Watchdog Says Hedge-Fund Secrets Kept by the CFTC Are Vulnerable to Hacking

Jun 12, 2019

First Read

Hits & Takes
JLN Staff

At the recent gala dinner at IDX the sporran was passed to the next person charged with wearing a kilt (or not, in the case of Emma Davey, who wore plaid pants). Who is this person, who apparently does not know his own strength? (This is a story for another day). The Most Interesting Man in the World, the Mayor of Fontana, Wisconsin, Pat Kenny has been passed the sporran and challenged to raise £10,000. ~JJL

It all started back in 2009 with a discussion in a London cab between Jeremy Grant, Martin Mosbacher and Candace Adam and a challenge for Jeremy to show his Scottish pride and wear a kilt to the IDX gala dinner. Jeremy challenged me to sport the kilt at the next year’s IDX gala dinner and Futures for Kids fundraiser and the tradition began. Others who have worn it and raised money for Futures for Kids as part of the challenge include Simon Rostron, Clive Furness, Walt Lukken, Bill Herder, Simon Puleston Jones, Kim Taylor, Mark Ibbotson and Emma Davey. Whom am I missing?~JJL

CFTC Commission Dan Berkowitz is a man after my own heart. Yesterday in a speech he said, “I’d like to turn now to the first initiative I believe should be a priority for the Commission: increasing competition in the derivatives markets.”~JJL

Berkowitz also noted “High levels of concentration present systemic risks and provide fewer choices for end-users. One of the purposes of the Commodity Exchange Act (“Act” or “CEA”) is to promote fair competition. The Commission therefore has an obligation to address this issue.”~JJL

The next big crisis in our markets will be magnified by the high levels of concentration. The CFTC and the industry should address this issue sooner rather than later.~JJL

Also, Berkowitz gave a hat tip to the late Bart Chilton with this subtitle of “Take It to the Limit, One More Time” (Again)[1]. “His footnote read: The Eagles, Take It To The Limit (Asylum 1975). My friend and former colleague, Bart Chilton, was a strong proponent of speculative position limits. In 2013, he issued a statement in support of the agency’s position limits proposal and quoted this ubiquitous Eagles song. See Statement of Commissioner Bart Chilton, Dodd-Frank Meeting on Position Limits (Nov. 5, 2013), available here. In borrowing this refrain, I honor him and the passion he brought with him every day to his job as a CFTC Commissioner”.~JJL

Exchange Disciplinary Roundup –
ICE: Two related disciplinary notices hit the tape at the end of last week at ICE. Johnathan Alexander was fined $85,000 and suspended for nine months for the manner in which he entered offers for ERCOT North 345 KV Real-Time Off-Peak Daily Fixed Price Futures. Here’s the best part: “Alexander initiated this conduct after he unknowingly fell victim to the same circumstances he then caused to occur. Alexander intended to prove the point that he was dissatisfied with the price adjustment provided by ICE Operations in accordance with the Exchange’s Error Policy after executing a series of trades in a wrong market.” So, he got what he wished for? (He neither admitted nor denied the violations.) In the second ICE notice, Macquarie was fined $250,000 for, pretty much, letting Alexander do the above while he worked for them. (They also neither admitted nor denied the violations.)~SD

Nasdaq: Citigroup was fined $100,000 for failing to maintain continuous two-sided trading interest and for lax supervision.~SD

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A Look Back with Steve Staszak
JohnLothianNews.com

John Lothian News sat down with former CME Group director of clearing operations Steve Staszak for a look back at his career, which spanned the days of grains and meats to the modern era of futures trading and all the great events in between.

Watch the video »

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‘A Horrifying Reality’: An Oral History of Coming Out on Wall Street
Alicia McElhaney – Institutional Investor
At 1:20 a.m. on Saturday, June 28, 1969, New York City police attempted to raid the Stonewall Inn, a bar serving the gay community. Instead of allowing orderly arrests to take place, Stonewall’s patrons, led by three transgender women, Jackie Hormona, Marsha Johnson, and Zazu Nova, protested. Violence broke out. The moment escalated into a gay liberation movement that sparked the now-famous gay pride celebrations across the United States and beyond. The Stonewall riots made the queer community in New York visible 50 years ago. Throughout the decades since, finance professionals have been waging their own struggle for open and full acceptance of LGBTQ people in a conservative industry.
bit.ly/2I8RPi2

***** I fully accept and love LGBTQ people. We can start there.~JJL

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Not afraid of investing: Deutsche Bˆrse offers first seminar of women for women; Three different modules on August 17th / No previous knowledge required / Taster webinar on June 24th
Deutsche Bˆrse
With a seminar designed by women for women, Deutsche Bˆrse wants to use its Capital Markets Academy to encourage people to deal with investment, financial planning and retirement provision. The events will take place on 17 August at the Deutsche Bˆrse in Eschborn.
bit.ly/2WB0bIe

***** We don’t live in a binary world~JJL

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How Much Did CME Group Inc.’s (NASDAQ:CME) CEO Pocket Last Year?
Simply Wall St
In 2016 Terry Duffy was appointed CEO of CME Group Inc. (NASDAQ:CME). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
bit.ly/2WsVqM5

***** I am detecting a trend here.~JJL

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Tuesday’s Top Three
So what’s a CEO worth? We all wanna know, thus making Yahoo Finance’s piece about Jeff Sprecher the top read story of the day, with Should You Worry About Intercontinental Exchange, Inc.’s CEO Pay Cheque?. To answer that, you must read the article. Second went to the 2013 video interview When Joe O’Neill Went Hollywood: “Trading Places” 30 Years Later in which O’Neill tells how “Trading Places” ended up at his exchange and why they chose orange juice futures as the contract that sank Mortimer and Randolph Duke. Why are we showing this? It’s the 36th anniversary of perhaps the greatest trading movie ever, which brought lines like this: Randolph Duke: “Mother always said you were greedy.” Mortimer Duke: “She meant it as a compliment.” Third was CCN’s CCN is Shutting Down after Google’s June 2019 Core Update. If you’re going to get a scoop (and the last one), it might as well be on your own firm.

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Lead Stories

A Watchdog Says Hedge-Fund Secrets Kept by the CFTC Are Vulnerable to Hacking
Benjamin Bain and Robert Schmidt – Bloomberg
Watchdog says antiquated systems make for ‘tempting target’; Derivatives regulator urged to overhaul its trading database
Confidential market information collected from hedge funds and brokers by the main U.S. derivatives regulator is vulnerable to hacking because of the agency’s outdated computer systems, according to an internal watchdog.
/bloom.bg/2MGmjMX

CFTC attacks insider trading in futures market
Lynne Marek – Crain’s Chicago Business
The Commodity Futures Trading Commission is working closely with exchange operator CME Group to take on insider trading in the futures market, with help from a recently established CFTC task force.
bit.ly/2WuWezT

Johannesburg Stock Exchange adopts Millennium platform for equities and FX derivatives; JSE to run all equities, equities derivatives and FX derivatives markets on Millennium Exchange platform.
John Brazier – The Trade
The Johannesburg Stock Exchange (JSE) has gone live with a new trading platform from LSEG Technology for its equities and FX derivatives markets.
bit.ly/2WKhqXT

‘The migration problem is a coffee problem’; In western Guatemala, cultivating coffee was once a way out of poverty. As prices fall, growers are abandoning their farms for the United States.
Kevin Sieff – Washington Post
From his wooden hut in the foothills of the Sierra Madre, Rodrigo Carrillo can see the product of his life savings: A vast green sea of coffee plants, sprouting red berries like tiny Christmas ornaments.
/wapo.st/2WvZpYg

Climate Change Poses Major Risks to Financial Markets, Regulator Warns; Rostin Behnam, a trading regulator in Washington, issued a warning about risks to financial markets from global warming.
Coral Davenport – NY Times
A top financial regulator is opening a public effort to highlight the risk that climate change poses to the nation’s financial markets, setting up a clash with a president who has mocked global warming and whose administration has sought to suppress climate science.
/nyti.ms/2WEJ6NM

Wells Fargo CEO Search Drags On as Two Top Candidates Take a Pass; Bank is still pursuing JPMorgan’s Gordon Smith, but he has told confidants he is likely to stay put
Rachel Louise Ensign and David Benoit – WSJ
Wells Fargo WFC -0.02% & Co. is having trouble getting top bankers interested in its open chief executive officer job.
/on.wsj.com/2WE5LcU

Germany sells 10-year Bunds at lowest yield on record; Auction results are latest sign of global shift into highly rated government bonds
Adam Samson – FT
Germany has sold medium-term Bunds at the lowest yield on record in the latest sign of how the uncertain outlook for Europe’s economy has depressed borrowing costs.
/on.ft.com/2WFE2IE

Landmark ABP deal gives a glimpse of life after Libor; Shift comes as regulators urge banks and investors to replace discredited benchmark
Katie Martin – FT
The shift away from the discredited London interbank offered rate benchmark crossed a key threshold on Tuesday as Associated British Ports became the first borrower to secure agreement from its bondholders to switch its debt over to a new rate.
/on.ft.com/2WKe8E1

What’s wrong with AQR (part III)
RCM Alternatives Blog
We’ve covered AQR’s eponymous managed futures product before, asking in April of 2017: What’s Wrong with AQR and again in March of 2019: What’s Wrong with AQR (Part II), because when you’re the elephant in the room, well – people want to know what if you’re playing nicely or shattering the dinnerware. And, well, when you’ve literally lost more assets (about $9 Billion) than all but a few shops have ever even managed, well – it begs the question of what is happening.
bit.ly/2I8mign

****Also, Managed futures retreat in May, says Societe Generale.

Former Deutsche Bank executive accused of cheating on Euribor; Andreas Hauschild was part of a group manipulating interest rate benchmark, court told
Jane Croft – FT
A “dishonest” senior former Deutsche Bank executive was part of a group including four traders who conspired to manipulate a key interest rate benchmark and “cheated the global financial system to give themselves an edge”, a London court has heard.
/on.ft.com/2WCTGov

Exchange leaders see a greening future in derivatives; On ESG, Europe leads the US, new products are sprouting and sourcing of metals is being examined
Helen Bartholomew – Risk.net
The derivatives world is being reshaped by ESG – environmental, social and governance issues – of all things. And the changes will take decades.
bit.ly/2I8Ey9a

RJ O’Brien’s chief risk officer on margin models and clearing; CME’s looming switch to VAR model will have pronounced effect on broker and its clients, says Brad Giemza
Costas Mourselas – Risk.net
Commodities’ king-sized default last September has sparked debate over the risk of allowing independent traders to hold large positions as direct clearing members. Margin models are under scrutiny, and some insiders are even questioning whether certain products are suitable for clearing.
bit.ly/2IcpPuh

Culture Clashes Remain Bugaboo Of Asset Manager M&A
Hanqing Chen and Xinyi Jiang – Forbes
Culture remains a key consideration for asset management firms seeking to consolidate, industry sources say.
If firms are not culturally aligned, they are bound to run into issues — “it’s just a matter of when will you have [the] problem,” says Martin Flanagan, chief executive of Invesco.
bit.ly/2Wyv4Z8

Hedge fund broker who left school at 15 and trained as a shipyard welder sets up his own firm; Mel Sutton founds Argyll & Buchanan as alternative to the City and Wall Street
Kenny Kemp – Insider.co.uk
See our privacy notice
A 29-year-old financier who began his career as an apprentice shipyard welder on an aircraft carrier has teamed up with a banking industry veteran to create a boutique hedge fund brokerage in Glasgow.
bit.ly/2Wuke6g

Exchanges, OTC and Clearing

Johannesburg Stock Exchange successfully migrates Equity & FX Derivatives to LSEG Technology platform
London Stock Exchange Group
LSEG Technology, part of London Stock Exchange Group, today announces that the Johannesburg Stock Exchange (JSE) has successfully gone live with Equity and FX Derivatives on Millennium ExchangeTM and Millennium SurveillanceTM. This project entailed a major upgrade to the existing equity market whilst on-boarding both the Equity Derivatives Market (EDM) and the Foreign Exchange Derivatives Market (FXM).
bit.ly/2WE8xPm

Intercontinental Exchange Completes Acquisition of Simplifile LC
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced it has completed its acquisition of Simplifile, LC. On May 1, 2019 ICE announced that it would acquire Simplifile for $335 million. The acquisition will not be material to ICE’s 2019 earnings or have an impact on capital return plans.
bit.ly/2WyE2p7

Nasdaq’s ModEx Extends Range of Catastrophe Risk Models with CoreLogic U.S. Earthquake Model
GlobeNewswire
Nasdaq’s ModEx (Nasdaq:NDAQ), the multi-vendor catastrophe modelling platform for the insurance industry, today announced that CoreLogic, a leading global property information, analytics and data-enabled solutions provider, has become the latest catastrophe risk model provider to make their models available via ModEx. The CoreLogic U.S. Earthquake Model will be the first of its models to be integrated on to the ModEx platform.
bit.ly/2WE8GSU

Euroclear CEO considering IPO in review, rules out mergers
Huw Jones – Reuters
Euroclear is open to a “fundamental transformation”, either through a listing or placing shares with major investors, but is ruling out a merger, the chief executive of Europe’s biggest stock and bond settlement house said.
/reut.rs/2IcnXSh

Moex to revive interest in Russian rates
Louisa Chender – Global Investor Group
Moscow exchange launched futures on Rusfar to revive the underdeveloped interest rate segment
bit.ly/2I9Ikzi

Albemarle declines to participate in LME lithium contract
Ernest Scheyder – Reuters
Albemarle Corp, the world’s largest lithium producer, said on Tuesday it will not participate in the London Metal Exchange’s plan to launch a new contract for the white metal, depriving it of a key source of pricing data.
/reut.rs/2XNawgA

Opening Remarks by SGX Chairman Kwa Chong Seng at The Official Monetary and Financial Institutions Forum Global Public Investor Launch
SGX
bit.ly/2WHkfJ9

Futures: Introduction of a mistrade range floor
Eurex
Eurex Exchange will introduce a mistrade range floor in addition to the current rules for the determination of the mistrade range for futures products.
bit.ly/2WCw2Ix

Securities Lending Times: “View from the CCP”
Eurex
Insights from the CPP: as Eurex Clearing’s CCP service continues to establish itself, board member Matthias Graulich discusses the outlook for the Lending CCP in the current issue of the Securities Lending Times. He talks about trading strategies, service features as well as challenges and opportunities in the context of topics that shape the securities lending market globally – legislation, regulation, infrastructure and technology.
bit.ly/2WEKsYS

Introduction of additional rights for the Audit Group and amendments to the Excessive System Usage Fee
Eurex
The Executive Board of Eurex Frankfurt decided to introduce additional rights for Eurex Deutschland, which allows the inspection of Trading Participant’s premises and data processing systems, and to amend the Excessive System Usage (ESU) fee. Those amendments are not related to each other but are defined in the same legal documents and will therefore be equally communicated with this circular.
bit.ly/2WEKwrA

REGIS-TR appoints new chief executive from Iberclear; Thomas Steinmann to succeed Elena Carnicero as new head of European trade repository.
John Brazier – The Trade
Luxembourg-based European trade repository REGIS-TR has announced the appointment of Thomas Steinmann as the company’s new chief executive officer.
bit.ly/2WAOfq1

Cboe to Host 2019 Risk Management Conference Europe in September; 8th Annual Cboe Risk Management Conference Europe planned for 9 – 11 September in Munich, Germany
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, will host its 8th annual CboeÆ Risk Management Conference (RMC) Europe from Monday, 9 September through Wednesday, 11 September, 2019, at the Andaz Hotel in Munich, Germany. This will be the first time Cboe’s highly-acclaimed Risk Management Conference will be hosted in Germany.
bit.ly/2WzEW4y

Fintech

A robot named Gekko: ‘quant’ funds home in on the bond market; Hedge funds are attempting to copy the best parts of human traders but without their frailties
Robin Wigglesworth and Laurence Fletcher – FT
In a red-brick building in the suburbs of the English city of Cambridge, a group of young computer scientists chat and joke about the latest tweaks to their codes. But rather than a new iPhone app, they are attempting to create the next “bond king” out of algorithms and data.
/on.ft.com/2WKduq5

Fintech spaghetti junction threatens UK’s innovation crown; Fears that London’s position as the leading city for financial innovation in Europe is under threat from Brexit
Emily Horton and Ryan Weeks – Financial News
Senior policy and business figures in UK fintech have expressed alarm that a spaghetti junction of government-led initiatives risks stifling efforts to promote London as a tech hub in the face of Brexit.
bit.ly/2KH6Aua

Vela wins award for Best Managed Low Latency Data Feed
Vela
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced that it has won the TradingTech Insight (TTI) Awards North America for Best Low Latency Data Feed – Managed for Vela’s SuperFeed Market Data Feed. The awards were presented at a ceremony in New York yesterday.
bit.ly/2KIUCjS

Cryptocurrencies

CryptoCompare launches new benchmark for cryptocurrency exchanges, and it shows Coinbase is king
The Block Crypto
Cryptocurrency data and indices provider CryptoCompare is launching its first cryptocurrency Exchange Benchmark, according to a press release CryptoCompare shared with The Block. The ranking assesses more than 100 active spot exchanges and analyses their reliability.
bit.ly/2WzhxAj

Crypto Exchanges Are Facing Their Biggest Regulatory Hurdle Yet
Olga Kharif – Bloomberg
Bitcoin and its fellow cryptocurrencies have surged in popularity partly because they’ve offered a way to skirt the government oversight exercised over traditional financial systems. Well, get ready to kiss much of that autonomy goodbye.
/bloom.bg/2R6UuMl

Industry Report: Institutional Crypto Trading Report
Vela
Vela, in association with The Realization Group, has put together an intriguing report into the prospects for more widespread adoption of cryptocurrency trading in the institutional space.
bit.ly/2I7pwR6

University of British Columbia Adds Blockchain Program for Master’s and PhD Students
Daniel Kuhn – Coindesk
One of Canada’s leading research universities, the University of British Columbia, is launching a blockchain tech training path for graduate students. According to the UBC, the program is a first in Canada. The track will focus on four areas: health and wellness, clean energy, regulatory technology and issues for Indigenous residents, and will officially launch next January.
bit.ly/2KcJ35a

Ex-Employee Sues Startup Behind Zcash for $2M Over Unpaid Stock
Daniel Kuhn – Coindesk
A former employee, Simon Liu, is suing the former Zerocoin Electric Coin Company for $2 million over unpaid shares, breach of contact, and damages, according to court documents filed on May 29.
bit.ly/2XAAd4c

CME’s Bitcoin Futures Hit New Records
Jamie Redman – Bitcoin.com News
Ever since the Chicago Board Options Exchange (Cboe) announced it was ending its bitcoin futures products back in March, the Chicago Mercantile Exchange (CME Group) has seen a huge influx of bitcoin derivatives volumes. During the second week of May, CME’s bitcoin futures touched a milestone when it surpassed 33,000 contracts ($1.3 billion notional value) in one day. In another instance, CME’s open interest for its bitcoin derivatives positions smashed an all-time record high of 5,190 contracts on May 28.
bit.ly/2MGLVcB

Coinbase launches its cryptocurrency debit card in six more countries in Europe
Elizabeth Schulze – CNBC
As of Wednesday, the Coinbase Card will be available in Spain, Germany, France, Italy, Ireland and the Netherlands. The card allows users with Coinbase accounts to spend cryptocurrencies like bitcoin, ethereum and litecoin in stores and online at any merchant that accepts Visa. Start-ups, banks and tech companies are trying to make crypto payments and trading more accessible.
/cnb.cx/2WEDym6

Nasdaq’s Quandl Institutional Data Platform to Add Crypto Reference Prices
Daniel Palmer – Coindesk
A Nasdaq-owned financial data platform for institutional investors is adding cryptocurrency reference prices. Nasdaq’s Quandl platform will source its price information from cryptocurrency price and indices provider CryptoCompare. Based on CryptoCompare’s aggregate index datasets, the product will provide up-to-date pricing data for the “most liquid” cryptocurrency markets, according to a press release published Tuesday. Nasdaq and CryptoCompare have agreed a strategic partnership for the new service, called the Nasdaq/CryptoCompare Aggregate Crypto Reference Prices.
bit.ly/2XEG9cp

The crypto challenge: Boosting institutional trading in a fast-evolving market
The Realization Group
In this article, Mike O’Hara and Adam Cox of The Realization Group examine the
prospects for more widespread adoption of cryptocurrency trading in the institutional space.
bit.ly/2WxzEXx

Politics

Under pressure, Fed faces an outlook clouded by trade wars and signs of weakness
Howard Schneider – Reuters
U.S. President Donald Trump’s attacks on the Federal Reserve have broken one set of precedents, his talk of stacking the central bank with political allies has strained another, and his on-again off-again tariff threats have made the economic outlook harder than ever to predict.
While the Fed may well find reason to cut interest rates in recent weak job and inflation readings, doing so could also put a safety net under Trump policies that, to the eyes of many policymakers, have to date done more harm than good.
/reut.rs/2ZhQ4Vx

Some Republican Lawmakers Break With Party on Climate Change; Officials favor market-based solutions over government regulations
Arian Campo-Flores – WSJ
A small but growing number of Republican lawmakers are urging action on climate change, driven by shifting sentiment among GOP voters and the effects of global warming, from stronger hurricanes to more-destructive wildfires.
/on.wsj.com/2WEoZ1V

We’re Not Ready for a China-Russia Team-Up; Before they turn on each other, they’re taking on the U.S.
By Mark Gongloff – Bloomberg
Sharing one giant, resource-rich landmass, China and Russia are in many ways natural enemies. But for now they have more reasons to team up against the U.S. instead, and it’s not clear the U.S. is ready to deal with it.
/bloom.bg/2WBCMBu

Goldman Sachs CEO: Tariffs for political agenda can impact markets: CNBC
Reuters
Goldman Sachs Chief Executive David Solomon told CNBC on Tuesday that U.S. President Donald Trump’s use of tariffs as part of a political agenda can impact market activity.
/reut.rs/2WCq6KZ

Regulation

The heavy cost of policing financial services; The UK spends far more on regulating the finance industry than on fighting organised crime
Paul Lewis – FT
The National Crime Agency cost £477m in 2017-18. The Financial Conduct Authority (FCA) cost £547m. In other words, we spend more in the UK on policing financial services than in dealing with serious and organised crime.
/on.ft.com/2WK3VaE

ESMA issues an additional five positive opinions on national product intervention measures
ESMA
The European Securities and Markets Authority (ESMA) has today issued five positive opinions on product intervention measures taken by the National Competent Authorities (NCAs) of the Czech Republic, Estonia and Slovakia. ESMA’s opinion finds that the proposed measures are justified and proportionate and that it is necessary for NCAs of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures.
bit.ly/2WB99R0

Keynote Address of Commissioner Dawn D. Stump at the ISDA Annual Legal Forum, New York, NY; The Law Is Our Authority and Common Sense Our Judge
CFTC
Thank you, Katherine, for the kind introduction and to ISDA for the opportunity to be here today at the Annual Legal Forum.
bit.ly/2WAqFEW

Keynote Address of Commissioner Dan M. Berkovitz at the FIA Commodities Symposium, Houston, Texas; “Take It to the Limit, One More Time” (Again)[1]
CFTC
Good morning. Thank you for the warm welcome. I’d like to thank Mike Sorrell, Steve Adamske, and the FIA for inviting me to speak at this inaugural commodities symposium.
bit.ly/2WC66wQ

Investing and Trading

Are U.S. and UK Interest Rates About to Converge?
Erik Norland – CME Group
The UK and U.S. economies look similar in almost every respect except one: interest rates. The Bank of England (BoE) has short-term rates at 0.75% while the Federal Reserve (Fed) has them a 2.375% (Figure 1) Otherwise, both have exceptionally low unemployment (Figure 2), reasonably low core inflation (Figure 3) and an extremely flat Phillips curve (the Phillips curve states that inflation and unemployment have an inverse relationship) (Figures 4, 5 and 6), which imply that low unemployment is not generating inflation in either country.
bit.ly/2I8iMmg

Washington trims US corn harvest forecast after rainy spring
Gregory Meyer – FT
The US government predicted the lowest domestic corn crop in four years in its first estimates to account for relentless rains that delayed planting across the Midwest.
/on.ft.com/2WCU0nd

ESG groups try to thin a thicket of sustainability metrics; As Americans demand ‘inclusive’ capitalism, companies say they are drowning in surveys
Andrew Edgecliffe-Johnson – FT
Two of the leading initiatives trying to make corporate America pay more attention to sustainability and social issues are joining forces, in the hope of thinning a thicket of new metrics that companies say is overwhelming them with requests for information.
/on.ft.com/2WCt7Q5

Corporate defaults are picking up across the heartland of ; What traders call ‘credit events’ are no longer an infrequent occurrence
Robert Smith – FT
When Galapagos Group, a Mittelstand manufacturer of heat exchangers, announced plans to write off some of its debt on Friday, it did not grab any headlines. Nevertheless, the restructuring reverberated hundreds of miles away from Germany’s industrial heartland.
/on.ft.com/2WATMwG

Oil Demand Signals Are Flashing Red as Price Dives Toward $50
Alex Longley and Julian Lee – Bloomberg
Trade is waning, car sales are weak and plastics margins poor; Some analysts see oil demand growth at the slowest in 8 years
Oil demand is shriveling as the trade war between the U.S. and China trips up the global economy.
/bloom.bg/2WBg9Ce

Five Myths About Commodities Investing; It might be time to diversify your portfolio, but first, understand what you’re getting into
By Suzanne McGee – WSJ
Gold prices are hovering near 52-week highs, propelled upward by speculation that Federal Reserve policy makers will cut interest rates. Swine flu is wreaking havoc in China, the world’s largest pork producer, boosting prices for lean-hog futures. Corn and other agricultural commodities are trading at or near their three-year highs, thanks to cool, rainy weather in the U.S. and floods that have delayed planting and raised fears of meager harvests.
/on.wsj.com/2WAsd1I

Chinese Cash That Powered Silicon Valley Is Suddenly Toxic; As U.S. startups reject their money, Chinese venture-capital firms in U.S. are dialing back investments, structuring deals to avoid regulators or shutting down
By Rolfe Winkler – WSJ
Silicon Valley startup Pilot AI Labs Inc. signed a Chinese-backed venture-capital firm as its first big investor in 2015. By last summer, Pilot AI wanted it gone.
/on.wsj.com/2WBaV4u

Institutions

State Street’s ambitious front-to-back plans lure in Lazard Asset Management; Lazard Asset Management signs letter of intent to use State Street’s widely-discussed front-to-back investment servicing platform.
Jonathan Watkins – The Trade
State Street has entered into a letter of intent with Lazard Asset Management (LAM) to sign the firm up as a client of its front-to-back investment servicing platform.
bit.ly/2WF1CWe

Deutsche Bank Warns Clients They Could Be Cut Off in Compliance Effort; Latest Deutsche Bank letters seek documentation from around 1,000 investment-bank clients
Jenny Strasburg – WSJ
Deutsche Bank AG has given around 1,000 investment-banking clients a month or less to hand over company-ownership information and other documentation in the bank’s protracted effort to close compliance gaps, according to the bank and people familiar with the demands.
/on.wsj.com/2WFwLZo

Neil Woodford risks being kicked off listed namesake investment trust; Woodford Patient Capital has spoken to broker about ending fund manager’s contract
Peter Smith and Owen Walker – FT
Neil Woodford is at risk of being kicked off the listed investment trust that bears his name in a humiliating setback for the former star fund manager, who is clinging to the relics of an investment empire that boasted assets of more than £15bn two years ago.
/on.ft.com/2WCt5aV

The Woodford case highlights a global risk; Rules need tightening on open-ended funds holding illiquid assets
The editorial board – FT
The suspension of withdrawals from a star fund manager’s Oxford-based investment fund is not just an issue for UK investors, but should sound alarms across the global asset management industry. Neil Woodford’s Equity Income Fund invested partly in illiquid assets, compounding problems when too many investors, disappointed by underperformance, tried to pull their money out at the same time. The incident highlights the perils of liquidity mismatches when open-ended funds invest in unlisted assets while offering investors daily access to their money.
/on.ft.com/2WHasmb

Deutsche Bank grapples with capital raising to pay for cuts; German lender’s options to raise cash are limited as shares languish near record lows
Stephen Morris and Olaf Storbeck – FT
With Deutsche Bank’s share price languishing close to a record low after talks to merge with Commerzbank collapsed this spring, Germany’s biggest bank is going through one of the toughest moments in its 149-year history.
/on.ft.com/2WKdE0F

Woodford apologises to clients but defends ‘undervalued’ portfolio; Fund manager understood there had been ‘company specific issues within the portfolio’
Kate Beioley – FT
Neil Woodford has issued an emotive apology to clients in his gated £3.7bn Woodford Equity Income fund, admitting he had been unhappy with the performance “for some time” and promising a “more liquid portfolio” when the fund reopens.
/on.ft.com/2WzU7Qa

Ex-Deutsche banker ‘ruled the roost’ in Frankfurt, Euribor trial told
Kirstin Ridley – Reuters
A former senior Deutsche Bank banker, who “ruled the roost” in Frankfurt, was part of an elite group that gamed the global financial system, seeking an edge over counterparties in a five-year rate rigging plot, a London trial heard on Tuesday.
/reut.rs/2WyoqSz

Regions

Chinese Brokerage’s $2 Billion Offering Kick-Starts Stock Link With London; U.S. trade tensions have given Beijing more incentive to roll out the long-planned program after months of delay
Shen Hong – WSJ
Chinese brokerage Huatai Securities Co. 601688 -0.62% plans to raise as much as $2 billion selling London-listed share-backed instruments this week, reviving a delayed financial link between China and the U.K.
/on.wsj.com/2WHbLl5

Japan finance ministry says to halt Citi’s JGB primary dealing licence for 1 month
Reuters
Japanese Ministry of Finance will suspend Citigroup’s primary dealing licence for Japanese government bonds (JGB) for one month starting on June 13, it said on Tuesday.
/yhoo.it/2X3uNle

Brexit

Boris Johnson warns of no-deal Brexit ó latest news
FT
PM Theresa May is facing MPs in the Commons after Boris Johnson launched his campaign to replace her. The favourite to become the next Conservative leader said that the UK needed to prepare for a no-deal Brexit on October 31 even though he did not think it would happen.
/on.ft.com/2WC3AGE

Miscellaneous

Economist Martin Feldstein Has Died at Age 79; Feldstein was chairman of the Council of Economic Advisers from 1982 to 1984 under President Reagan
By Harriet Torry – WSJ
Martin Feldstein, a top adviser to presidents and one of the most influential academic economists of his generation, died Tuesday at the age of 79.
/on.wsj.com/2WB9XFw

The media has a big problem, Reuters Institute says: Who will pay for the news?
By Guy Faulconbridge – Reuters
News organisations are being challenged by technology giants and unsettled by a broader lack of trust but they have a much deeper problem: most people don’t want to pay for online news, the Reuters Institute found.
/reut.rs/2Wy7CLm

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