol
Azam Ahmed – NY Times
Running a newspaper, radio station or television outlet in Mexico usually means relying on a single, powerful client that spends exorbitant sums on advertising with a simple warning: “I do not pay you to criticize me.” That client is the government of Mexico.

Russia’s FinMin: crypto FX should only be traded by professionals
Reuters Staff
Russian Finance Minister Anton Siluanov said on Monday that cryptocurrencies should be traded only by professional investors, not in the mainstream.

Russia’s Putin calls for Web activities of some firms to be monitored
Reuters Staff
President Vladimir Putin said on Monday the Russian authorities should monitor the activity of “some companies” on social media during next year’s presidential election and assess the extent of their involvement in domestic politics.

Japan’s households open their wallets, BOJ seen keeping stimulus
Leika Kihara – Reuters
Japan’s households spent more than expected in November while consumer inflation ticked up and the jobless rate hit a fresh 24-year low, offering the central bank some hope an economic recovery will drive up inflation to its 2 percent target.

Nigeria Says It’s Solving Issue That Led to Christmas Gas Queues
Sophie Mongalvy and Mustapha Muhammad – Bloomberg
Vice President visits filling stations on Christmas Eve; Motorists in Kano say buying gas 50% higher than capped price
Nigerian Vice President Yemi Osinbajo made a surprise Christmas Eve visit to petrol stations in the commercial hub Lagos, where motorists had been queuing for hours as the nation grappled with a fuel crisis.

Vietnam army reveals 10,000-strong cyber warfare unit; Communist party tackles ‘wrong views’ as growing numbers of citizens go online
John Reed in Bangkok – FT
Vietnam has revealed its recruitment of more than 10,000 people to a cyber warfare unit as it seeks to battle “wrong” views being spread online.


I feared losing Brexit vote, admits Osborne
Lucy Fisher – City AM
George Osborne, a key Remain campaigner, has said that he was against the idea of holding a Brexit referendum and that he became increasingly pessimistic about winning in the weeks leading up to the vote.

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