Saudi Arabia’s Economic Dreams Falter

Oct 15, 2018

Saudi Arabia’s Economic Dreams Falter

Oct 15, 2018

First Read

Hits & Takes
JLN Staff

Welcome to FIA EXPO Week in Chicago. Over 120 companies are represented in the FIA EXPO hall and people come from all over the world. If you missed our FIA EXPO preview interview with FIA CEO Walt Lukken, you can find it HERE.~JJL

John Lothian News will again be present in the Cinnober booth on the EXPO hall. You can find us shooting video there.~JJL

If you want to know where the next generation of traders is coming from, please show up for my FIA EXPO session at 3 PM on Wednesday in the EXPO Learning Lab.~JJL

Don’t miss the speech by CFTC Chairman J. Christopher Giancarlo on Wednesday at 9 AM.~JJL

The lunch speaker on Wednesday is Jeremy Heimans, the co-founder and CEO of Purpose, an organization headquartered in New York that builds and supports social movements for a more open, just, and habitable world.~JJL

For information on Thursday’s Great Chicago Steakout, click HERE.~JJL


Nasdaq CEO is on a mission — for the little guy
Thomas Heath – Washington Post
Nasdaq chief executive Adena Friedman is wrapped in a woody Washington steakhouse on a steamy August afternoon, slamming her fist on a table over frustration that a vibrant corner of the economy is not available to average investors.

****** Somehow I feel left out.~JJL


Upstart Exchange Looks to Profit From Wall Street Fear; MIAX to launch options on index for volatility traders, competing with Cboe’s VIX
Gunjan Banerji – WSJ
Just after the stormiest week for U.S. markets in months, investors may get a new way to bet on Wall Street fear. Miami International Holdings Inc., a small but rapidly growing exchange operator, won regulatory approval on Friday for options on an index that tracks expectations for U.S. stock volatility. The measure, called SPIKES, competes head-to-head with the already established Cboe Volatility Index, known as the VIX.

***** SPIKES, the solution for fear of trading while golfing.~JJL


Deepfake Videos Are Ruining Lives. Is Democracy Next?; Moving Upstream explores the dark side of sophisticated video fakery
Hilke Schellmann – WSJ
Seeing isn’t believing anymore. Deep-learning computer applications can now generate fake video and audio recordings that look strikingly real.

****** I hope the fake me is more interesting.~JJL


Self-Reporting Pays; Costly Cyber-Attack; No Systemic Threat by Crypto-Assets
Gary DeWaal – Bridging the Week
An international bank settled an enforcement action brought by the Commodity Futures Trading Commission for spoofing. However, in the process, the CFTC went out of its way to laud the bank for self-reporting the incident, as well as its cooperation in the CFTC’s investigation and voluntary efforts to enhance its internal processes to detect spoofing and train staff going forward. Separately, a UK-based financial institution was assessed a fine of the equivalent of approximately US $21.5 million by the Financial Conduct Authority for a cyber breach that detrimentally impacted some customers. Although the FCA acknowledged that the bank’s cybercrime framework was “appropriate,” it said that employees did not follow it.


Friday’s Top Three
Our top two stories from Friday were all about bitcoin and blockchain, led by Bloomberg’s profile on John Griffen, in This Texas Finance Professor Sifts Data for Signs of Rigged Markets. Second went to Nouriel Roubini’s testimony before the US Senate Banking Committee in Exploring the Cryptocurrency and Blockchain Ecosystem. Let’s just say he is not impressed with crypto. Third went to Bloomberg’s The Bikinis Are Gone, But Change Is Slow for London’s Metal Boys – probably because the word bikini was in the headline. It is a good story about how the industry is slowly changing.


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Lead Stories

Saudi Arabia’s Economic Dreams Falter; JP Morgan’s Dimon joins host of executives pulling out of Riyadh’s premier business conference
Rory Jones in Dubai and Benoit Faucon in London – WSJ
Saudi Arabia’s dream of becoming an investment hub in the desert is unraveling. JPMorgan Chase & Co. Chief Executive James Dimon, Sunday became the latest prominent executive to back out of the kingdom’s premier business conference amid questions about the disappearance of journalist Jamal Khashoggi. Mr. Dimon had been a featured speaker, and his bank has longstanding ties to Saudi Arabia and is advising it on deals.

Why Crypto Traders Are So Worried About Tether
Andrea Tan, Benjamin Robertson, and Matthew Leising – Bloomberg
It’s one of the most hotly debated questions in the world of virtual currencies: Is Tether telling the truth when it says that each of its digital coins is backed by one U.S. dollar? The answer could have big ramifications, given that Tether’s coin (also called Tether or USDT) is among the most actively traded cryptocurrencies — treated by many as a substitute for the greenback on crypto markets around the world.

TP ICAP looks to overhaul management incentive scheme
Philip Stafford in London – FT
Disagreements over bonus plan at interdealer broker led to ousting of chief
TP ICAP, the interdealer broker, is assessing whether to overhaul its controversial incentive scheme for senior executives following the sacking of former chief John Phizackerley.

Brussels gives UK 24-hour Brexit deadline; EU waiting to see if May can muster support for exit deal
Mehreen Khan and Alex Barker in Brussels and George Parker in London – FT
Brussels is giving Britain a day to settle its position on Brexit before deciding how to respond to Theresa May’s dramatic move to “disengage” from talks on an EU exit agreement.

FCA opens a discussion on the impact of climate change and green finance on financial services; The Financial Conduct Authority (FCA) has today published a Discussion Paper on climate change and green finance.
The effects of climate change and the associated transition to a low carbon economy may have a major impact on financial markets and on products that serve those markets. The Discussion Paper sets out how the impacts of climate change are relevant to the FCA’s statutory objectives of protecting consumers, protecting market integrity and promoting competition.

Saudi Arabia hits back at Trump’s ‘punishment’ warning; Kingdom vows to use its economic muscle to counter Khashoggi backlash
Andrew England in London and Demetri Sevastopulo in Washington – FT
Saudi Arabia has threatened to use its economic muscle to respond to any punitive measure taken against the kingdom in the wake of the disappearance of a prominent journalist.

Stephen Schwarzman and Larry Fink pull out of Saudi conference; BlackRock and Blackstone chiefs join growing exodus amid clash over missing journalist
FT Reporters – FT
Two of the world’s most high-profile financiers have joined a growing list of senior business executives to pull out of Saudi Arabia’s “Davos in the Desert” conference in the wake of the suspected killing of a prominent Saudi journalist.

Saudi stocks plunge on fear of sanctions over Khashoggi
Zahraa Alkhalisi – CNN
Shares in Saudi Arabia plunged as the fallout over the disappearance of journalist Jamal Khashoggi got worse over the weekend.
The main stock market index in Riyadh fell as much as 7% on Sunday and billions of dollars were wiped off the value of leading Saudi companies. The index recovered some ground later to close 3.5% down.

World’s central bankers feel the heat as populists demand easy fix
Francesco Canepa, Balazs Koranyi – Reuters
Central bankers from the United States to Europe are coming under pressure from their governments to loosen their purse strings again as a decade of accelerating economic growth and booming markets fueled by cheap cash comes to an end.

Crypto Markets Roiled as Traders Question Tether’s Dollar Peg
Andrea Tan, Eric Lam, and Benjamin Robertson – Bloomberg
Tether slides below $1 amid fresh concern over dollar backing; Bitfinex dismisses rumours, says withdrawals working as normal
A sudden exodus from the most popular dollar-linked cryptocurrency rippled through digital asset markets on Monday, saddling some investors with losses while propelling Bitcoin to its biggest gain in more than three weeks.

NEX’s acquisition by CME receives DOJ’s approval
Maria Nikolova – Finance Feeds
The proposed deal has received clearance under the Hart-Scott-Rodino Act from the United States Department of Justice – Antitrust Division.

U.S. Alleges Futures-Spoofing by Three Commodities Traders
Tom Schoenberg – Bloomberg
Two to plead guilty to market manipulation in Houston; U.S. has been cracking down in deceptive trading tactics
Three commodities traders were charged by the U.S. Justice Department with orchestrating a $60 million fraud that involved spoofing and conspiring to manipulate futures contracts, according to prosecutors and court filings in Houston.

Barclays halts work on cryptocurrency trading project; The initiative has been put ‘on ice’, according to people familiar with the situation
Paul Clarke – Financial News
Barclays has halted work on a cryptocurrency trading project, according to two people familiar with the situation, in the latest twist for banks hoping to tap into the burgeoning sector.

Anger grows over Vanguard’s technical malfunctions; Users take to forums to question if the money manager has grown too big too fast
Owen Walker – FT
Vanguard faces pressure from its army of devoted customers to deal with its frequent technical difficulties after disruption to its website and phone lines during Wednesday’s market tremors.

Get Out of Equities Before It’s Too Late, Says Fund Manager
Gabriella Lovas – Bloomberg
The tumble in equities may go deeper than the correction earlier this year and investors should get ready to sell, according to a Budapest-based fund manager. “Investors have to start looking for a way out from equities now,” Attila Dzsubak, investment director at MKB-Pannonia Fund Manager, who helps oversee 670 billion forint ($2.4 billion) in assets, said in Budapest. “Past experience shows that exits can quickly become too narrow.”

Exchanges, OTC and Clearing

Nasdaq Launches ESG futures in the Nordics
Nasdaq (Nasdaq:NDAQ) today announced the launch of futures based on the recently launched OMXS30 ESG Responsible index (OMXS30ESG). The product is the first exchange listed and ESG compliant index future in the world.

CME Group Announces E-Mini Nasdaq-100 Futures All-Time Daily Trading Volume Record
CME Group, the world’s leading and most diverse derivatives marketplace, today announced E-mini Nasdaq-100 futures reached an all-time daily volume record of 1,150,475 contracts traded on Thursday, Oct. 11, 2018. This surpasses the previous single-day volume record of 1,149,387 contracts reached on Sept. 18, 2008.

CME Group Receives DOJ Clearance for Proposed NEX Acquisition
CME Group today announced that it has received clearance under the Hart-Scott-Rodino Act from the United States Department of Justice – Antitrust Division for its proposed acquisition of NEX Group plc (NXG.L).

NSE enters commodity derivatives trading biz with gold and silver contracts; Introduces two contracts in gold – 1 kg and 100 gm – to enable even smaller players to hedge their positions on NSE
Dilip Kumar Jha – Business Standard
India’s largest stock exchange the National Stock Exchange (NSE) has entered the commodity derivatives trading business with the launch of gold (1 kg and 100 grams) and silver contracts (30 kg).

Deutsche Börse stock market open delayed by ‘technical issue’
Adam Samson in London – FT
The opening of trade in Deutsche Börse’s stock market, the primary trading venue for German equities, was delayed on Monday by “technical problems”.

Deutsche Börse forced to delay Xetra opening due to technical issue; Deutsche Börse Xetra and Eurex trading systems suffered technical glitch this morning, forcing the exchange group to delay start of trading.
Hayley McDowell – The Trade
A technical glitch has forced Deutsche Börse to delay the start of trading this morning on its Xetra market in Frankfurt.

Nasdaq to implement CQG trading platform for US Treasuries; Nasdaq’s fixed income business will implement CQG’s front-end trading platform for US Treasuries.
Hayley McDowell – The Trad
US exchange operator Nasdaq has teamed up with CQG to implement its front-end trading platform for fixed income, specifically US Treasuries.

Block trading in Europe sees EUR8.1billion value traded record; Value traded of block trading in Europe saw record highs last week, led by Liquidnet, ITG POSIT, Cboe LIS and Turquoise Plato.
Hayley McDowell – The Trade
Europe saw a record amount of block trading activity last week as restrictions on dark pool trading under MiFID II continue to drive large-in-scale (LIS) trading.

Harold de Boer, Transtrend: “This will improve the price discovery process and general stability of markets”; A commodity trading advisor’s opinion on Eurex’ plan to extend its trading hours into the Asian time zones
Eurex runs global markets and continues to enhance its services. As of December 2018, we will extend our trading hours into the Asian time zones to strengthen the bridge between Asia, Europe and the U.S. We discussed this subject with Harold de Boer, Managing Director at Rotterdam-based Transtrend.


Does Big #FinTech Innovate? Introducing Alphacution’s #BigFinTech Index
Paul Rowady – Alphacution Research Conservatory
One of the most fascinating aspects of innovation is its resistance to scaling. At least this is one observer’s interpretation. Those trying to innovate at increasing scale – like, inside a large enterprise – might prefer to describe it as frustrating, to say the least.
The rabid interest in startups – small groups of visionaries and entrepreneurs that are able to deliver radical levels of change to the provision of solutions for unmet market needs – is a reaction to this resistance. During the post-global financial crisis (GFC) hangover, it became vogue for large banks to establish externalized “innovation laboratories” to protect relevant and critical innovations from the harsh bureaucracies and incumbent politics inherent to large enterprises. Best case, they keep the proximity of innovation close; worst case, the messaging serves as a marketing tool.

CQG Desktop Selected By Nasdaq Fixed Income As Official Front-End For U.S. Treasury Trading
CQG, a leading global provider of high-performance trading, market data, and technical analysis tools, announced today a new partnership with Nasdaq Fixed Income (NFI). Under the agreement, NFI will provide the web-based CQG Desktop platform to NFI customers as the official front-end for trading NFI’s U.S. Treasury Benchmark products.

Which Fintech Startup Holds The Key To Argentina’s Future?
Jonathan Moed – Forbes
Argentina’s financial system is broken, and the nation’s Fintech startups are building technology solutions to challenge the status quo. These companies, many of which focus their efforts on devising solutions for the 50% of the population lacking a bank account, are accomplishing what the government and traditional banks have failed to achieve: offering real and impactful solutions to put Argentina’s 45 million people in control of their finances.

How Fintech Companies Are Helping The Failing Credit Card Sector
Madhvi Mavadiya – Forbes
A 2016 Bankrate study revealed that 67% of people under the age of 30 do not have a credit card, which is an interesting statistic in light of the fintech boom and amid the lack of trust that banks have following the financial crisis.

Sila Provides FinTech Companies With An On-Ramp To Payments
Tom Groenfeldt – Forbes
Shamir Karkal a co-founder of Simple and then head of open APIs at BBVA, is now launching a tool to help fintech developers with one of their greatest challenges — getting access to the payments system.
“Despite extensive efforts to innovate, the current financial system is controlled by a long chain of middlemen engaged in moving money between a buyer and a seller, Karkal said in a blog announcing Sila.

Hong Kong is Rocking Fintech
JD Alois – Crowdfund Insider
Later this month, Hong Kong will host their annual Fintech Week. This year’s event is being billed as the “world’s first” cross-border Fintech event. The multi-faceted conference will straddle Honk Kong and Shenzen – the relatively new metropolis that links Hong Kong to China’s mainland. Macao is being rolled into the event as well, according to organizers.
Hong Kong has always been an important financial center in Asia. Additionally, the country fares well in some external global rankings.

First Dubai-based member joins CurveGlobal
London Stock Exchange Group
CurveGlobal, the interest rate derivatives platform, today announces that ED&F Man Capital Markets MENA Limited has joined as a member of London Stock Exchange Derivatives Market (LSEDM) member to trade CurveGlobal products. They are the first Middle-Eastern member on the platform following London Stock Exchange plc’s approval as a Recognised Body by the Dubai Financial Services Authority (DFSA) in July 2018. This allows participants based in the Dubai International Finance Centre (DIFC) to trade CurveGlobal products directly. ED&F Man Capital Markets is a global financial brokerage business offering direct access to global capital markets.


Gemini Latest Exchange To Offer Litecoin
Charles Bovaird – Forbes
New York-based Gemini is the latest exchange to offer trading of litecoin, the alternative protocol asset (altcoin) that many consider to be bitcoin’s little brother.

Microsoft Is Pushing New Blockchain ID Products (But There’s Pushback, Too)
Anna Baydakova and Marc Hochstein – Coindesk
Microsoft is moving to turn blockchain-based decentralized identity from a lofty aspiration into a business line. In a white paper posted this week, the software giant says it intends to develop two products designed to give consumers greater control of their personal data – long the Holy Grail of many technologists in the blockchain space and adjacent industries.

Constantinople Nears: Ethereum’s Next Hard Fork Is On Track for 2018
Christine Kim – Coindesk
Open-source coders backing the ethereum project now say its next system-wide upgrade, Constantinople, is on track for November release.

How The Netherlands Is Blazing A Trail Through The Blockchain Scene
Yoav Vilner – Forbes
The world is abuzz about blockchain, but not all are equally up to speed when it comes to their embrace and support of this important emerging technology.

Hong Kong’s securities regulator mulling over new rules for city’s cryptocurrency exchanges
Enoch Yiu, Georgina Lee – South China Morning Post
Hong Kong’s Securities and Futures Commission (SFC) is exploring ways to regulate the various cryptocurrency trading platforms already operating in the city and thus tighten investor protection, says its outgoing chairman Carlson Tong Ka-shing.

Cryptocurrency Thieves On Track To Steal Over $1 Billion In 2018
Nermeen Abbas – Forbes Middle East
The total value of stolen cryptocurrency is expected to hit over $1 billion by the end of this year, which represents a 350% increase over the amount that was stolen in all of 2017, according to a new research from CipherTrace.

Barclays halts work on cryptocurrency trading project
Paul Clarke – Financial News
Barclays has halted work on a cryptocurrency trading project, according to two people familiar with the situation, in the latest twist for banks hoping to tap into the burgeoning sector.

Why Mastercard’s Multi-Blockchain Might Be a New Step in the Patent Race
Stephen O’Neal – Cointelegraph
On October 9, American financial services giant Mastercard was granted a patent for a method to partition a blockchain so that it can store multiple transaction types and formats. The filing published by the U.S. Patent and Trademark Office (USPTO) reveals the details of the new system — not the first of the kind for Mastercard.

The Howard Test: The 4 Rules For Success For Blockchain Music Entrepreneurs (Part 1)
George Howard – Forbes
We are at an inflection point in the trajectory of Blockchain tech and music product development. In this space, and, now compiled — with a new introduction by yours truly — in book form, I have been chronicling the development of Blockchain tech being applied to the music industry since the beginning. I’ve pulled back a bit from writing about this topic of late, and have focused on building/working/advising in the space. But, I return now to sound an alarm.

SEC Halts ICO Touting OK From Fake ‘Blockchain Commission’
Lydia Beyoud – Bloomberg Law
The SEC filed a lawsuit to stop a planned ICO launch by a company that falsely claimed it had already obtained approval from regulators, including the fictitious “Blockchain Exchange Commission.”

Crypto Exchange Sues Former Employee Over Seizure of Platform
Erik Larson – Bloomberg
Bibox co-founder Wang accuses ex-worker of extortion attempt; Chinese national claims ownership of Investre Network
A newly created management platform at the 10th-biggest global cryptocurrency exchange has become the focus of a fight over who owns the potentially lucrative venture in a booming industry.

Coinfloor licensed under Gibraltar’s flagship blockchain rules
Hannah Murphy – FT
UK cryptocurrency exchange Coinfloor has become the first company to gain a licence to operate under Gibraltar’s new blockchain-specific legislation, flagship rules in Europe.

It’s really happening… Woz joins Baroness Mone’s blockchain company
Jemima Kelly – FT
Yes. That’s Apple co-founder Steve Wozniak. He’s sitting alongside a beaming Baroness Michelle Mone, OBE — lifetime Tory peer and former lingerie company boss — and her partner, entrepreneur Doug Barrowman. Woz is explaining why he has decided to become a co-founder of their rebranded blockchain company, EQUI Global.


Trump Says He Doesn’t Want to Fire the Fed Chair. It Isn’t Clear If He Could
Nick Timiraos – WSJ
President Trump stepped up his attacks on the Federal Reserve this week, but said he wouldn’t fire central bank Chairman Jerome Powell, leaving some observers wondering whether that is even an option.

Companies donate millions to political causes to have a say in the government — here are 10 that have given the most in 2018
Laura McCamy – Business Insider
Before 2010, companies weren’t able to independently spend money on politics to influence federal elections, according to the Daily News.

Mnuchin Says He’s Not Worried China Would Unload Treasuries
Saleha Mohsin – Bloomberg
‘We have plenty of buyers for Treasuries,’ Mnuchin Says; Treasury chief speaks to reporters at IMF talks in Indonesia
Treasury Secretary Steven Mnuchin isn’t worried that China would use its $1.2 trillion pile of Treasuries holdings as a bargaining chip for a better trade deal.

China Won’t Use Yuan as Tool to Deal With Trade War, Yi Says
Bloomberg News
Governor says China won’t engage in ‘competitive devaluation’; Domestic slowdown, trade tensions to continue to pressure yuan
China won’t use its currency as a tool to deal with trade conflicts, central bank Governor Yi Gang said, as a tariff war between the U.S. and the world’s No. 2 economy intensifies.

Playboy party for metal traders condemned by MPs
Samuel Agini and Lucy McNulty – Financial News
Politicians have hit out at one of the City’s oldest trading houses for hosting a networking event at the Playboy Club in London, calling the move “inappropriate” and a “spectacularly bad choice”. Gerald Group, a commodities trading firm, hosted the cocktail party at the exclusive club in Mayfair on Monday October 8. The gathering comes just months after public outcry over the scandal-hit Presidents Club dinner in which the women working at the men-only event were sexually harassed by guests.

Trade war won’t trigger Asian credit ratings downgrades, for now: Fitch
Fitch Ratings has maintained its stable credit outlook for all Asian countries, except Pakistan, despite expecting some “dampening effect” in the region due to the U.S.-China trade tensions, senior ratings analysts said on Saturday.

Bundesbank chief sees reducing chance that U.S.-China will escalate trade conflict
There is a diminishing chance for the escalation of the trade conflict between the world’s two biggest economies, China and the United States, the president of Germany’s central bank said on Saturday.

Trump Is Risking an Even Greater Chicken War; A trade spat over poultry between the U.S. and European nations in the 1960s left lasting damage. The fight with China could do greater harm.
Stephen Mihm – Bloomberg
The staggering tariffs being levied on China will almost certainly test President Donald Trump’s claim that “trade wars are easy to win.” He might be right, but the president doesn’t seem to have contemplated a different question: What happens when trade wars come to an end?

Trump: ‘I don’t trust everybody in the White House’
Emily Birnbaum – The Hill
President Trump during an interview with CBS’s “60 Minutes” on Sunday said he doesn’t “trust everybody” in the White House.


In CFTC Action, Former Trader Kamaldeep Gandhi Admits to Engaging in Spoofing and Manipulative Schemes at Proprietary Trading Firms
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Kamaldeep Gandhi, in which Gandhi admits to engaging in manipulative and deceptive schemes, along with other individuals, which involved thousands of acts of spoofing (bidding or offering with the intent to cancel the bid or offer before execution) with respect to a variety of futures products traded on the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, and the Commodity Exchange, Inc. The Order finds that Gandhi engaged in this unlawful activity while placing orders for, and trading futures contracts through, accounts owned by his former employers, two proprietary trading firms named as Firm A and Firm B in the Order

The Danske Bank Scandal Is the Tip of the Iceberg; Financial institutions and the governments that regulate them aren’t doing nearly enough to prevent money laundering.
Gabriella Gricius –
Last month, the CEO of Danske Bank, Thomas Borgen, stepped down, and both Denmark’s Financial Services Authority and the European Banking Authority opened investigations into the bank’s illegal activities at its Estonian branch. On Sept. 19, Bruun & Hjejle, general practice attorneys hired by Danske Bank, released a chilling report revealing how over 200 billion euros, about $230 billion, were illegally laundered through its branch in Estonia over a nine-year period. Despite this negligence, the report cleared Borgen and the board of directors of any kind of legal responsibility. While it is by no means the first money laundering exposé in recent years, it may be the largest one.

Gloomy City stockbrokers struggle with Mifid II fallout; Sector is braced for more pain after profit warnings and a spate of departures
Hannah Murphy – FT
As City stockbrokers gathered on Thursday for the glitzy annual Aim awards, a celebration of London’s junior stock market, one prize that had always been handed out in the ceremony’s 20-year history was notably absent: the best research award.

U.S. to seek currency chapters in trade talks with Japan, others: Mnuchin
David Lawder, Leika Kihara – Reuters
U.S. Treasury Secretary Steven Mnuchin said on Saturday that Washington wants to include a provision to deter currency manipulation in future trade deals, including with Japan, based on the currency chapter in the new deal to revamp NAFTA.

Richest Clients Are Being Penalized by MiFID, Nordea Bankers Say
Frances Schwartzkopff – Bloomberg
High net-worth customers may be losing access to the best investment offers because of revised European market rules, according to the people running debt and market sales at Nordea Bank Abp.

The Fed Isn’t Worried About the Stock Market Drop – Yet
Nicholas Jasinski – Barron’s
Despite captivating the financial world, October’s stock market declines and a spike in bond yields aren’t bothering anybody over at the Federal Reserve. Multiple officials who have spoken recently downplayed the impact of October’s volatility on the broader economy and their monetary policy intentions.

ESMA sees 1.9% increase in prospectus approvals across the EEA
The European Securities and Markets Authority (ESMA), in its annual report on prospectus activity, has found that in 2017 the number of prospectus approvals across the European Economic Area (EEA) increased by around 1.9% compared to 2016 (from 3499 to 3567). The growth in prospectus approvals puts an end to a decade-long decline observed since the start of the financial crisis.

Investing and Trading

With risky bets back in play, stock selloff revives ‘Volmageddon’ memories
Trevor Hunnicutt – Reuters
Months after he lost millions when an esoteric corner of financial markets cratered in February, former Target Corp store manager Seth Golden is betting against volatility again.

Hedge Fund Bets on Beaten-Up New York Taxi Business; Marblegate has scooped up about 300 medallions for more than $50 million
Paul Berger and Miriam Gottfried – WSJ
Vulture investors are circling the beleaguered New York City taxi-cab industry. Hedge funds that specialize in distressed investing have been kicking the tires of the New York taxi market after prices for medallions plummeted in the face of competition from ride-hailing upstarts.

How Five Copper Mines Determine Global Supply
Andrew Capon – CME Group OpenMarkets
On June 7, copper prices hit a four-and-half-year high of more than $7,300 a tonne. Just ten weeks later, on August 15, the price of copper languished at below $6,000 a tonne, down 19 percent from June and the lowest level since July 2017.

Climate change is becoming so real that it’s gaining converts for a carbon price
Akshat Rathi – Quartz
By any standard, this has been a remarkable week for conversations about climate change. It started with a grim report from the International Panel on Climate Change, which warned that anything short of dramatic action could cause irreversible harm to the planet, lead to food shortages, and cost the world economy tens of trillions of dollars in damages in as few as 20 years.

The financial challenges sports stars face after the game; For many, retirement is a shock as income dries up but good planning can keep the cash rolling in
Murad Ahmed – FT
It was November 2016. Nico Rosberg had reached the top of his sport. The German driver for Mercedes was the new Formula One world champion, beating teammate Lewis Hamilton to win the title he had coveted since he was a boy. Yet, just a few days later, he unexpectedly announced his retirement at the age of 31.

How millennials and savings apps are making asset managers wake up and smell the coffee; Tools such as ’round-ups’ are posing a significant threat to the traditional sales strategies
Owen Walker- FT
Michael Katchen first tasted investing at age 12 when he won a stockpicking contest. Since then, the 30-year-old Canadian technology entrepreneur who runs WealthSimple has taken a keen interest in managing his personal portfolio of stocks, mutual funds and exchange traded funds.

Sears files for bankruptcy protection as it buckles under debt; Billionaire chair unable to win backers for revival plan ahead of $134m loan repayment
Alistair Gray in New York – FT
Sears, the department store chain that once dominated the US retail landscape, filed for bankruptcy protection on Monday as it finally succumbed to a crushing debt burden and failure over several years to adapt to upheaval in the industry.

A World of Hurt Awaits If Traders Start to Panic: Taking Stock
Arie Shapira – Bloomberg
Stocks are back to their declining ways, after Friday’s breather, as tensions are bubbling up between the U.S. and Saudi Arabia over the disappearance of a prominent journalist while Trump threatens another round of tariffs on China — note the WSJ had an ominous story over the weekend about a “new cold-war era” between the two sides.

Battle to recruit ESG specialists intensifies; Applications are up but the right skills are hard for funds to find
Jennifer Thompson – FT
Specialists in responsible investing are hot property. “Competition is quite intense,” says Helen Pradas-Page, an executive recruitment consultant at Acre, which helps employers recruit for environmental, social and governance roles. “There has been a distinct growth in ESG headcount.”

ETF industry’s record-breaking growth streak in danger of ending; Leading providers of exchange traded funds are on track for a disappointing year
Chris Flood – FT
New business growth has slowed markedly for most of the leading providers of exchange traded funds this year even before the sell-off across global equity markets gathered pace last week.

Companies With Newly Flush Pensions See Chance to Unload the Risk; Some firms with highly funded pension plans are transferring retiree obligations to insurers
Tatyana Shumsky – WSJ
U.S. corporate pensions are at the highest funded level since the financial crisis, which could lead more companies to turn over to insurers the responsibility for paying retirees, pension consultants say.


Leon Cooperman leaves hedge fund business, but he isn’t going quietly
Lydia Moynihan and Charles Gasparino – Fox Business
Leon Cooperman is leaving the hedge fund business, but he isn’t going quietly.
The famously hot-headed hedge fund legend did not mince words Monday night during a retirement party attended by some of Wall Street’s biggest names, National Enquirer publisher David Pecker, and a comedian known for his impersonations of former President Obama, taking some parting shots at the Securities and Exchange Commission (SEC), which people close to him say he blames for forcing him out of the investment business after a 50-year run, the Fox Business Network has learned.

Banks Need to Protect Themselves Much Better Against Risks From Italy to Trade
Stefania Spezzati and Sonali Basak – Bloomberg
Executives at IIF meeting debate threats to financial system; Finance has been strengthened, not fixed, Saccomanni says
The global banking industry needs to do more to protect itself against looming threats such as market turmoil, trade tensions, rising leverage and the implications of Italy’s rule-busting budget, according to executives gathered in Bali for the Institute of International Finance annual meetings.

JPMorgan Chase profits bolstered by strength at consumer bank; Rising rates a boon to retail bank, but lender faces fall in bond trading revenue
Laura Noonan in New York – FT
A strong performance in US consumer banking and lower bad loan charges helped JPMorgan Chase to beat analysts’ expectations comfortably for the third quarter, even as revenues from fixed income trading fell 10 per cent year-on-year.

Barclays to challenge Goldman’s Marcus in US retail banking; Lender to draw on UK experience to target consumers wanting a digital-only service
Laura Noonan in New York – FT
Barclays is launching a US current account that will put the British bank in competition with Goldman Sachs’ Marcus for customers who want the low costs of a digital-only bank and the security of dealing with a major financial institution.

Bank of America’s misfiring investment bankers braced for shake-up; Executives at US lender ‘hunker down’ after missing out on booming M&A market
Stephen Morris and Arash Massoudi in London and Laura Noonan in New York – FT
When 20 of Bank of America’s top executives met in the US last month to discuss the company’s strategy, the burning issue high on the agenda was how to turn round its stuttering investment banking operation.

Bank of England tells institutions to prepare for climate change; Banks and insurers put on notice to appoint top executives to oversee environmental risks
Leslie Hook and Caroline Binham in London – FT
The Bank of England will put banks and insurers on notice to vastly improve their planning for the long-term risks of climate change, placing senior executives in the line of fire if their institutions take insufficient action.

LaSalle Street stares down major changes as big banks exit
Danny Ecker – Crain’s Chicago Business
A century after the Central Loop thoroughfare was established as Chicago’s financial district, three of its largest financial tenants are planning to leave, forcing landlords to reinvent several grand but outdated buildings.

Mizuho Seeks Flight Attendants, TV Producers for MiFID Era
Takahiko Hyuga – Bloomberg
Japanese brokerage is hiring for its corporate access business; Sees hospitality and media veterans as suited to liaison role
Flight attendants and television producers seeking a career change might want to look up Japan’s third-biggest bank. Mizuho Financial Group Inc. wants the hospitality and media veterans to woo investors and company executives with their strong communication and social skills, said Yuki Maeda, head of corporate access across Asia. It will recruit three people by March who will put institutional clients in touch with Japanese business leaders through conference calls and face-to-face meetings, she said.

Bank of America profit and revenue top estimates
Rachel Louise Ensign – MarketWatch
Bank of America Corp. said Monday that third-quarter profit rose. Quarterly profit at the Charlotte, N.C.-based bank, the second largest in the U.S. by assets, was $7.2 billion, compared with $5.4 billion a year ago. Per share, earnings were 66 cents. Analysts polled by Refinitiv had expected 62 cents per share.

Angry management: The dark side of Santander’s new boss; Some of Andrea Orcel’s former UBS colleagues say the star banker is a bully and a bad choice to be Santander’s chief executive
Duncan Mavin, David Wighton and Francesco Guererra – Financial News
When Andrea Orcel was named as CEO-in-waiting at Santander last month, it was the crowning moment of a stellar six-year spell running UBS’s investment bank. Orcel, renowned as a consummate dealmaker, proved he was also a skilled operator with a knack for streamlining the business. His elevation to the top of the Spanish bank, Europe’s second largest lender, was just reward for a job well done.

RBS chief Ross McEwan: restoring a damaged reputation; Bank is recovering after a decade of blows. Now it is looking to a digital future
Martin Arnold in London – FT
When Ross McEwan dropped in for a surprise visit to a Royal Bank of Scotland branch in London last month, he was appalled by how scruffy it looked. “It needs a bloody good clean,” the New Zealand-born banker said, with his customary bluntness.


Saudi Stocks Sink as Tension With U.S. Escalates Over Khashoggi
Filipe Pacheco and Ben Bartenstein – Bloomberg
Tadawul’s main index retreats to lowest level since January; Kingdom says it will retaliate against any punitive measures
Saudi Arabian equities slumped on concern the nation’s relationship with the U.S. may sour over the disappearance of Washington Post columnist Jamal Khashoggi.

EU to offer billions of funding for electric battery plants; Four groups planning to build European rival to Tesla’s ‘gigafactory’
Rochelle Toplensky in Brussels – FT
The EU is planning to allow state aid for electric battery research and will offer billions of euros of co-funding to companies willing to build giant battery factories.

Head of Powerful Chinese Lender Swept Up in Corruption Inquiry
Alexandra Stevenson – NY Times
China’s sweeping anti-corruption campaign has claimed another target: the head of a powerful state lender. Lai Xiaomin, a former Communist Party secretary and the former chairman of Huarong Asset Management, was kicked out of the party on Monday for “serious violations” of party law and regulations, including trading his power and influence for sex with several women, the government said.

China Is the Climate-Change Battleground; The U.S. and other developed nations must pitch in and help clean up the world’s dirtiest economy.
Noah Smith – Bloomberg
Climate change is a menace. The Intergovernmental Panel on Climate Change just issued a report showing how serious the situation is. If warming continues on its current trajectory, the report warns, then by the end of this century average temperatures will be 4 degrees Celsius (7.2 degrees Fahrenheit) higher than at the start of the Industrial Revolution.

Saudi summit in crisis as top finance names dropped; Some banks and corporate chiefs are still planning on attending, but most will not say, as conference organisers scrub names from site
Pierre Briançon and Emily Horton – Financial News
Saudi Arabia’s flagship investment summit was plunged into crisis over the weekend, after JPMorgan CEO Jamie Dimon pulled out and other top bankers declined to confirm their participation, in the wake of the disappearance of dissident journalist Jamal Khashoggi.

China’s Stocks Extend $3 Trillion Rout
Bloomberg News
Shanghai benchmark closes at lowest level since November 2014; Government encouraging insurers to invest in firms: report
Supportive words from China’s securities regulator failed to slow the $3 trillion rout in the the nation’s stock market, as evidence of weakening domestic demand added to concern about the trade war with the U.S.

Venezuela’s Meltdown Creates a Nation of Desperate Capitalists; Entrepreneurship is thriving in the heart of the economically ravaged socialist country.
Patricia Laya – Bloomberg
“The lightbulb lady is here!” Yessica Vaamonde spends weekends climbing the narrow stairs of Caracas’s biggest slum, Petare, calling out for damaged light bulbs. She offers 30 bolivars each—in cash—which she collects by selling avocados on one of the Venezuelan city’s busiest avenues.


Finance chiefs warn on disruption of a no-deal Brexit; RBS boss McEwan criticises government infighting as banks struggle to make plans
Nicholas Megaw and Martin Arnold – FT
Finance chiefs including the boss of state-backed lender Royal Bank of Scotland have warned that government infighting has left the UK “sleepwalking” towards a no-deal Brexit that would severely disrupt the financial services sector.

Brexit talks at impasse over Irish backstop, say No 10 sources
Dan Sabbagh Peter Walker Daniel Boffey and Jennifer Rankin – The Guardian
The Brexit talks have reached a significant impasse over the issue of the Irish border, UK government sources have said, prompting Theresa May to update MPs in the House of Commons on the state of the negotiations.
No 10 indicated that a deal was being held up by renewed differences on the backstop arrangement insisted upon by the EU to prevent a hard border, after discussions came to a halt following a visit to Brussels by the Brexit secretary, Dominic Raab.

John Lothian Newsletter

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Past Newsletters

The City of London’s Supremacy Goes Very Deep

The City of London’s Supremacy Goes Very Deep

First Read $16,711/$300,000 (5.6%) ++++ FIA Asia-V: Asia-Pacific Exchanges Look Back and Ahead Sarah Rudolph and Suzanne Cosgrove - John Lothian News In the first panel at FIA's Asia-V 2020 Expo, exchanges in the Asia-Pacific looked back at their successes during a...

Libor’s Delayed Demise Rewards Slow-Moving U.S. Bankers

Libor’s Delayed Demise Rewards Slow-Moving U.S. Bankers

First Read $16,711/$300,000 (5.6%) ++++ Editor's Note: Yesterday some of our readers, mainly those who use Gmail, got a warning on our newsletter that, "This message seems dangerous." We can assure you there was nothing dangerous about that email. Unfortunately, the...

S&P Global Agrees to Buy IHS Markit for About $44 Billion

S&P Global Agrees to Buy IHS Markit for About $44 Billion

First Read $16,711/$300,000 (5.6%) Steve Auerbach, Guy Sheetz (and Anonymous x2) ++++ The Hemp Industry Has Room To Grow Thom Thompson - John Lothian News As the third nationally legal industrial hemp crop hits the market, it is clear that American producers,...

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

The City of London’s Supremacy Goes Very Deep

The City of London’s Supremacy Goes Very Deep

First Read $16,711/$300,000 (5.6%) ++++ FIA Asia-V: Asia-Pacific Exchanges Look Back and Ahead Sarah Rudolph and Suzanne Cosgrove - John Lothian News In the first panel at FIA's Asia-V 2020 Expo, exchanges in the Asia-Pacific looked back at their successes during a...

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