U.S. Stocks Are Keeping China’s Amateur Investors Awake at Night; Gold Is Flying High, but Getting Harder to Mine

Aug 17, 2020

First Read


CFTC Dismisses Its Case Against Jitesh Thakkar, Settles With Edge Financial
By Thom Thompson, John Lothian News

The CFTC is dropping all charges against Jitesh Thakkar in the anti-spoofing case that grew out of software development work that Thakkar’s company, Edge Financial Technology, performed in 2012 for Navinder Sarao. Sarao made at least $12.8 million by illegal spoofing, making him the most prominent trader to have been charged by the U.S. government for the crime.

The proposed consent order was filed with the U.S. Federal District Court for Northern Illinois on Thursday. The court still needs to approve the settlement.

The CFTC had not announced the settlement or provided any additional information on its website by this weekend.

A petition, “Justice for Jitesh,” asking that all charges be dropped against Jitesh Thakkar, was launched last year by John Lothian, publisher of this newsletter. The petition on Change.org garnered more than 2,500 signatures from newsletter subscribers, traders, programmers and the public.

To read the rest of this commentary, go here.


Hits & Takes
By John Lothian & JLN Staff

Thank you to the CFTC Commissioners for finally resolving the Jitesh Thakkar and Edge Financial case, even if it was not completely in line with my request to simply drop the case. I know Jitesh and his family and friends are all glad this is done and he can move on with his life.

From History.State.Gov: “On August 15, 1971, President Richard M. Nixon announced his New Economic Policy, a program “to create a new prosperity without war.” Known colloquially as the “Nixon shock,” the initiative marked the beginning of the end for the Bretton Woods system of fixed exchange rates established at the end of World War II.”

The U.S. now has 170,000 reported deaths from COVID-19.

The Mini VIX futures are available for trading from the Cboe. Check them out HERE.

Nodal Exchange reports that last week it became the number one futures exchange in the US Power Derivatives market in North America by gaining the majority share of open interest.

PanXchange announced that Julie Lerner won the category of Small Business Leaders at Denver Business Journal’s virtual Outstanding Women in Business event.

Simon Rostron has joined Caliber Corporate Advisers as a senior consultant. This is an additional role to his long running one at Rostron Parry.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


The CFTC is getting a newbie! The White House nominated Robert Benedict Bowes to replace
Brian Quintenz for a five-year slot on the CFTC. Bowes is coming from the White House, where he has been an advisor after working for three years for the Department of Housing and Urban Development. According to his LinkedIn profile, starting in 2003 Bowes was a director of counterparty risk management for Fannie Mae for 11 years, during which time the federal mortgage giant was forced into conservatorship due to losses. Bowes was a field director for President Trump’s 2016 campaign. He holds a bachelor’s degree in finance and economics from Indiana University. ~Thom Thompson

The International Swaps and Derivatives Association Inc. (ISDA) has just made available a number of recordings of past virtual conferences. Topics include CCP Regulation, Benchmarks, and MiFid. You can go here to find the recordings.~SR


The Spread: The Futures Of Vol Trading

This week on The Spread, Cboe launches Mini VIX Futures while the CME announces a volatility product of its own, the OCC foots the bill, and more.

Watch the video »


TMX Group Names John McKenzie as new Chief Executive Officer
TMX Group Limited today announced that it has appointed John McKenzie to lead the organization as its Chief Executive Officer (CEO). Mr. McKenzie, who assumes the role effective immediately, also becomes a member of the TMX Group Limited Board of Directors. Mr. McKenzie had served as TMX Group interim CEO since the retirement of former CEO Lou Eccleston in January 2020.

*****Congratulations to Mr. McKenzie on his new role.~JJL


Southeast Asia Detects Mutated Virus Strain Sweeping the World
Yudith Ho and Claire Jiao – Bloomberg
Virus mutation detected in cases in Malaysia and Philippines; The strain is the predominant variant in Europe and the U.S.
Southeast Asia is facing a strain of the new coronavirus that the Philippines, which faces the region’s largest outbreak, is studying to see whether the mutation makes it more infectious. The strain, earlier seen in other parts of the world and called D614G, was found in a Malaysian cluster of 45 cases that started from someone who returned from India and breached his 14-day home quarantine. The Philippines detected the strain among random Covid-19 samples in the largest city of its capital region.

*****Here is some Monday morning news for you: “The coronavirus mutation called D614G has been found to be 10 times more infectious.”~JJL


Working Parents Are Hitting Their Coronavirus Breaking Point—and Paying for It; As the pandemic drags on, more parents are in the market for child care. That means less money to spend, invest and save.
Christina Rexrode and Lauren Weber – WSJ
Working parents going on six months without school or camp are about to take another hit: rising child-care costs. Parents with school-age children are hiring sitters or paying for online classes they wouldn’t need if their children were in school. Some are lining up tutors or switching to private schools that plan to open for in-person learning. Parents with younger children are bracing for potentially higher charges at their day cares, which are straining to pay for protective gear and additional cleaning.

*****I would just like to get back to my breaking point. That would be a victory.~JJL


Russia Doesn’t Really Know Whether Its Covid Vaccine Works; That could undermine confidence in Putin’s government, and in vaccines generally.
Max Nisen Bloomberg
Russia is prematurely declaring victory in the race for a vaccine against Covid-19, with potentially dangerous consequences for the Russian population. President Vladimir Putin says his government has approved a vaccine and will start inoculating teachers and medical workers this month, before embarking on a mass vaccination effort in the fall. Yet the shot is not backed by evidence from a complete phase 3 trial, the gold standard for confirming safety and efficacy. Deciding to move ahead without this proof stands to hamper rather than help Russia’s Covid-19 response.

*****That is what inhuman testing is for.~JJL



Friday’s Top Three
Our top story Friday was the press release Miami International Holdings and MGEX Announce Plan of Merger; MGEX to Join MIAX Exchange Group. Second was the Obituary for Warren Francis Smith from the Joseph B. Paul Jr. Funeral Home. Smith was a long time member of the Chicago Board of Trade. Third was CME jumps into Cboe’s pool from Crain’s Chicago Business, about CME getting into the volatility business.


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Lead Stories

U.S. Stocks Are Keeping China’s Amateur Investors Awake at Night; Traders are being drawn by global brands like Apple and Tesla, as well as local names such as Pinduoduo and Bilibili.
Berber Jin – Bloomberg
A growing number of amateur stock traders in China are making their biggest decisions in the dead of night. It was 4 a.m. when Li Bohao, a 23-year-old Beijing native, got a panicked call from a friend telling him to sell all his shares of Nio Inc., the U.S.-listed Chinese electric-car company dubbed the “Tesla of China.” The stock was on the slide and analysts were speculating it could soon be worthless. Li took the advice — and missed out. Nio’s shares are now worth over four times more than when he sold in March. The comic animation entrepreneur, however, has no regrets.

Gold Is Flying High, but Getting Harder to Mine; Miners have benefited from a gold price rally but face higher costs and tougher projects ahead
Alistair MacDonald – WSJ
Gold miners are riding high as the metal trades at record prices, but digging it out of the ground is getting harder. Gold is among the rarest metals in the earth’s crust and much of the easier-to-get ore has already been mined. What is left is harder to find and more expensive to extract, miners say.

Covid-19 Shaping Up to Be Battle for Years Even With Vaccine
Drew Armstrong and Riley Griffin – Bloomberg
Vaccine for general public will take until well into next year; Goal is to make the pandemic ‘manageable,’ Novartis CEO says
The coronavirus pandemic is likely to be a challenge for years to come even with a vaccine, according to pharmaceutical and public-health experts. While a vaccine will provide some measure of protection to societies around the globe, the virus is likely to flare up from time to time and be constantly battled, much like the flu and other pathogens.

The Hedge Fund Interview That Made Me Forget About the Pandemic
Erik Schatzker – Bloomberg
Ben Melkman hosted it on Long Island and we didn’t wear masks; An unexpected ending involving one of the world’s great wines
Not many interviews end with a toast. Far fewer with a glass of 1981 Chateau d’Yquem. But after five months in various stages of lockdown and isolation, Ben Melkman, a hedge fund manager, and I had just sat down across from one another in the same room and talked for 75 minutes — without masks on. That’s what a pandemic can do, make the ordinary worth celebrating.

Day Traders in Brazil Study Would’ve Done Better With 9-to-5 Job
Katherine Greifeld and Vildana Hajric – Bloomberg
Just 1.1% of day traders earned more than Brazil minimum wage; Retail trading has boomed amid pandemic-fueled boredom
Thinking of packing it all in and embarking on a career trading stocks from a commission-free brokerage account? Good luck with that, says recent research. Academics from Brazil looked at people doing short-term trades in iBovespa contracts and found that of 1,551 retail traders, just 1.1% posted higher average net returns than the Brazilian minimum wage in a bit more than a year. About 0.5% of the traders, who were tracked for 300 sessions, earned more than the average Brazilian bank teller.

‘Traders Brace for Haywire Markets Around Presidential Election; Betting on a wave of market volatility straight through to the inauguration
Gunjan Banerji and Gregory Zuckerman – WSJ
The presidential election is three months away, but some traders are preparing for the possibility that prolonged political uncertainty will stoke stock-market mayhem. The investors are going beyond the normal hedging ahead of a potential change in power in Washington. Instead they are betting on volatility and a possible market tumble later in the year. Among the concerns expressed by some: speculation that President Trump could try to delay the election or disrupt mail-in voting, as well as the chance that a result remains unclear for weeks after polls close.

Congress Needs to Think More Like a Central Bank on Covid Relief; The choice isn’t between a large or small relief bill, but to minimize future regret and avoid a contraction.
Mohamed A. El-Erian – Bloomberg
Last Friday’s U.S. retail sales numbers provided comfort for both the V and the square-root economic recovery camps. But rather than mark the beginning of a consensus on what lies ahead, they highlight a durable debate raging not just on Wall Street, but also on Capitol Hill.

Switching off Cash Supply Causes a Nasty Shock; Invoice finance has become a fashionable form of quasi-debt. But if the facilities suddenly end, a company’s cash buffer can deteriorate.
Chris Bryant – Bloomberg
When the global economy went into hibernation to try to halt the spread of Covid-19, companies everywhere scrambled to get their hands on cash. Banks, shareholders and governments were all tapped for money, but self-help played a big part too. Businesses tried to clear their inventories, to get paid quickly for their products and services, and to pay their bills more slowly. Do all those things and a company should have more funds in the bank to pay wages and other fixed costs — crucial if you want to survive an economic crisis of this scale.

Helping Single Workers Deal With Isolation Is Good for Everyone; German software maker SAP has hosted virtual wine tastings and BBQs—and even designed a Tinder-like app for lunch dates.
Benedikt Kammel – Bloomberg
Companies typically regard singles as lower-maintenance employees—steady, flexible, and predictable. There are no sick children to upset their routines, no spouse calling for a timely return home. It’s wake, work, repeat.

Oil Spill Puts Five-Decade Mauritian Fisher Family in a Bind
Kamlesh Bhuckory – Bloomberg
Japanese-owned vessel run aground and spilled tons of oil; Indian Ocean island nation now faces widespread pollution
It may take a decade to restore a delicate ecosystem in Mauritius after a bulk carrier ran aground and spilled oil into the island nation’s pristine waters. Some fishermen fear they may never get their lives back.

Massive Russian Oil Spill Cleanup to Stretch Into Next Year
Yuliya Fedorinova – Bloomberg
Tycoon Potanin says clean-up work will extend into next year; Miner is challenging watchdog’s estimate of damage cost
MMC Norilsk Nickel PJSC’s Vladimir Potanin said it’s impossible to estimate the cost of damages from May’s massive fuel spill in the Arctic until the miner completes the clean-up, which may extend into next year.

Goldman Boosts S&P 500 Target by 20% as Strategists Catch Up
Joanna Ossinger and Ksenia Galouchko – Bloomberg
David Kostin lifts year-end S&P 500 target to 3,600 from 3,000; JPMorgan strategists join Goldman in being bullish on U.S.
Goldman Sachs Group Inc. is the latest firm to boost its year-end price target for the S&P 500, as a relentless rally off the March lows leaves strategist predictions in the dust.

Developing Nations Are Dealt a One-Two Hit to Growth; The coronavirus was bad enough, but a faltering U.S. is no longer in a position to offer much help.
Noah Smith – Bloomberg
Recent decades have been glorious for developing countries, where rapid growth has lifted millions of their citizens out of crushing poverty. But the coronavirus pandemic is threatening to halt their gains. And in the long term, the decline of the U.S. may pose an even bigger obstacle for developing nations.

Chinese banks’ Hong Kong ranks on track to outnumber global rivals; Mainland lenders boost headcount as city’s troubles slow expansion by international groups
Hudson Lockett and Jane Pong – FT
Hong Kong investment bankers employed by Chinese groups are on track to outnumber those in the territory with Wall Street and international banks, in a reversal that underscores Beijing’s growing influence in the city.

New Coronavirus Outbreak Prompts New Zealand to Postpone Election; Prime Minister Jacinda Ardern says the national election scheduled for Sept. 19 will now be held on Oct. 17
Stephen Wright – WSJ
New Zealand delayed a national election by about a month after a coronavirus outbreak in its largest city of Auckland put a third of voters into lockdown. The election, which was expected to be dominated by debate over the government’s response to the pandemic, will now be held on Oct. 17, Prime Minister Jacinda Ardern said Monday.

If you can do your job anywhere, can anyone do your job? Trusting people to work well from home is one skill managers now have to lear
Andrew Hill – FT
I have been thinking a lot about “Bob”. He was a US software developer who worked from home for a large company. In 2013, it emerged Bob had been outsourcing his own job to China. He sent a chunk of his own salary to a Chinese consulting firm to do his work so he could surf Reddit, trade on eBay, update Facebook, and watch cat videos, according to a blog post by Andrew Valentine of Verizon, who investigated the case.

China’s Bank Regulator Warns Dollar Dominance Is Seed of Crisis
Bloomberg News
CBIRC’s Guo says Fed stimulus may lead to financial crisis; Guo warns rising bad debts at Chinese banks, leverage risks
China’s top banking watchdog cautioned that U.S. dollar dominance combined with the massive stimulus unleashed by the Federal Reserve could push the world to the edge of another financial crisis.

Western Investors Are Misreading China’s Markets; Outsiders are leaving money on the table by persisting in seeing the country as simply another big emerging market.
Shuli Ren – Bloomberg
Chinese and American investors share one thing: They both see opportunity in China’s markets. Westerners would do a lot better, however, if they started approaching those markets the way locals do.


Fearing a ‘Twindemic,’ Health Experts Push Urgently for Flu Shots; There’s no vaccine for Covid-19, but there’s one for influenza. With the season’s first doses now shipping, officials are struggling over how to get people to take it.
Jan Hoffman – NY Times
As public health officials look to fall and winter, the specter of a new surge of Covid-19 gives them chills. But there is a scenario they dread even more: a severe flu season, resulting in a “twindemic.”

Coronavirus Claims Hurt Shares of European Insurers
Julie Steinberg – WSJ
European insurers have been singed by coronavirus claims and restrictions since the beginning of the year—and their share prices are feeling the burn. The Euro Stoxx Insurance index is down more than 20% so far this year, trailing the broad Euro Stoxx 600 stock-market index, which is down more than 10% over the same period.

Sorry, the World’s Biggest Bike Maker Can’t Help You Buy a Bike Right Now; The pandemic has created a bicycle boom — and a shortage. Giant, the Taiwanese juggernaut, is trying to meet demand while navigating the politics of trade.
Raymond Zhong – NY Times
Because gyms are closed and we could all use a little more exercise; because we are avoiding buses and trains; because we are in need of outdoor group activities; or perhaps just because the pandemic has made us crave simple pleasures like the wind against our faces, bicycle sales are soaring around the world.

Back to the paddy fields. COVID smashes Indian middle-class dreams
Saurabh Sharma, Devjyot Ghoshal – Reuters
Until late March, Ashish Kumar was helping to make plastic boxes for Ferrero Rocher praline chocolates and the plastic spoons tucked inside Kinder Joy eggs to scoop out the milky sweet cream inside.

A Guide to Reopening NYC’s $50,000-a-Year Elite Private Schools; What private institutions such as Dalton, Brearley and Horace Mann are doing to get their students back to school.
Amanda L Gordon – Bloomberg
Dalton plans to use virtual teachers on Zoom even when students are in the classroom. At Collegiate, older students will have custom-made plexiglass desk barriers they can carry around from class to class. And Horace Mann is looking to buy specially made masks for its choir.

Hong Kong Shipping Terminal Hit by Coronavirus, Threatening Movement of Goods
Felix Tam – Bloomberg
Infections linked to Kwai Tsing container port rise to 65; Government extends social distancing measures to Aug. 25
Hong Kong reported 31 local coronavirus cases Monday and extended social distancing restrictions after new clusters emerged, including at the main container shipping port where essential food and supplies are brought in to the city.

Hong Kong’s Closed Schools Risk a Lost Generation; The damage to students means shutdowns can’t be a long-term solution, even if they have helped limit Covid infections.
Clara Ferreira Marques – Bloomberg
Keeping schoolchildren home again this fall will come at a hefty price for families and economies around the world. In Hong Kong, authorities may be underestimating the cost.

How covid-19-related travel restrictions are complicating the once-simple road trip
Andrea Sachs – Washington Post
Road-tripping used to require little more than a full tank of gas and a dance-in-your-seat playlist. Even if you were the designated planner, sketching out the route and stops, you could still let impulsiveness be the co-pilot. Unfortunately, the pandemic has sapped the spontaneity out of driving vacations. In response to the rise in infections, states have crafted restrictions for visitors and returning residents that are making interstate travel as challenging as crossing international borders. “It’s extraordinarily difficult to plan, even in a limited geographic place,” said Mark Wolfe, a Washington, D.C., resident who spent his recent honeymoon driving around New York and New England with his new wife, Jeanne Cohn-Connor.

Scientists See Signs of Lasting Immunity to Covid-19, Even After Mild Infections; New research indicates that human immune system cells are storing information about the coronavirus so they can fight it off again.
Katherine J. Wu – NY Times
To the immune system, not all germs are equally memorable. But our body’s cells seem to be seriously studying up on the coronavirus.

Exchanges, OTC and Clearing

HKEX Appoints Group Head of Technology Risk
Hong Kong Exchanges and Clearing Limited (HKEX) is today (Monday) pleased to announce that Brian Lee has joined the company as Managing Director, Group Head of Technology Risk, reporting to Group Risk Officer, John Killian.

After-hours trading of Mini-KOSPI Futures – only at Eurex Exchange
Eurex is the only exchange to offer Mini-KOSPI 200 futures for overnight trading. Since Mini KOSPI 200 futures are fully fungible with KRX ‘s Mini-KOSPI 200 futures, investors can benefit from:

The Tel Aviv Stock Exchange Reports The Results Of The Financial Statements For The Second Quarter Of 2020
Ittai Ben-Zeev, CEO of the Tel Aviv Stock Exchange, says today (11 August): “We are concluding the second quarter since the coronavirus outbreak and its adverse effects on the local and global economy. The aid extended by governments and central banks overseas and in Israel to stimulate economic activities and support citizens in the shadow of the restrictions that were imposed in many countries due to increasing morbidity rates, stabilized share prices and interest rates on TASE and worldwide.

Instabank Admitted To Trading At Oslo Børs
Instabank has today been admitted to trading on Merkur Market. Banks have flocked to the Oslo Børs marketplaces in recent years to finance their growth plans.

Former CFO at Russell Investments and Janus Capital joins Cboe board of directors; Jennifer McPeek joins the board of directors at Cboe after serving in various senior buy-side executive roles.
Annabel Smith – The Trade
Buy-side industry veteran and the former chief financial officer at Russell Investments and Janus Capital, Jennifer McPeek, is set to join the board of directors of Cboe Global Markets.

Veteran regulator in Hong Kong joins HKEX as technology risk head; Brian Lee will join Hong Kong Exchanges and Clearing after working at the Hong Kong Monetary Authority for 25 years.
Annabel Smith – The Trade
A veteran division head at the Hong Kong Monetary Authority (HKMA) has departed after more than two decades with the regulator to join Hong Kong Exchanges & Clearing (HKEX) in a senior role.

MERSCORP Holdings Partners with the Federal Home Loan Banks on eNote Acceptance
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that MERSCORP Holdings, Inc. (MERS) has partnered with the Federal Home Loan Bank (FHLBank) System to facilitate use of the MERS® eRegistry by FHLBank member financial institutions wishing to pledge eNotes as collateral. MERS is part of ICE Mortgage Services, which applies technology and high-capacity infrastructure to make the mortgage process more efficient and assist clients in navigating the eMortgage ecosystem.


Fintechs Were Supposed Improve Equality
Ilona Limonta-Volkova – Forbes
Separate and unequal. This was one of the key findings of the 1968 Kerner Commission, which was assigned to investigate the underlying causes of the 1967 race riots. In many ways, this report portended the gruesome displays of inequality that have punctuated recent history.

TP ICAP names new sales heads for data and analytics division; Jeff Missimer joins TP ICAP Data & Analytics as head of sales Americas, as Rhys Spencer is promoted to head of sales Asia.
Annabel Smith – The Trade
TP ICAP has appointed two senior sales heads for its data and analytics division as the interdealer broker looks to grow its client base and revenue streams.

FIS Doubles Applications Covered by Service Level Agreement; Reduces Service Disruption Period to As Little as Ten Minutes
Continuing its commitment to providing world-class levels of service and system uptime to its clients, financial technology leader FIS™ (NYSE:FIS) said today that it has doubled the number of cloud-based applications covered by its industry-leading service level agreement (SLA), while reducing the designated service disruption period to as little as ten minutes.

How Covid-19 Changed Americans’ Internet Habits; Broadband usage surged in mid-March as millions of Americans turned to the internet to work, learn and communicate at home
Lillian Rizzo and Sawyer – WSJ
Internet usage soared 25% within a few days in mid-March as the coronavirus pandemic started forcing Americans to stay home, a Wall Street Journal analysis found, and is bound to remain substantially higher than before the pandemic.


Pantera Tells SEC Its Crypto Fund Has Raised Nearly $165M
Paddy Baker – Coindesk
Institutions and the well-heeled have poured millions into a fund from Pantera Capital, which has more than double in size since it first launched in 2018.

Ex-Prudential Securities CEO Calls Bitcoin a ‘Safe Haven’
Muyao Shen – Coindesk
George Ball, the former chief executive officer of Prudential Securities and now CEO of Sanders Morris Harris, suggested that bitcoin or other cryptocurrencies could be “a safe haven” for investors and traders as an alternative investment.

Litecoin Gets Bullish Speculation, at Last, as Upgrade Approaches
Omkar Godbole – Coindesk
The cryptocurrency litecoin is often referred to as the silver to bitcoin’s gold. This year, litecoin investors might have been better off staying in the analog world: While bitcoin has gained twice as much as gold, litecoin has barely kept up with silver.

Central banks should not rush into digital currencies
FT Editorial Board (opinion)
The great financial crisis sowed distrust in the global monetary order, spawning bitcoin and myriad copycat cryptocurrencies. But it was not until the middle of 2019 when a Facebook-led consortium threatened to launch Libra, its own stablecoin, that officials really began to fret. The perceived threat to sovereigns’ unrivalled power to control money creation was such that state-backed digital currencies now look inevitable.

Bitcoin was the second most popular asset on TradingView after Tesla stock last month
Yogita Khatri – The Block
Bitcoin was the second most viewed asset on TradingView after Tesla stock in July. The charting platform revealed the data point on Friday, saying that Tesla was the most viewed stock in 31 U.S. states, while bitcoin was particularly popular in California, Washington, and Oregon states. “The west coast loves crypto the most,” said TradingView.

Curve becomes third DeFi protocol to hit $1 billion in total value locked
The Block
Curve, a decentralized exchange (DEX) for trading stablecoins, has become the third decentralized finance (DeFi) protocol to hit $1 billion in total value locked. This milestone follows just one day after non-custodial lending and borrowing protocol Aave hit the $1 billion mark on Saturday.

Binance saw the highest web traffic among other crypto exchanges in July
Momina Khan – The Block
Crypto exchange Binance had the highest number of visitors among its peers in July, coming in at 25 million visitors. This was followed by Coinbase and BitMEX, with 22.5 million and 6.9 million visitors, respectively, according to data collected by The Block Research.

Aave becomes second DeFi protocol to hit $1 billion in total value locked
The Block
Aave, a non-custodial lending and borrowing protocol, has become the second decentralized finance (DeFi) protocol to hit $1 billion in total value locked. The milestone means Aave users have deposited $1 billion worth of assets into the protocol for lending and borrowing purposes.

Federal Reserve shares details on ‘FooWire’ distributed ledger experiment
Michael McSweeney – The Block
The U.S. Federal Reserve published details about a 2019 payments trial involving distributed ledger technology, specifically the Hyperledger Fabric blockchain software. The results were released alongside news that the Fed, the U.S. central bank, is partnering with the Massachusetts Institute of Technology on a multi-year effort focused on central bank-issued digital currencies or CBDCs. In statements, Fed governor Lael Brainard spoke about the Fed’s work in this area to date, pointing to work conducted by researchers at the Federal Reserve Bank of Boston.


First Thing: Trump’s USPS cuts are ‘a crisis for US democracy’; Speaker Nancy Pelosi recalls the House of Representatives early to tackle the ‘sabotage’ of the postal service. Plus, why Fantastic Beasts is a PR disaster
Tim Walker – The Guardian
Nancy Pelosi has recalled the House of Representatives from its summer recess early, to vote on a bill to prevent the United States Postal Service downgrading its operations or service from early-2020 levels, in response to what the Democratic House speaker called the “sabotage” of the mail system by the Trump administration. Donald Trump admitted last week that he was blocking funding to the USPS in a bid to disrupt mail-in voting at November’s presidential election.

‘Who are we willing to sacrifice?’: teachers’ fears grow as US schools plan reopenings; The debate over whether to resume in-person classes continues across the US as some schools plan to reopen after pressure from Trump
Michael Sainato – The Guardian
Two weeks into the school year, the school district of Gwinnett county, Georgia, plans on reopening schools for in-person learning on 26 August, with staggered schedules toward fully reopening schools. With the coronavirus still far from under control, the plans are provoking a heated debate, one that is blazing across the US.

Democrats to open virtual convention with a show of unity for Biden
John Whitesides – Reuters
Democrats will kick off a four-day virtual convention on Monday with a display of party unity for U.S. presidential candidate Joe Biden and the broad coalition aiming to defeat Republican President Donald Trump in November.

Explainer: How the coronavirus changed U.S. political conventions, perhaps forever
John Whitesides – Reuters
The U.S. political convention, a presidential campaign ritual dating to the 1830s, is being reinvented on the fly after being short-circuited by the coronavirus pandemic – much like the campaign itself.

Iowa seeks about $4 billion in disaster aid after storm
The U.S. state of Iowa is seeking about $4 billion in disaster relief after a storm packing hurricane-force winds tore across the Midwest last Monday, Governor Kim Reynolds said.

As Democrats prepare to nominate Joe Biden, widespread fears about unfair election
James Oliphant – Reuters
With less than 80 days to go before the U.S. presidential election, it looks like Joe Biden’s race to lose.

Biden’s 2009 Lessons for Now: Spend Big, No Coddling Wall Street
Jeffrey Taylor, Mike Dorning, and Jennifer Epstein – Bloomberg
Infrastructure, clean energy were his focus then and now; Biden won’t shy from taxes or deficit increase to meet goals
When Joe Biden entered the White House as vice president in 2009, the country was in economic turmoil caused by a global financial meltdown. The new president, Barack Obama, gave Biden a leading role in the economic recovery — and Biden’s approach then shows a former senator struggling to find middle-ground solutions that might anger people, but not alienate them.

Vote-By-Mail Fight Opens New Front for Democrats Against Trump
Benjamin Bain – Bloomberg
Postal Service cutbacks by Trump ally raise doubts on election; Pelosi calls House back from recess to work on urgent bill
A pitched battle over the U.S. Postal Service and its ability to reliably deliver presidential election ballots during a pandemic has broken out on the eve of the parties’ high-profile conventions.

Why Mass Incarceration Is Looming as a Campaign Issue
Ryan Williams – Bloomberg
America has long had more prison inmates than any other nation. This phenomenon, which has been given the name of mass incarceration, has the potential to be an issue in this year’s presidential campaign. President Donald Trump can point to a bipartisan 2018 measure he signed that shortened some mandatory minimum sentences and gave judges more power to override them.

Just How Far Will Trump Go? The president has dramatically accelerated the pace of his efforts to weaponize the federal government to his advantage.
Ronald Brownstein – The Atlantic
President Donald Trump’s open admission yesterday that he’s sabotaging the Postal Service to improve his election prospects crystallizes a much larger dynamic: He’s waging an unprecedented campaign to weaponize virtually every component of the federal government to partisan advantage.

UAE Summons Iranian Diplomat Over Denunciation of Israel Deal
Abeer Abu Omar – Bloomberg
The United Arab Emirates summoned the Iranian charges d’affaires in Abu Dhabi over President Hassan Rouhani’s reaction to the UAE’s deal to establish ties with Israel, which it deemed “inflammatory.”


CFTC Unanimously Approves Proposals Amending Margin Requirements for Swap Dealers and Major Swap Participants
Press Release August 14, 2020
Washington, D.C. — The Commodity Futures Trading Commission today announced it has voted unanimously to approve two proposals amending certain margin requirements for swap dealers (SDs) and major swap participants (MSPs). The Division of Swap Dealer and Intermediary Oversight delivered a staff presentation on the proposed rulemakings during the Open Meeting held on July 22, 2020. Both proposed rules have a 30-day comment period following publication in the Federal Register.

Statement of Commissioner Dawn D. Stump in Support of Proposed Margin Rulemakings Based on Recommendations of Global Markets Advisory Committee
I am pleased to support the two proposed rulemakings that the Commission is issuing with respect to margin requirements for uncleared swaps.
These proposed rulemakings address several recommendations that the Commission has received from its Global Markets Advisory Committee (“GMAC”), which I am proud to sponsor, and are based on a comprehensive report prepared by GMAC’s Subcommittee on Margin Requirements for Non-Cleared Swaps (“GMAC Margin Subcommittee”)

Statement of Commissioner Dan M. Berkovitz Regarding Notices of Proposed Rulemaking for Certain Matters Related to Margin for Uncleared Swaps
I support issuing for public comments two notices of proposed rulemaking to improve the operation of the CFTC’s Margin Rule.[1] The Margin Rule requires certain swap dealers (“SDs”) and major swap participants (“MSPs”) to post and collect initial and variation margin for uncleared swaps.[2] The Margin Rule is critical to mitigating risks in the financial system that might otherwise arise from uncleared swaps. I support a strong Margin Rule, and I look forward to public comments on the proposals, including whether certain elements of the proposals could increase risk to the financial system and how the final rule should address such risks.

ASIC winds up illegal unregistered managed investment scheme and Askk Investment Group Pty Ltd
The Federal Court has made orders to wind up Askk Investment Group Pty Ltd (ASKK) and the illegal unregistered managed investment scheme it operated in respect of land at Lot 2, 615 Hume Highway, Beveridge, Victoria (Land).

SGX RegCo issues Trade With Caution alert on shares of Kitchen Culture Holdings Ltd.
Singapore Exchange Regulation (“SGX RegCo”) urges investors and potential investors to trade with caution (TWC) when dealing in the shares of Kitchen Culture Holdings Ltd. (“KCH”).

Investing and Trading

Cyclical Stocks Are Leading the Latest Leg of the Market’s Recovery; Strides by energy and financial stocks have helped ease worries among some investors who feared a market dominated by a subset of stocks could be vulnerable to sudden reversals
Karen Langley – WSJ
Stock-market laggards like small-caps and industrial shares surged in August, a sign that the market’s breadth is widening after months of dominance by big technology companies.

Morgan Stanley Sees Stocks Hit in Bond Rout as Bull Market Forms
Gregor Stuart Hunter – Bloomberg
This month’s selloff in U.S. government bonds could spark a correction in equity markets before a new cycle of stock gains, according to Morgan Stanley. “There is growing evidence that long term nominal yields are making a secular trough with several near term catalysts that may extend last week’s rise,” strategists including Michael Wilson wrote in a note on Monday. “Such a development could prove to be very challenging to many equity portfolios that likely embed higher long duration risk than may be appreciated.”

Oil Driller Chaparral Files for Bankruptcy Protection
Hailey Waller – Bloomberg
Energy bankruptcies have multiplied during the pandemic; Company plans $300 million debt cut and new money raising
Chaparral Energy Inc.’s filed for bankruptcy protection for the second time in four years, paving the way for bondholders to take control of the Oklahoma driller in the aftermath of sluggish oil prices.

Environmental, Social and Corporate Governance

Europe’s Big Oil Companies Are Turning Electric; Under pressure from governments and investors, industry leaders like BP and Shell are accelerating their production of cleaner energy.
Stanley Reed – NY Times
This may turn out to be the year that oil giants, especially in Europe, started looking more like electric companies. Late last month, Royal Dutch Shell won a deal to build a vast wind farm off the coast of the Netherlands. Earlier in the year, France’s Total, which owns a battery maker, agreed to make several large investments in solar power in Spain and a wind farm off Scotland. Total also bought an electric and natural gas utility in Spain and is joining Shell and BP in expanding its electric vehicle charging business.

The First Arctic Summer Without Ice Is Coming in Just 15 Years; New models convinced a team of scientists to move up projections for the first summer in 130,000 years without sea ice.
Eric Roston – Bloomberg
There’s a standard image of the Earth as seen from space that we carry in our heads: vast blue seas, green bands of forests, and frozen white caps on the top and bottom. By the summer of 2035, it may not be accurate. Scientists estimate that in just 15 years Arctic summer sea-ice could disappear for the first time since primitive humans left Africa.

Worst Heat in 70 Years Threatens to Take Down California’s Grid
Mark Chediak, Brian Eckhouse, and Brian K Sullivan – Bloomberg
Power system operator warns of more rotating blackouts; Temperatures expected to soar to as high as 112 degrees
One of the most extreme heat waves in generations is smothering California this week and pushing the region’s power grid to the brink of collapse.

Millions of Beetles Are Wiping Out Forests All Across the World; The pest are eating away at trees as climate change warms winters. Infestations have the potential to worsen future emissions.
Jen Skerritt – Bloomberg
A plague of tiny mountain pine beetles, no bigger than a grain of rice, has already destroyed 15 years of log supplies in British Columbia, enough trees to build 9 million single-family homes, and are chewing through forests in Alberta and the Pacific Northwest. Now, an outbreak of spruce beetles is threatening to devour even more trees in North America just as similar pests are decimating supplies in parts of Europe, creating a glut of dead and dying logs.

Oil Companies Wonder If It’s Worth Looking for Oil Anymore; More European producers are saying energy resources worth billions of dollars now might never be pumped out of the ground.
Laura Hurst – Bloomberg
A few dots near the bottom corner of the world map in the southern Atlantic, the Falkland Islands were once at the forefront of a new era for the oil industry as companies scoured the planet for resources.


Sixth Street Partners Amasses One of the Largest Private-Capital Funds; Former affiliate of private-equity firm TPG has one of biggest pools of private capital on record, raising $10 billion for its flagship fund since April
Miriam Gottfried – WSJ
A former affiliate of private-equity firm TPG has amassed one of the biggest pools of private capital on record as investors seek opportunity from the economic uncertainty unleashed by the coronavirus pandemic.

Calpers Faces Questions Following Investing Veteran’s Abrupt Exit; The giant pension fund’s procedures for managing conflicts of interest are getting attention from the board following Ben Meng’s departure
Heather Gillers and Dawn Lim – WSJ
Calpers’s investment chief resigned from the biggest U.S. pension fund Aug. 5 amid questions about potential conflicts of interest raised by his personal investments. Now board members are calling for an inquiry into the fund’s handling of the matter.

BGC veteran and president to step down from role; Shaun Lynn, who has been credited with spearheading BGC’s move to spin out from Cantor Fitzgerald, will step away from the day-to-day operations of the business.
Annabel Smith – The Trade
Interdealer broker BGC Partners has confirmed that Shaun Lynn will step down as president of the firm and transition to vice chairman role from 1 October.

Hedge Funds Are Short on Dollar for First Time in Two Years
Masaki Kondo and David Ramli – Bloomberg
Hedge funds turned bearish on the dollar for the first time since May 2018, an indication that a summer slump in the world’s reserve currency will be prolonged. Net futures and options positions held by leveraged funds against eight other currencies dropped to minus 7,881 contracts last week, according to data aggregated from the Commodity Futures Trading Commission. The swing was driven by growing bullish bets on the euro.

Shaun Lynn appointed Vice Chairman of BGC Partners and will transition from role as President
BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners” or “BGC” or the “Company”), a leading global brokerage and financial technology company, today announced that Shaun Lynn has been appointed Vice Chairman of the Company, and will transition from his current role of President, effective October 1, 2020. Mr. Lynn will continue to work for the Company on matters including strategy and corporate development.


WeChat Links Many Americans to Family Abroad. That’s Now in Jeopardy; For some in the U.S., the app is a connector without easy substitute, but the Trump administration has national security concerns
Shan Li – WSJ
The Trump administration’s plans to restrict the Chinese messaging app WeChat TCEHY -0.69% could have a casualty beyond geopolitics: It would cut off a vital link Americans use to keep in touch with family in China.

Japan’s record economic plunge wipes out Abe era gains
Leika Kihara, Tetsushi Kajimoto – Reuters
Japan was hit by its biggest economic slump on record in the second quarter as the coronavirus pandemic emptied shopping malls and crushed demand for cars and other exports, bolstering the case for bolder policy action to prevent a deeper recession.

A Fifth Billionaire Emerges From Malaysia’s Glove-Making Industry. But the Boom May Fade
Yoojung Lee – Bloomberg
Riverstone’s chairman is worth $1.2 billion after stock surge; Skepticism is rising over the jump in glovemaker shares
Malaysia has long been a place where vast fortunes have been amassed over time. The Kuoks, Tehs and Queks are custodians of palm oil, property and banking empires that stretch back decades.

Turkey’s Budget Falls Deeper in the Red as Pandemic Hits Revenue
Cagan Koc – Bloomberg
Turkey posted a budget deficit for a sixth month, as the government ramped up spending to support an economy paralyzed by the coronavirus pandemic and allowed for tax deferrals that chipped away at revenue.

South Africa Government Lacks Coherent Economic Plan, Group Says
Paul Richardson – Bloomberg
Latest proposals ‘appear to have been drafted at last minute’; Strategy promised in April yet to be unveiled, BLSA says
An economic plan presented by the South African government last week was “fragmented and uncoordinated,” suggesting there’s been little discussion on the proposals, the nation’s main business lobby group said.


EU warns City it faces longer wait for market access after Brexit
Jim Brunsden, Sam Fleming, and Philip Stafford – FT
The EU’s financial services chief has warned the City of London it may have to wait beyond the end of this year to know whether it will secure prized access rights to the whole of the bloc’s market, leaving banks and asset managers in the UK grappling with a complex patchwork of national rules. Valdis Dombrovskis, an executive vice-president of the European Commission, said that Brussels would not be ready in the coming months to assess whether Britain qualifies for some pan-EU access rights, known as equivalence provisions, because the bloc’s own regulations are in flux.

UK remains attractive to investors despite Brexit, says Tata boss
Benjamin Parkin, Peter Campbell, and Michael Pooler – FT
The UK will remain an attractive investment destination after Brexit because global trade turmoil has become the “new normal” for companies, according to the head of India’s Tata, one of Britain’s largest private sector employers. Brexit had not unduly hurt the UK’s standing, said Tata Sons chairman Natarajan Chandrasekaran, though he warned that any new tariffs would damage the Indian conglomerate’s businesses. “I think what you look for in running big businesses is stability, it’s not that every policy you end up liking,” said the boss of Tata, a business empire whose UK interests include Jaguar Land Rover, Tetley Tea and the country’s biggest steelworks in Port Talbot.

Brexit: Farmers seek assurances on ‘unfettered access’ through Dublin
Conor Macauley – BBC News
Farmers want assurances that meat exports from NI shipped through Dublin Port to customers in Britain will qualify for “unfettered access”. The Ulster Farmers’ Union (UFU) says up to 50% of red meat destined for the GB market goes this way. The UK government has made a commitment that NI goods will face no barriers entering their main market in GB. However, the UFU said it does not extend to produce shipped via the Republic of Ireland.


In lawsuit, ‘Fortnite’ maker to test idea of iPhone as market unto itself
Stephen Nellis – Reuters
(Reuters) – ‘Fortnite’ maker Epic Games has launched the most significant effort yet to advance the legal theory that Apple’s iPhone ecosystem has become so “sticky” that it is a distinct software market over which Apple exercises monopoly power.

Google says Australian news rule threatens free search services; Internet group has also paused licensing deals with outlets due to proposed regulation
Jamie Smyth – FT
Google has warned that a landmark Australian proposal to make it pay for news content could threaten its free search services in the country, as it vowed to fight the regulation.

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The Spread

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