The Story of 2018 Was Climate Change; This Was a Great Year to Be a Math Geek

Jan 2, 2019

First Read

Remembering R. Conrad Leslie

It is with sadness and great respect that I share the news that our longtime friend and colleague, Conrad Leslie, has passed away. Les was a well-known and highly regarded financial and agri-business professional for over 50 years, and we were fortunate that he and his colleague Roberta Kabot spent the last decade of his career at ADM Investor Services. Many of you read and relied on the great insights shared daily in his pre-market opening letter, and continued to enjoy the letter when it was written by Roberta after Les retired.

Some of Les’ most notable contributions to our industry were the monthly crop production estimate he generated more quickly than the USDA report, the assistance he provided to the Nixon White House with Russian wheat sales, his numerous writings and calls on Congress that helped pass the 1975 bill that allowed Americans to own gold, and the 3 books he wrote including his collection of market wisdom and experiences presented in his book Conrad Leslie’s Guide for Successful Speculation, Stocks, Commodities, Gold.

Les adored Cynthia, his wife of 70 years, his children and grandchildren and was a good friend to many in the financial and agricultural industries. He will be missed by all. His obituary is attached, and I ask that you join me in remembering him today.

Sincerely,

Thomas R. Kadlec
President, ADM Investor Services

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Hits & Takes
JLN Staff

Welcome to 2019, the 19th year of the John Lothian Newsletter. We wish you all a healthy and successful 2019.

Conrad Leslie passed away on Christmas Day. There was no bigger name in crop and market forecasting when I first came into the markets. He was greatly respected and was a CBOT member for 40 years. Condolences to his family, friends and colleagues.~JJL

Tyler Trent, the Purdue University student in hospice who predicted victory and cheered on the Purdue Boilermaker football team to victory over Ohio State, has died of cancer at the age of 20. Tyler became a hero to the football team and Purdue community, showing great courage in the face of a terminal diagnosis. The university has started “The Tyler Trent Cancer Research Endowment” to help fight this disease.

Here is the Sports Illustrated story titled “Tyler Trent, Purdue Superfan, Dies at 20.” Tyler was also a journalist at the Purdue Exponent on the sports desk. I am veteran of the Exponent as well.~JJL

From Jim Toes of STA: In 2008, there were 4,999 FINRA registered firms, or broker-dealers. By the end of 2017, there were 3,716, a reduction of 1,283, or 25.6 percent.~JJL

Oliver Frischemeier has been promoted to head of corporate engagement & executive services at Deutsche Bˆrse.~JJL

Rolf Andersson has left Goldman Sachs and is the founder of a company called Stealth.~JJL

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First capital raise: complete
Kelly Loeffler – via Medium
I am pleased to confirm that we have completed our first round of funding of $182.5 million from 12 partners and investors who, like us, believe in the future of digital assets.
/jlne.ws/2F3cW4a

***** The equity raise and the list of partners is impressive for this ICE-backed startup.~JJL

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What if George Bailey had owned a broker-dealer instead?
Jim Toes – Security Traders Association
Once again, Christmas Eve at my house was spent watching It’s a Wonderful Life, with Jimmy Stewart playing George Bailey, a steadfast pillar in his hometown who also owns a building and loan company that bears his family name. In all the years of watching, Good Ol’ George always inspired thoughts associated with valuable life lessons like, how random acts of kindness have a rippling effect. This year was different. All I could think about was, “What if George Bailey had owned a broker-dealer instead of a community bank? Would our industry be in a better place than it is now?”
/goo.gl/YaHurQ

****** It’s a Wonderful Life never stops giving.~JJL

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Wall Street’s most famous trader says markets need a human touch
Taylor Nicole Rogers- CNN Business
When trader Peter Tuchman first set foot on the floor of the New York Stock Exchange in 1985, there wasn’t a computer in sight.
/jlne.ws/2BV5Ifr

***** Einstein hair, always in the picture, the face of the NYSE markets.~JJL

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Friday’s Top Three
Our top stories from our last issue of 2018 on December 28th were led by Bloomberg’s `Completely Bizarre’ Stock Volatility Leaves Traders Baffled. Second was the Sydney Morning Herald’s piece on trader Jim Zhao, in Sydney trader pleads guilty to manipulating Chicago futures market. Third was Yahoo’s Trump Brags To Troops About A Fictional Giant Pay Raise He Got Them

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

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Lead Stories

The Story of 2018 Was Climate Change; Future generations may ask why we were distracted by lesser matters.
David Leonhardt – NY Times
Our best hope may be the weather. For a long time, many people thought that it was a mistake to use the weather as evidence of climate change. Weather patterns contain a lot of randomness. Even as the earth warms and extreme weather becomes more common, some years are colder and calmer than others. If you argue that climate change is causing some weather trend, a climate denier may respond by making grand claims about a recent snowfall.
/jlne.ws/2BVkCTa

This Was a Great Year to Be a Math Geek; And 2019 is shaping up to be pretty good, too.
Scott Duke Kominers – Bloomberg
For math geeks like me, 2018 was a banner year: not only was it a year in which the field’s top prize was awarded, it was the only year in this century featuring days lining up with both the Golden ratio, an elegant proportion found throughout art and nature, and the mathematical constant e, which is at the core of calculus.
/jlne.ws/2BXdMMG

Inside Xi Jinping’s Plan to Dominate the World; Elizabeth Economy’s “The Third Revolution” makes the case that China is most dangerous in the realm of ideas.
Hal Brands – Bloomberg
Who is the most important and disruptive leader in the world today? Most Americans would probably answer, Donald Trump — with Russia’s Vladimir Putin running a close second. But my choice for the must-read book of 2018, Elizabeth C. Economy’s “The Third Revolution,” makes a strong case that China’s Xi Jinping may deserve the title.
/jlne.ws/2BSJaMx

Stock Traders Win, Bond Desks Lose in Volatile Year; Equity-trading desks at biggest U.S. banks have biggest revenue year since financial crisis
Telis Demos – WSJ
Fear and uncertainty over rising interest rates, trade spats and global politics sent stocks swinging and created a boon for trading in those markets. Equity-trading desks at the five biggest U.S. banks are set to record their biggest revenue year since the 2008 financial crisis, according to company reports and analyst forecasts.
/jlne.ws/2BUeAlF

Farmers risk loss of federal payments, loans, from shutdown
Juliet Linderman – AP News
The end of 2018 seemed to signal good things to come for America’s farmers. Fresh off the passage of the farm bill, which reauthorized agriculture, conservation and safety net programs, the Agriculture Department last week announced a second round of direct payments to growers hardest hit by President Donald Trump’s trade war with China.
Then parts of the government shut down.
bit.ly/2rZ4mvG

FCA probes 18 businesses involved in cryptocurrency transactions; Regulator also issued warnings to dozens of companies suspected of crypto scams
Josephine Cumbo – FT
The UK financial regulator is probing more than a dozen companies in connection with cryptocurrency transactions amid concerns about growing market risks. The Financial Conduct Authority on Sunday confirmed it was investigating 18 businesses involved in the sale of cryptocurrencies such as bitcoin. The regulator has also issued alerts and warnings about dozens of companies suspected of cryptocurrency investment scams.
/jlne.ws/2BSE6rA

Back to Normal Felt Anything But Average for Stock Bulls in 2018
Elena Popina and Vildana Hajric – Bloomberg
Average daily VIX in 2018 was 16.6, roughly the median year; The year-over-year change in volatility is among biggest ever
As bad as it repeatedly has seemed, in the end 2018 really was a ho-hum year for stock turbulence. So why did it feel so harrowing? Simple. Because of how abnormally calm things were in the past.
/jlne.ws/2BXhaHF

The Fed should seize blockchain’s potential; Central banks must embrace new financial technologies to boost market stability
Eswar Prasad – FT
The plunging prices of bitcoin and other cryptocurrencies are validating sceptics who deride them as pure speculative bubbles, enabling a global cesspool of illegal commerce. The environmental cost of the massive energy consumption needed to create bitcoin is another strike against it. Whatever happens to bitcoin, its underlying technology, called blockchain, could transform the worlds of finance and central banking.
/jlne.ws/2R7TISB

Individual Investors Try Not to Panic Over Big Market Gyrations; ” ‘My friends are like: ‘Oh my God, the world is ending’ “
Dawn Lim, Daniel Kruger and Ira Iosebashvili – WSJ
The year-end stock selloff saddled major indexes with their worst annual decline since 2008 as concerns over global growth intensified, but retail investors are trying to hold on despite the intense volatility.
/jlne.ws/2R5TuLC

$1 Billion Is the Loneliest Number for Hedge Funds in 2019
Katherine Burton, Katia Porzecanski and Nishant Kumar – Bloomberg
Only a few firms will start with more than $500 million; One firm, Woodline Partners, is expected to exceed $1 billion
Hedge fund managers set on starting their own firms in 2019 face the worst money-raising environment in years.
/jlne.ws/2R2GA0Q

Lenders Are Thriving on Bitcoin’s Bust by Aiding Both Fanatics and Shorts
Olga Kharif – Bloomberg
Crypto lending is a world of ample collateral and margin calls; In a bear market ‘true magic happens,’ says one startup’s CEO
As a growing number of cryptocurrency ventures struggle for funding, cut staff or shut down, all is well in one small corner of the industry: lending.
/jlne.ws/2R5I8r0

Crypto Mania Morphs From Digital Gold to What Was I Thinking?
Olga Kharif – Bloomberg
Bitcoin’s price plunge leaves mining operations in jeopardy; Digital assets turn out to be fool’s gold for most investors
What a difference a year makes. At the end of 2017, investors were willing to pay almost double the underlying value to buy a stake in Bitcoin’s lone U.S. investment trust. Now the premium is almost nonexistent in the wake of the roughly 70 percent plunge by the biggest cryptocurrency.
/jlne.ws/2R6CEfF

Exchanges, OTC and Clearing

ICE’s Bakkt completes $182 million funding round, delays launch until early 2019; Intercontinental Exchange’s cryptocurrency exchange and platform completes first funding round with 12 investors on board.
John Brazier – The Trade
Bakkt, the cryptocurrency exchange and platform project from Intercontinental Exchange, has raised $182 million from its first funding round.
/jlne.ws/2R1GG8W

Launch Timeline for Bakkt’s Bitcoin Futures to Be Clarified Early 2019: ICE
Adrian Zmudzinski – Cointelegraph
The Intercontinental Exchange (ICE) announced an update on the launch of the Bakkt Bitcoin (USD) Daily Futures Contract in an official notice Dec. 31.
The document from ICE ó the operator of the New York Stock Exchange (NYSE) and creator of digital assets platform Bakkt ó states that “[f]ollowing consultation with the Commodity Futures Trading Commission [CFTC], ICE Futures U.S., Inc. expects to provide an updated launch timeline in early 2019 for the trading, clearing and warehousing” of Bakkt’s Bitcoin (BTC) futures contract.
/goo.gl/rGGua5

Cash market achieves highest trading volume since 2008; 1.72 trillion euros in 2018 / plus of 17 percent compared to Previous year / List of the highest-turnover stocks by index
Deutsche Boerse
The spot market of Deutsche Boerse achieved an order book turnover of 1.72 trillion euros in 2018 – the highest trading volume since 2008 and an increase of 17 percent over the previous year (1.47 trillion euros). Of this, 1.57 bio. Euro on Xetra trading, EUR 40.11 billion on the Frankfurt Stock Exchange and EUR 105.81 billion on Tradegate Exchange.
/jlne.ws/2R30f0x

HKEX Enhances Designated Specialist Programme for Exchange Traded Products
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) today (Wednesday) enhanced the Designated Specialist (DS) programme for its Exchange Traded Products (ETPs), which include Exchange Traded Funds (ETFs) and Leveraged and Inverse (L&I) Products, to permit global liquidity providers that are not its Securities Market Makers (SMMs) to participate in ETP market making activities.
/jlne.ws/2R4sg8d

London Stock Exchange Group Board Appointment
London Stock Exchange Group
LSEG appoints Chief Data Officer for its Information Services Division
London Stock Exchange Group plc (LSEG) today announces that Professor Kathleen DeRose will join the Board as an Independent Non-Executive Director, effective immediately.
/jlne.ws/2R82y2J

The Saudi Stock Exchange Performance Report – Annual Statistical Report 2018
Mondovisione
At the end of the year 2018 Tadawul All Share Index (TASI) closed at a level of 7,826.73 points compared to 7,226.32 points for the previous year, gained 600.41 points (8.31%). The highest close level for the index (TASI) during the year (2018) was 8,490.75 points as on 16th of July.
/jlne.ws/2BSFyKt

ICE coffee markets end 2018 with second straight yearly losses
Renita D. Young – Reuters
Coffee futures on ICE closed 2018 down on a year-over-year basis on Monday, with both the London and New York markets seeing a second straight yearly decline on plentiful supplies in top-growing regions and pressure from the Brazilian currency.
March arabica coffee futures closed 2018 at $1.0185 per lb, up 0.9 cents from the prior session, as investors attempted to position for 2019. They were down 19.4 percent from the end of 2017.
/goo.gl/5VpgKC

Fintech

Fintech Takes the High Road, Only to Trip Up
Avi Salzman – Barron’s
From hawking shoddy mortgage securities to nickel-and-diming retail customers, banks have squandered the public’s trust over the past decade.
/jlne.ws/2BX3Xi9

Lessons from history on the dangers of blind trust in data; Businesses and government are learning that the information they collect can mislead
John Thornhill – FT
The Great Hanoi Rat Massacre of 1902 is a classic reminder of why we need to be wary about what data we measure and reward.
/jlne.ws/2BQDYbO

Once big banks crack the code of how to win millennials, star fintech unicorns will be crushed
Callum Burroughs – Business Insider Prime
Fintech startups beware, banks are coming after your customers.
If the giants of the banking world manage to crack the code of how to market to and serve millennials, that is. Should that day come, financial research firm Autonomous Next says, fintech firms’ advantage will shrink and “at least one unicorn will implode.”
The success of challenger banks and payment services like Revolut and investment platforms like Robinhood have highlighted the potential gold mine of millennials. Big banks have taken notice, with Goldman Sachs, JPMorgan, UBS and Santander are among those that are also ramping up their expansion.
/goo.gl/9CGvz7

Cryptocurrencies

The Federal Reserve drops Fedcoin idea
The Block Crypto
Just last year, it seemed that national cryptocurrencies were on their way. With the value of bitcoin skyrocketing, blockchain-based cash was seen as the future of money. However, as bitcoin fell 70 per cent in value this year, the Federal is abandoning the idea of the “Fedcoin”óa theoretical blockchain-based substitute for the dollar.
/jlne.ws/2BYK2z1

Crypto’s 2019 Goal: Technology People Can Use
Paul Vigna – Wall Street Journal
At the beginning of 2018, the question was whether bitcoin could live up to the hype of 2017’s manic rally. At the end of 2018, the answer seems to be an emphatic “no.” After rising nearly 1,400% in 2017, bitcoin reversed hard in 2018, falling about 70% and erasing some $160 billion worth of value. The selloff exposed the budding cryptocurrency market’s shaky footing.
/jlne.ws/2s6zKby

Mainstream Crypto Adoption: A Possible Tax Nightmare
Benjamin Pirus – Forbes
The cryptocurrency space is filled with people who want mainstream adoption, but they often fail to realize just how difficult it would be to use bitcoin (or any other cryptocurrency) as a method of everyday payment while complying with current tax laws. Taking into account current regulations, tax expectations and cryptocurrency usage, mainstream crypto adoption turns into a giant headache.
/jlne.ws/2LHn6sA

Ethereum’s New Radical: Glen Weyl Isn’t Vitalik But He’s Its Next Best Hope
Rachel Rose O’Leary – Bloomberg
Dr. Glen Weyl speaks with the calm of a man who has history on the mind. With an unbroken gaze and an unambiguous delivery, the author, economist and Microsoft researcher calmly espouses a clear and revolutionary vision: that the world’s hierarchies can be challenged and reconceived with the power of markets.
/jlne.ws/2BX129b

Trump Has a New Challenger, and She Is Not Keen on Crypto
Aziz Abdel-Qader – Finance Magnates
Massachusetts Senator Elizabeth Warren, known for her critiques of cryptocurrency, jumped into the race for the US presidency in 2020, announcing on Monday she is forming an exploratory committee. The move is the first by a high-profile Democrat and allows her to begin raising money for the presidential campaign.
/jlne.ws/2RqniBP

2018 Was the Reality Check. 2019 Starts the Crypto Comeback
Micah Winkelspecht – Coindesk
If 2017 was the year of irrational exuberance, 2018 became the year of reality checks when the market sputtered and crashed. I predict that this year will see a return back to first principles as we rethink many of our assumptions about how this is all supposed to go down. The truth is, we just don’t know yet.
/jlne.ws/2BX2RTz

Bitcoin Adoption Could Be Boosted By Surging China Demand
Billy Bambrough – Forbes
Bitcoin and cryptocurrency adoption has failed to support the bitcoin price this year, with fears around sluggish bitcoin uptake weighing on investors and companies in the crypto space.
/jlne.ws/2BUgwKX

Crypto Mom’s Crusade: Inside the SEC, Hester Peirce Is Putting Up a Fight
Christine Kim – Coindesk
“It’s always time for a change.” Unexpected words from a regulator, but then again, Hester Peirce, one of the five commissioners at the U.S. Securities and Exchange Commission (SEC), isn’t an average regulator.
/jlne.ws/2BTY1pW

Stories from Alternative Crypto Sources

UK Regulators Probe 18 Crypto Firms for Fraud and Illegal Operations
CCN
/jlne.ws/2F3ilcy

Government of Abkhazia Cuts Off Power to 15 Cryptocurrency Mining Facilities
Cointelegraph
/jlne.ws/2Sy8RsI

Fortnite Merch Store Now Accepts Monero (XMR): Crypto Adoption
Ethereum World News
/jlne.ws/2s4OPuA

This Bitcoin Price Indicator Adjusts for Lost and Unmoved Coins
Bitcoinist.com
/jlne.ws/2F2nmSD

Politics

Column: Trump’s incurable incompetence
Steve Chapman – Chicago Tribune
In May 2017, Donald Trump met in the Oval Office with the Russian ambassador and the Russian foreign minister and did something appalling: He tossed out highly classified details about an Islamic State plot provided by Israeli intelligence, which could have revealed the source of the information and how it was obtained.
/jlne.ws/2BSFUR9

Mitt Romney: The president shapes the public character of the nation. Trump’s character falls short.
Mitt Romney – Washington Post
The Trump presidency made a deep descent in December. The departures of Defense Secretary Jim Mattis and White House Chief of Staff John F.?Kelly, the appointment of senior persons of lesser experience, the abandonment of allies who fight beside us, and the president’s thoughtless claim that America has long been a “sucker” in world affairs all defined his presidency down.
/jlne.ws/2R2yeX2

Donald Trump’s Trade Wars Leave U.S. Farmers ‘Helpless’ as Other Nations Gain Advantages
Alexandra Hutzler – Newsweek
American farmers are watching “helplessly” as President Donald Trump’s trade policies are helping to boost foreign nations
/jlne.ws/2BUiElV

Deciphering the Patterns in Trump’s Falsehoods; We review how President Trump bent the truth this year by repeating and inflating falsehoods, shifting his statements, embellishing or omitting details, and offering misleading attacks.
Linda Qiu – NY Times
President Trump has a well-documented problem telling the truth. Fact checkers have compiled lists of all of Mr. Trump’s falsehoods since he took office (The Washington Post counts over 7,500, and The Toronto Star over 3,900), rounded up his most egregious whoppers in year-end lists and scrutinized his claims in real time with television chyrons.
/jlne.ws/2BSIhDH

No, Mr. Trump, the Press Is Only the Enemy of Lies; A president who misleads and threatens is no friend of the American people. The news media should not be intimidated.
Albert R. Hunt – Bloomberg
President Donald Trump doesn’t read or study history, so he’s probably unfamiliar with the Alien and Sedition Acts. He’d love them. They were the infamous series of discredited measures promulgated by President John Adams in 1798 and designed, in part, to silence unfriendly journalists.
/jlne.ws/2C5lapJ

Why Washington is making Wall Street so jumpy
Lydia DePillis, CNN Business
The only place more chaotic than Washington right now seems to be Wall Street. But what exactly are investors so worried about? Fundamental economic indicators like unemployment and consumer spending are still very strong.
/jlne.ws/2BYKayS

America’s new year’s resolution: impeach Trump and remove him; The shutdown, attacks on the judiciary, the politicization of the military. All confirm it: Congress must impeach. Now
Robert Reich – The Guardian
After his first bizarre year, Donald Trump’s apologists told us he was growing into the job and that in his second year he would be more restrained and respectful of democratic institutions. The halfway point: what have two years of Trump’s wrecking ball done to America? Wrong. He’s been worse.
/jlne.ws/2BSC5M2

Regulation

FINRA Slams Ex-Morgan Stanley Broker Ami Forte Over Trades in Billionaire’s Account; The former star broker is accused of excessive trading; she accuses FINRA of “strong-arm and coercive tactics.”
Janet Levaux – ThinkAdvisor
In the ongoing saga of fired Morgan Stanley advisor Ami Forte, the Financial Industry Regulatory Authority issued a notice of complaint on Thursday, raising seven issues tied to her and another advisor’s management of assets owned by the estate of Roy M. Speer, a co-founder the Home Shopping Network, Forte’s longtime client with whom she had an affair.
/jlne.ws/2BSDXUV

UK financial regulator to overhaul its treatment of whistleblowers; Move by FCA follows complaints from people who tried to report failings in banking
Nicholas Megaw – FT
The UK’s Financial Conduct Authority is overhauling how it deals with whistleblowers after complaints from people who have tried to report wrongdoing at banks and other companies in the financial services sector.
/jlne.ws/2BSEZAb

Watchdog probes 18 cryptocurrency trading firms amid fears consumers have been ripped off in Wild West trading
Daily Mail
Eighteen online currency companies are being probed by the City watchdog amid fears consumers have been ripped off in Wild West trading.
/jlne.ws/2BR7AGa

Mifid II has thrown up several unintended consequences; New rules have put a strain on relationships between analysts and fund managers
Hannah Murphy, Stephen Morris and Attracta Mooney – FT
Asset managers grappling with Europe’s new markets rules have a request for the investment analysts they rely on for advice: please do not leave a message after the tone.
/jlne.ws/2R0jJ69

Investing and Trading

Vanguard Founder Jack Bogle Says It’s Time to Play It Safe
Leslie P. Norton – Barron’s
In case you’re thinking that it’s safe to dive back into the stock market, think again. Jack Bogle, the father of the index fund, is advocating caution. Over the past several years, index fund investors have reliably bought the dips in the stock market, expanding the valuations on growth stocks and helping push the S&P 500 higher. But that probably no longer is a savvy approach, says the founder of the Vanguard Group.
/jlne.ws/2BSjWhi

Bad Liquidity or Bad Markets? Traders Weigh in on Stock Tumult
Justina Lee – Bloomberg
A Goldman Sachs study from Dec. 18 saw thinning order books; Market infrastructure gets tested in an extremely rough week
Seeing prices run away is part of doing business in smaller stocks. Seeing it happen when he was trying to fill an order in blue chips recently was something unusual for Beltran de la Lastra.
/jlne.ws/2BZt4AC

US energy independence is not the shining prize it seems; American policymakers still have good reason to be wary of a future oil shock
Ed Crooks – FT
It is a common sensation at this time of year: waiting for something in eager anticipation, only to find it disappointing when it eventually arrives. For decades, the US has dreamt about ending its dependence on foreign oil. Now “energy independence”, defined in that way, is very close, the limitations of that ambition have been brought more sharply into focus.
/jlne.ws/2BSiQSI

BlackRock, Capital Group and Pimco Warn of 2019 Risks
John Gittelsohn and Charles Stein – Bloomberg
T. Rowe’s Stromberg among those seeing value in EM stocks; ‘Don’t count the U.S. out,’ says Rob Lovelace at Capital
U.S. stocks are looking scary after their worst year in a decade. Credit is risky too. Volatility is back. For many, cash and short-term debt may be the best place to go.
/jlne.ws/2BUi9bx

Bruising and unpredictable: the year in markets; From a melt-up in stocks to a near meltdown, few will have fond memories of 2018
FT
The buzzword at the start of the year was ‘melt-up’ as US stocks raced almost 3 per cent higher in the first week of January. Jeremy Grantham, the founder of asset manager GMO who predicted the dotcom and housing bubbles, warned that the almost euphoric rally was the harbinger of bad news. But with investors still basking in the effect of the US tax cut on corporate profits, not many were listening, as January became one of the best months for global equities since the financial crisis. But over the next few weeks much of January’s rally unravelled, as investors had their first taste that 2018 would be far more volatile than 2017.
/jlne.ws/2BTB3PW

Corporate Profit Crunch Looms as Stocks Slide; Investors worry that the moneymaking outlook for companies will deteriorate further
Riva Gold – WSJ
A danger is lurking as the stock market dives: Earnings expectations are falling, too. In December, analysts cut their earnings forecasts for 2019 on more than half the companies in the S&P 500, according to FactSet, the first time that had happened in two years.
/jlne.ws/2BSgKSQ

Mutual Fund Managers Try a New Role: Activist Investor; Portfolio managers increasingly are taking on corporate executives with their demands for change
Justin Baer and Dawn Lim – Bloomberg
Benjamin Nahum’s letters to corporate executives don’t set off alarm bells like those from billionaire investors like Carl Icahn or Dan Loeb.
/jlne.ws/2BWNE4E

This Is What Traders Will Be Watching in 2019
Joe Weisenthal and Tracy Alloway – Bloomberg
After a volatile 2018, few people in the market expect calm to return anytime soon. Politics, the Fed, and trade will continue to be major sources of uncertainty. And of course there will be numerous events that nobody is thinking about right now. On this week’s Odd Lots, host Joe Weisenthal speaks with Bloomberg macro strategist Cameron Crise and cross-asset reporter Luke Kawa about the key things to watch in 2019 if you’re in the market.
/jlne.ws/2C5jdtp

U.S. Stocks End Worst Year Since Financial Crisis: Markets Wrap
Vildana Hajric – Bloomberg
S&P 500 rises in last session, ends 2018 lower by 6.2 percent; Dollar trims yearly gain, 10-year yield slumps to 2.68 percent
U.S. stocks ended the worst year since the financial crisis with a narrow gain in thin pre-holiday trading. Treasuries rose to a 10-month high.
/jlne.ws/2BVm0oQ

Institutions

Deutsche Bank is strong, has no need for state aid, merger: chairman
Reuters
Deutsche Bank is strong and its turnaround strategy is bearing fruit, Chairman Paul Achleitner said, ruling out the need for state aid and playing down speculation that the lossmaking German bank should merge.
/jlne.ws/2BSEpTg

Troubled German lender Deutsche Bank can survive without a merger or a taxpayer bailout, chairman insists
Daily Mail
Troubled German lender Deutsche Bank can survive without a merger or a taxpayer bailout, chairman Paul Achleitner has insisted.
/jlne.ws/2C5izMv

How to stay married when you work in banking
Daniel Davies – eFinancialCareers.com
Everyone knows it’s no bed of roses to date a banker. Nor is it the easiest thing in the world to be a banker looking for love. But one way or another, it does seem to happen; singleton analysts who’ve been complaining about their slave-driver bosses grow up into married vice presidents VPs complaining about their lazy entitled juniors. And it’s when you’re a married VP that the hard work really begins.
/jlne.ws/2BU01hT

Banking scandals continued throughout 2018. It simply isn’t good enough; The industry is still playing the same sorry song. Its executives pocket their bonuses, while its customers get kicked in a painful place
James Moore – The Independent
The year 2018 saw the 10th anniversary of the financial crisis, the effects of which we are still living with. Given the succession of scandals, cock-ups and general awfulness we were again treated to, it isn’t any wonder that people were left asking whether anything has really changed.
/jlne.ws/2BV1Afw

Einhorn’s Greenlight Extends Decline to 34% in Worst Year
Shelly Hagan, Katherine Burton and Simone Foxman – Bloomberg
Main hedge fund plunges 9% in December amid rocky markets; Money manager posted 10 months of negative returns this year
David Einhorn closed out 2018 with his biggest annual loss ever for the 22-year-old Greenlight Capital. The firm’s main hedge fund fell 9 percent in December, extending this year’s decline to 34 percent, according to an investor update viewed by Bloomberg.
/jlne.ws/2BTn5gS

Big banks look to cut back, alter credit card rewards programs: WSJ
Reuters
Large financial institutions including JP Morgan Chase & Co (JPM.N), Citigroup Inc (C.N), and American Express Co (AXP.N) are cutting back or altering some of the rewards plans that their credit card businesses offer borrowers, the Wall Street Journal reported on Tuesday.
/jlne.ws/2BV3zjT

Asset Management’s Squeezed Middle Faces a Bleak 2019; Nervous, cost-conscious investors aren’t making it easy for fund managers to grow profits
By Paul J. Davies – WSJ
It was a rough year for listed asset managers in 2018 and things likely won’t get easier this year. Deals to build scale may be investors’ best hope.
/jlne.ws/2R81OKZ

Regions

An Ugly Victory for Hong Kong in the IPO Derby; Several of the biggest listings in the city this year have subsequently performed poorly
Andrew Peaple – WSJ
Hong Kong is set to regain top spot in the charts for initial public offerings. It’s something of a Pyrrhic victory.
/jlne.ws/2BV5B3v

China to end the year as worst performing stock market; Shadow banking crackdown and trade war wipe more than $2tn off Chinese equities
Don Weinland – FT
A trade dispute with the US and a crackdown on shadow banking made China the world’s worst-performing major stock market in 2018, shedding some $2.3tn in value.
/jlne.ws/2BSFcDt

Insight: Collapse in India’s onion prices could leave Modi smarting in election
Rajendra Jadhav, Mayank Bhardwaj – Reuters
A spike in the price of onions has led to the ouster of governments in Indian elections in the past. Now, prices of the staple have collapsed, and many impoverished farmers are saying they will make Prime Minister Narendra Modi pay in next year’s general election.
/jlne.ws/2BWOONy

California bitcoin trader accused of murdering girlfriend in the Philippines
Bradford Betz – Fox News
A renowned California bitcoin trader is accused of killing his girlfriend and dumping her body in a river in the Philippines the day before Christmas Eve, according to reports.
/jlne.ws/2BWudZN

Trudeau’s Carbon Tax Set to Take Effect in Industrial Heartland
Josh Wingrove – Bloomberg
Ontario will be a key battleground as PM seeks second mandate; Fuel tax due in April, while major emitters’ tax begins Jan. 1
Canadians are about to start paying a carbon tax in what is set to be a key political battleground of the 2019 election.
/jlne.ws/2BShE1G

Euro Exit Should Not Be Taboo, Former ECB Chief Economist Says
Carolynn Look – Bloomberg
In the run-up to the euro’s 20th anniversary, one of its chief architects says the idea of quitting the common currency can no longer be off limits if a member flouts fiscal rules.
/jlne.ws/2R7IpJR

Chinese Investors Back Away From Global Property Markets; The days of Chinese investors snapping up trophy buildings in Western markets are likely over for now
Esther Fung and Dominique Fong – WSJ
Chinese investors will likely continue beating a retreat from the world’s top commercial real-estate markets in 2019, adding to the downward pressure on prices from rising interest rates.
/jlne.ws/2R2ywgA

Brexit

Brexiter hedge fund chief’s bets against UK economy fail to pay off; Crispin Odey’s share of profit from Odey Asset Management is down £4m on last year
Rupert Neate – The Guardian
Crispin Odey’s share of the profit of his hedge fund has fallen by £4m, as various bets made by the Brexit-backing billionaire against the UK economy and British businesses failed to pay off.
/jlne.ws/2BU129H

US banks to cut London-EU commuting support for staff after Brexit; Employees must cover own costs if they want to keep London connections
Laura Noonan – FT
Four big US banks have warned staff that commuting from London to European cities is “not a long-term option” after Brexit and that financial support for travel and accommodation costs will be withdrawn within months of their jobs being transferred.
/jlne.ws/2C5kctB

Can Any Politician Have a ‘Good’ Brexit? Yes; Labour’s Keir Starmer has harried the government successfully; he’s about to play a big role in shaping Britain’s departure from the EU.
Therese Raphael – Bloomberg
When Brexit is said and done, legion will be the politicians whose careers and ambitions are shattered along the way. Most will fall into two categories: Those who campaigned for an outcome they weren’t prepared for and couldn’t control, and those who put party politics above national interests.
/jlne.ws/2BT3aib

Juncker calls on UK to ‘get your act together’ on Brexit talks; EU impatience grows as UK attempts to gain concessions before Brexit divorce vote
Mehreen Khan – FT
Jean-Claude Juncker has told the UK to “get your act together” before making demands on Brussels to amend a Brexit divorce agreement weeks before it is due to be voted on by the House of Commons.
/jlne.ws/2BZqJ8O

U.K. Needs Leadership, U.S. Ambassador Says as Brexit Looms
Alex Morales – Bloomberg
Woody Johnson says Brexit deal may hinder U.S. trade agreement; Envoy takes swipe at negativity in press reporting of Brexit
The U.K. is in need of leadership, U.S. Ambassador to London Woody Johnson said, as he also cast doubt on the chances of a bilateral trade deal if Prime Minister Theresa May manages to push her Brexit agreement through Parliament.
/jlne.ws/2BSGcrn

Brexit Region Lives With Alarming Echoes of the Past; “Whole families, whole districts, whole towns are feeling abandoned and there’s not much to fix it on the horizon.”
Rodney Jefferson, Jess Shankleman – Bloomberg
People in the hardy suburbs of Newcastle, home of the bank where Britain’s financial crisis began, have become used to living on the brink.
/jlne.ws/2BTzRfq

Miscellaneous

In the Sierras and Rockies, the Snowpack Is Shrinking Fast
Wired
The mountains of the High Sierra and the Rockies are, in effect, shrinking, according to a new analysis of the nation’s snowpack over the past 36 years. These places are experiencing a shorter winter with less snow, just like regions closer to sea level.
/jlne.ws/2BWsrI7

Jeff Bezos Announces $97.5 Million in Grants to Help Homeless People
Erin Corbett – Fortune
Amazon CEO Jeff Bezos on Tuesday announced that 24 organizations working to help the homeless will receive a combined $97.5 million in grants from his Day One Fund, CNBC reported.
/jlne.ws/2BR7fDo

As Government Shutdown Continues, Workers’ Worriesóand BillsóGrow; Some federal employees are bracing for the worst, deferring payments, filing unemployment claims and notifying landlords they may not make rent
Andrew Duehren – WSJ
Ernest Johnson, a geologist for the Bureau of Land Management in Wyoming, isn’t sure how long he can last without a paycheck.
/jlne.ws/2R0ICOU

John Lothian Newsletter

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