The Malign Incompetence of the British Ruling Class

Jan 17, 2019

First Read

Hits & Takes
JLN Staff

The FIA issued an advocacy piece titled “FIA Urges Regulators to Eliminate Barriers to Clearing.”~JJL

Part one of the 13th amendment of the US Constitution says: Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. Part two says: Congress shall have power to enforce this article by appropriate legislation.~JJL

I wonder how this works with government employees who are being forced to work for no pay. Seems like the current shutdown is against the spirit of this amendment.~JJL

The OCC has appointed Chris Isaacson of Cboe Global Markets to its board of directors, replacing Cboe Executive Chairman and CEO Ed Tilly, who resigned from the board last month.~JJL

INTL FCStone Inc. will host its second annual Global Markets Outlook Conference on March 3-5, 2019 in Orlando, Florida. And this will not be just any Mickey Mouse conference.~JJL

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John C. Bogle, Founder of Financial Giant Vanguard, Is Dead at 89; John C. Bogle in 2017. He built the Vanguard Group on the belief that over the long term, most investment managers cannot outperform the broad market averages.
Edward Wyatt – NY Times
John C. Bogle, who founded the Vanguard Group of Investment Companies in 1974 and built it into a giant mutual fund company, with $4.9 trillion in assets under management today, died on Wednesday at his home in Bryn Mawr, Pa. He was 89.
/nyti.ms/2RxgBid

*****Here is the FT version of the John Bogle obituary, and the WSJ version and Barron’s

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US shutdown puts Cboe plan for closing stock orders on hold; NYSE, Nasdaq have appealed the SEC’s decision to approve the plan
Nicole Bullock – FT
Add to the list of things awaiting the reopening of the US government: plans by Cboe Global Markets to shake up the close of trading in the equity market.
/on.ft.com/2RwjgJ4

***** For some reason the Chicago press did not pick up this story when the same information was shared on Tuesday.~JJL

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Climate Change Threatens to Make Your Morning Brew More Expensive
A warmer planet is forcing coffee farmers to move uphill and cultivate different crops.
Jeremy Hodges, Fabiana Batista, and Aine Quinn – Bloomberg
Coffee farmer Masumi Kondo wrapped himself in a cosy blanket on cool nights in the 1970s when he began growing the crop in the Franca region of Brazil’s Sao Paulo state. Now, thanks to persistently warmer weather, he needs an air conditioner.
It’s not just the sleeping habits of farmers responding to a change in the climate. Rising temperatures are reducing the range of wild arabica plants, the most popular bean for drinkers. From Brazil to Ethiopia and Kenya, growers are moving uphill and deploying new technologies to maintain yields.
/goo.gl/7R8Nvc

***The NY Times has a related story on coffee and climate change in Leads. ~SR

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Why bankers are missing a treat in Frankfurt; Anyone who thinks the German city is boring has not really lived here, says FT correspondent
Patrick McGee – FT
Frankfurt has a reputation for dullness, particularly among outsiders. Even Germans — especially those from Munich or Leipzig — cannot conceal a grin when they ask how I am enjoying life. The boring tag has come into focus since the UK’s vote in 2016 to leave the EU. Where might thousands of bankers and their families restart their lives if they have to leave London?
/on.ft.com/2RuIZlf

***** I have greatly enjoyed Frankfurt every time I have been there. I could certainly live there.~JJL

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Wednesday’s Top Three
I remember when Maria Bartiromo was scheduled to be a host at the CME’s inaugural Global Financial Leadership Conference in September 2008. In the weekend before the event, Lehman Brothers collapsed and Bartiromo joined via teleconference and cried over the financial collapse which was happening before her in New York. One could say it showed her passion for the industry, and she was at one time the face of it. As such, the Institutional Investor feature piece on her was the top story of the day yesterday, Maria Bartiromo Was a Generational Icon for Financial Television. What Happened? Second was perhaps the most important news of the day, Risk.net’s coverage of the Nasdaq Nordic clearing house losses, but a yet unknown $1.2 billion margin call on ICE Clear Europe, in A tale of two CCPs. Third was the TT blog post Know Your Risk Scores and Replay Your Trading Activity with TT Score for $250/Month.~JK

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Lead Stories

The Malign Incompetence of the British Ruling Class; With Brexit, the chumocrats who drew borders from India to Ireland are getting a taste of their own medicine.
Pankaj Mishra – NY Times
Describing Britain’s calamitous exit from its Indian empire in 1947, the novelist Paul Scott wrote that in India the British “came to the end of themselves as they were” — that is, to the end of their exalted idea about themselves. Scott was among those shocked by how hastily and ruthlessly the British, who had ruled India for more than a century, condemned it to fragmentation and anarchy; how Louis Mountbatten, accurately described by the right-wing historian Andrew Roberts as a “mendacious, intellectually limited hustler,” came to preside, as the last British viceroy of India, over the destiny of some 400 million people.
/nyti.ms/2RAPLpu

Larry Fink Calls on Businesses to Lead, Not Just Live, With Purpose
Andrew Ross Sorkin – NY Times
Larry Fink, the investment manager who oversees nearly $6 trillion at BlackRock, set off a yearlong conversation among business leaders and policymakers last January when he wrote a letter to chief executives declaring that companies needed to do more than make profits.
/nyti.ms/2RAQ9UY

Crypto exchange CEO says traders shouldn’t hold their breath for ether futures
Frank Chaparro – Bloomberg
That might have to do with changes coming to the ethereum network
A slew of crypto firms have their hearts set on launching markets for ethereum derivatives, but the chance regulators get comfortable with giving the green light for those products this year seem slim, some market experts say.
bit.ly/2suJeO8

Global Warming Is Helping to Wipe Out Coffee in the Wild; Drying coffee beans in Ethiopia. More than half of all species are at risk of vanishing in the wild because of climate change and deforestation.
Somini Sengupta – NY Times
Aaron Davis, a British botanist, has spent 30 years trekking across forests and farms to chronicle the fate of one plant: coffee. He has recorded how a warming planet is making it harder to grow coffee in traditional coffee-producing regions, including Ethiopia, the birthplace of the world’s most popular bean, arabica. He has mapped where farmers can grow coffee next: basically upcountry, where it’s cooler. He has gone searching for rare varieties in the wild.
/nyti.ms/2Rv9WoI

LME progresses new product plans as price providers are announced
LME
The London Metal Exchange (LME) today announces the index price providers for its seven new cash-settled futures products due to launch on 11 March 2019, and provides an update on its lithium contract which is expected to launch in Q4 2019.
bit.ly/2RuMiZH

CME’s TriOptima launches initial margin calculation tool
Hayley McDowell – The Trade
Post-trade derivatives services provider TriOptima has launched a tool to provide insights into options for initial margin (IM) calculation and to help firms identify in-scope counterparties.
bit.ly/2RvceEk

BlackRock targeted by fake letter on climate change; Message purporting to be from Larry Fink threatened to ditch groups not taking action on environment
Peter Smith – FT
BlackRock has been targeted by an elaborate hoax involving a spoof letter purporting to be written by the fund group’s chief executive Larry Fink that was sent to media outlets.
/on.ft.com/2Rwiyvn

Goldman CEO apologises to ‘people of Malaysia’ for 1MDB scandal
Laura Noonan- FT
Goldman Sachs chief executive David Solomon has apologised to the “people of Malaysia” for the involvement of its former partner Tim Leissner in the multi billion dollar 1MDB money laundering and bribery scandal.
/on.ft.com/2RwGFtW

Goldman Sachs’s Tactic in Malaysian Fraud Case: Smear an Ex-Partner
Matthew Goldstein, Emily Flitter and Kate Kelly – NY Times
They sound like the ingredients of a pulpy thriller: Bigamy. Secret religious conversions. A doctorate from a mail-order diploma mill. Affairs with powerful women. The sordid list — a mixture of facts, accusations and insinuations, packaged in a glossy slide show — represents the crux of a well-orchestrated campaign by Goldman Sachs to discredit one of its former partners and to minimize the Wall Street bank’s role in the looting of a big Malaysian investment fund.
/nyti.ms/2RzYKHm

Wall Street’s Mr. Fix-It Has $338 Million Riding on Fiserv Deal
Anders Melin and Jenn Zhao – Bloomberg
Frank Bisignano left JPMorgan to run debt-laden First Data; He received $102.2 million in total compensation for 2017. First Data Corp. was Frank Bisignano’s big bet, rooted in the idea that waiting for Jamie Dimon to retire wasn’t worth it.
/bloom.bg/2RwSGzn

It’s Official: Wall Street Topped $100 Billion in Profit
Hannah Levitt and Max Abelson – Bloomberg
The six biggest U.S. banks have never had a $100 billion year. Until now. Goldman Sachs Group Inc., JPMorgan Chase & Co. and their peers have already reported more than $111 billion of profit for 2018. Morgan Stanley will only make that number bigger when it releases its fourth-quarter results Thursday.
/bloom.bg/2RxBaeE

Germany steps up work on potential Deutsche-Commerzbank tie-up; Finance ministry asks for regulator’s analysis of a merger between major lenders
Olaf Storbeck and Guy Chazan – FT
Germany’s finance ministry has asked banking regulator BaFin to share the results of its scenario analyses that model a potential merger of Deutsche Bank and Commerzbank, people briefed on the matter told the Financial Times.
/on.ft.com/2RuORuJ

Bank regulators deem any Deutsche-Commerzbank merger unwise: source
Reuters
European bank regulators do not think Germany’s two largest banks, Deutsche (DBKGn.DE) and Commerzbank (CBKG.DE), should merge, a source with direct knowledge of the matter said.
/reut.rs/2CqtzUQ

Citigroup Reveals Female Employees Earn 29% Less Than Men Do
Rebecca Greenfield – Bloomberg
Bank is first in U.S. to publish ‘unadjusted’ gender pay gap; ‘We should obviously be at 100 percent parity,’ bank says
Citigroup Inc. offered an uncharacteristically blunt assessment of the pay gap between men and women in its global workforce Wednesday, revealing that female employees earn 29 percent less than men do.
/bloom.bg/2Rxl2JT

Exchanges, OTC and Clearing

TriOptima Launches triCalculate IM Analytics Tool for Initial Margin Compliance
CME Group
TriOptima, a leading infrastructure service that lowers costs and mitigates risk in OTC derivatives markets, today announced that it has launched triCalculate IM Analytics which provides crucial insight into the options for initial margin (IM) calculation, helps with the identification and prioritization of in-scope counterparties and aids trading decisions to reduce future IM costs.
bit.ly/2RAK1fB

Speech by SGX CEO Loh Boon Chye at Nikkei Forum: Innovative Asia; Building a Digital Marketplace for Capital
SGX
It is my pleasure to share my thoughts on innovation in Asia, a topic that SGX is very excited about.
bit.ly/2RwJjQo

Updated position limits for Equity Derivatives, ETF and ETC Derivatives
Eurex
Eurex Exchange checks and updates the position limits for Equity Derivatives, ETF and ETC derivatives on a regular basis. The updated position limits will be effective as of 30 January 2019 and will be provided to you on the same day on the Eurex website www.eurexchange.com under
bit.ly/2RyWFf1

Eurex Clearing FIXML Interface: New server certificates
Eurex
New SSL/TLS certificates will be installed on the AMQP brokers, which are used for the Eurex Clearing FIXML Interface in the simulation and production environment. They will replace the existing certificates, which are approaching their expiration date.
bit.ly/2RxOCiG

Eurex Clearing appoints Dmitrij Senko as Chief Risk Officer
Eurex
Eurex Clearing, one of the world’s leading central counterparties (CCP) and part of Deutsche Börse Group, appoints Dmitrij Senko as Chief Risk Officer. Senko will take over from Thomas Laux on 1 July 2019.
bit.ly/2RA1JQ6

Eurex Exchange’s Quarterly Equity Derivatives Highlights – Q4/2018; Equity options:
Eurex
In June 2018, Eurex introduced Eurex EnLight, the Request for Quote (“RfQ”) service for the Swiss equity & index options segment. More than 250 requests have since been sent with a conversion rate of 50 percent. Overall, 125 deals have been agreed upon.
bit.ly/2RyWDUr

Bloomberg expands China bond market access via Terminal; Bloomberg claims position as the first platform connected to CFETS to offer global investors access to the CIBM Direct and Bond Connect initiatives.
Hayley McDowell – The Trade
Bloomberg has struck a deal with the China Foreign Exchange Trade System (CFETS) to become the first trading platform to offer access to both of the China’s interbank bond market (CIBM) Direct and Bond Connect schemes.
bit.ly/2RvaVFq

MEMX: The road ahead; Following news of major US players looking to establish a member-owned equities exchange, industry experts agree the move could prove to be positive for markets, but warn the road ahead for MEMX may be a difficult one.
Hayley McDowell – The Trade
Wall Street kicked off the new year with a bang, with news of major US players banding together to take on incumbent exchange operators with a potentially game-changing move.
bit.ly/2RA1h4m

Fintech

Fixed income tech start-up aims to make waves ahead of launch; Start-up founded by former Nordea AM head of trading and due to launch this year aims to put the power back in the hands of fixed income traders.
John Brazier – The Trade
A new start-up is taking aim at established fixed income trading practices by placing greater power into the hands of traders and portfolio managers.
bit.ly/2RCO0s8

Buy-side prefer front-to-back solution from tech vendors rather than custodians, finds survey; Despite opportunities such as reduced workload, buy-side firms would still opt for a technology vendor over a custodian for front-to-back-office solutions.
Joe Parsons – The Trade
A new survey of 100 buy-side operations executives showed the majority of firms would pursue a front-to-back-office solution provided by a technology vendor rather than a custodian.
bit.ly/2RzVprO

The Hot New Job in Fintech: Someone to Deal With Regulators
Julie Verhage -Bloomberg
Job listings for compliance officers are on the rise; Companies are responding to increased regulatory scrutiny
U.S. regulators have taken a greater interest over the last year in technology startups promising to reinvent finance. This newfound attention is compelling the biggest names in fintech to prioritize a part of their business that’s often ignored.
/bloom.bg/2RAgF0Q

Consolidated Market Data Feeds Gain Traction in Algo Trading and Fixed Income
consolidated market data
Ivy Schmerken – Flextrade
Broker dealers and high-frequency trading firms have complained about U.S. stock exchanges charging high fees for direct data feeds, accusing the exchanges of having a monopoly and demanding transparency into their costs.
bit.ly/2ssXUgN

Cryptocurrencies

Crypto’s Billion-Dollar Theft Problem Prompts Safer Way to Trade
Matthew Leising – Bloomberg
BitGo and Genesis’s service aims to protect coins from hackers; Thieves swiped almost $1 billion in first nine months of 2018
Big investors who’ve soured on cryptocurrencies because of the industry’s billion-dollar theft problem will soon have a new way to trade that’s touted as a safer solution.
/bloom.bg/2RzSTlm

Crypto Winter Isn’t Fatal For All ‘Picks and Shovels’ Makers
Matthew Leising -Bloomberg
Executives say key infrastrucute is continuing to be built; Dropping equity valuations also attractive buying opportunity
The crypto winter that’s seen major digital assets crash by as much as 90 percent hasn’t been bad for all of the firms building infrastructure or investors looking to pick up equity in projects that dropped appreciably.
/bloom.bg/2RC5C7d

GMEX Launches Crypto Custodian and Vault Services
Arnab Shome – Finance Magnates
GMEX Technologies has announced the launch of two new products – ForumCustody and ForumWallet. With this, the company has extended its support to provide digital custodian services to high volume digital asset holders. Both the products will be a part of the GMEX Fusion product suite which provides digitally enabled hybrid trading and post-trade solutions for exchanges, clearing-houses, and central securities depositories (CSD).
bit.ly/2DeD0Il

Crypto exchange CEO says traders shouldn’t hold their breath for ether futures
Frank Chaparro – The Block
A slew of firms — including ErisX, Seed CX, and Cboe — have ether derivatives in the works. But it doesn’t look like regulators are going to approve such products anytime soon. That might have to do with changes coming to the ethereum network.
bit.ly/2suJeO8

Bitwage Now Lets Firms Pay Salaried Staff in Crypto
Zack Seward – Coindesk
Bitwage is partnering with a payroll company to give more firms the ability to pay their workers in cryptocurrency. Revealed exclusively to CoinDesk, Bitwage CEO Jonathan Chester says the partnership will let more U.S. employers fund payroll, payroll taxes and benefits with bitcoin or ether. “This is a lifeline for companies to pay their people compliantly,” Chester told CoinDesk.
bit.ly/2RvDFhn

Gibraltar Blockchain Exchange Lists EOS on Crypto Exchange
Celeste Skinner – Finance Magnates
The Gibraltar Blockchain Exchange (GBX), a cryptocurrency exchange and marketplace for initial coin offerings, has added a new cryptocurrency to its Digital Asset Exchange (DAX) this Wednesday – EOS. EOS is the token of EOS.IO, a blockchain protocol which is powered by the cryptocurrency. EOS was launched in 2017, and since then, its price has fluctuated between $18 and less than $0.80.
bit.ly/2suqXR5

Genesis, BitGo Team Up to Ease Crypto Trading for Institutions
Ian Allison – Coindesk
Cryptocurrency custodian BitGo and over-the-counter (OTC) specialist Genesis Global Trading have teamed up on a service designed to make Wall Street feel more comfortable dipping a toe in the market. Announced today, the tie-up means institutional investors storing digital assets with BitGo can use Genesis’ platform to execute trades at the speed they are accustomed to in the traditional financial markets.
bit.ly/2RzFXw4

I’m As Certain As Ever – Bitcoin’s Revolution Is Only Just Beginning
Tim Draper – Coindesk
It wasn’t 10 years ago, but more like 15, when I first saw the potential for a digital currency. I’ve been through some big up and downs in bitcoin. But today, I’m more certain than ever that the bitcoin revolution is coming.
bit.ly/2Rza5Yx

On The Block with Christine Sandler: Meet the former NYSE exec who made the leap to Coinbase
Isabel Woodford – The Block Crypto
When a recruiter approached Christine Sandler in late-2017 about coming out of retirement for an opening at Coinbase, he warned her it was “a little out there.” To be sure, after an extended career in the traditional financial world, which included time at the NYSE and Barclays, switching camps to crypto isn’t a move for the faint-hearted. But Sandler’s decision to become head of sales (US) at Coinbase – the US’s biggest exchange – was not a difficult one, she tells The Block.
bit.ly/2RA3Ray

Cryptocurrency Deals Can Always Be Erased, for a Price; But at least in the blockchain, everyone knows the price.
Elaine Ou – Bloomberg
Long before there was a Federal Reserve, banks settled accounts with each other by sending porters from bank to bank to exchange checks for bags of gold. Sometimes a porter would present a check only to find that the issuing bank had insufficient funds. Rumors of insolvency quickly spread and panic would ensue.
/bloom.bg/2Cn2bqs

Margin Trading on Seed CX
Chintan Sheth – via Medium
It was the afternoon of June 22nd 2016 in Chicago, a few hours from the result of the Brexit referendum. Most of the world was betting that the UK would vote to remain in the EU. One of the trading desks at my previous firm was selling volatility in the E-minis which already seemed too high.
bit.ly/2CqoADl

Stories from Alternative Crypto Sources

Swiss Crypto Industry Leader Says Next Crypto Wave Will Be Stablecoins, Security Tokens
Marie Huillet – Cointelegraph
bit.ly/2Fx1n6n

Security Report Gives A or A- Rating to 16% of Major Crypto Exchanges, None Get A+
Marie Huillet – Cointelegraph
bit.ly/2FDH5ra

Politics

New House Financial Services Chair Targets Mulvaney for Interim CFPB Role; Rep. Maxine Waters says panel will look into White House chief of staff’s efforts to overhaul agency
Andrew Ackerman – WSJ
House Democrats plan to target White House Chief of Staff Mick Mulvaney over his previous role as the Trump administration’s temporary head of a federal consumer finance agency, a Democratic committee chairwoman said Wednesday.
/on.wsj.com/2RvThS6

Watchdog Finds Flaws in Review of Trump Hotel Lease; GSA inspector general says federal agency should have considered Constitution’s emoluments clause
Rebecca Ballhaus – WSJ
A watchdog report released Wednesday said the General Services Administration improperly ignored a constitutional provision when it was reviewing whether to allow the Trump International Hotel in Washington to keep its lease after President Trump’s inauguration.
/on.wsj.com/2RuJprP

Impeach Donald Trump; Starting the process will rein in a president who is undermining American ideals—and bring the debate about his fitness for office into Congress, where it belongs.
Yoni Appelbaum – The Atlantic
On january 20, 2017, Donald Trump stood on the steps of the Capitol, raised his right hand, and solemnly swore to faithfully execute the office of president of the United States and, to the best of his ability, to preserve, protect, and defend the Constitution of the United States. He has not kept that promise.
bit.ly/2RzTzaG

Ocasio-Cortez, freshmen poised to take on Wall Street
Sylvan Lane – The Hill
An influx of young, progressive freshman members, headlined by Rep. Alexandria Ocasio-Cortez (D-N.Y.), is set to create new headaches for Wall Street and its allies in Washington.
bit.ly/2CmZZ2c

The Economy Can’t Shrug Off the Shutdown Forever; Idled federal employees and contractors roughly match the job losses from a recession.
Noah Smith – Bloomberg
For months now, commentators and economists have been warily eyeing the U.S. economy and asking what will cause the next recession. Risky corporate debt seemed to be building up in the system, but with profits robust and interest rates low, servicing the debt didn’t seem to be a problem. The Federal Reserve raised rates by a modest amount, but signaled that it didn’t have much appetite for future increases. President Donald Trump’s trade war didn’t seem to be having much effect yet.
/bloom.bg/2CqaRN5

Regulation

ASIC takes court action against Advanced Wealth Financial Services
ASIC
ASIC has commenced proceedings in the Supreme Court of Queensland against Richard Gardner, a credit representative and former financial adviser; and
bit.ly/2Rz996t

IRS Offers Penalty Reprieve to Taxpayers Adjusting to New Law; Move is nod to uncertainty surrounding implementation of 2017 tax overhaul
Richard Rubin – WSJ
Some taxpayers who didn’t have enough money withheld from their paychecks last year won a reprieve Wednesday from the Internal Revenue Service.
/on.wsj.com/2Rz7RZb

Shutdown is starting to hurt Trump’s financial deregulation agenda
Pete Schroeder, Suzanne Barlyn, Michelle Price – Reuters
The U.S. government shutdown over President Donald Trump’s call for Congress to fund a wall he promised to build on the U.S.- Mexican border is threatening another campaign pledge to make rules easier to navigate for banks and corporations.
/reut.rs/2Cpv7yg

Award claims due in March after Alton, IA man receives $2.1M judgment in connection with fraud scheme
KTIV
The U.S. Commodity Futures Trading Commission said in a news release individuals may submit whistleblower award claims after the Commodity Futures Trading Commission announced an Order and Judgment against Lon Friedrichsen of Alton, Iowa in December 2018.
bit.ly/2CshuOF

ESMA publishes responses to Call for evidence on periodic auctions for equity instruments
ESMA
The European Securities and Markets Authority (ESMA) has published the responses received to its Call for evidence on periodic auctions for equity instruments.
bit.ly/2CudzB9

Tick Size Pilot Data Collection to End on April 2, 2019
FINRA
On April 2, 2019, the data collection requirements under the National Market System (NMS) Plan to implement a Tick Size Pilot Program (Tick Size Pilot) will come to an end. The Tick Size Pilot was a data-driven test to evaluate whether or not widening the tick size for securities of smaller capitalization companies would impact the trading, liquidity, and market quality of those securities. While the quoting and trading requirements under the Tick Size Pilot ended on October 2, 2018, firms that meet the definition of a “trading center” in Tick Size Pilot securities have continued to have the obligation to submit specific data elements within their OATS Reports. These data elements were used in the process of generating statistics in order to comply with Appendices B.I and B.II of the Tick Size Pilot. This data obligation will end on April 2, 2019.
bit.ly/2CqP9IE

Investing and Trading

Louis Dreyfus to exit non-core dairy business
Emiko Terazono – FT
Louis Dreyfus Company, the international agricultural trader, announced that it would exit its non-core dairy business by the middle of this year mid-2019 as part of its strategy to divest non-core businesses.
/on.ft.com/2RCLLVK

Palladium Hurtles Through $1,400 as Breakneck Rally Continues
Rupert Rowling and Ranjeetha Pakiam – Bloomberg
JNear-term supply shortage has driven metal to fresh highs; Palladium continues to rise despite slowing car sales
Palladium rocketed through $1,400 an ounce for the first time, extending its precipitous rally despite signs that global vehicle sales are slowing.
/bloom.bg/2RxeISF

Investing Prophet Jeremy Grantham Takes Aim at Climate Change; The veteran money manager will devote $1 billion to helping the world escape catastrophe.
Ben Steverman – Bloomcer
Terrifying an audience is one of Jeremy Grantham’s specialties. The legendary investor, co-founder of Grantham Mayo Van Otterloo (GMO), is famous for predicting doom. And he’s famous for being right, with a remarkable record of spotting investment bubbles before they pop, notably the 2000 tech crash and 2008 financial crisis.
/bloom.bg/2RwSKiB

John Bogle, who founded Vanguard and revolutionized retirement savings, dies at 89
Art Carey and Erin Arvedlund – The Inquirer
John C. Bogle, 89, who revolutionized the way Americans save for the future, championed the interests of the small investor, and railed against corporate greed and the excesses of Wall Street, died of cancer Wednesday at his home in Bryn Mawr, his family confirmed.
bit.ly/2RAewCk

Fed Says Student Debt Has Hurt the U.S. Housing Market; Student loans prevented 400,000 young Americans from buying homes, Fed says in paper covering 2005 to 2014
Josh Mitchell and Laura Kusisto – WSJ
The Federal Reserve has linked rising student debt to a drop in homeownership among young Americans and the flight of college graduates from rural areas, two big shifts that have helped reshape the U.S. economy.
/on.wsj.com/2RxMR4T

ADM to buy rest of UK grain merchant Gleadell from InVivo
Reuters
U.S. agribusiness group Archer Daniels Midland Co said on Thursday it had agreed to buy complete control of British grain firm Gleadell Agriculture Ltd by purchasing a 50 percent stake from current partner InVivo.
/reut.rs/2CpuUv4

Institutions

Morgan Stanley Reports Lower Earnings; The bank led by CEO James Gorman is the final of the six largest in the U.S. to report earnings
Liz Hoffman – WSJ
Morgan Stanley ‘s MS 3.75% fourth-quarter profit fell short of expectations as the Wall Street bank wrapped up an earnings season for banks that’s been mostly solid except in securities trading.
/on.wsj.com/2RAPF16

SocGen’s Trading Slide Adds to Setbacks for French Banks
Ross Larsen , Geraldine Amiel , and Fabio Benedetti Valentini – Bloomberg
Bank expects revenue hit, charge for disposal of units; Peers in U.S. and France also hampered by wild markets
Societe Generale SA capped a dramatic reversal of fortune for French banks after markets turned volatile, warning that fourth-quarter trading revenue dropped about 20 percent.
/bloom.bg/2Rz3M7j

SocGen Considers Shutting $4.7 Billion Prop-Trading Unit
Fabio Benedetti Valentini , Donal Griffin , and Stefania Spezzati – Bloomberg
Executives reviewing future of Descartes division: sources; Crosstown rival BNP shuttered prop-trading unit last week
Societe Generale SA is considering closing its proprietary-trading unit, people familiar with the matter said, a week after French rival BNP Paribas SA decided to close its operation.
/bloom.bg/2RzTS5k

SocGen warning boosts investment bank sceptics
Christopher Thompson – Reuters
Frédéric Oudéa remains at the mercy of his misfiring traders. The Société Générale boss on Thursday warned the French lender’s investment banking revenue had fallen by a fifth in the fourth quarter. Keeping the dividend flat and letting investors take it in shares, rather than cash, points to further capital headwinds.
/reut.rs/2Cs2ekW

BofA Shares Jump as Retail Bankers Save the Day for Bond Traders
Lananh Nguyen – Bloomberg
Consumer banking posts 5% loan growth, driving record profit; Bond trading drops 15% and falls short of analysts’ estimates
Bank of America Corp.’s consumer bankers saved the day for investors, sending shares surging as they helped make up for a bond-trading slump.
/bloom.bg/2CqMbnx

Quants Take Beating as Momentum Strategy Lags Stock Rebound
Justina Lee – Bloomberg
ETF investors withdraw $275 million in blow to high fliers; Bernstein warns strategy faces valuation and crowding risks
Equity investors are fleeing the darlings of yesteryear, hit by valuation fears and spiking correlations. In a sign of vanishing confidence in the bull market’s biggest anchor, $275 million fled the iShares Edge MSCI USA Momentum Factor ETF on Tuesday — the biggest one-day withdrawal since May — even as the broader index edged higher.
/bloom.bg/2CuCCUw

Regions

China Won’t Save the Oil Market; Crude imports are up sharply in recent months, but investors shouldn’t take that as a go signal
Nathaniel Taplin – WSJ
Oil markets have been whipsawed this week by news from China. Monday, Brent oil fell 2.5% after trade data came in much weaker than expected. Tuesday, it rose 2.8% thanks in large part to stimulus hints from top Chinese officials. The price is now at $61 a barrel.
/on.wsj.com/2RC6tEX

A Billionaire, a Coder and a Probe Into EU Funds; Czech Prime Minister Andrej Babis’s conglomerate has a wide reach and a local app developer thinks it’s time to keep track.
Peter Laca , Lenka Ponikelska , and Michael Winfrey – Bloomberg
Martin Vytrhlik carefully scans packages of meat and cartons of milk with his smart phone. It responds, but not with information about nutrition, price or availability. Up pops a picture of the Czech prime minister.
/bloom.bg/2RANI4M

Some Hong Kong Stocks Sink 70% as Wave of Selling Hits
Bloomberg News
One Chinese developer loses HK$26.3 billion in market value; Bocom’s Hao Hong expects more sudden share crashes this year
A string of Hong Kong-listed stocks plunged without warning in afternoon trading, the latest shock losses to sideswipe investors in the world’s fourth-largest equity market.
/bloom.bg/2Rv7u1u

Brexit

So Bad It’s Good: Markets See Silver Lining in Brexit Rejection
Samuel Potter and Patricia Lui – Bloomberg
Pound defies worst analyst fears after May’s historic defeat; Stocks, gilts lag but analysts see more chance of soft exit
Prime Minister Theresa May’s record defeat in Parliament over her Brexit divorce deal provoked a curious response from markets: Optimism.
/bloom.bg/2RCKpdC

More Wealthy Europeans Are Leaving the U.K., Movers Say
Irene Garcia Perez and Benjamin Stupples – Bloomberg
London relocation firm says international exits jumped in 2018; Clients are typically millionaires leaving with their families
With the Brexit deadline less than 75 days away, the increasing likelihood of a no-deal split is pushing wealthy Europeans who have made their homes in the U.K. to call it a day and get the movers in.
/bloom.bg/2RwFA5m

Britain’s a Small Country. Get Used to It; Europe is full of former imperial powers that have adjusted to their diminished status. The U.K. needs to find a way to do the same.
Mihir Sharma – Bloomberg
The United Kingdom of Great Britain and Northern Ireland is a small country that is about to get even smaller. I know that this simple statement of fact will nevertheless infuriate many English people — and I do mean English people, not Scottish, Welsh or Northern Irish. Last week, at India’s Raisina Dialogue, the Spanish foreign minister said that there were two types of countries in Europe: countries that are small and countries that do not know that they are small. Aside from the English, no Europeans in the audience were upset at this plain-speaking. Not even the French.
/bloom.bg/2Rzas5n

Newspapers Are Stockpiling Ink and Newsprint Against Brexit
Thomas Seal – Bloomberg
Publishing industry among businesses preparing for no deal; Political paralysis over exit has worsened business concerns
With the political chaos of Brexit filling their column inches, British newspapers are now having to ensure the country’s drive to leave the European Union doesn’t leave them without enough paper and ink.
/bloom.bg/2Cs3owO

Miscellaneous

Crain’s names first female editor; Veteran Chicago journalist Ann Dwyer will lead the newsroom at the 41-year-old business publication.
Crain’s Chicago Business
Ann Dwyer, a veteran Chicago journalist, has been named the first female editor of Crain’s Chicago Business in its 41-year history.
bit.ly/2CqmL9t

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Food groups’ fight over wheat manipulation re-erupts

Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe CFTC Kraft/Mondelez Global announcement is not worth two bits. Claiming to win the case, without clarity of the specific actions that were manipulative,...

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