Crypto cybercrime crosses into the physical world
By Matt Raebel, John Lothian News
Last week, the alleged kidnappers of Anne-Elisabeth Hagen, the wife of the Norwegian multi-millionaire real estate investor Tom Hagen, demanded a ransom of EUR9 million worth of Monero (XMR), a cryptocurrency known for allowing blockchain transactions that are exceptionally private, and therefore extremely difficult to trace.
Earlier that week, the alleged kidnappers of a nine-year-old girl South African girl named Linathi Titshala demanded payment of 5 BTC (bitcoins) in a similar fashion. The kidnappers said her family had 48 hours to respond, or all communications would cease. South African anti-crime website and Facebook group Western Cape Gangwatch received the ransom demand, along with a bitcoin wallet address and instructions.
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Hits & Takes
EEX posted record volumes in core products in 2018, with spot trading in emissions rising 82 percent, or 107.2 million tonnes of CO2, while volumes in futures and options rose 318 percent to 1,973.0 million tonnes of CO2.~JK
The FIA has announced that Reshma Saujani, the founder of Girls Who Code, will be the Keynote Lunch speaker at this year’s Boca conference. ~SR
The second and final day of the 2019 STAC Mid-Winter Meeting led with a talk on Living Fearless by Wendie Lloyd, a licensed professional counselor, success coach and motivational speaker. Some of the takeaways from the discussion were:
-Skydiving with her son was “the most exhilarating experience” Lloyd had ever had.
-Some of people’s biggest fears are: fear of failure, fear of looking clueless, fear of public speaking, and fear of flying. But quite a few -members of the audience overcame their fear of public speaking in order to share their experiences.
-Gratitude is a great weapon in the fight against fear.
-When facing a challenge – for example, as a woman, trying to get onto a corporate board – remember why it’s important to you to be in that role.
-Women – support and mentor other women. A good leader inspires employees and understands them. When people feel heard, they do their best work.
-Figure out how you want to be perceived, and start acting that way.~SR
Jeff Carter’s latest blog post on Points and Figures is “You Cannot Beat The Market,” which talks about John Bogle.~JJL
How Wealthy Americans Like Jack Benny Avoided Paying a 70% Tax Rate; ‘When top tax rates were high, there was always a large gap between the stated rates and what the highest earners actually paid as a percentage of their income’
Laura Saunders – WSJ
It wasn’t that long ago, in 1980, that America had a top income-tax rate of 70% for individuals, nearly double the current top rate of 37%.
The Things John Bogle Taught Us: Humility, Ethics and Simplicity; Personal finance luminaries and everyday investors share lessons from the late Vanguard founder.
Ron Lieber and Tara Siegel Bernard – NY Times
So many people have John Bogle stories. For some, it is a chance encounter at a conference and a whispered word of advice. For others, it is a formal meeting. In one case, it was an airplane day trip and train ride just to meet the man.
Thursday’s Top Three
Our top read story of the day for the second straight day was Institutional Investor’s Maria Bartiromo Was a Generational Icon for Financial Television. What Happened? It is a good read. Second was the New York Times’ opinion piece The Malign Incompetence of the British Ruling Class. Third was TheBlockCrypto.com’s Crypto exchange CEO says traders shouldn’t hold their breath for ether futures. You can all exhale now.
139,852,356 pages viewed; 23,390 pages; 216,328 edits
CryptoMarketsWiki’s Coin of the Week is: Ethereum (ETH)
Ethereum’s long-awaited system-wide upgrade, dubbed Constantinople, was delayed this week after a crucial security flaw was discovered. Core developers of Ethereum, including its creator Vitalik Buterin, are scheduled to meet today via conference call to discuss the upgrade.
Tim Cook Calls for ‘Data-Broker Clearinghouse’ in Push for Privacy Rules
Alistair Barr – Bloomberg
Apple Inc. Chief Executive Officer Tim Cook called on the Federal Trade Commission to track data brokers and monitor how they use people’s digital information, the latest privacy push by the iPhone maker.
****Also see Cook’s essay in Time Apple CEO Tim Cook: It’s Time for Action on Data Privacy
US government shutdown throws up ‘triple threat’ of market fears; No end in sight as investor nerves jangle over political gridlock
Richard Henderson and Robin Wigglesworth – FT
Investors that skipped into the new year with fresh optimism are now starting to eye the equivalent of a banana peel in their path — the US government shutdown.
SocGen Considers Shutting $4.7 Billion Prop-Trading Unit
Fabio Benedetti Valentini, Donal Griffin, and Stefania Spezzati – Bloomberg
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 shut its operation.
SocGen executives are reviewing the future of the Descartes Trading division, which makes risky bets with its shareholders’ funds, said the people, who requested anonymity as the details are private.
Time to ditch Brexit, say German political and business leaders; CDU’s Annegret Kramp-Karrenbauer signs joint letter urging UK to remain in EU
Guy Chazan – FT
The frontrunner to succeed Angela Merkel as Germany’s next chancellor has made an impassioned appeal to Britons to stay in the EU, in an unusual intervention that highlights the depth of German misgivings over Brexit.
Volatility Hedge Funds Hit by Market Woes in All Directions
Yakob Peterseil – Bloomberg
Relative-value funds in worst recorded year amid perfect storm; Choppy VIX trends and outsized U.S. gyrations challenge trades
Some of the nimblest hedge-funds that trade volatility are hoping history doesn’t repeat after suffering their worst year in over a decade.
Commodity Research Bureau (CRB) is now cmdty by Barchart
Barchart announces the transition of the Commodity Research Bureau (“CRB”) – the world’s leading commodities and futures research, data and analysis firm – to the cmdty by Barchart product line. Since 1934, CRB has been trusted by commodity traders worldwide to provide them with reliable data products, publications, fundamental data services, and rich historical data on commodities. All of this content will now be made available via cmdty and its innovative line of products across Data, Indexes, Trading, and Solutions. Commodity Research Bureau
What Drove Jack Bogle to Upend Investing; For Vanguard’s founder, much of life was a near-death experience
Jason Zweig – WSJ
History will remember Jack Bogle, the founder of Vanguard Group, as the great democratizer of capitalism, the person who made it possible for just about everyone to afford to buy a stake in stocks and bonds.
**Also see Jack Bogle’s legacy in the words of finance leaders and the NY Times The Things John Bogle Taught Us: Humility, Ethics and Simplicity
Brexit Is Bad for Your Health and Wealth; Pound traders are unduly optimistic about the likely path of negotiations with the EU. Also, Fed tightening and Jack Bogle.
John Authers – Bloomberg
Brexit: Deal or no deal? Where have the latest medieval intrigues in the Palace of Westminster left us? For those of you fortunate enough not to have been paying attention, the Mother of Parliaments voted by a majority of more than two to one on Tuesday to reject the deal that the government had come up with to leave the EU. The issue had dominated British debate to the exclusion of most anything else for three years. Then on Wednesday, the same parliament voted by a narrow but still decisive margin that it still had confidence in the government. Makes sense.
Tim Harford: how behavioural economics helped kick my phone addiction; What economic theory can teach us about reining in our screen habits
Tim Harford – FT
The year 2011 was a big one for me. My son was born. We moved to a new city. I published a book. But something else happened that was in some ways more significant: on February 9 2011, I bought my first smartphone.
Hemp Bets Grow After Crop Is Legalized; Farmers, food makers rush into potentially volatile market for products containing cannabidiol
Heather Haddon – WSJ
Hemp is poised for a comeback.The fast-growing plant related to marijuana was farmed across the U.S. for more than a century, its strong fibers woven into rope and textiles. Cultivation was largely banned from 1970 until December, when President Trump signed a new $867 billion farm bill that removed hemp from a list of federally controlled substances.
Blockchain Startup Aims to Cut Out Equifax From Loan Process
Matthew Leising – Bloomberg
SoFi, OnDeck Capital join group to cut out credit bureaus; Sharing may be enabled by Spring Labs ‘triple-blind’ method
Blockchain startup Spring Labs is partnering with 16 lenders and fintech firms to test a system to eliminate centralized entities like credit bureaus from their role in granting loans to individuals and companies.
Billionaire Bill Koch Doesn’t Have to Sell His Oxbow Carbon
Jef Feeley – Bloomberg
Delaware Supreme Court reverses order for sale of company; Two investors sought forced sale of petroleum-coke producer
Billionaire Bill Koch doesn’t have to sell his Oxbow Carbon LLC so two private equity firms can recoup an investment of more than $250 million in the energy company, an appeals court ruled, reversing a lower-court order.
Exclusive: Goldman Sachs on course to launch cash management in mid-2020
Elizabeth Dilts, Sumeet Chatterjee – Reuters
Goldman Sachs Group Inc (GS.N) is considering paying big multinational corporations more for their deposits than other banks as it paves the way for its entry into a mundane but prized business: managing cash.
Exchanges, OTC and Clearing
2018: EEX Group Achieves Record Volumes On Power And Emissions
In 2018, EEX Group continued its growth path, further consolidating its position as a global commodity exchange. On the power and emissions markets in particular, EEX recorded significant volume gains and continued its long-term growth trend.
Updated position limits for Equity Derivatives, ETF and ETC Derivatives
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
Eurex Clearing FIXML Interface: New server certificates
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.
Exchange Publishes Consultation Conclusions on Proposed Changes to Review Structure for Listing Committee Decisions
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published its consultation conclusions on proposed changes to the review structure for Listing Committee (LC)2 decisions (Consultation Conclusions).
Opinion: Here’s what low NYSE trading volume is telling us about the stock market’s direction
Mark Hulbert – MarketWatch
Is a low level of stock-trading volume warning of a new major downleg for the U.S. market? Some of the bearish advisers I monitor are worried that it might be, on the grounds that volume is a leading indicator and New York Stock Exchange trading volume has been trending lower. As you can see from the chart below, the five-day moving average of NYSE volume currently is a third less than where it stood in mid-December.
Why Key Gold and Silver ETFs Are Focusing on Futures
Leks Gerlak – CME Group OpenMarkets
As the exchange-traded product landscape evolves, the largest provider of leveraged and inverse ETFs has embarked on another first in indexing.
In January, ProShares changed its silver and gold ETFs to track futures-based indexes. This marks the first time leveraged and inverse ETFs will benchmark to gold and silver futures prices. Our silver and gold ETFs (AGQ, ZSL, UGL and GLL) are changing their benchmarks from the LBMA (London Bullion Market Association) silver and gold auction prices to Bloomberg Commodity Subindexes.
FTSE Russell launches Chinese Green Bond Index Series
FTSE Russell, the global index, analytics and data provider, has launched a new index series tracking Chinese green bonds. The FTSE Chinese (Onshore CNY) Green Bond Index Series will benchmark securities whose proceeds are specifically used to finance climate or environmental projects in mainland China. The index will measure the performance of onshore Chinese yuan-determined fixed-rate government, agency and corporate debt issued that are labelled ‘green’ by the issuer. There are currently 126 bonds included in the main index, covering approximately 75% of all on-shore labelled green bonds issued by China’s government, agencies and corporations.
Freelance fintech — can apps replace accountants?; Technology could mean the days of the shoebox full of receipts are numbered
Iona Bain – FT
“Come and file your self-assessment tax return — ON A SKY DIVE!” When this offer from an online accountancy service pinged into my email inbox, I was curious. I am one of nearly 5m self-employed workers in the UK who must complete a tax return by January 31.
Line Bets Mizuho and Nomura Could Help Open 78 Million Wallets
Pavel Alpeyev – Bloomberg
The messaging app taps marquee partners for fintech services; Line Securities may debut this year; Line Bank in late 2020
Line Corp. is betting that tie-ups with Japan’s biggest financial institutions will help convince its 78 million users to entrust the free texting app with their money.
French ex-central banker joins board of UK fintech Setl; Christian Noyer is latest high-profile appointment for blockchain group
Philip Stafford – FT
Christian Noyer, the former governor of the Bank of France, is the latest big name in financial services to join the board of Setl, the UK blockchain technology group.
The Hot New Job In Fintech: Someone To Deal With Regulators
Julie Verhage – Financial Advisor Magazine
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.
Fintech SETL hires former central banker Noyer as board member
U.K.-based Fintech SETL said on Friday it has appointed former Bank of France governor Christian Noyer as board member in the hope he will help the startup navigate through regulations.
IHS Markit Alternative Scenarios: Real Gross Domestic Product (Source: IHS Markit. Historical data source: Bureau of Economic Analysis)
IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today announced the launch of its economic and financial scenario solution designed to help banks comply with the Current Excepted Credit Loss (CECL) estimation required under the Financial Accounting Standards Board (FASB) standard going into effect in 2020.
As Genetic Testing Blossoms, Companies Search for a Killer App; Color, Invitae are among DNA firms revamping their focus
Kristen V Brown – Bloomberg
Millions of Americans have taken genetic tests to help them learn more about who they are or how sick they could become. In a crowded field of firms selling DNA tests — 10 new products enter the market each day by one estimate — many of the companies are racing to sort out their own identities.
You Can Now Buy Bitcoin at Some Grocery Stores in the US
Nikhilesh De – Coindesk
The crypto curious will soon be able to dip their toes into bitcoin while grocery shopping. Bitcoin ATM company Coinme is partnering with coins-to-cash converter Coinstar to allow bitcoin purchases through Coinstar kiosks in a number of U.S. states, the companies announced Thursday.
New Zealand FMA Trashes Alliance Investment Crypto Fraudsters
David Kimberley – Finance Magnates
It’s Friday and that means it’s the New Zealand Financial Markets Authority’s (NZ FMA) turn to add a scam firm to its warning list. This time it’s a company called Alliance Investment Ltd. The firm claims that it is the “best cryptocurrency investment company.”
Grayscale’s Newest Crypto Investment Trust Will Hold Stellar Lumens
Nikhilesh De – Coindesk
Grayscale Investments, the digital asset management firm operating under the Digital Currency Group umbrella, is adding support for Stellar lumens with a new investment product.
This country leads the world in crypto trading — and it isn’t the one you think
Aaron Hankin – MarketWatch
Malta is home to more than twice the amount of crypto exchange trading than the U.S. Financial centers like New York and London might be home to the hustle and bustle of equity and currency trading, but in the world of cryptocurrency, traditional hubs rank down the list.
iFX EXPO Asia Unveils Dedicated Crypto and Fintech Track!
Jeff Patterson – Finance Magnates
The iFX EXPO’s dedicated crypto and fintech track will offer insight into the shifting sands of the digital asset marketplace. The annual iFX EXPO Asia 2019 will begin next week in Hong Kong, bringing together the industry’s leading executives. This year will include a freshly launched Crypto and Fintech Track, emphasizing the role and trajectory these segments have on the industry.
Chip Maker TSMC Reports ‘Big Drop’ in Crypto Mining Revenue
Yogita Khatri – Coindesk
Chip-making giant Taiwan Semiconductor Manufacturing Company (TSMC) has reported a slump in its crypto mining business revenue for last year.
ConsenSys Invests in Two Crypto Startups to Lead VCs Into Ethereum Ecosystem
Leigh Cuen – Coindesk
Despite recent belt-tightening at Brooklyn-based ethereum venture studio ConsenSys, the company’s investment arm is ramping up outreach to independent startups. ConsensSys Ventures, headed by managing partner Kavita Gupta, announced two new investments on Thursday: $1 million in the Paris-based crypto wallet and trading platform Coinhouse and an undisclosed amount in the encryption-centric browser Tenta.
South Africa Wants to Regulate Crypto, Mandates Registration
Arnab Shome – Finance Magnates
The country will come up with a complete registration process for crypto exchanges and wallets by Q1 2019. In a recently published consultation paper, the South African Reserve Bank (SARB) has put forth its view on the crypto industry and stated that the sector should be regulated on priority to protect the consumers and investors.
Kraken, Cobinhood, and Poloniex ranked the most secure exchanges in the world
The Block Crypto
Independent analysts, ICORating, have ranked the security of 135 platforms trading above $100,000 in crypto per day – and the results are in. U.S.-based Kraken and Cobinhood came out on top with a solid A rating, while Poloniex came in third place with a high A-.
The Hottest Cryptocurrency, Tron, Rekindles Memories of the Bitcoin Bubble
Olga Kharif – Bloomberg
Digital token Tron has almost doubled in the last month; MIT, Stanford Academics Design Cryptocurrency to Better Bitcoin
Memories die hard in the cryptocurrency market, where a digital token known as Tron has almost doubled in value over the past month.
Stories from Alternative Crypto Sources
Please Do Not Store Crypto on Any Exchange, Warns CEO of Major Crypto Exchange Kraken
Joseph Young – CCN
Winklevoss Capital: Investors Are ‘Thoughtfully Dipping their Toes into Crypto,’ Not Taking the Plunge
Marie Huillet – Cointelegraph
Founder of Ethereum and ConsenSys Joe Lubin Joins Board of Directors of Crypto Startup ErisX
Ana Alexandre – Cointelegraph
Putin Push to Dump Dollar Proves Hard Sell With Russia Inc.
Natasha Doff , Evgenia Pismennaya , and Anna Andrianova – Bloomberg
Even biggest state companies finding ditching greenback tough; Kremlin, fearing sanctions, seeks alternative currencies
Russia’s central bank dumped $101 billion last year in its biggest-ever shift away from the U.S. currency amid fears of new sanctions. But the Kremlin’s drive to wean the rest of the economy off the greenback has been slower going.
Cohen Hired IT Firm to Rig Early CNBC, Drudge Polls to Favor Trump; Behind the scenes, Michael Cohen hired RedFinch Solutions, then allegedly stiffed it—and his boss
Michael Rothfeld, Rob Barry and Joe Palazzolo – WSJ
In early 2015, a man who runs a small technology company showed up at Trump Tower to collect $50,000 for having helped Michael Cohen, then Donald Trump’s personal lawyer, try to rig online polls in his boss’s favor before the presidential campaign.
U.S. Debates Lifting China Tariffs to Hasten Trade Deal, Calm Markets; New tactic under discussion would be aimed at giving Beijing incentives to make long-term concessions
Bob Davis and Lingling Wei – WSJ
U.S. officials are debating ratcheting back tariffs on Chinese imports as a way to calm markets and give Beijing an incentive to make deeper concessions in a trade battle that has rattled global economies.
President Trump Directed His Attorney Michael Cohen To Lie To Congress About The Moscow Tower Project; Trump received 10 personal updates from Michael Cohen and encouraged a planned meeting with Vladimir Putin.
Jason Leopold – Buzzfeed
President Donald Trump directed his longtime attorney Michael Cohen to lie to Congress about negotiations to build a Trump Tower in Moscow, according to two federal law enforcement officials involved in an investigation of the matter.
Trump-Deutsche Bank links in sights of U.S. House investigators
Mark Hosenball and Ginger Gibson – Reuters
Democrats now in control of the U.S. House of Representatives are working out which House panels will take the lead in investigating President Donald Trump’s business ties to Deutsche Bank, lawmakers and aides familiar with the plans told Reuters.
Wall Street Grows Antsy as Shutdown Threat to Stocks Intensifies
Reade Pickert – Bloomberg
Now a 40% chance it extends into February, Evercore ISI says; The longer it lasts, the higher chance it leaks into markets
A growing group of analysts and investors is warning that the U.S. government shutdown could soon hurt stocks.
Federal Shutdown Has Meant Steep Health Bills For Some Families
Julie Appleby – NPR
Joseph Daskalakis’ son Oliver was born on New Year’s Eve, a little over a week into the current government shutdown, and about 10 weeks before he was expected. The prematurely born baby ended up in a specialized neonatal intensive care unit, the only one near the family’s home in Lakeville, Minn., that could care for him. But Daskalakis, who works as an air traffic controller outside Minneapolis, has an additional worry: The hospital where his newborn son is being treated is not part of his current insurer’s network and the partial government shutdown prevents Daskalakis from filing the paperwork necessary to switch insurers, as he would otherwise be allowed to do.
Trump’s Tariffs Are Producing Billions, But China Isn’t Paying
Mark Niquette – Bloomberg
More than $13 billion in duties were assessed as of Dec. 18; Trade economists say companies and consumers ultimately pay
President Donald Trump is right to say that his tariffs are generating billions of dollars for the U.S. But China and other countries aren’t paying them as he’s suggested.
October 2018 Supplement to the Options Disclosure Document
The SEC approved the October 2018 supplement to the Options Disclosure Document (ODD). The ODD contains general disclosures on the characteristics and risks of trading standardized options. The October 2018 supplement (i) amends and restates in its entirety the April 2015 Supplement, which accommodated foreign index options and certain implied volatility index options; (ii) provides additional contract adjustment disclosures regarding the determination of contract adjustments by OCC rather than adjustment panels and the manner in which certain adjustments may affect an option’s value; and (iii) reflects T+2 settlement. As with other supplements to the ODD, this should be read in conjunction with the current ODD, Characteristics and Risks of Standardized Options.
Mifid II hysteria over analyst research appears misplaced; Claims that new EU regulations will leave smaller companies unloved are questionable
Ben McLannahan – FT
Bankers like to warn about “unintended consequences” whenever regulators come up with a new rule that could make them poorer.
US SEC and ESMA’s narratives for crypto-custodians to improvise on liquidity angsts for BTC ETF approvals
In a recent trend, the cryptocurrency derivatives have been in limelight one or the other way, be it for good or bad reasons. It could be for the launching procedures of newly designed crypto-instruments business including cryptocurrency futures, cryptocurrency CFDs, cryptocurrency options or ETFs), or for their performances. Hence, they have been under the meticulous scanner of the renowned global regulators, such as US SEC, CFTC and UK’s Financial Conduct Authority (FCA).
Investing and Trading
Why Europeans Won’t Catch Wall Street’s Bandwagon; Barclays aside, European lenders don’t have much exposure to the areas that shone for their U.S. peers
Paul J. Davies – WSJ
Investors in European banks shouldn’t get too excited about eye-catching results on Wall Street. Most big European lenders are more exposed to areas in which U.S. peers did badly and less to those that shone. Only Barclays BCS 0.24% could enjoy a U.S.-style bounce.
Traders Wished for Volatility. The Fourth Quarter Wasn’t What They Had in Mind; Despite big price swings in stocks and other assets, trading revenue was down 6% among the five largest banks
Liz Hoffman – WSJ
Wall Street traders for years complained that they couldn’t make money in calm markets. They haven’t fared any better in wild ones.
Davos Predicted the Stock Market Selloff of 2018
Simon Kennedy and Samuel Potter – Bloomberg
Delegates predicted complacency among investors on Fed rates; Consensus right on bonds and Bitcoin, but not on commodities
They may not be happy about it, but the masters of the universe proved accurate in predicting the stock market selloff of 2018.
Economists Downplay Indicators That Say U.S. Recession Is Coming
Christopher Condon – Bloomberg
Stock-based measures are especially prone to false positives; Market models that flash red today may turn green next week
Market-based recession indicators are flashing red. To some economists, they’re better left ignored.
The Fed is Zeus and the algos are the underworld — Greek mythology is a lot like today’s wild markets, Macquarie says
Rebecca Ungarino – Business Insider
“Investors are confused and ask when normality would return. Never.” That’s how Macquarie analysts Viktor Shvets and Perry Yeung view the market right now. They detailed their outlook in a new report, “What lessons can Greeks teach investors?” because sometimes the stock market in 2019 behaves in such a way that pushes analysts and strategists to look 3,000 years into the past. Stocks, after all, are tossed around by computers, tweets, central bankers, and concerns over global growth.
Bad bets on oil, gas spark wave of energy-fund closures
Devika Krishna Kumar, Liz Hampton – Reuters
Energy fund managers took heavy losses last year with wrong-way bets on the prices of oil and natural gas, leading to a wave of closures in the volatile fund sector.
David Livingstone named as new Citi EMEA CEO to succeed Jim Cowles; Current Citi chief executive for EMEA to leave the banking group later this year to establish a not-for-profit organisation.
John Brazier – The Trade
Citigroup has promoted one its senior executives to lead the group’s EMEA business, according to an internal memo seen by The TRADE.
US active funds suffer record $143bn ‘exodus’ in December; Heaviest monthly outflows in 10 years as investors seek shelter in passive vehicles
Kate Beioley – FT
Actively managed investment funds in the US experienced a record $143bn “exodus” in December, according to data, with many nervous investors flooding into cheaper passive funds.
Top Deutsche Bank executive drawn into tax loophole probe; Scheme cost German taxpayer at least EUR5.7bn in unwarranted tax refunds
Olaf Storbeck – FT
Deutsche Bank’s head of investment banking was sent an email in 2007 that discussed a design flaw in Germany’s tax code that allowed its clients to trick tax authorities into refunding dividend tax that was never paid.
These Money Managers Are Getting Ready to Grab the Worst Loans When Market Turns
Lisa Lee and Sally Bakewell – Bloomberg
HPS, Z Capital sold deals that can hold more CCC rated loans; Such CLOs offer higher debt returns to compensate for the risk
Some of Wall Street’s biggest buyers of leveraged loans are gearing up to profit from a U.S. economic downturn. A growing number of money managers that buy the loans and bundle them into bonds are giving themselves more leeway to purchase debt made to the weakest companies. Firms like Ellington Management Group, HPS Investment Partners and Z Capital Credit Partners expect the ranks of corporations with the lowest junk ratings to grow, and believe many investors will be forced to sell loans when companies get downgraded.
ING to Cut Bonuses ‘Significantly’ After Money Laundering Fine
Ruben Munsterman – Bloomberg
Reduction comes after firm paid record fine in Dutch probe; BNP Paribas, SocGen, Deutsche Bank are also said to mull cuts
It’s shaping up to be a sad bonus season for Europe’s battered bankers.
ING Groep NV on Friday said payouts will be “significantly smaller” after the largest Dutch lender paid record fines to end a money-laundering probe. Two of France’s top banks are also weighing lower rewards after their trading units were hit by a broader downturn.
At UBS, Succession Looms Large as Bank Ponders Post-Ermotti Era
Patrick Winters, Eyk Henning, Jan-Henrik Foerster and Steven Arons – Bloomberg
Bank is said to want new executives to strengthen management; Weber, Ermotti seeking to signal united front on succession
As UBS Group AG executives and board members convened for annual meetings this week in Zurich, one subject was impossible to ignore: succession planning and the future of Chief Executive Officer Sergio Ermotti.
Morgan Stanley Targets Singapore’s Rich Chinese Entrepreneurs
Chanyaporn Chanjaroen – Bloomberg
Bank is expanding operations for family offices in the city; Asia wealth management head Vincent Chui speaks in interview
Morgan Stanley, the world’s second-largest wealth manager, is beefing up its services for rich clients in Singapore with a focus on Chinese entrepreneurs looking to set up family offices in the city state.
Morgan Stanley Is Ready, After a Decade, to Grow Through Deals
By Sonali Basak – Bloomberg
James Gorman is going shopping for his asset-management unit. The Morgan Stanley chief said he’s looking to buy “small add-on firms” or hire teams to spur growth at his $463 billion investment management division. The unit’s fixed-income offering is “smaller than we would like” and the company sees opportunities to grow in alternative products such as private equity and infrastructure, he said on a call with analysts after the bank reported a drop in fourth-quarter revenue.
Jamie Dimon Gets 5% Pay Increase After JPMorgan’s Record Year
By Michelle Davis – Bloomberg
JPMorgan Chase & Co. awarded Chief Executive Officer Jamie Dimon $31 million in total compensation for his work in 2018, a 5.1 percent bump after his bank posted record profit.
Malaysia’s Finance Minister Wants Goldman’s $7.5 Billion, Not an Apology; Lim Guan Eng seeks full reimbursement and reparations for the money the 1MDB fund raised with the investment bank’s help
Yantoultra Ngui – WSJ
Malaysia’s finance minister waved off an apology from Goldman Sachs Chief Executive David Solomon for the role of one its then-bankers in the scandal surrounding state investment fund 1Malaysia Development Bhd., saying it wasn’t enough.
A Top-Performing Hedge Fund Is Shorting Canada Banks on Housing
Paula Sambo – Bloomberg
Companies are generating little cash flow, Crescat adds; ‘Canadian banks will be left holding the bag,’ analyst says
A small U.S. hedge fund that was a top performer last year is shorting Canadian banks. Crescat Capital sees the Canadian economy heading for recession as the housing market buckles. That might be bad enough for the banks but they face an added strain: outside the financial sector, more than 80 percent of Canadian companies aren’t generating enough cash to support their businesses, the highest in the world, according to Crescat.
Europe’s Most Important River Is Running Dry; The Rhine waterway, critical to moving coal, car parts, food and thousands of other goods, risks becoming impassable because of climate change.
William Wilkes, Vanessa Dezem and Brian Parkin – Bloomberg
Kevin Kilps’s car ferry churns the waters of Germany’s Rhine river as he steers toward the bank opposite Kaub, a scenic village just south of the rocky outcropping named after the legendary siren Lorelei.
Investors Are Singing Along to ‘Baby Shark’; A backer of the hit Korean nursery rhyme has seen its stock almost double in just three weeks
Jacky Wong – WSJ
“Baby shark, doo doo doo doo doo doo.” Investors might profit from singing along, as long as they manage to stop before everyone else.
Taiwan Semiconductor Occupies Precarious Perch in International Trade
Kevin Curran – The Street
As news breaks of a possible resolution to the trade war, Taiwan Semiconductor (TSM) is still left in a tenuous position. Shares of the Hsinchu, Taiwan-based semiconductor company have bounced from pre-market losses to a modest gain on the day, as analysts suggests the bottom might have been hit for the stock. As news broke of a possible trade resolution, shares accelerated gains to break 1%. With Apple (AAPL) and Huawei as its top customers, indisputably two of the companies most disproportionately affected by trade tensions, it is no surprise the shares reacted as such.
Apocalypse now talk has drowned out Brexit opportunities; Calmer minds will be looking beyond March 29 and seeing bargains in British businesses
Neil Collins – FT
The Big Mac index is an absurdly imperfect attempt to measure purchasing power parity, but then no other yardstick is very precise as an indicator of whether a currency is relatively cheap or dear. In their latest binge, writers from The Economist bravely ate their way through burgers in 55 countries, and concluded that sterling is 27 per cent undervalued against the dollar.
Stop worrying about Brexit — it’s time to invest in UK assets; For investors, too much misery may now be embedded in the price of UK assets
Merryn Somerset Webb – FT
“When the history books are written?.?.?.” said Theresa May in the Commons this week. I can’t remember what she said next. As she mostly says the same thing over and over again, you can all make a perfectly reasonable guess without bothering to look it up. But if this were one of those games where we all get to finish the sentence, my entry would say “.?.?.?they will barely mention Brexit.”
Brexit Battle Lines Harden as May Stumbles in Search for a Deal
Jess Shankleman – Bloomberg
Theresa May and Jeremy Corbyn locked in political stalemate; European Union countries expect delay to March 29 Brexit day
Theresa May’s bid to break Britain’s Brexit gridlock faltered Thursday after she refused to give up her red lines to reach a compromise with her political opponents.
UK can delay Brexit without holding Europe elections, say lawyers; Legal opinion could remove one obstacle if Britain seeks to stay in bloc beyond May vote
Mehreen Khan and Alex Barker – FT
Britain can extend its EU membership beyond the summer of 2019 without taking part in European elections or undermining the European Parliament, lawyers have advised the assembly.
Where the Conservative tribes stand on Brexit
Theresa May faces a daunting task to get her Brexit deal ratified by Parliament after it was rejected by 230 votes. It has not been made easier by the fact that the 118 Tory rebels who voted against her on Tuesday can’t agree on an alternative plan.
A ‘No Deal’ Brexit Can Save the European Union
Joseph C. Sternberg – The Wall Street Journal
The European Union is often accused of being an undemocratic conspiracy against its common people. Tell that to the British, who are discovering to their chagrin that sometimes the EU gives voters exactly what they say they want. This week witnessed another few turns in the Brexit psychodrama.
Brexit: France activates no-deal plan
French Prime Minister Edouard Philippe has said a no-deal Brexit looks “less and less unlikely” and has launched a contingency plan to prepare for it.