What France—Yes, France—Can Teach the U.S. About Free Markets

Sep 4, 2019

First Read

Hits & Takes
JLN Staff

The Cboe 7-Day AMERIBOR Futures traded 62 contracts yesterday and the Cboe Three-Month AMERIBOR Futures traded 54 contracts.~JJL

CME Group’s Micro E-Mini Equity Index futures continue to impress. August average daily volume in the product group was 854,000 contracts, almost double the monthly average since the May launch.~JK

OCC reported that total cleared contract volume in August was 478,561,649 contracts, a 10.3% increase from a year earlier and the highest total volume for August since 2011.~JK

TP ICAP has appointed former CFTC Director, Division of Market Oversight Amir Zaidi as global head of compliance. Congratulations to Amir on the new job.~JJL

Former NYSE communications executive Katrina Clay is now vice president media relations at Morgan Stanley.~JJL

Joe Campagna is now COO at MaterialsXchange, a new start-up.~JJL

According to data from Refinitiv, European companies raised a record EUR10.6bn of venture capital in H1 2019, up 61% year-over-year. This record was set despite the number of deals decreasing 7% year-over-year.~SD

The Eurex Roadmap event is Thursday, September 19, 2019 from 3:30 p.m. to 6:30 p.m at Convene (Room: Gallery – 2nd floor), 311 West Monroe Street in Chicago. Eurex Exchange and Eurex Clearing will discuss their market models and improved solutions for trading and clearing members. Click HERE To Register.~JK

Andrew Hecht has an analysis on ICE on SeekingAlpha titled “The Intercontinental Exchange: A One-Way Street.”~JJL

The CME Group is looking for a “Senior Corporate Marketing and Event Management Specialist” in New York.~JJL

The CME CF Bitcoin Reference Rate and Real-Time Index via CME Bitcoin futures are now reflecting price data from Gemini.~JJL

We hope to publish the first video from the Open Outcry Traders History Project this week. First up will be Leo Melamed.~JJL


OCC Strengthens Financial Resiliency With New Capital Management Policy


In the past few years, OCC has taken steps to strengthen its resilience through a variety of activities including increasing headcount, working to revamp the clearinghouse’s technology stack and altering margin methodologies, to name a few. In this video, OCC Executive Vice President and Chief Operating Officer Scot Warren talks about the OCC’s new capital management policy. It was recently re-submitted after the prior policy was disapproved by the SEC at the beginning of 2019.

Watch the video »


CME Group Reaches Second-Highest Monthly Volume Ever, Averaging 24.3 Million Contracts Per Day in August 2019
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, reached average daily volume (ADV) of 24.3 million contracts during August 2019, up 53% from August 2018 and the second-highest monthly ADV on record. During a month that historically sees lower average daily volumes, August 2019 was the company’s best August ever. Open interest (OI) at the end of August was 139 million contracts, up 21% from year-end 2018 and up 14% from August 2018.

***** CME continues to reach higher and farther.~JJL


On days when President Trump tweets a lot, the stock market falls, investment bank finds
Thomas Franck – CNBC
If President Donald Trump wants to keep his strong stock market gains, he may want to stay off Twitter.
Days when Trump tweets a lot are associated with negative stock market returns, Bank of America Merrill Lynch said Tuesday in a report.

***** Is there a Presidential Tweet Volatility Index I can trade?~JJL


Tuesday’s Top Three
Our top story coming off the break was John Lothian’s JLN column A Fictional Account of the Results of Supporting Open Outcry. Second was The Wall Street Journal’s The U.S. Wants to Adopt a Cap-and-Trade Plan for Water That Isn’t Working. A misleading headline can only get you so far here. The US water market referred to is actually three local markets in California, Nevada and Arizona. But hey, there you have it – a US market based on localized water sources. Third was Bloomberg’s Negative Interest Rates Threaten the Financial System, an interesting look at various impacts on pensions and valuations.


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Lead Stories

What France—Yes, France—Can Teach the U.S. About Free Markets; From cellphones to airfares, competition has risen in Europe but shrunk in America
Greg Ip – WSJ
When Thomas Philippon moved to the U.S. in 1999 to pursue graduate studies, he found internet service, cellphone plans and airfares all cost less than in his native France. Two decades later, he observes, they are cheaper not just in France but throughout Europe and Asia.

Thinning Liquidity Adds to Headaches for Traders; As summer wanes, assets from stocks and bonds to currencies and derivatives are hard to trade
Gunjan Banerji and Amrith Ramkumar – WSJ
Investors already preoccupied with the trade battle between the U.S. and China and the prospect of a recession have another frustration: thinning liquidity.

Deutsche Bank CEO Says Negative Rates Ruin Financial System
Steven Arons and Nicholas Comfort – Bloomberg
Banks in Europe have urged ECB to offset impact of another cut; Sewing says another rate cut is unlikely to help the economy
Deutsche Bank AG Chief Executive Officer Christian Sewing warned that more monetary easing by the European Central Bank, as widely expected next week, will have “grave side effects” for a region that has already lived with negative interest rates for half a decade.

How Malaysia’s 1MDB Scandal Shook the Financial World
Shamim Adam, Laurence Arnold, and Yudith Ho – Bloomberg
Malaysia’s state-owned investment fund, 1MDB, was supposed to promote development. Instead, it has spurred criminal and regulatory investigations around the world that have cast an unflattering spotlight on deal-making, election spending and political patronage under former Prime Minister Najib Razak. The figures are mind-boggling: Of the $8 billion that 1MDB raised via bond sales, the U.S. alleges more than half was siphoned off. Angry voters ousted Najib in a 2018 election that ended his party’s 61 years of rule. A series of trials on corruption and other charges has begun in Malaysia and U.S. prosecutors have implicated at least three senior bankers from Goldman Sachs Group Inc., one of whom admitted to bribery. Malaysia has also filed criminal charges against the U.S. bank and more than a dozen current and former employees.

How U.S. Banks Took Over the World; A decade ago, they almost brought down the global financial system. Now they rule it.
Liz Hoffman and Telis Demos – WSJ
When two of Europe’s corporate titans sat down to negotiate a merger this year, they called American banks. Fiat Chrysler Automobiles hired Goldman Sachs Group Inc. GS -2.42% as its lead adviser. France’s Renault SA hired a boutique bank stacked with Goldman alumni. In a deal that would reshape Europe’s auto industry, the continental banks that had sustained Fiat and Renault for more than a century were muscled aside by a pair of Wall Street deal makers.

Eurex temporarily waives fees for RFQ trades via EnLight platform; Requesters on Eurex EnLight will have transaction fees temporarily waived between 1 September until the end of this year.
Hayley McDowell – The Trade
Eurex has introduced a fee waiver for its request for quote (RFQ) platform, EnLight, aiming to encourage more trading activity.

Goldman’s Coder-in-Chief Ditches Wall Street for California Sunshine; Martin Chavez typified the new breed of engineers ruling the financial industry, overseeing the firm’s push to digitize
Liz Hoffman – WSJ
Martin Chavez began planning his escape from Wall Street in January. Weary of the New York winter, the Goldman Sachs Group Inc. trading executive retreated to his vacation home in the Berkshires, bought a white board at Target and sketched out his next chapter, named in order of his priorities: Operation Kids, Freedom & Sunshine.

Investors seek sustenance in alternative proteins; Growing awareness of meat’s environmental impact is feeding demand elsewhere
Emiko Terazono – FT
Global investors are showing greater interest in alternative proteins, such as plant-based substitutes and lab-grown meat, as the climate impact of agriculture and food production comes under the spotlight.

Businessman Michael Spencer builds up stake in broker Numis; Entrepreneur attracted by low share price and ‘quality’ of business
Cat Rutter Pooley and Philip Stafford – FT
British businessman Michael Spencer has built up a 6 per cent stake in City broker Numis Securities, a decade after he sold out of the company he once chaired.

Hong Kong chief Carrie Lam formally withdraws extradition bill; Leader’s announcement marks first concession to protesters after weeks of violent clashes
FT Reporters
Hong Kong chief executive Carrie Lam has withdrawn the controversial extradition bill that sparked three months of fierce protests in the city, in a move that was quickly met with resistance from pro-democracy activists.

The Big Short’s Michael Burry Explains Why Index Funds Are Like Subprime CDOs
Reed Stevenson – Bloomberg
Investor from ‘The Big Short’ is worried about passive funds; ‘The longer it goes on, the worse the crash will be’
For an investor whose story was featured in a best-selling book and an Oscar-winning movie, Michael Burry has kept a surprisingly low profile in recent years.

Exchanges, OTC and Clearing

CME Group to Launch SOFR Options on January 6, 2020
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it will launch options on Three-Month Secured Overnight Financing Rate (SOFR) futures starting on Jan. 6, 2020, pending regulatory review.

Eurex incentivizes Eurex Enlight with temporary fee waiver
To foster transparency and to improve efficiency around the negotiation of off-book transactions, Eurex has introduced a fee waiver for its fully integrated RFQ platform Eurex EnLight which will be effective until 31 December 2019.

Eurex figures upward trend continues: Eurex Exchange up by 22 percent in August
Eurex, Europe’s largest derivatives exchange and part of Deutsche Börse Group, saw a double-figure increase year-on-year in August. The number of traded contracts reached 156.4 million compared to 127.9 million in August 2018, an increase of 22 percent.

The Saga of the EDGX Retail Priority Order
Themis Trading Blog
We recently filed a comment letter with the SEC concerning a Cboe EDGX proposal which aimed to add a new Retail Priority Order. Our main concern with this order type was the information leakage that would occur on the exchange proprietary data feeds since the retail priority orders would be designated with a special identifier.

Adjustment of Yanzhou Coal Structured Products, Futures and Options
Hong Kong Exchanges and Clearing Limited (HKEX) has announced the arrangements for the adjustment to Yanzhou Coal Mining Co Ltd (Yanzhou Coal) structured products, futures and options to account for Yanzhou Coal’s issuance of special dividend.

HKEX to Invest in Data Technology Firm
Hong Kong Exchanges and Clearing Limited (HKEX) is today (Wednesday) pleased to announce that it has signed a letter of intent to acquire a minority stake in a Beijing-based data technology company, Huakong TsingJiao Information Science (Beijing) Limited (TsingJiao). The proposed deal is part of HKEX’s strategic focus on developing its data and technology offering.

Ag barometer declines sharply as commodity prices weaken; majority of farmers expect MFP payments in 2020
CME Group
The Purdue University/CME Group Ag Economy Barometer weakened significantly in August to a reading of 124, down 29 points from July. The barometer is based on a mid-month survey of 400 agricultural producers across the U.S. and was conducted between August 12 and August 20, 2019, with nearly all of the responses collected following USDA’s release of the August 12 Crop Production report.

Update of ETF Market Making Incentive Scheme Version 2.0
Tokyo Stock Exchange, Inc. (TSE) introduced an ETF Market Making Incentive Scheme in order to improve liquidity in the ETF market in July 2018. Thereafter, TSE launched ETF Market Making Scheme Version 2.0 (Ver.2.0) in April 2019 and will now be updating said scheme on October 1, 2019.

Equities Trading Services
Overview arrowhead & ToSTNeT How to start trading on JPX List of ISVs (current system) List of ISVs (arrowhead upgrade) ISVs which develop or provide systems or terminals, etc. for each of TSE trading system are listed below. Please note that this list only includes ISVs who wish its name to be posted on the website and have passed the test specified by TSE, and is not a comprehensive list of all available ISVs.

ToSTNeT Trading Information – Super-Block Execution of Single-Issue Trading
This page contains information on trading whose trading value is JPY 5 billion or higher in single-issue trading (ToSTNeT-1) (excluding trading for which both sale and purchase are entrusted by customers). The following table lists will be posted for 2 weeks.

Euronext FX Secures Former Citi Director as Sales Director; Kelly Yount joined the company last month.
Celeste Skinner – Finance Magnates
Pan-European company Euronext has managed to secure former director at Citi as its Sales Director for its foreign exchange (forex) operations, Kelly Yount, Finance Magnates has learned. The move was made public via Yount’s LinkedIn profile, which reveals that she has taken on the new position in August of this year and is based in New York in the United States.

MGEX Reports a Top-5 Record Breaking Month
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports August 2019 as the fourth best month in the history of the Exchange with a total of 283,743 contracts traded. This is the fifth consecutive August to hold a spot in MGEX’s record book for best overall month, and the second-best August in history.

OCC August Cleared Volume Up 10.3 Percent; Futures Cleared Volume Up 23.7 Percent from a Year Ago
Index Options Up 19.6 Percent from August 2018; ETF Options Up 31.5 Percent from August 2018
OCC, the world’s largest equity derivatives clearing organization, announced today that total cleared contract volume in August reached 478,561,649 contracts, a 10.3 percent increase compared to last August, and the highest total volume for August since 2011. OCC’s year-to-date average daily cleared contract volume is 19,672,145, down 3.2 percent compared to 2018’s record-breaking pace.

EEX and Powernext intend to offer power derivatives and gas markets under one Exchange license, European Energy Exchange AG, press release –


Accion Venture Lab Launches New Fund, Quadruples Capital for Inclusive Fintech Startups
Yahoo Finance
Today, global nonprofit Accion announced that its seed-stage investment initiative Accion Venture Lab is adding $33M to its initial capital pool, with the launch of a new $23M fund and an additional, separate $10M investment from Accion. The new fund brings together a group of third-party impact and commercial investors that share Venture Lab’s commitment to innovative fintech startups that leverage technology to increase the reach, quality, and affordability of financial services for the underserved at scale.

Former Head of Equity Derivatives Trading at Standard Chartered Joins Fintech PremiaLab
Yahoo Finance
PremiaLab, the Fintech platform for Risk Premia Strategies, has today announced the appointment of Dr. Georgios Sittas as Managing Director, Head of Risk Solutions to lead its key products expansion linked to risk solutions. Dr. Sittas as previously served at Lehman Brothers and HSBC as Head of Investment Solutions Trading in London and then Head of Index & Structured Products Trading, Head of Equity Derivatives Trading and Head of Funds and Structured Solutions at Standard Chartered Bank in Hong Kong.

Hong Kong Relaxes Rules To Hike FinTech Lending
The Hong Kong Monetary Authority has, as finews.asia reported this past week, amended its credit risk management guidelines in a way that seeks to boost the embrace of analytics when lending to smaller firms.

BOJ’s Kuroda sees ‘new sources of growth’ in bank-fintech teamwork
Nikkei Asian review
Bank of Japan Gov. Haruhiko Kuroda on Wednesday emphasized the potential growth that banks and fintech companies can spark if they work together, acknowledging the expanding role of financial services provided by companies outside the conventional banking industry.


‘Big 4’ Auditor PwC’s Luxembourg Office to Accept Crypto Payments
Daniel Kuhn – Coindesk
“Big Four” auditing firm PwC’s Luxembourg branch will accept cryptocurrency payments from clients starting next month. The move, announced Monday, is a response to client demand and demonstrates PwC Luxembourg’s belief in blockchain technology’s “medium to long-term” role in the economy, the firm said.

Cryptocurrency traded volume dries up in August
Larry Cermak – The Block
Traded volume on spot cryptocurrency exchanges hit a 5-month low of $55 billion in August. August seems to be the first month in the last three years when there is a significant discrepancy between volume and price. Coinbase, bitflyer, and Bitstamp have grown the fastest in 2019; Bitfinex and Bittrex the slowest Based on both the falling spot and derivatives volume, the market doesn’t seem to be in the best shape at the moment.

Huobi backs blockchain smartphones for cryptocurrency traders, purchasable with Huobi Token
Celia Wan – The Block
Huobi, one of the most popular cryptocurrency exchanges, is backing a blockchain project that manufactures blockchain smartphones which can be purchased with Huobi Token. The smartphones are issued by blockchain project Whole Network, which is partly funded by Huobi’s venture capital arm Huobi Capital. The network’s native token, NODE, will also be listed on Huobi Prime, Huobi’s initial exchange offering (IEO) platform, according to a company statement.

Amazon Will Likely Announce Cryptocurrency to Threaten Facebook’s Libra: Report
Tolu Ajiboye – Coinspeaker
Even though Amazon is yet to announce any plans for its own digital assets, a new report which surveyed opinions from several analysts, has claimed that Amazon is very likely to announce a Libra competitor.

As Bitcoin Sharply Rebounds, Ripple Is Tearing Itself Apart Over XRP
Forbes – Billy Bambrough
Bitcoin has swung higher after a sudden sell-off last week, climbing back above the psychological $10,000 per bitcoin mark.

Bitcoin’s Total Share of Crypto Market Now Highest Since March 2017
Omkar Godbole – Coindesk
Bitcoin’s price recovery from the Aug. 29 low of $9,320 is backed by an uptick in the dominance rate to 30-month highs. Weak trading volumes, however, indicate the recovery could be short-lived and a fall back to $9,750 could be in the offing in the next day or two. Weekly chart indicators continue to call a bearish move.

Santiago Stock Exchange Set to Partner in Blockchain Consortium
Omar Faridi – EthereumWorldNews.com
A new blockchain project is being launched to help stabilize and improve Chile’s stock market and attract foreign investors. The Santiago Stock Exchange (STE), Central Securities Depository (DCV), and the Global Trade Directory (GTD) are set to establish a blockchain association, in order to work on a Hyperledger blockchain initiative. This, according to a BNamericas report, released on August 27, 2019.

Why the Marshall Islands Is Issuing Its Own Cryptocurrency
David Paul – Coindesk
This essay is presented as a part of No Closing Bell, a series leading up to Invest: Asia 2019 focused on how the Asian crypto markets are interacting with and impacting global investors. To keep the conversation going in person, register for Invest: Asia 2019 coming up in Singapore on Sept. 11-12.

TomoChain And The Race To Crypto Mass Adoption
Joresa Blount – Forbes
The underlying complexity and lack of general familiarity with cryptocurrencies have made onboarding mainstream users to the crypto space one of the industry’s most formidable challenges. The promise of decentralized applications and the use of cryptocurrencies as mediums of exchange have made some headway, but there are still technical problems that cause friction with the end-users’ experiences.

Norwegian Bank Invests in Crypto Exchange Founded by Airline Magnate
Daniel Palmer – Coindesk
A Norwegian savings bank dating back to the mid-1800s has just invested in a cryptocurrency exchange set up by local business magnate Bjørn Kjos.


Trump Says China Will Suffer as Data Shows Trade War Hurting U.S.
Ana Swanson – NY Times
President Trump said on Tuesday that Chinese manufacturing would “crumble” if the country did not agree to the United States’ trade terms, as newly released data showed his trade war was washing back to American shores and hurting the factories that the president has aimed to protect.

The Trump Voters Whose ‘Need for Chaos’ Obliterates Everything Else; Political nihilism is one of the president’s strongest weapons.
Thomas B. Edsall – NY Times
Over the four years during which he has dominated American political life, nearly three of them as president, Donald Trump has set a match again and again to chaos-inducing issues like racial hostility, authoritarianism and white identity politics.

Markets warm to idea of a Labour government; Risks attached to no-deal Brexit test age-old assumption of ‘Tories Good, Labour Bad’
Katie Martin – FT
Markets are warming towards Jeremy Corbyn. Yes, you read that right. In a sign of just how unpredictable UK markets have become, analysts are starting to believe that the diehard socialist leader of the Labour party could be just what sterling needs in this, its darkest hour.

The U.S.-China Endgame Is Getting Harder to Visualize
Bryce Baschuk – Bloomberg
The economic fallout of President Donald Trump’s trade war is becoming easier to see. The endgame — not so much.

What I Meant When I Said ‘Don’t Enable Trump’; The Fed should push back to encourage better policy, not stand by and allow a recession.
Bill Dudley – Bloomberg
My Bloomberg Opinion article from last week, titled “The Fed Shouldn’t Enable Donald Trump,” elicited an intense and often critical reaction. To provide context and address any misunderstanding, I believe some further explanation is warranted. Here are answers to what I see as the most relevant questions.

Dudley Tells The Fed To Go Kill Itself
Milton Ezrati – Forbes
Bill Dudley has just told the Fed to kill itself. This recently retired president of the Federal Reserve Bank of New York, now a research scholar at Princeton University, did not explicitly advise suicide. He simply wants the Fed to throw away about a century of conducting policy independently and apart from partisan politics. He wants it now to make policy with an eye to denying Donald Trump re-election, because, he says, Trump is “a threat to the U.S. and global economy.” Even if that were true, his recommendations would undermine the Fed’s prestige and cause it to lose its much-coveted independence, in other words, cease to be the institution this country and the world have known for about one hundred years.

How Bad Can a Trade War Get? The Trump China policy has fixed no problem, but the recovery can survive it.
Holman W. Jenkins, Jr. – WSJ
For the 2020 election, the big question is: Can the decoupling of the U.S. economy from China take place without tanking the U.S. economy? It’s not impossible. After all, other low-wage countries are eager to take over China’s role and keep the products flowing (no, those jobs won’t be coming to the U.S.). Apple may have a big adjustment to make but also has big profit margins to absorb the cost. China still wants American technology. Boeing jetliners won’t be easily replaced. If China buys Brazilian soybeans, Brazil’s existing customers will have to buy soybeans elsewhere. For these reasons, I suspect a decoupling in U.S.-China trade relations would be less damaging, say, than any that might follow from Mr. Trump’s occasional threats to impose heavy tariffs on Japan and Europe to blow up the supply chains of an integrated world-wide auto industry.

Donald Trump isn’t up to the job
Jill Filipovic – CNN
Hurricane Dorian spent much of the weekend stalled over the Bahamas, where it ceaselessly battered the islands with 110 mph winds and inundated it with floodwaters, destroying homes and livelihoods. At least five people died. Forecasters say it could turn towards the East Coast next.


SEC probe taps incoming Caesars Entertainment chief
Josh Kosman – NY Post
Tom Reeg, the soon-to-be head of Caesars Entertainment, has been slapped with a subpoena in a Securities and Exchange Commission trading probe, The Post has learned.

Whistleblower alleges ethics breach at FMSB
Antonia Cundy and Izabella Kaminska and Claire Jones – FT
A whistleblower has accused top executives at the body set up by the Bank of England to guide financial market behaviour of perverting the course of justice, alleging that they put pressure on him not to testify as an expert witness in a case against a member bank.

ASIC cancels AFS licence of Perth-based Platinum Perpetual Global Private Wealth
ASIC has cancelled the Australian financial services licence of Platinum Perpetual Global Private Wealth Pty Ltd, based in Perth (AFSL 508415).

ASIC sues Bendigo and Adelaide Bank for use of unfair contract terms
ASIC has commenced proceedings in the Federal Court of Australia against Bendigo and Adelaide Bank concerning unfair contract terms in small business contracts.

ASIC sues Bank of Queensland for use of unfair contract terms
ASIC has commenced proceedings in the Federal Court of Australia against the Bank of Queensland concerning unfair contract terms in small business contracts.

ESMA Newsletter – Nº7
ESMA’s newsletter is back, we hope you all had a relaxing summer as we look ahead to a busy September. This month, two important consultations will close and the application deadline for data experts to join our industry advisory group is approaching. Also, in our seventh edition, we catch up on the full list of publications from July and August and highlight where ESMA staff will be speaking this month.

Rule Submission: National Futures Association: Proposed Amendments to NFA Compliance Rule 2-29: Communications with the Public and Promotional Material, NFA Compliance Rule 2-36: Requirements for Forex Transactions, Related Interpretive Notices and other Technical Amendments to NFA Requirements

BDCs increase pressure on SEC for reporting exemption
David Brooke – Reuters
Business development companies (BDCs) are becoming increasingly vocal as they look to push the Securities and Exchange Commission (SEC) to exempt the industry from reporting requirements that they argue are curtailing the liquidity in the market and limiting its potential for growth.

New York Fed Lays Out Projections for Future of Fed Holdings; Central bank’s holdings of assets and bonds could again increase sometime between later this year and 2025
Michael S. Derby – WSJ
The Federal Reserve’s balance sheet, which has recently stopped shrinking, may once again start growing later this year, the Federal Reserve Bank of New York said Tuesday.

Investing and Trading

Investors May Regret Believing Hong Kong’s Crisis Is Over; The extradition bill that sparked the protests wasn’t the underlying cause of the protests, and its withdrawal isn’t guaranteed to end them
Mike Bird – WSJ
Hong Kong Chief Executive Carrie Lam ‘s unpopular extradition bill is a symptom of the city’s political problem, not a cause. Investors are in for a shock if protesters aren’t satisfied with its long-awaited withdrawal.

Central banks are locked in currency wars they cannot win; Lowering interest rates to support economies has created a domino effect
Seema Shah – FT
Negative-yielding bonds are taking on an ever-greater chunk of the global fixed income universe and are still failing to lift economic activity. But the market continues to call for monetary policy easing from the European Central Bank and the Federal Reserve. It is not clear why central banks continue to acquiesce.

How to Find Meaning Amid the Market’s Sense of Impending Doom; It’s hard to understand how the sense of dread that has driven bond yields lower hasn’t infected stocks more broadly
James Mackintosh – WSJ
This column has been trying to make sense of the apparent disconnect between the fear on display in the bond market and the high levels of the S&P 500 for months. August seems to have severed the ties between stocks and bonds almost entirely, with long-dated bonds metaphorically screaming in panic, while the S&P lost less than 2%.

Bundesbank opposes banning banks from charging savers negative interest rates
Frank Siebelt, Hans Seidenstuecker – Reuters
Germany’s central bank does not want banks banned from charging retail customers negative interest rates to improve profitability, an official said.

Deere Sells 30-Year Corporate Bonds at Record Low Yields; Treasury yields dropped sharply on weak manufacturing data
Sam Goldfarb – WSJ
Deere DE -2.64% & Co. sold 30-year bonds at a record low yield for U.S. corporate debt of that maturity on Tuesday, seizing on tumbling U.S. Treasury yields to lock in favorable interest rates.


Goldman Sachs veteran and global equities trading co-head Chavez to retire; After 19 years, Goldman Sachs veteran Martin Chavez will retire at the end of the year.
Hayley McDowell – The Trade
Goldman Sachs veteran and global co-head of the trading division, Martin Chavez, is set to leave the bank after 19 years.

RBS to take up to £900m hit from late PPI claims; Provision to wipe out up to a third of UK lender’s annual profits
Nicholas Megaw – FT
A late spike in complaints about mis-sold payment protection insurance will wipe out up to a third of Royal Bank of Scotland’s annual profit, the state-owned lender warned.

JPMorgan Says China to Be Included in Benchmark Bond Indexes
Gregor Stuart Hunter and Tian Chen – Bloomberg
Move follows Bloomberg Barclays, which added China in April; JPMorgan to start phased-in inclusion from February 2020
JPMorgan Chase & Co. will start a phased inclusion of Chinese government bonds into some of its benchmark indexes, potentially ushering in a fresh wave of inflows into the world’s second-largest bond market.

A European bank gets paid to borrow
Thomas Hale
One of the common complaints about negative rates is that banks can’t pass them on to retail depositors, for now at least. But there are other people willing to pay to lend to a bank.


AxeTrading appointed technology partner for $217 billion Indonesia bonds market; AxeTrading will provide technology to the Indonesia Stock Exchange as it implements a new electronic bond trading platform.
Hayley McDowell – The Trade
The Indonesia Stock Exchange (IDX) has appointed AxeTrading as its technology partner for the Indonesian bond market, as the exchange group prepares to deploy a new electronic bond trading system.

Argentina’s political uncertainty is stoking financial fears; Capital controls and debt ‘reprofiling’ can only do so much
Andrew Cummins – FT
Politics hates a vacuum; capital markets even more so. Argentina is suffering a confidence-driven liquidity crisis in the uncertain lead up to October 27 presidential elections.

Norway’s $1 Trillion Wealth Manager Vows to Stick to U.K. ‘No Matter What’
Jonas O Bergman – Bloomberg
The man managing Norway’s $1 trillion wealth fund is looking beyond the current political turmoil, vowing to invest in the U.K. “no matter what” and planning to plow another $100 billion into the U.S. stock markets.

A $20 Billion Fund in Denmark Is Dumping 10 Major Oil Companies
Mikael Holter and Christian Wienberg – Bloomberg
A $20 billion fund in Denmark, MP Pension, is selling its stakes in the 10 biggest oil companies after deciding they haven’t done enough to live up to climate goals set out in the Paris accord.


Scottish court rules in British PM Boris Johnson’s favour in parliament suspension case
Michael Holden – The Globe and Mail
Prime Minister Boris Johnson’s decision to suspend parliament later this month until shortly before Britain leaves the European Union is lawful, a Scottish court ruled on Wednesday, saying the matter was not one for judges to decide.

U.K.’s Super-Rich Prepare to Flee From Corbyn Rule, Not Brexit
Benjamin Stupples and Edward Robinson – Bloomberg
No-deal Brexit? That’s no problem, at least for Britain’s wealthiest people. Their bigger fear is leftist firebrand Jeremy Corbyn.

The Great Brexit Purge Rips Apart U.K. Tories
Tim Ross – Bloomberg
Boris Johnson has only been prime minister for six weeks. He might not last another six.

John Lothian Newsletter

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Japan Exchange Appoints Hiromi Yamaji as Head of Tokyo Bourse

Japan Exchange Appoints Hiromi Yamaji as Head of Tokyo Bourse

First Read $29,676/$300,000 (9.9%) Gabriella Kusz and Patrick Troy ++++ Hits & Takes John Lothian & JLN Staff The artist who deposited an illegal charging bull sculpture in lower Manhattan has died at the age of 80. Arturo Di Modica, the Sicilian-born sculptor...

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