First Read
Hits & Takes
JLN Staff
A number of CME disciplinary notices hit the wire yesterday, most pertaining to violations of Rule 575.A. (Disruptive Practices Prohibited). One individual, another individual and a brokerage were penalized for spoofing-related activity (entering and canceling orders to get a fill on the other side or to determine depth of book). Another notice was for misreporting block trades. Lastly, there was a fine assessed to JPMorgan for a nat gas position limit violation. ~SD
Eurex held a technology and regulatory update in Chicago yesterday. The room was full during the trading engine updates, less so for the clearing updates. The key terms of the day were T7, C7 and EnLight. The event was deep in the weeds, but presented well in a team effort and done efficiently.~JJL
Sometimes there is reputational risk with some investors.~JJL
Who knew crypto infrastructure runs through…Milwaukee. Stay tuned for a column on Coingy which provides trading connectivity to about 40 different crypto exchanges.~JK
Should weather forecasts be free? Trump’s pick to lead NOAA, AccuWeather’s general counsel Barry Myer, apparently does not think so.~JB
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FIA IDX 2018 – TT’s Biondo Says AI Can Tackle Spoofing And More
JohnLothianNews.comIt’s been eight months since Trading Technologies purchased AI-driven regulatory software firm Neurensic. Since then the firm has integrated the software into the TT platform and rebranded the service as TT Score. Jay Biondo, product manager, surveillance at Trading Technologies, spoke with John Lothian News at the FIA IDX 2018 conference about how the technology can be adapted to multiple market users from trading firms to regulators.
The software is designed to find and alert firms of trading patterns that may be questionable or potentially illegal. Biondo said the firm is looking to ramp up alerting with a method called “micro-batching” so firms can react faster and comply with the host of new regulations in the US and Europe. The software is designed to pick up trading activity such as spoofing, but is being expanded to identify other patterns as well.
Watch the video and read the rest here »
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Crypto Coins Surge as SEC Spares Ether From Securities Rules
Benjamin Bain and Lily Katz – Bloomberg
Ether investors got a reprieve Thursday when a top U.S. regulator said transactions involving the token aren’t subject to federal securities rules, ending months of speculation that had weighed on the second-most valuable digital currency. Ether and other coins surged on the news.
/bloom.bg/2JKWeWO
****The SEC statement clears the way for Cboe to get into the ether futures game, according to Cboe President Chris Concannon. Cboe has been consistent in its messaging – it wants to host a full crypto trading ecosystem. ~SD
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Here’s the real reason hedge funds give you ideas, according to Harvard
Graham Rapier – Business Insider
Hedge funds love to pitch stocks to investors. But new research published this spring by Harvard Business School researchers has found that most of them tend to exit their positions right after pitching them to fellow investors at conferences
/jlne.ws/2JR9JEr
***** Buy the rumor, sell the fact. And sell the fact the stock is being featured at a conference.~JJL
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Wall Street worker trades in finance job to write young adult fiction
Ryan Bergeron – CNN
Wall Street trader writes off job stress and becomes young adult author; He began writing to relieve stress, eventually turning it into a new career
In December 2015, Chris Babu suddenly became very ill. For weeks, he was dizzy, nauseated and couldn’t ride the subway without feeling like he was going to pass out or be sick. One doctor thought he might have a parasite, but the treatment didn’t work.
/jlne.ws/2tc4Qif
*****Been stressed. Have not written the book yet. Still germinating in my head.~JJL
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Thursday’s Top Three
Our top three stories yesterday were all about speed. The most read piece was the Wall Street Journal’s Study Finds ‘Speed Bumps’ Help Protect Ordinary Investors. Second went to Business Insider’s article on the fast growing firm Robinhood, with Robinhood to target serious traders with options trading exploding. And third was about bringing Chicago’s 19th Century transportation into the 21st century with Bloomberg’s piece Elon Musk’s Boring Co. Wins Chicago Airport High-Speed Train Bid
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MarketsWiki Stats
127,960,310 pages viewed; 23,163 pages; 213,439 edits
MarketsWiki Statistics
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Lead Stories
Wall Street wants more female traders, but old perceptions die hard
Anna Irrera – Reuters
As a biomedical engineering student at Duke University, Priya Karani thought she did not have the right skills to break into the heavily male-dominated field of Wall Street trading.
/jlne.ws/2taApJu
The EU Is Emerging as the New Sheriff for Global Financial Markets; Brussels throws its weight around.
Silla Brush, Viren Vaghela – Bloomberg
From its Chicago headquarters, CME Group Inc. offers options, swaps, and futures contracts designed to help investors mitigate the potential fallout from, say, a failed gold mine in Africa, a spike in Mexican interest rates, or an oil spill in the North Sea. Today the company itself faces growing risk from an unexpected quarter: Brussels.
/jlne.ws/2JQYsUZ
Trump Insiders Seek Pardon for ‘Junk Bond King’ Michael Milken
Greg Farrell, Katherine Burton and John Gittelsohn – Bloomberg
Scaramucci, Mnuchin, Kushner taking up a decades-long push; Judge who oversaw Milken matter now presiding in Cohen case
Some of President Donald Trump’s closest confidants have urged him to pardon Michael Milken, the 1980s “junk bond king” who has unsuccessfully sought for decades to reverse his securities fraud conviction, according to people familiar with the matter.
/jlne.ws/2JPNIpQ
Stock Flows Haven’t Been This ‘America First’ Since Trump Won
Todd White – Bloomberg
U.S. equity funds see longest inflow streak since 2016: EPFR; Country’s bond funds also added cash while EM suffers outflows
Clinging to their own version of “America First,” global investors are tilting further away from European and Asian assets.
/jlne.ws/2taYYWJ
U.S. SEC official says ether not a security, price surges
Anna Irrera – Reuters
The price of ether rose on Thursday after a senior official at the U.S. Securities and Exchange Commission stated that the cryptocurrency was not a security, thus exempting certain transactions in the token from federal securities laws.
/jlne.ws/2JO8yFO
Fed Caps How Much Giant Banks Can Be Each Other’s Customers
Jesse Hamilton and Reade Pickert – Bloomberg
Rule would limit a bank’s exposure to any single counterparty; Long-awaited Wall Street constraint required by Dodd-Frank
The Federal Reserve is imposing limits on big banks’ credit exposure to one another with a new rule, though their interactions have already declined and the rule has been eased so much that all of Wall Street is already generally in compliance.
/jlne.ws/2JNYcpE
Financial Services Committee Unanimously Passes Hultgren’s Options Markets Stability Act
Congressman Randy Hultgren Press Release
Today, the House Committee on Financial Services unanimously passed H.R. 5749, the Options Markets Stability Act. The legislation authored by U.S. Rep. Randy Hultgren (IL-14) would facilitate liquidity in options markets by calling on bank regulators to provide targeted capital relief.
/goo.gl/a3Li2m
****Huge for the options industry – capital requirements were the topic du jour at the Options Industry Conference.~SD
Behemoths Have Dominated the Market Before, but Tech Is Different; That big tech companies now dominate the stock market isn’t cause for alarm, but the risks are worth noting
James Mackintosh – WSJ
As the race to become the first company worth $1 trillion enters the final lap, technology monopolies are dominating the stock market. The five biggest companies by market value are U.S. tech stocks: Apple , Amazon, Alphabet , Microsoft and Facebook . Between them they accounted for more than a third of the $2.7 trillion increase in value of the S&P 500 in the past 12 months.
/jlne.ws/2JQW5S5
Young, Female, and Smarter Than Their Bankers; The old private banking model of pushing IPOs or junk bonds doesn’t cut it.
Nisha Gopalan – Bloomberg
The private bankers who serve Asia’s very wealthy have a new challenge on their hands. It’s young, female and smarter than they are.
/jlne.ws/2tfgdWW
European tech IPOs begin to rival US successes; At its debut Dutch group Adyen achieved a valuation that would be the envy of Silicon Valley
Aliya Ram and Richard Waters – FT
The day before Adyen’s stock market listing this week, the Dutch financial technology group’s co-founder sent a message to employees: “We won’t be ringing the bell ó or sounding the gong ó tomorrow,” Pieter van der Does wrote. “While it’s definitely important to celebrate successes, investor liquidity is not something we celebrate.”
/jlne.ws/2t92qRF
Look at banks and euro to judge central bank fallout; Stress for financial stocks and an ever-strengthening dollar may yet have costs
John Authers – FT
“The economy is doing very well.” So started new Federal Reserve chairman Jay Powell’s press conference, as he explained his decision to raise interest rates. In far clearer language than is usual from central bankers, he abandoned nuances, announced more press conferences in future and made clear that he saw a need to keep raising rates.
/jlne.ws/2tce1z4
NY Fed-FX swaps with foreign central banks total $91 million in latest week
Reuters Staff
The Federal Reserve provided $91 million of liquidity to foreign central banks in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.
/jlne.ws/2tbn6rV
Volcker ‘fix’ may cause new headaches for Wall Street
Pete Schroeder, Michelle Price – Reuters
A proposal to simplify a rule banning banks from proprietary trading, rather than making life easier for Wall Street, could ensnare billions of dollars’ worth of assets not currently caught by the regulation.
/jlne.ws/2JRKqm0
Swiss Wine Upstart Takes on the Old World Auctioneers; Geneva-based Baghera plans a a sale of Burgundy two years after it pulled bottles from an auction, due to authenticity concerns.
Thomas Buckley and Thomas Mulier – Bloomberg
The Burgundy wines of Henri Jayer are prized for their seductive expression of the French region’s pinot noir grapes, as well as their scarcity. Jayer died in 2006, having produced his final vintage five years earlier. When old vintages turn up at auction, prices can top $15,000 a bottle.
/jlne.ws/2JM7KkN
Odd lots provide fertile ground for algo bond trading; More trading of smaller portions of company bonds being done by algorithms
Robin Wigglesworth and Joe Rennison – FT
A quiet but important evolution is unfolding in a less glamorous corner of the US corporate bond market, as machines oust humans as traders of smaller “odd lots”of debt bought by both institutional and retail investors.
/jlne.ws/2taZZxH
Exchanges, OTC and Clearing
Aquis first-day pop shows there are Mifid II winners; UK exchange trading venue surges on debut but betting on regulatory change is tricky
Philip Stafford – FT
The debut of Aquis Exchange on London’s stock market is a reminder that not everyone sees Mifid II as a colossal drag on time, efficiency and resources.
/jlne.ws/2tbv5p9
Eurex EnLight: targeting a new segment
Eurex
Taking into account clients’ needs, we are extending the product range of Eurex EnLight into the equity derivatives space.
/jlne.ws/2JTmPEo
home24 SE lists at the Frankfurt Stock Exchange; Online furniture store listed in the Prime Standard / Sixth IPO from the Deutsche Boerse Venture Network
Deutsche Boerse Group
Home24 SE is listed on the Frankfurt Stock Exchange today. This marks the sixth startup from the Deutsche Boerse Venture Network in Frankfurt. The online furniture store listed in the Prime Standard and scored a first exchange price of 28.50 euros after an issue price of 23.00 euros. The number of IPOs in Frankfurt since the beginning of the year thus rises to eleven.
/jlne.ws/2sYRB5o
HKEX to Introduce New Stock Option Classes and Stock Futures Contracts
HKEX
7 new stock futures contracts to be introduced on 3 July 2018; 5 new stock option classes to be introduced on 16 July 2018; Commission levy for new stock futures to be waived for the first 6 months
Hong Kong Exchanges and Clearing Limited (HKEX) will introduce seven new stock futures contracts on Tuesday, 3 July 2018 and five new stock option classes on Monday, 16 July 2018.
/jlne.ws/2MwgWMa
ICBC London lists $1.58bn equivalent Green Bond on London Stock Exchange Green Bond Segment
London Stock Exchange
London Stock Exchange Group (LSEG) today welcomes the listing of Industrial and Commercial Bank of China London Branch’s (ICBC London Branch) US$1.58 billion equivalent green bond on its International Securities Market (ISM) and green bond segment. The green bond, part of ICBC’s $10 billion MTN programme, is the largest ever green bond listing on London Stock Exchange and the first Chinese issuance on ISM.
/jlne.ws/2sZsuzj
CME Group Prices $1.2 Billion Aggregate Principal Amount of Senior Unsecured Notes
CME Group
CME Group Inc. today announced it priced an underwritten public offering of $500 million aggregate principal amount of senior unsecured 3.750% notes due 2028 and $700 million aggregate principal amount of senior unsecured 4.150% notes due 2048. The offering is being made under CME Group’s existing shelf registration statement and is expected to close on June 21, 2018, subject to the satisfaction of customary closing conditions.
/jlne.ws/2MqKQBk
Fintech
Embracing Emerging Technologies Across Industry
Mondovisione
Over the past few months, John Lee, Managing Director, Enterprise Innovation and Product Development, TMX Group, has engaged in an ongoing dialogue with a consortium of industry partners, leaders and early adopters who are developing bold new ways of leveraging disruptive technologies to power game-changing, value-based solutions.
bit.ly/2MlutpL
Lime Brokerage Signs with Trillium Surveyor for Trade Surveillance
Trillium
Trillium announced today that Lime Brokerage will now use Trillium’s Surveyor platform for trade surveillance.
/jlne.ws/2JNT9W7
This German Fintech May Soon Be More Valuable Than Deutsche Bank
Jan-Patrick Barnert – Bloomberg
They may be worlds apart in the financial services industry but German payments company Wirecard AG is fast approaching the market valuation of banking behemoth Deutsche Bank AG, capping a week in which investors snapped up shares in Europe’s biggest ever fintech public offering.
/jlne.ws/2t6G3Mo
Forget the tech whales, it’s the minnows we should worry about; The rush to consolidate is hitting ‘seed stage’ companies who are suffering a funding drought
Tom Braithwaite – FT
When Judge Richard Leon this week permitted AT&T and Time Warner to merge, he accepted that they were only “chasing the taillights” of Netflix and Amazon.
/jlne.ws/2JR0Pal
Cryptocurrencies
Crypto firm Paxos using Goldman Sachs playbook to become juggernaut
Business Insider
The cryptocurrency company Paxos appears to be taking a page out of Goldman Sachs’ playbook.
The firm, which runs a crypto exchange and over-the-counter trading desk via its itBit unit, is looking to leverage its crypto-custody business to lure trading volumes to its venue. It’s a move that Paul Ciavardini, the director who oversees OTC trading at the firm, says looks similar to the way Goldman offered prime brokerage services to hedge funds that turned into big profits for its trading business.
/read.bi/2HNj6Dy
Novogratz Firm Makes $15 Million Investment in Crypto Startup
Lily Katz – Bloomberg
AlphaPoint helps build crypto exchanges, tokenize assets; CME Group. U.K.’s Royal Mint have worked with the technology
AlphaPoint Corp., a company that helps institutions launch cryptocurrency exchanges and tokenize assets, said it raised $15 million in funding from Galaxy Digital LP, the digtal-asset firm started by billionaire investor Mike Novogratz.
/jlne.ws/2t6DFVW
Retail Investors Trading Crypto at Highest Level Ever: Monex Report
David Kimberley – Finance Magnates
The firm’s biannual retail investor report also shows strong support for US stocks in coming months
/goo.gl/9rJNyt
Bitcoin Futures Fueling ‘Gut-Wrenching’ Declines, Tom Lee Says
Felice Maranz – Bloomberg
Cboe, CME futures expiry likely adding to selloffs: Fundstrat; May be piling on to already ‘awful’ sentiment and technicals
Blame it on the futures? Some of the recent “gut wrenching” weakness in Bitcoin, which dropped as much as 20 percent earlier this week, may be due to the expiration of futures linked to the cryptocurrency, according to Thomas Lee, head of research at Fundstrat Global Advisors.
/jlne.ws/2t9ibrK
Blockchain insiders tell us why we don’t need blockchain, redux
Jemima Kelly – FT
Gerald Ratner caused a crash in his stock back in 1991, when he referred to some of his products being “total crap”. His affordable-jewellery company’s shares lost $500m in a couple of days.
/jlne.ws/2tbbjtU
Cryptocurrency fans cheer SEC official’s remarks; William Hinman raises hopes that certain digital assets could be exempt from supervision
Ben McLannahan – FT
Cryptocurrency evangelists celebrated what they called a big step forward on Thursday, after a Securities and Exchange Commission official held out the prospect of exempting certain digital assets from its supervision.
/jlne.ws/2JJJFLw
Blockchain trading platform technology provider raises $15 million; AlphaPoint provides blockchain technology to help clients launch trading platforms and tokenise assets.
Hayley McDowell – The Trade
A New York-based capital markets trading platform blockchain technology provider has raised $15 million in a Series A funding round.
/jlne.ws/2t9SjMg
Politics
IMF puts itself at odds with Trump over US growth; Lagarde says effect of tax cuts will fade soon
Sam Fleming in Washington – FT
America’s yawning budget deficit could trigger an upsurge of inflation and interest rates that shakes financial markets, according to a report by the International Monetary Fund.
/jlne.ws/2tccNnL
New York sues Trump and his charity over ‘self-dealing’
Jonathan Stempel, Jonathan Allen – Reuters
The New York state attorney general sued U.S. President Donald Trump, three of his children and his foundation on Thursday, saying he illegally used the nonprofit as a personal “checkbook” for his own benefit, including his 2016 presidential campaign.
/jlne.ws/2JRLWVe
How Trump Rides on Waves of Other People’s Money
His father’s. His investors’. His campaign contributors’. Will every taxpayer be next?
Timothy L. O’Brien – Bloomberg
During a campaign stop in North Carolina last week, Donald Trump described the logic behind his plans for billing other countries for U.S. military support should he become president:
/jlne.ws/2taT9sl
New York Lawsuit Brings Tough Allegations, but a Silver Lining for Trump; Possible penalties of case brought by New York attorney general can only go so far
Corinne Ramey – WSJ
The New York attorney general’s lawsuit against President Donald Trump and his family’s foundation contains some eye-raising allegations, namely that the foundation “was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization.”
/jlne.ws/2JPHoyC
The less economic freedom a state has, the more political connections local firms need; Daniel M. Gropper, John S. Jahera Jr. and Jung Chul Park argue this is the case for US banks
London School of Economics and Political Science
The linkages between firm performance, the economic environment and influential political connections have long been of interest across the spectrum of business and politics. These links can be particularly important for banks and other firms in heavily regulated industries where a simple change in law or regulatory policy can result in significant costs, open new profitable opportunities, or otherwise change the operating environment. Firms in such industries may devote a great deal of time and resources toward efforts directed at influencing elected officials, regulators or public opinion, and their strategies in the political arena may end up being as important as any other element of their strategic efforts.
/jlne.ws/2tc8VDf
China poses ultimate test of Trump’s rationality; A trade war with Beijing could prove disastrous to the North Korea deal
Edward Luce – FT
Diplomacy is about getting other countries to do what you want them to do. Without China’s help, Donald Trump cannot hope to enforce his deal with Kim Jong Un. Eliminating North Korea’s nuclear arsenal is Mr Trump’s biggest goal ó his reputation for dealmaking rests almost exclusively on it. Yet reaching that prize undercuts a key element of his America First agenda. On Friday, his administration will unveil the latest list of targeted Chinese goods. A trade war with China could prove disastrous to the North Korea agreement. Mr Trump is thus faced with a choice. Should he wreck the deal of the century by escalating America’s trade dispute with China? Or should he confine his trade belligerence to America’s allies?
/jlne.ws/2t9HcCX
Wall Street keeps waiting for infrastructure to fund; Trump administration’s grand spending plans have been overrun by other matters
Ben McLannahan – FT
When fans of the Staten Island Yankees were invited to give the team a new name for Saturday fixtures this summer, a big faction went with the obvious: the Pizza Rats. What could better evoke the spirit of the minor league baseball franchise ó scrappy, dogged and enterprising ó than the rat that became an internet sensation a few years ago, dragging a thin-crust slice down a flight of subway stairs?
/jlne.ws/2tfgmcW
Regulation
Digital Asset Transactions: When Howey Met Gary (Plastic)
William Hinman, Director, Division of Corporation Finance – SEC
Thank you Andy. I am pleased to be here today.[1] This event provides a great opportunity to address a topic that is the subject of considerable debate in the press and in the crypto-community – whether a digital asset offered as a security can, over time, become something other than a security.[2]
/jlne.ws/2tb43y7
Mifid II unbundling to go global
Kristen McGachey – International Advisor
The US and Asia could be subject to similar research unbundling rules as Europe under Mifid II by 2022, a survey by a research platform provider has shown.
/jlne.ws/2t85Dkl
Ether Shouldn’t Be Subject to SEC Regulation, Official Says; Remarks indicate cryptocurrency is clear from oversight that could have imposed significant requirements on foundation
Dave Michaels – WSJ
The world’s second-most valuable cryptocurrency isn’t an investment that should be regulated as stocks and bonds are, a senior U.S. regulator said Thursday.
/jlne.ws/2taSfMt
CFTC Talks EP047: CFTC Chairman Chris Giancarlo and CFTC Chief Economist Bruce Tuckman
CFTC
This week on CFTC Talks, we speak with CFTC Chairman Chris Giancarlo and CFTC Chief Economist Bruce Tuckman. We review their white paper, “Swaps Regulation Version 2.0.” At the ISDA annual meeting, the Chairman states, “This white paper is economy-focused. And our role at the CFTC is to bring a market-focused approach. Our focus is what’s in the best interest of the markets. Our mission is market integrity and market health.” 24:47
/jlne.ws/2t9h4IA
ASIC reports on decisions to cut red tape – October 2017 to March 2018
ASIC
ASIC has released its latest report outlining decisions on relief applications, highlighting ASIC’s efforts to reduce red-tape and achieve a practical, positive outcome for companies seeking some regulatory flexibility.
/jlne.ws/2JQ6HR3
Buy-side to outsource more compliance functions over next five years, study finds; New report suggests that spending, automation and outsourcing of compliance functions at buy-side firms will increase over the next five years.
Hayley McDowell – The Trade
Asset managers are likely to increase the automation or outsourcing of compliance functions for regulations such as MiFID II over the next five years, according to a new study.
/jlne.ws/2JKW9CF
A Gift for Dad This Father’s Day: Financially Independent Kids
Erika Karell – FINRA
When it comes to pleasing Dad on Father’s Day, there are a lot of possible gift ideas. A subscription to a “bacon-of-the-month” club, the latest grilling tools or a new golf bag could be a good fit.
/jlne.ws/2MstFzq
Investing and Trading
Looking Under the Hood
Ajay Dravid – Equinox Funds
Stocks generally make up a significant part of most investor portfolios, be they institutional or individual. Investors have been taught, and have come to believe, that stocks are a good investment for the long run, and their realized historical returns appear to support this story. What is sometimes overlooked, particularly during prolonged bull market runs, is that returns are high because they must compensate investors for the high degree of risk equity investing entails.
bit.ly/2JAPJtG
ECB to phase out EUR 2.4tn bond-buying programme by year end; Euro falls as markets respond to cautious elements in plan to end QE
Claire Jones and Michael Hunter – FT
The European Central Bank has declared an end to its three-year EUR2.4tn stimulus programme, announcing it will wrap up the historic scheme credited with reviving a crisis-wracked eurozone economy at the end of the year.
/jlne.ws/2t6Dvhi
Man Group and AQR try to take aim at private equity industry; Asset managers examine whether they can replicate PE returns at less cost
Lindsay Fortado and Robin Wigglesworth – FT
The popularity of private equity investments has prompted asset managers such as Man Group and AQR to devise strategies that aim to replicate PE returns but at a much lower cost to investors.
/jlne.ws/2tcbh53
Market forces and competition are not necessarily detrimental to sustainability; Paul T.M. Ingenbleek and Machiel J. Reinders study the case of coffee roasters and supermarkets in the Netherlands
London School of Economics and Political Science
The consumption of sustainable foods and drinks is becoming common in certain categories. This provides us with an opportunity to study markets that have transformed from merely “unsustainable” to “sustainable” consumption. As approximately three fourths of the coffee consumed in the Netherlands is being produced in a sustainable way, the Dutch coffee market is a market from which we can draw lessons. To this end we analysed the case in a historical way by using available documents and conducting interviews with actors that played key roles in the transformation of the market.
/jlne.ws/2JPfZwD
Millionaires Now Control Half of the World’s Personal Wealth
Suzanne Woolley – Bloomberg
Global wealth reached $201.9 trillion on equities, soft dollar; Fastest growth in Asia, where fortunes increased 19% last year
The rich are getting a lot richer and doing so a lot faster. Personal wealth around the globe reached $201.9 trillion last year, a 12 percent gain from 2016 and the strongest annual pace in the past five years, Boston Consulting Group said in a report released Thursday. Booming equity markets swelled fortunes, and investors outside the U.S. got an exchange-rate bonus as most major currencies strengthened against the greenback.
/jlne.ws/2tbkqKT
Glencore Tests U.S. Sanctions Resolve With Gertler Payments
Thomas Wilson – Bloomberg
Swiss miner to pay royalties in euros using a non-U.S. firm; Gertler was sanctioned by U.S. for alleged bribery, corruption
Glencore Plc, the world’s biggest commodities trader, is testing the limits of U.S. sanctions.
/jlne.ws/2tbwpZ0
Short-Volatility Bets Boom as Hedge Funds Take Baton From Banks
Yakob Peterseil – Bloomberg
Fast money bets on muted price swings in debt, mutual funds; Option sales profitable as private-bank clients go long
The short-vol trade is dead. Long live the short-vol trade. Investors are discovering fresh ways to bet volatility across asset classes will tumble anew even as hawkish monetary policy, emerging-market turmoil and February’s vol-mageddon underscore headwinds to the complex trade.
/jlne.ws/2JN8yWE
Institutions
RBC Plans $3.2b in Tech Spending, Targeting Client Acquisition
Jeff Patterson – Finance Magnates
Banks have increasingly been pushing an emphasis on new technology over the past few years. The desire to harness digital banking services over legacy systems has been central to most strategies. This includes the Royal Bank of Canada (RBC), which rolled out plans to spend upwards of $3.2 billion on tech spending this year alone.
/goo.gl/vtakyY
Share of Black Employees at JPMorgan Falls for Sixth Straight Year in U.S.
Max Abelson and Jordyn Holman – Bloomberg
Jamie Dimon told JPMorgan Chase & Co.’s shareholders in an April 2016 letter that the biggest U.S. bank would “dramatically step up our effort” to hire black people. A year later, he said the firm was making progress and would keep it up, and this April he said the results of some efforts were encouraging.
/jlne.ws/2JNUT1B
Morgan Stanley Shows Power of Stock Picking With Timing on Twitter
Sonali Basak – Bloomberg
One way Morgan Stanley’s proving that stock picking still matters is by showing off its timing in technology stocks.
/jlne.ws/2JLHtmH
Private-Equity Giant Abraaj Files for Liquidation; Once a rising star of the investment world, firm may become one of the industry’s largest-ever failures
Simon Clark, Nicolas Parasie and William Louch – WSJ
Abraaj Group, the once-highflying private-equity firm that attracted the likes of Bill Gates and the World Bank as investors, said its Cayman Islands-based holding company filed for liquidation Thursday in what could turn into one of the industry’s largest-ever failures.
/jlne.ws/2JO8K80
Exclusive: Ackman’s hedge funds gain after years of losses, Chipotle helps
Svea Herbst-Bayliss – Reuters
William Ackman’s private hedge fund has gained more than 9 percent this year while his publicly traded fund is up double digits, marking a dramatic reversal for the billionaire investor after three years of losses.
/jlne.ws/2JKKqEg
Mid-Cap ETFs Are Huge Performers, But Nobody’s Buying; Will an ESG twist entice investors?
Carolina Wilson
It’s not easy being the middle child. Just ask the category of exchange-traded funds, or ETFs, tracking U.S. mid-cap companies. The SPDR S&P MidCap 400 ETF Trust, or MDY, is the largest mid-cap ETF. Despite grossly outperforming its large-cap and small-cap fund competitors, it has the least amount of assets among the three. To take that a step further, if you compare the performance of all ETFs that have ever existed, MDY would have been the best bet, according to Bloomberg Intelligence ETF analyst Eric Balchunas. “Mid-caps are the Jan Brady of the stock market, the forgotten middle child,” he says. “I continue to be amazed by mid-caps, and I continue to forget about them.”
/jlne.ws/2JRfzFR
BNP Moves to Grab Bigger Piece of German Private Bank Action
Fabio Benedetti Valentini – Bloomberg
French lender targeting expansion with hires over three years; French bank seeks to expand services for Mittelstand clients
BNP Paribas SA plans a major hiring spree in German wealth management, seeking to become a leader in one of Europe’s biggest markets.
/jlne.ws/2JNsEA5
Regions
Massive Argentine Peso Plunge Deepens Emerging-Market Selloff
Rita Nazareth – Bloomberg
Peso tumbles amid reports of central bank departures; Brazil’s real extends drop as traders snub record intervention
The brutal tumble of Argentina’s peso added to the list of concerns over the ability of developing economies to defend their currencies as the era of cheap money wanes. Emerging-market assets extended losses a day after the Federal Reserve’s more hawkish signals.
/jlne.ws/2tbzXur
China May End Up Paying More for Soybeans in Trade Spat With U.S.
Shruti Singh – Bloomberg
China could pay premium for South American supply: Rabobank; Buyers of U.S. shipments could benefit from lower costs
China’s threats of tariffs against imports of U.S. soybeans may end up being a costly move for the Asian country if the trade spat heats up.
/jlne.ws/2JONEXl
EU nations back retaliating against U.S. steel tariffs
Philip Blenkinsop – Reuters
European Union countries on Thursday unanimously backed a plan to impose import duties on 2.8 billion euros ($3.3 billion) worth of U.S. products after Washington hit EU steel and aluminum with tariffs at the start of June, EU sources said.
/jlne.ws/2JPKCSK
Draghi treads middle path on bond-buying exit to soothe investors; ECB chief seeks to wind down stimulus but avoid tightening policy too hastily
Claire Jones – FT
When it has come to tightening monetary policy, history has not been kind to the European Central Bank.
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Goldman Sachs Made Millions in Malaysia. Now Malaysia Wants Some Money Back.
Alexandra Stevenson and Hannah Beech – NY Times
Goldman Sachs once made a lot of money in Malaysia. Now Malaysia wants some of it back.
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Brexit
Brexit Postponement May Be an Option If Talks Get Messier
Ian Wishart and Dara Doyle – Bloomberg
Senior European Union officials have informally discussed whether the U.K. might need to stay in the bloc past March 2019 if Brexit negotiations don’t accelerate over the summer.
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Wealthy Brits brace themselves for Brexit uncertainty; Investors find their nerves tested by political volatility in the UK
James Pickford – FT
More than one-third of wealth managers say they or their clients are taking action to limit the impact of risks associated with political uncertainty in the UK, including the prospect of higher taxes on wealth.
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EU Rejects Post-Brexit Defense Plan
Ian Wishart and Nikos Chrysoloras – Bloomberg
The U.K. can’t maintain full participation in the European Union’s foreign policy after Brexit, the bloc said, in the latest setback to the British government’s ambitions for the two sides’ future relationship.
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Miscellaneous
MacArthur launches funding for Chicago media upstarts
Lynne Marek – Crain’s Chicago Business
MacArthur Foundation is launching a grant-making program to support Chicago media focused on reflecting the city’s diversity, starting with $2.4 million for four organizations this year.
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Elon Musk Outlines How His Chicago ‘Loop’ Transport Will Work; The train-like system will ferry eight to 16 passengers (or maybe even a car) at up to 150 miles per hour.
Sarah McBride and Elizabeth Campbell – Bloomberg
Elon Musk’s Boring Co. got the green light to work on a project connecting downtown Chicago to O’Hare International Airport, its first major city contract. The plans represent both a victory for the 18-month-old startup and a reality check for the billionaire.
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It’s Still Tough Out There For The Cannabis Industry, Which Is Badly In Need Of Good PR
Thor Benson – BigBudMag.com
It’s no secret that currently, despite the burgeoning legalization of marijuana in a majority of states, for legitimate cannabis companies it’s still difficult to advertise their products compared to other kinds of business sectors. That’s because advertising outlets ó including the largest, most visible ones, like Facebook and Google ó don’t allow drug-related businesses (unless they’re pharmaceutical) to promote their wares on these platforms. In light of this, many brands have turned to social media to get the word out.
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