Texas Heat Record; Wall St. Unprepared for Libor’s Absence; Trump’s Trade Tweets

Jul 20, 2018

Texas Heat Record; Wall St. Unprepared for Libor’s Absence; Trump’s Trade Tweets

Jul 20, 2018

Spencer Doar

Spencer Doar

Associate Editor

First Read

Hits & Takes
JLN Staff

Are your interns signed up for MarketsWiki Education in Chicago on July 30, 31 and August 2? This don’t miss series still has some room for more. Sign up at www.marketswikieducation.com.~JJL

With the large number of stories out there about artificial intelligence taking over (see yesterday’s piece in The Trade) – it’s fitting to relink to a JLN video from earlier this year – Myths and Misconceptions Surrounding Artificial Intelligence. Basically, saying “artificial intelligence” doesn’t always mean the super complicated thing you think it means. The video features Inderdeep Singh of CME Group, Brian Peterson of DV Trading, Matt Dixon of IIT and Morgan Slade of CloudQuant talking about the subject. ~SD

Are we heading toward a T+1 settlement cycle? Murray Pozmanter of DTCC believes there are ways to shorten settlement times including one method that sends matched T+1 trades to the clearinghouse in the morning rather than end of day.~JK

I was not aware that the UK’s high value payment system was called the Clearing House Automated Payment System or CHAPS – how quaint.~SD

Nasdaq was scheduled to list its U.S. 10-YR DV01 Treasury Futures on Thursday, but announced the date of listing “will be moved to accommodate additional client and market maker onboarding and clearinghouse testing.” The new listing date is TBD.~SD

HKEX’s USD/CNH Options Hit a Record High with 1127 contracts traded, beating the previous record of 909 on July 3, 2018.~JJL

Over 5,500 people viewed my LinkedIn post of the FIA’s announcement of the sad passing of Bernadette Connolly. What a great expression of the love for Bernie.~JJL

Pages of CryptoMarketsWiki.com that were updated yesterday included: Gavin Andresen??, Global Markets Exchange Group International LLP (GMEX)??, Mt. Gox??, Mark KarpelËs?? and CFTC.~JJL

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The Spread – Playing Ketchup – 7/19
JohnLothianNews.com
As there was no installment of “The Spread” last week, we added a brief lightning round to the end of this week’s options news recap. This week’s episode also features celebrity appearances by Mr. Bill and the Kool-Aid Man.

Watch the video and see the stories referenced here »

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YCharts Adds Michael Kraines to Board of Directors; Kraines brings more than 25 years of investment banking and fintech leadership experience to support YCharts in its accelerated growth trajectory
YCharts
YCharts, a modern investment research platform that enables smarter investments, today announced Michael Kraines, President and CFO at Trading Technologies International, Inc. (TT), has been appointed to its Board of Directors.
/jlne.ws/2LnNaLG

***** A smart addition by YCharts. JLN commentary on the move can be found here. ~JJL

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Nobody Knows Where to Take Shelter From Trump’s Trade War; The battle over tariffs is starting to get investors’ attention, but there’s no clear defense.
Sarah Ponczek – Bloomberg
During months of heated rhetoric surrounding trade and tariffs, Wall Street strategists and advisers largely assumed it was all just brinkmanship. But suddenly more of them are advising investors to go defensive. Easier said than done in 2018, when every global market is intertwined. S&P 500 companies got 43 percent of their sales from overseas in 2016, according to a report from S&P Global Inc. “There is a lot of debate on what is a defensive sector,” says Emily Roland, head of capital markets research at John Hancock Investments.
/jlne.ws/2LotqHX

***** Managed futures?~JJL

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Migrants are key to productivity gains for countries; There are many reasons to believe that migration may be a highly effective driver of knowledge diffusion across borders, write Dany Bahar and Hillel Rapoport
London School of Economics and Political Science
For decades, the focus of the economic literature when studying migration was, for the most part, on the impact it has on labour-related outcomes such as wages and unemployment, among others. But these studies have been able to tell us one side of the story. As is the case with other flows, such as trade and investment, there are many other aspects of migration that go beyond the localised short-term impact it might have on the labour force.
/jlne.ws/2LvYTbm

****** Knowledge diffusion goes both ways, good and bad. However, you can’t truly stop it, and it has led to some of the world’s greatest achievements.~JJL

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Thursday’s Top Three
Our top read story of the day on Thursday was Quartz’s Citadel’s Kenneth Griffin says “there’s no need” for cryptocurrencies, but I suspect deep down inside, he doesn’t believe that. Second went to the DOJ announcement Two Connecticut Men Charged For Deceptive Trading Practices Executed On U.S. Commodities Markets. The guys in Boca Raton are saying, “whew, finally it’s not us.” Third was the New York Times’ piece Did Goldman Sachs Just Edge Away From Its Bonus Culture?

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MarketsWiki Stats
129,822,747 pages viewed; 23,206 pages; 214,309 edits
MarketsWiki Statistics

Lead Stories

Texas Smashes 1925 Heat Record as Power Prices Surge on Demand
Margot Habiby and Chris Martin – Bloomberg
Dallas-Fort Worth region climbs to 108 degrees Fahrenheit; State broke power-demand record on Wednesday, prices surged
North Texas smashed a 93-year-old daily heat record Thursday, with the mercury climbing to 108 degrees Fahrenheit (42 Celsius) in the Dallas-Fort Worth area.
/jlne.ws/2LpGWLb

****Also from Bloomberg – Sizzling U.S. Heat Strains Power Grids, Withers Texas Cotton

The Most Important Number in Finance Is Going Away. Wall St. Isn’t Prepared.
Matt Phillips – NY Times
In the world of finance, there is one number that arguably matters more than any other. You can find it in the small print on adjustable-rate mortgages and private student loans, it is the basis for enormous corporate loans, and it underpins nearly $200 trillion of derivatives contracts.
/jlne.ws/2Lrz4c4

**It took about 17 paragraphs to get to the Libor alternative, SOFR

Trump’s Trade Tweets Now Matter for Only One Asset Class
Luke Kawa – Bloomberg
Goldman sees lack of relationship between trade tweets, VIX; Online missives have some impact on soybeans, strategists find
Donald Trump’s tweets once rattled markets more than a North Korean nuclear test, with attacks on individual companies sparking stock selloffs.
/jlne.ws/2LvKmwl

Free Trade With or Without the U.S.; As America lurches toward protectionism, Europe and Asia are shrewdly lowering trade barriers.
Editorial Board – Bloomberg
President Donald Trump is intent on punishing other nations for “ripping off” the U.S. in trade. Their governments aren’t exactly falling into line. They’re getting on with promoting trade and leaving the U.S. behind.
/jlne.ws/2Lq64l6

Trump says he’s ‘ready’ to put tariffs on all $505 billion of Chinese goods imported to the US
CNBC
President Donald Trump has indicated he is willing to put tariffs on all $505 billion of Chinese goods the U.S. imports. The rhetoric marks ramps up the U.S-China trade war another step, though each country has issued just $34 billion in tariffs so far.
/goo.gl/qe5XHJ

Hedge fund assets eclipse record level for eighth consecutive quarter
Hedgeweek
Hedge fund capital ended Q2 2018 at a new record level for the eighth consecutive quarter as investors reversed Q1 strategy flow trends, allocating new capital to Equity Hedge strategies while redeeming from Macro strategies, with Relative Value Arbitrage and Event Driven also showing small outflows.
/goo.gl/6jdehD

So This Is Why Trump Tweets About Oil; High fuel prices hit red-state drivers the most, right in time for midterms.
Mark Gongloff – Bloomberg
Never let it be said President Donald Trump doesn’t understand his voters.
Back in April, he started tweeting angrily at OPEC about high oil and gasoline prices. Last month, he pushed Saudi Arabia to raise production. It’s hard to say how effective he’s been – oil is more expensive than when his jawboning started, though it’s fallen a bit since his Saudi pitch. National gas prices have stabilized just below $2.90 a gallon, up about 60 cents from a year ago. There’s still talk Trump might tap the Strategic Petroleum Reserve. The truth is, neither he nor OPEC can fully control the market, which has been squeezed by his threat to bottle up Iranian oil.
/jlne.ws/2Loz24V

U.S. Grain Prices Crunched by Trade Fears; Gluts of corn, wheat and other crops are finally easing after years of oversupply, but prices have yet to meaningfully rebound
Benjamin Parkin – WSJ
Gluts of corn, wheat and other crops are finally easing after years of oversupply, but prices have yet to meaningfully rebound.
/jlne.ws/2LryLhq

No End in Sight for Commodity Crash With Charts Sending Bear Signals
Luzi-Ann Javier – Bloomberg
Money managers’ copper position swung to a net-short: CFTC; Crude oil rallies, defying sell-off in raw materials
What’s next for commodities after a recent price collapse? It looks like more bad news, if the chart watchers are right.
/jlne.ws/2LmwQe5

Trump lays into the Fed, says he’s ‘not thrilled’ about interest rate hikes
Jeff Cox – CNBC
In a stinging and historically rare criticism, President Donald Trump expressed frustration with the Federal Reserve and said the central bank could disrupt the economic recovery.
Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt.
/cnb.cx/2L8lwCZ

****SD: He doubled down on the criticism in a tweet.

Blockchain Efforts Move Beyond the Hype: ‘This Is Happening Now’
Matthew Leising – Bloomberg
Big leap from when focus was mostly on research & development; Bank-backed consortium has completed real-world transactions
There has been more talk in recent years about how blockchain technology can change the world than actual projects showing what it can do.
But now, after years of research and development, companies are using blockchain networks to conduct trade finance, track diamonds and prove the provenance of marijuana.
/goo.gl/46Xk9Y

Stolen Crypto Millions Paid Back for Cents on Dollar, Guaranteed
Olga Kharif, Brian Louis, Julie Edde and Katherine Chiglinsky – Bloomberg
Few want to talk about it, but more insurers selling coverage; AIG, Allianz among those taking crypto-insurance plunge
In the staid and buttoned-up world of insurance underwriting, few want to talk about it. You won’t find many ads promoting it or details on company websites offering it.
/jlne.ws/2Ln6kkP

CFTC Reduces Risk for Customer Funds Held by Derivatives Clearing Organizations by Expanding Investment Options
CFTC
The Commodity Futures Trading Commission (CFTC) unanimously approved an order that allows registered derivatives clearing organizations (DCOs) to invest customer euro cash in French and German sovereign debt. Allowing DCOs to invest customer euro cash in high-quality European sovereign debt poses less risk than the current practice of holding customer euro cash at commercial banks.
/jlne.ws/2uBeP25

There’s a new global stock exchange centered on digital assets being built in Malta
Zoe Bernard – Business Insider
A global trade market for decentralized assets like cryptocurrencies and equity tokens is taking root in Malta, the tiny European country that has positioned itself as a pioneer in the blockchain industry.
/jlne.ws/2Lsi7hV

CFTC Official to Congress: Don’t Be ‘Hasty’ With Crypto Rules
Nikhilesh De and Christine Kim – Coindesk
The director of the Commodity Futures Trading Commission (CFTC)’s fintech initiative cautioned against what he called “hasty regulatory pronouncements” during a Congressional hearing on Wednesday
/jlne.ws/2Lq6lo8

Powell Wants to Create Some Mystery Around Fed Meetings; A slower or faster pace of rate hikes, an extended pause, or even a cut are all possibilities at this point.
Tim Duy – Bloomberg
Change is in the air at the Federal Reserve. Chairman Jerome Powell’s semiannual monetary policy testimony in the Senate gave a big hint that we can no longer count on the explicit policy of gradual interest-rate hikes to continue too much longer. That doesn’t mean gradual rate increases will end, only that the Fed will rely less on forward guidance. A slower or faster pace of hikes, an extended pause, or even a rate cut are all possibilities at this point.
/jlne.ws/2Ls84cy

Murdoch Caps Long Career by Laughing All the Way to Bank
Anousha Sakoui and Nabila Ahmed – Bloomberg
Disney’s winning bid for Fox assets will net him billions; Cements the 87-year-old’s legacy as a great media dealmaker
Rupert Murdoch had one more blockbuster deal in him. And it might be the grizzled veteran’s sweetest yet.
/jlne.ws/2Ln5gxl

Exchanges, OTC and Clearing

A Different Approach to Accelerating Settlement and Reducing Risk
Murray Pozmanter – DTCC
The financial industry’s model for clearing and settling securities has been on a long trajectory toward shorter cycles. One of the last remaining exposures in the settlement system today is time, which increases the risk an unpredictable event could affect the transfer of cash or ownership of securities from the point of execution through settlement.
/jlne.ws/2Lja2Mx

Scott Bradley on Turquoise periodic auctions
The Trade
Scott Bradley, head of sales and marketing for LSE cash markets and Turquoise, tells TRADE TV about how Turquoise periodic auctions have seen increased activity post-MiFID II.
/jlne.ws/2LpIAwq

‘We need a call to action’: Stacey Cunningham, the NYSE’s first female president; She is the first woman to lead the New York Stock Exchange in its 226 years. Faced with falling sales and government pressure, though, she finds the attention to her gender a distraction
Dominic Rushe. – The Guardian
The Fearless Girl is on the move. launched a million selfies and became an unlikely avatar of . Soon it will be transported a few hundred metres down the road in downtown Manhattan to confront another symbol of entrenched masculinity: the New York Stock Exchange (NYSE). Stacey Cunningham says she couldn’t be more delighted.
/jlne.ws/2LnVHhM

The other London Stock Exchange
City AM
NEX Exchange is a growing stock exchange servicing a highly diverse range of companies. Providing the most cost-effective route to market in London, the NEX Exchange’s personal relationship-based approach helps companies realise their growth ambitions.
/jlne.ws/2LoDmRH

Deutsche Boerse receives four Global ETF Awards; Awarded as Europe’s highest performing and most proactive ETF exchange, for the largest number of ETF listings and as the most innovative ETF index provider
Deutsche Boerse
Deutsche Boerse has been honored four times at this year’s Annual Global ETF Awards in New York and has received prizes as “Most proactive ETF exchange in Europe”, “Exchange with the largest number of primary listed ETFs in Europe”, “Largest exchange for ETFs by dollar turnover in Europe “and” Most innovative ETF index provider in Europe “for their STOXX indices.
/jlne.ws/2Lnbw8j

Winners unveiled in SGX Orb Awards recognising best of financial news and content
SGX
Judging by independent panel comprising senior executives from Deloitte, Google News Lab, Nasdaq and an international broadcasting industry veteran; Awards broaden SGX’s efforts to enhance financial education for investors and acknowledge content contributors
Singapore Exchange (SGX) has announced the winners in its inaugural SGX Orb Awards, recognising excellence in financial journalism and content in an evolving media landscape. Following the theme of “Connecting Perspectives and Inspiring Conversations,” the awards are an extension of SGX’s efforts to enhance financial education and empower investors.
/jlne.ws/2LrG0pC

MOEX Commits To FX Global Code
MondoVisione
Moscow Exchange (MOEX: MOEX) announces it has signed a statement of commitment to the FX Global Code, pledging to support robust, fair, liquid, open and transparent foreign exchange markets.
/jlne.ws/2LncCAX

Fintech

IHS Markit Brings Bond Pricing Data to Municipal Securities Rulemaking Board’s Market Transparency Platform
IHS Markit
IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today announced that its benchmark yield curve for AAA-rated municipal bonds is now available to investors through the Municipal Securities Rulemaking Board’s (MSRB) Electronic Municipal Market Access (EMMA) platform.
/jlne.ws/2LAhuzP

Maven Wave Harnesses Google’s Machine Learning and Cloud Technologies to Optimize Digital Marketing Analytics and Execution
Maven Wave
Maven Wave, a technology consulting firm and Google Cloud Premier Partner that enables digital transformation for enterprises, announces its new solution that harnesses Google’s sophisticated analytics and cloud services to optimize and automate customers’ digital marketing strategies. Through a comprehensive three-phase approach, Maven Wave builds integrated warehouses of marketing data, delivers insights using machine learning tools, and automates historically manual digital marketing practices to help customers get the most out of their marketing budgets.
/jlne.ws/2LpHYqx

State Street to buy Charles River for $2.6 billion; Custodian announces deal to acquire investment management front office service provider Charles River Development in a landmark $2.6 billion deal.
Jon Watkins – The Trade
Boston-based custodian bank State Street is set to acquire buy-side front office services provider Charles River Development in a landmark $2.6 billion deal.
/jlne.ws/2LsnvBB

NICE Actimize Voted “Best Anti-Money Laundering Compliance Solution Provider” for Fifth Consecutive Year in 2018 Waters Magazine Rankings
NICE Actimize
NICE Actimize is recognized for its new Suspicious Activity Monitoring solution which reduces investigation time for a single alert by up to 70 percent
/jlne.ws/2LmvJe

Cryptocurrencies

Derivatives veteran and market makers combine to launch cryptocurrency reference rates; Bitcoin and Ether reference rates and indices launched by cryptocurrency liquidity providers and trueDigital Holdings.
Jon Watkins – The Trade
A new set of Bitcoin and Ether reference rates and indices have been launched by trueDigital and 10 market makers including Genesis Global Trading, Circle and Hehmeyer.
/jlne.ws/2LoD3X3

Surrey Police get budget boost after £1.25m bitcoin seizure
Caroline Binham – Financial Times
Surrey Police has become the first UK force to seize and convert bitcoin as part of a criminal probe, netting £1.25m worth of the cryptocurrency, some of which will pay for financial investigators at a time of reduced budgets.
Kingston crown court on Thursday ruled that Seregjs Teresko, a convicted Latvian money-launderer with ties to organised crime, must forfeit £1.45m of his ill-gotten gains, including bitcoin.
/on.ft.com/2LxxPVV

Fed chief casts doubt on benefits, safety of cryptocurrencies
Sylvan Lane – The Hill
Federal Reserve Chairman Jerome Powell on Wednesday expressed doubts about the usefulness of cryptocurrency for anything other than obscuring illegal activity.
/jlne.ws/2LsgLnh

The Dark Side of Cryptocurrencies Highlighted yet Again at House Hearing
Viraj Shah – [blokt]
US senators are not convinced that cryptocurrencies could be used for positive purposes. During a House Financial Services Committee hearing titled ‘The Future of Money: Digital Currency,’ four witnesses spoke before the house to highlight the state of cryptocurrency. Proponents suggested that cryptos being used for illegal activities is not enough to criminalize their use. However, there was harsh criticism of digital currencies and the demand for an outright ban was discussed.
bit.ly/2LvrzRs

Hong Kong’s Blockchain Trade Finance Platform to Go Live By September
Wolfie Zhao – Coindesk
The Hong Kong Monetary Authority (HKMA), the autonomous Chinese territory’s de facto central bank, is poised to launch a live blockchain trade finance platform within two months.
/jlne.ws/2Lmzel3

LabCFTC head warns against haste in cryptocurrency rules
SmartBrief
Daniel Gorfine, director of the Commodity Futures Trading Commission’s fintech initiative LabCFTC, told a US House Committee on Agriculture hearing there should not be “hasty regulatory pronouncements” on cryptocurrencies and digital assets. Gorfine said regulators “need to be sure that we are thoughtful in our approach and do not steer or impede the development of this area of innovation.”
/jlne.ws/2LrzxLm

SEC Will Go Against Companies Using ‘Blockchain’ On Their Names To Boost Prices
Jose Antonio Lanz – EthereumWorldNews
United States Securities and Exchange Commission (SEC) is taking the hype of blockchain technologies more seriously by standing against companies using misleading names to promote an artificial increase of their stocks value.
/jlne.ws/2LoLEsM

Cryptocurrencies – An Overview of the Legal Landscape, The Risks of Investing, and the Future of the Markets – Part 1
Trace Schmeltz – Barnes & Thornburg
In this two-part blog series, I will be giving an overview of the legal landscape of cryptocurrencies, touch on the biggest risks for those who want to trade cryptocurrency, as well as a look into what the future of this market looks like.
/jlne.ws/2Lkqmg3

Why Litecoin’s Creator Is Buying Into a Bank (And How It Could Go Wrong)
Leigh Cuen – Coindesk
One of the most unusual and potentially transformative deals in the cryptocurrency space started as an argument on social media.
/jlne.ws/2Lt8sHK

‘Blockchain Island’ to host regulated trading of tokenised securities on new exchange; Malta Stock Exchange partners with digital asset trading venue OKEx to launch tokenised securities trading venue with support from government.
Jon Watkins – The Trade
The Malta Stock Exchange has partnered with digital asset trading venue OKEx to launch a new regulated tokenised securities venue in 2019.
/jlne.ws/2LsgiBB

Surrey Police get budget boost after £1.25m bitcoin seizure; Court ruling on money-laundering assets aids force’s stretched finances
Caroline Binham in London – FT
Surrey Police has become the first UK force to seize and convert bitcoin as part of a criminal probe, netting £1.25m worth of the cryptocurrency, some of which will pay for financial investigators at a time of reduced budgets.
/jlne.ws/2LmDTn8

Politics

White House invites Putin to Washington for fall meeting
Zeke Miller, Ken Thomas and Lisa Mascaro – The Associated Press
Unbowed by criticism over his Helsinki summit, President Donald Trump extended an invitation to Russian President Vladimir Putin to meet in Washington in the fall, the White House said Thursday.
/goo.gl/NpaFHE

Trump Blasts Powell’s Rate Hikes, Trespassing on Fed’s Independence
Christopher Condon and Craig Torres – Bloomberg
President Donald Trump criticized the Federal Reserve’s interest-rate increases, breaking with more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the U.S. central bank.
“I’m not thrilled” the Fed is raising borrowing costs and potentially slowing the economy, he said in an interview with CNBC broadcast Thursday. “I don’t like all of this work that we’re putting into the economy and then I see rates going up.”
/goo.gl/nAUj7R

With Blankfein’s exit, Goldman Sachs loses major DC influence
John Crudele – NY Post
I’d like to wish Goldman Sachs’ Lloyd Blankfein a happy retirement. God and I both appreciate ó and understand ó what he really did.
/jlne.ws/2Lkr1hx

U.S. Says It Will Alert Public to Foreign Influence Operations
Chris Strohm – Bloomberg
Rod Rosenstein says ‘information warfare’ threatens U.S.; Deputy attorney general speaks as new report is published
The U.S. Justice Department is considering ways to alert the public to foreign efforts to influence Americans and U.S. elections as the threat from adversaries such as Russia “continues to grow,” Deputy Attorney General Rod Rosenstein said.
/jlne.ws/2Lsk3ab

Trump Is Being Manipulated by Putin. What Should We Do?; Lawmakers must keep the American people informed of the current danger, writes a Republican congressman from Texas.
Will Hurd – NY Times
Over the course of my career as an undercover officer in the C.I.A., I saw Russian intelligence manipulate many people. I never thought I would see the day when an American president would be one of them.
/jlne.ws/2LsjxsL

***Mr. Hurd, a former C.I.A. officer, is a congressman from the 23rd District of Texas.

Trump’s CFPB nominee suggests she would support action against Equifax
Steve Goldstein – Marketwatch
Kathleen Kraninger spent most of her confirmation hearing to be director of the Consumer Financial Protection Bureau on Thursday ducking questions about her involvement in Trump administration policies such as the zero-tolerance immigration enforcement and Puerto Rico rebuilding efforts.
But one thing she made clear was that she supported the agency’s taking enforcement action against Equifax, the credit-rating agency that didn’t prevent hackers from stealing information on 143 million Americans.
/goo.gl/GRkjFv

Regulation

Federal Court In District Of Columbia Orders “Prediction Market” Companies To Pay $3 Million Civil Monetary Penalty For Illegally Trading Binary Options And Violating A 2005 CFTC Cease And Desist Order
Mondovisione
The Commodity Futures Trading Commission (CFTC) today announced that on July 5, 2018, Senior Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia issued an Opinion and Order (Order) against Defendants Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, requiring them to pay, jointly and severally, a $3 million civil monetary penalty for violations of the Commodity Exchange Act (CEA) and CFTC Regulations.
/goo.gl/qFjzAu

Payment and lending fintechs gearing up for OCC’s “fintech charter” decision
Jinman Li – MarketWatch
When Manu Smadja and his partner founded financial technology startup Mpower Financing in 2014, the online lender was only licensed to operate in Washington, D.C., New York and Massachusetts. Like many other nonbank loan originators that aspire to expand their businesses, Mpower wanted to expand but was stymied by the need to apply for licenses in each state in their expansion plan.
/jlne.ws/2Loxjwx

Fed’s banking supervisor backs new interest rate benchmark; Fed Governor Randal Quarles endorsed an alternative to the London Interbank Offered Rate, a guide banks have long used for what to charge each other for overnight lending.
Jeff Cox – CNBC
The Federal Reserve’s banking supervisor gave his backing Thursday to a new interest rate benchmark for institutions to use when lending to each other.
/jlne.ws/2Lp3agG

CFTC Chairman Giancarlo to Testify before the House Committee on Agriculture
CFTC
/jlne.ws/2LxBnY6

Concerns raised about ‘too big to fail’ KPMG; Regulators, competitors and clients have posed hard questions about firm’s strength
Madison Marriage, Caroline Binham and Martin Arnold – FT
When Arthur Andersen collapsed after becoming entangled in the Enron scandal in 2002, the US accounting firm was written off by many in the audit profession as an outlier.
/jlne.ws/2LowN1v

HSBC fined $1.2 million for failures in bond sale; HSBC failed to assess risk of individual bonds before recommending them to clients in Asia.
Hayley McDowell – The Trade
HSBC’s securities broking business in Asia has been fined a total of $1.2 million (HK$9.6 million) for failing to carry out proper due diligence on bonds it recommended and sold to clients.
/jlne.ws/2LsgQaD

Bank of England probed risks to KPMG’s viability after string of scandals; Regulator sought assurances in wake of firm’s role in South Africa and at Carillion
Madison Marriage and Patrick Jenkins – FT
The Bank of England has probed the strength of KPMG’s business after a string of high-profile corporate scandals damaged the reputation of the Big Four accounting firm.
/jlne.ws/2Lqssuz

ESMA Launches Dedicated Template for Systematic Internalisers Calculations Ahead of August 1 Publication
ESMA
The European Securities and Markets Authority (ESMA) has today provided access to the template which will be used to publish the first set of figures necessary for investment firms to assess whether they are systematic internalisers in specific financial instruments on August 1.
/jlne.ws/2Lw5tyA

Lend to Friends and Family – But Only if You Follow These 3 Tips
Pete Chandler – FINRA
There’s a maxim associated with risky investments (think penny stocks) that goes like this: Don’t invest money you can’t afford to lose. The same holds true with lending money to friends and family, but with an added caution. A “friendly” loan can be a good way to lose moneyóand tarnish a good relationship with the borrower.
/jlne.ws/2LsfoF4

Podcast: CFTC Talks EP052: MARK YALLOP FMSB Part One
CFTC
This week on CFTC Talks, we speak with Mark Yallop, chair of the Fixed Income, Currencies and Commodities Markets Standards Board. We cover the enormous cost to the world financial system of bad behavior…
/jlne.ws/2LqtPcH

Bank of England, FCA, PRA and PSR conduct review of Memorandum of Understanding in relation to payment systems in the UK
UK FCA
The Bank of England (BoE), the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and the Payment Systems Regulator (PSR) have a Memorandum of Understanding (MoU) that sets out the high-level framework the Authorities use to cooperate with one another, in relation to payment systems in the UK. The Financial Services (Banking Reform Act) 2013 requires the Authorities to review this MoU annually. The Authorities committed that this review would include feedback from regulated entities, and that a summary of the review’s findings would be published. 2018 saw the third such review.
/jlne.ws/2LkwHrR

Investing and Trading

Emerging market volatility fuelling currency trading boom
Tommy Wilkes – Reuters
Emerging market foreign exchange trading is growing at a double-digit clip this year, as economic and political worries stoke volatility and sell-offs in currencies such as the Chinese yuan, Turkish lira and Mexican peso, industry data shows.
/reut.rs/2O2BEE7

Analysis: 10 years after global financial meltdown, big banks still play with fire
James Royal, Ph.D. – NerdWallet
It’s been a decade since the global financial crisis rocked the world. In the years since 2008, the U.S. and other countries mended their broken economies, assessing what went wrong and trying to curb the abuses that could lead to another crisis. But today many factors that contributed to the implosion still pose a threat.
/jlne.ws/2LmwHr8

Firmer U.S. dollar boosts corporate interest in currency hedging
Saqib Iqbal Ahmed, Jessica DiNapoli, Caroline Valetkevitch – Reuters
U.S. multinational companies are starting to reevaluate their currency hedging strategies after a surge in the dollar in recent months, as the impact of the stronger greenback starts to show up in second-quarter corporate earnings.
/jlne.ws/2LvLsYZ

Hate ETFs? Quants Say They Found Anomaly to Profit on Their Flows
Lu Wang – Bloomberg
Shares prices seen distorted by passive flows before reversing; Deutsche Bank study shows ETF signals enhance factor returns
Stock managers sick of being steamrolled by the onslaught of passive funds may have a new weapon to wield, one that was born of the very success their enemies had in overrunning the market. According to quant strategists at Deutsche Bank, investors can beat equity benchmarks by building portfolios out of stocks that get whipped around the most when exchange-traded funds rebalance.
/bloom.bg/2O0nPWG

Opinion: Tilray’s IPO is creating a buzz, but don’t overspend on marijuana stocks
Nigam Arora – MarketWatch
Money is to be made in marijuana stocks in the long run. But the recent buzz may be overdone.
/jlne.ws/2LseSqH

Wall Street’s $6.3 trillion man is worried about a trade war
Paul R. La Monica – CNN
The CEO of the world’s largest money management firm said Wall Street is getting increasingly nervous about a trade war.
/jlne.ws/2LvliFo

US Treasuries market volatility gauge falls to new low
Joe Rennison – FT
A widely-watched measure of volatility in Treasury markets has fallen to a new low for the year, despite broader consternation over trade disputes and warning signals in the bond market that the US may be headed toward recession.
/jlne.ws/2LvFRSt

West Monroe Partners Appoints Zach Jones as Chief Financial Officer; Jones succeeds Holly Kay, who has built and led Finance and Shared Services functions to support the firm’s 35% CAGR
West Monroe Partners
West Monroe Partners, a national business and technology consultancy, today announced that it has appointed Zach Jones to chief financial officer, effective August 1, 2018. Jones, currently the director of finance, succeeds Holly Kay, who has served as the firm’s CFO since 2006.
/jlne.ws/2LpHjFJ

US income inequality continues to grow; In 2015, the top 1 percent of families in the United States made more than 25 times what families in the bottom 99 percent did, according to a paper from the Economic Policy Institute.
Carmen Reinicke – CNBC
The rich are getting richer and the poor are getting poorer, at least in the United States.
/jlne.ws/2LkosMr

Thieves Jump on Cobalt Craze With $10 Million Warehouse Heist
Mark Burton – Bloomberg
Trade group says 112 tons of cobalt was stolen in Rotterdam; A three-fold jump in cobalt prices is starting to lure crooks
It’s not just hedge funds that have noticed the cobalt boom — thieves have too.
/jlne.ws/2LslGof

Big hedge fund bet on NXP hit by trade war; Chip deal that appeared to offer easy winnings caught in US-China tensions
Arash Massoudi, Eric Platt and Lindsay Fortado – FT
Some of the world’s biggest hedge funds are learning the hard way that there is no such thing as a slam-dunk trade.
/jlne.ws/2Low6W0

Institutions

Pritzkers Raise $1.8 Billion From Wealthy Families for Fund
Simone Foxman – Bloomberg
PPC Partners’ fund will target packaging, health-care firms; Tony Pritzker says ‘We’re very different from private equity’
Just because you raise a buyout fund doesn’t mean you’re a private equity manager.
/jlne.ws/2LsaPuv

BofA loses analysts in London as Mifid rules bite; Many junior staff are departing to take in-house roles at asset managers
Hannah Murphy – FT
Bank of America Merrill Lynch has lost dozens of analysts from its London office this year with many departing to join asset managers, as Europe’s Mifid markets rules begin to squeeze investment bank research departments.
/jlne.ws/2LoyHPH

Goldman’s 1MDB Role Is the Subject of Banker’s Plea Talks
Greg Farrell and Sridhar Natarajan – Bloomberg
Leissner, ex-Southeast Asia chief, discussing U.S. cooperation; U.S. questioning whether bank should have flagged bond deals
U.S. prosecutors negotiating a possible deal with a former Goldman Sachs Group Inc. executive are pressing for information about whether the bank turned a blind eye to the plunder of a Malaysian investment fund, according to a person familiar with the matter.
/jlne.ws/2LlvW1H

Rothschild Bank Broke Money-Laundering Rules in 1MDB Case
Patrick Winters – Bloomberg
Rothschild Bank AG and one of its subsidiaries were found to have seriously breached money-laundering rules in the multi-billion-dollar 1MDB Malaysian corruption case, which has ensnared lenders around the world.
/jlne.ws/2LvMxQx

Goldman Sachs, Once Closed to Outsiders, Is on a Hiring Spree; Goldman Sachs has brought in 15 outsiders at the elite rank of partner over the past year, the biggest influx of senior executives in two decades
Liz Hoffman – WSJ
For years, Goldman Sachs GS -0.70% Group Inc. rarely hired from the outside, guarding its culture with an insularity that, to rivals, bordered on arrogance.
/jlne.ws/2Lku2yn

BNY Mellon shares drop on client losses
Diptendu Lahiri – Reuters
Bank of New York Mellon Corp’s (BK.N) second-quarter outflows more than doubled, as the world’s largest custodian bank said it lost two clients and warned that the departures would impact results in the next few quarters.
/jlne.ws/2LvqkBM

Regions

An old movie is playing in emerging markets
Financial Times
If it walks and quacks like an emerging markets balance of payments crisis, is it really an emerging markets balance of payments crisis? We are not yet there, and hopefully it will not come to one. But the patterns recently displayed by global financial markets are sufficiently redolent of capital flight from poorer countries in the past that caution is in order.
/on.ft.com/2JEN39B

The greening of the Emerald Isle: Dublin’s divestment decision
David Harris – FTSE Russell
Ireland has become the first nation state to ban its sovereign wealth vehicle, the $8 billion Ireland Strategic Investment Fund, from investing in companies with significant exposure to fossil fuels. Norway, with its $1 trillion SWF, has been considering similar moves, and others may not be far behind.
bit.ly/2JBXBGH

China central bank says cannot refuse, discriminate against cash payments
Reuters Staff
Companies or individuals cannot refuse or discriminate against cash payments, China’s central bank said on Friday, but stressed the rules won’t apply to online payments and unmanned stores.
/jlne.ws/2Lsci3Z

Putin Hedges Trump Bet by Dumping Treasuries to Safeguard Assets
Anna Andrianova, Evgenia Pismennaya and Olga Tanas – Bloomberg
Russia learned from Iran’s experience, ex-central banker says; Sell-off started the same month new sanctions were imposed
Russian officials are hoping Vladimir Putin’s rapport with Donald Trump will lead to rapprochement with the U.S. But they’re not taking any chances.
/jlne.ws/2LqYN4x

Brexit

FCA fines fall 60% as Brexit dominates watchdog’s workload; Regulator offers little explanation for the drop in fines but caseload figures jump as it seeks to crack down on financial crime
Mark Cobley – Financial News
Financial penalties imposed by the UK’s markets regulator fell by more than 60% last year ó a period the authority said was increasingly dominated by its work on Brexit.
/jlne.ws/2LpFHeZ

London’s Financial-Center Appeal Undimmed in AIM Listings
Viren Vaghela – Bloomberg
London’s allure as a global financial center remains undimmed, at least in terms of activity on the London Stock Exchange’s AIM market. Listings on the bourse for smaller companies reached $1.4 billion in the first half, the highest for such a period in four years, even as the U.K. government’s Brexit planning remained mired in uncertainty.
/jlne.ws/2LpbGME

The U.K. Stock Market Isn’t Paying Attention to Brexit Chatter
Justina Lee – Bloomberg
Almost daily, ministerial spats, intra-party broils and corporate objections to government fill U.K. newspapers. You couldn’t tell from looking at the stock market.
/jlne.ws/2Lsn5ez

Miscellaneous

Amazon Prime Day crash: internal docs reveal scramble to fix
Eugene Kim – CNBC
Amazon failed to secure enough servers to handle the traffic surge on Prime Day, causing it to launch a scaled-down backup front page and temporarily kill off all international traffic, according to internal Amazon documents obtained by CNBC.
/cnb.cx/2O3TXZA

Sinclair’s ‘misrepresentation’ in WGN sale to connected auto dealer derailed Tribune Media acquisition, FCC says
Robert Channick – Chicago Tribune
AFederal Communications Commission order Thursday said Sinclair Broadcast Group’s “misrepresentation or lack of candor” in its since-withdrawn agreement to sell WGN-TV to a Maryland auto dealer was a major factor in derailing the proposed $3.9 billion acquisition of Tribune Media.
/jlne.ws/2Loy0WB

John Lothian Newsletter

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ETF trading surges on European stock exchanges

ETF trading surges on European stock exchanges

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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

Reddit traders wage battle against Wall Street

Reddit traders wage battle against Wall Street

First Read $27,651/$300,000 (9.2%) Elizabeth Cook and Robin Trott ++++ SEC Commissioner Peirce Rolls Out Welcome Mat For New Chairman Thom Thompson - John Lothian News "Even though there are unknowns, there are potential benefits," is what SEC Commissioner Hester...

ETF trading surges on European stock exchanges

ETF trading surges on European stock exchanges

First Read $26,851/$300,000 (9.0%) Denise Knabjian ++++ Hits & Takes JLN Staff The U.S. has surpassed the 25 million Covid-19 infections level, according to data reported Sunday by Johns Hopkins University. JPX has signed a memorandum of understanding, or MOU,...

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