First Read
Hits & Takes
By JLN Staff
What’s hot: palladium. What’s not: lead. What’s been kind of interesting: lumber. ~SD
The music streaming service Spotify has decided to go with a direct listing on the NYSE rather than a traditional stock offering – the most prominent company to try that route. This news comes, unfortunately for Spotify, directly on the heels of a lawsuit against the company for $1.6 billion over copyright infringement. The songs in question come from the catalogues of the likes of Tom Petty, Neil Young, The Doors and more. ~SD
CQG’s Pat Kenny will moderate a cryptocurrency panel at the Association of Futures Markets Conference in Bangkok at the end of the month. Where else would the most interesting man in the world be? ~JJL
JPX decided to commence construction of a new secondary center as a way to set up a framework for handling wide-area disasters. The new data center will be built and situated in the Kansai region, at a great distance from the primary center, which is located in the Kanto region. Via JPX CEO New Year’s message. ~JJL
January marks exactly five years since JPX was born from the business integration of TSE and OSE. ~JJL
Here you will find Clarus Financial Technology’s (then) live blog of the start of MiFID II in London time.~ SD
There was a problem with the link yesterday for the Giancarlo interview by Energy Metro. You can find the Special Year End edition on the front page of the site. ~JJL
Save the date! This year’s Options Industry Conference will be held in Amelia Island, FL on May 2-4. ~JJL
Would you like an invoice for your 2018 JLN subscription? Email me at johnlothian@johnlothian.com and I will be glad to provide one.
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Bitcoin Is a Hit in Countries Where Locals Face Currency Troubles; Sudan, Kenya and South Africa have seen a surge in bitcoin use over the past year
Matina Stevis-Gridneff in Nairobi, Kenya and Georgi Kantchev in London – FT
In Sudan, a young woman wants her dowry paid in bitcoin. In Kenya, students are using it to bet on English soccer games, and use of the cryptocurrency in South Africa has surged amid political turmoil.
/goo.gl/AFL8S7
***** Remember my theory about bitcoin being a credit default swap or currency default swap? ~JJL
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Intel CEO sold millions in stock after company was informed of vulnerability, before disclosure
Jeremy C. Owens – MarketWatch
Intel Corp. Chief Executive Brian Krzanich sold millions of dollars worth of shares after the company was informed of vulnerabilities in its semiconductors but before it was publicly disclosed.
/goo.gl/UwtNkY
***** There is smart and then there are moves like this. ~JJL
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Massive Winter Storm Threatens East Coast With Snow and Floods
Brian K Sullivan – Bloomberg
Almost 3,000 flights already canceled by winter storm;Snow, power outages have been reported across U.S. South
This winter’s worst storm has knocked out power to thousands and canceled almost 3,000 flights. Next it’s bringing more snow, ice and winds from Florida to Nova Scotia, including New York.
/goo.gl/fv57h5
***** To my friends and readers impacted by the storm, please be smart and careful in the coming days. ~JJL
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Wednesday’s Top Three
Our most read story yesterday was the Financial Times’ Mifid II launch overshadowed by futures delay. Second most read was not actually an article but rather a job listing page from the NFA: Want a job with the NFA?. Third was another Mifid II story from City A.M., Three of the world’s largest exchange groups granted last-minute reprieve from Mifid II futures rules
| MarketsWiki Statistics Sponsored by Level Trading Field | |
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Lead Stories
Researchers Discover Two Major Flaws in the World’s Computers
Cade Metz and Nicole Perlroth – NY Times
Computer security experts have discovered two major security flaws in the microprocessors inside nearly all of the world’s computers. The two problems, called Meltdown and Spectre, could allow hackers to steal the entire memory contents of computers, including mobile devices, personal computers and servers running in so-called cloud computer networks.
/goo.gl/9U5nqN
MiFID II’s First Day Comes Off Without Glitches, Regulator Says
John Glover – Bloomberg
The first day of MiFID II for European Union markets wasn’t quite the disaster many in the financial industry had predicted, according to the bloc’s top markets regulator.
/goo.gl/bYmwDe
China Said to Curb Power Supply for Bitcoin Miners
Bloomberg Markets
After banning ICOs, authorities in China are now said to have bitcoin miners in their sights. The PBOC reportedly is pushing to curb their power use over concerns miners in some areas are taking advantage of low electricity prices. Bloomberg’s Justina Lee reports on “Bloomberg Markets: Asia.”
/goo.gl/hj7VXt
Is MiFID to Blame for Thin Trading, or Is Everyone on Holiday?
Namitha Jagadeesh and Blaise Robinson – Bloomberg
Traders have been hit hard by the January blues this year. Already dealing with seasonally low trading volume, the biggest shakeup to European regulation in a decade is making things even worse.
/goo.gl/buoZqa
MiFID Rules on Stock Pricing at Dark Venues Won’t Change Quickly
Boris Groendahl, Silla Brush and Alexander Weber – Bloomberg
EU Commission will monitor market before proposing legislation; EU lawmaker Ferber seeks changes for systematic internalizers
Europe’s biggest stock exchanges have been on a winning streak in their campaign to tighten MiFID II rules on rival trading platforms. Their next victory may take some time.
/goo.gl/9mRNqq
Investor relief at smooth launch of Mifid II reforms; Fears for new systems and trading levels prove mostly unfounded
Philip Stafford and Hannah Murphy – FT
Investors and regulators breathed a sigh of relief on Wednesday after the launch of the biggest shake-up of European markets in a decade passed without major upset.
/goo.gl/UHM3VB
Mifid II risks drowning in its ambition; Only 11 of the EU’s 28 member states have added flagship legislation into national laws
Hannah Murphy and Philip Stafford – FT
Mifid II was billed as the biggest shake-up to European markets for a decade, but as it arrived on Wednesday, bankers and investors warned it will take several years before its effects are fully felt.
/goo.gl/RLyCyQ
What You Need to Know About the Big Chip Security Problem
Ian King – Bloomberg
Intel Corp. said Wednesday that most of the processors running the world’s computers and smartphones have a feature that makes them susceptible to attack. The largest chipmaker is working with rivals and partners on a fix, but the news sparked concern about this fundamental building block of the internet, PCs and corporate networks.
/goo.gl/rHBkbr
Spotify Files to Go Public on New York Stock Exchange
Lucas Shaw and Alex Barinka – Bloomberg
Music provider is said to file documents to put shares on NYSE; Company would be most prominent to attempt a direct listing
Spotify filed to go public on the New York Stock Exchange, according to a person familiar with the matter, in the highest-profile test yet of a technique that lets companies list shares without raising money through a traditional stock offering.
/goo.gl/amLgDY
Wall Street regains title as king of IPOs
Alanna Petroff – CNN
Move over Hong Kong. The New York Stock Exchange raised more money for companies going public than any other market in 2017.
/goo.gl/BEHhgU
Bitcoin: The Rise of the Regulators; Travel the world to see how the remarkable rise of cryptocurrencies has drawn a response from governments
Steven Russolillo, Sharon Shi, Crystal Tai and Andrew Peaple – FT
Bitcoin has a reputation as the Wild West of financial markets. But the sheriffs are increasingly closing in. In this video, Steven Russolillo travels the world (sort of) to see how the remarkable rise of cryptocurrencies has drawn a response from regulators.
/goo.gl/JNxEuP
The Tokenization of Research, Part 2: Innovation & Compliance
Joel Steinmetz, Allan Chiulli – UAT via TABB Forum
There is an opportunity to leverage innovative technology and new payment and consumption methods to satisfy the requirements and enable the desirable benefits of both MiFID II research unbundling and Section 28(e) of the US Securities Act of 1934. UAT’s Joel Steinmetz and Allan Chiulli examine the structure and operations of a token, smart contract and blockchain-based platform for U.S. equity research that incorporates Section 28(e) practices in a post-MiFID II environment.
/goo.gl/RSrDDV
How a Secretive Conclave Decides When U.S. Recessions Happen
Daniel Moss – Bloomberg
Whether the U.S. tips into recession this year or not, chances are you won’t hear about it until well after it happens. That’s because the decision on whether the economy is in a serious slump or merely having a bad day rests with a little-known group of academics who deliberate behind the scenes. Ten years after the economy entered the worst downturn since the Great Depression, the group’s chair, Stanford University professor Robert Hall, gives Dan and Scott an inside look into how the panel makes its calls — and shares his thoughts on whether another recession could be in store soon.
/goo.gl/aoet7Z
Wall Street Aims to Thwart a Hacking Nightmare for Your 401(k)
Yalman Onaran – Bloomberg
System for backing up bank accounts to include other nest eggs; That may help safeguard trillions of dollars in global markets
U.S. financial firms plan to expand a secretive project protecting bank accounts against crippling cyber attacks so that it will also guard trillions of dollars in investment funds.
/goo.gl/9FGyjQ
Hackers and a Shrinking Talent Pool Top CEO Concerns for 2018; New pressures come during massive changing of guard in corner office; ‘looking for a unicorn’
Joann S. Lublin and Vanessa Fuhrmans – WSJ
Corporate leaders see cybersecurity threats, disruptive technologies and stiffer competition for talent as some of their most pressing issues in the new year, according to interviews with nearly a dozen CEOs.
/goo.gl/q3PyHR
Bank analyst very proud of his cryptocurrency mining rig
Alexandra Scaggs – FT
Mitch Steves, an RBC analyst covering chipmaker stocks, can’t write in detail about specific digital coins. Crypto falls in a regulatory grey area, so most sell-side analysts steer clear.
/goo.gl/G5HhWP
Exchanges, OTC and Clearing
MarketAxess Announces Monthly Volume Statistics for December 2017 Nasdaq:MKTX
Globe Newswire
MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced total monthly trading volume for December 2017 of $104.4 billion, consisting of $60.4 billion in U.S. high-grade volume, $40.7 billion in other credit volume, and $3.3 billion in liquid products volume. U.S. high-yield, emerging market and Eurobond volumes represented approximately 23.9%, 55.7% and 19.3% respectively, of the total trading volumes of the other credit category.
jlne.ws/2EQ4dA4
Cboe LIS sees trading milestone from MiFID II preparation; Cboe Europe Equities saw a number of milestones in December for its LIS platform and Periodic Auctions order book.
Joe Parsons – The Trade
Cboe Global Markets recorded a new block trading milestone for its European equities exchange in preparation for MiFID II, which has gone live for Europe.
/goo.gl/oC2MWq
Spotify files for US public listing; Music streaming service could be first high-profile market debut of 2018
Anna Nicolaou and Nicole Bullock in New York – FT
Spotify, the music streaming company, has filed paperwork to list its shares on the New York Stock Exchange, in an indication that it is pressing on with a unique plan to go public.
/goo.gl/YXFYm2
Texan broker completes first CME Clearing bitcoin futures trade
Asset Servicing Times
Choice! Natural Gas, a portfolio company of inter-dealer broker OTC Global Holdings (OTCGH), has completed its first bitcoin-denominated futures block trade through CME Clearing.
/goo.gl/ZxeYJK
NYSE ARCA: REMINDER – SUNSET OF NYSE ARCA GATEWAYS
ICE
On August 21, 2017, NYSE Arca introduced new NYSE Pillar gateways utilizing NYSE Pillar protocols and announced that sessions utilizing NYSE Arca FIX or Binary protocols would remain available for six months after the introduction of NYSE Pillar gateways. That six month period expires on February 28, 2018.
/goo.gl/QftCjX
TMX Group Limited announces release date for Q4 2017 financial results and analyst conference call
TMX
TMX Group Limited will announce its financial results for the fourth quarter and year ended December 31, 2017 in the evening of Monday, February 12, 2018. An analyst conference call to review the results will be held on Tuesday, February 13, 2018 at 8:00 a.m. ET.
/goo.gl/bPrmz3
ASX Monthly Activity Report – December 2017
ASX
/goo.gl/by7MVW
Appointment of HKEX Risk Management Committee (Statutory) Member
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) welcomes Gao Yingxin, the new chairman of the Hong Kong Interbank Clearing Limited (HKICL), to its Risk Management Committee (Statutory) (RMC). He was named HKICL chairman following the resignation of Yue Yi. The chairman of the HKICL was appointed as a member of the RMC in accordance with the Securities and Futures Ordinance.
/goo.gl/YDY2F6
New year’s Message from Group CEO Kiyota
JPX
I would like to wish everyone a happy new year. As we usher in 2018, I would like to offer my warmest greetings and wish everyone health and prosperity for the year.
/goo.gl/zzDQ6z
Fintech
Start the New Year with the right financial tools
Morgan Downey, Money.net via LinkedIn
Over the past few months we have been busy working on building an entirely new version of Money.Net for desktop users (still includes free mobile and excel apps).
/goo.gl/Nt9JYq
Security flaws put virtually all phones, computers at risk
Douglas Busvine, Stephen Nellis – Reuters
Security researchers on Wednesday disclosed a set of security flaws that they said could let hackers steal sensitive information from nearly every modern computing device containing chips from Intel Corp (INTC.O), Advanced Micro Devices Inc (AMD.O) and ARM Holdings.
jlne.ws/2EP944t
Kernel-memory-leaking Intel processor design flaw forces Linux, Windows redesign; Speed hits loom, other OSes need fixes
John Leyden and Chris Williams
A fundamental design flaw in Intel’s processor chips has forced a significant redesign of the Linux and Windows kernels to defang the chip-level security bug.
/goo.gl/pb2REK
How Blockchain Could Radically Alter Global Finance; The technology underlying cryptocurrencies like Bitcoin is already starting to make its mark; Based on insights from Robert McDonald, Caitlin Long and Peter Cherecwich
KelloggInsight
Since its creation in 2008 by the mysterious Satoshi Nakamoto, Bitcoin has fascinated the technical world and bedeviled law enforcement. The digital cryptocurrency gained notoriety for fueling Silk Road, a marketplace famous for selling illicit drugs, but subsequently won commercial acceptance from outlets like Expedia and Overstock.com. More recently, Bitcoin has been the object of much attention for its wild price gyrations and the introduction of Bitcoin futures.
/goo.gl/jsr4sn
Bitcoin’s Cheap Energy Feast Is Ending
David Fickling – Bloomberg
To understand why China is cracking down on power use by bitcoin miners, have a look at curtailment. The practice — where producers of wind and solar power cease generation because the entire electricity system is oversupplied — has been a major problem for the country in recent years. In the northwestern provinces of Xinjiang and Gansu, as much as one-third of wind generation and a quarter of solar was curtailed in the first half of 2017, according to Bloomberg New Energy Finance.
/goo.gl/JjeXnq
Microsoft To Acquire Avere Systems, Add High-Performance Appliances, Hybrid Cloud NAS To Azure
Joseph F. Kovar – CRN
Microsoft Wednesday said it has agreed to acquire Avere Systems, a developer of technology that provides fast access to file-based data on hybrid cloud infrastructures.
jlne.ws/2EPVSMT
Bitcoin may be king, but Ripple dark horse in crypto race
Reuters Staff
Bitcoin was the star of the white-knuckle ride that cryptocurrencies offered in 2017 but lesser-known names, such as Ripple and Ethereum, are seen gaining prominence in 2018.
/goo.gl/m75hQL
Digital currency stellar jumps 60% into sixth place by market capitalization; Stellar soared 62.6 percent Wednesday to a record high of 91.85 cents, briefly marking a more than 150 percent gain for the year already, according to CoinMarketCap. The digital currency now ranks sixth by market capitalization.
Evelyn Cheng – CNBC
Digital currency stellar is now the sixth-largest cryptocurrency by market capitalization, after only breaking into 10th place Friday.
/goo.gl/rtKYqM
Bitcoin’s ‘Altcoin’ Cryptocurrency Rivals Are Finally Catching Up
Fortune
Bitcoin alternatives are closing the gap with the market leader after names like stellar and cardano became red hot as 2017 was closing.
/goo.gl/gwLvxw
Token Storm World ICO Showcase to Bring Leading Blockchain Startups from Across the Globe to Asia for Community Outreach
Coinspeaker
Arifa Khan, a former investment banker with Credit Suisse and UBS has announced that she will be leading Token Storm – a Global ICO showcase, featuring leading Blockchain startups and experts, in a roadshow across China, Japan, India the UK and Switzerland.
/goo.gl/c2sEyU
Ethereum and Stellar join Ripple in BBVA bank tests
Finder.com.au
A statement issued to finder.com.au today by Banco Bilbao Vizcaya Argentaria (BBVA) confirms its involvement in blockchain technology and the use of cryptocurrency.
/goo.gl/VS43Pa
Politics
Trump lashes out at Bannon over Russia ‘treason’ claim; President responds to incendiary book by saying former strategist ‘lost his mind’
Courtney Weaver in Washington – FT
Donald Trump has lashed out at Steve Bannon, alleging that his former chief strategist and close ally had “lost his mind” after Mr Bannon was quoted accusing the US president’s son of treason for meeting a Russian lawyer during the election campaign.
/goo.gl/esq92o
Trump dissolves voter fraud commission; adviser says it went ‘off the rails’
By Elizabeth Landers, Eli Watkins and Kevin Liptak, CNN
President Donald Trump dissolved his much-touted voter fraud commission on Wednesday, attributing the step to various states’ refusal to participate in the board, which was criticized as a misguided step to solve a practically non-existent problem.
/goo.gl/9b5dxe
Regulation
U.S. jury finds Turkish banker guilty of helping Iran dodge sanctions
Brendan Pierson – Reuters
A U.S. jury on Wednesday found a Turkish banker guilty of helping Iran evade U.S. sanctions, after a nearly four-week trial that has strained diplomatic relations between the United States and Turkey.
jlne.ws/2ESveCP
Turkish Banker Guilty in U.S. of Iran-Sanctions Conspiracy
Christian Berthelsen and Bob Van Voris – Bloomberg
Mehmet Atilla found guilty by federal jury in New York; Trial sparked angry protests from Erdogan, Turkish officials
A Turkish banker was convicted of helping Iran evade U.S. financial sanctions in a verdict likely to further strain relations between Turkey and the U.S.
/goo.gl/7SqdzL
Metzler Asset Management GmbH Selects Visible Alpha for MiFID II Research Tracking and Valuation
Globe Newswire
Metzler Asset Management GmbH (Metzler) announces today the implementation of a new process for discovering, tracking and valuing research through the selection of Visible Alpha’s ONEaccess Platform. The addition of the ONEaccess Forward Calendar, Resource Tracking and Broker Vote applications enable the company to meet the compliance obligations associated with MiFID II regulations, particularly those associated with BaFin, the financial regulatory authority in Germany.
/goo.gl/KvWyFV
Five Things We Learned About MiFID II on Its First Day at Work
Sofia Horta E Costa and John Glover – Bloomberg
Bloomberg Gadfly columnist Lionel Laurent discusses why it’s too early to write off MiFID II.
MiFID II came to life. And belying its billing as a “Big Bang” that would cause disruption as it transforms the European Union’s financial markets, its first day turned out to be more of a whimper as traders waited to see how the shakeup panned out. Here are five things we learned:
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California Bill Seeks Ban on Fossil-Fueled Vehicles by 2040
Ryan Beene – Bloomberg
California would ban the sale of new cars and trucks powered by fossil fuels in 2040 under legislation introduced Wednesday in the state legislature.
/goo.gl/yTMjjW
MiFID II: What you should know about new financial regulatory system
Robin De Peyer – The Evening Standard
The City is braced for the impact of one of the biggest regulatory shake-ups of since the 1980s ‘Big Bang’ as a new framework of rules comes into force across Europe.
/goo.gl/9kJ2jS
SEC mixes message on Apple shareholder proposals, activists say
Ross Kerber – Reuters
Apple Inc was allowed to disregard one activist shareholder proposal on greenhouse gas emissions but told to hold a vote on another concerning human rights issues, in closely watched securities rulings that tested new guidance from U.S regulators.
/goo.gl/uXJvVU
U.S. charges ex-Och-Ziff executive with fraud, obstruction of justice
Reuters Staff
U.S. prosecutors have charged Michael Cohen, the former head of European investing at hedge fund Och-Ziff Capital Management Group (OZM.N), with fraud and obstruction of justice, according to court documents unsealed on Wednesday.
/goo.gl/LRRqa7
MiFID II Rules Might Mean Less Email; Also free bond underwriting, state tax arbitrage, crypto-venture capital
Matt Levine – Bloomberg
The European Commission’s Markets in Financial Instruments Directive II went into effect today, with a bunch of new rules including limits on dark pools, increased pre- and post-trade price transparency and changes to fund marketing and research costs. So far so quiet — “trading volumes slumped ahead of the changes, according to two brokers with knowledge of the matter, with client business at one major brokerage in Europe almost non-existent as the rules were poised to take effect Wednesday” — though to be fair it is the first week of January.
/goo.gl/Ho9Epb
ASIC cancels AFS licence of Smart Trader International
ASIC
ASIC has cancelled the Australian financial services (AFS) licence of NSW-based company Smart Trader International Pty Ltd (AFS 475277) for failing to lodging its financial statements and auditor’s reports for a period of three years.
/goo.gl/rF6mrp
ASIC permanently bans South Australian financial adviser
ASIC
ASIC has permanently banned Mr David Mario Alafaci, of Morphett Vale, South Australia from providing financial services on the basis that he is not of good fame or character.
/goo.gl/cNovzb
Statement on transitional arrangements for trading venues under MiFIR Article 54(2)
Statements Published: 03/01/2018 Last updated: 03/01/2018
UK FCA
Under Article 54(2) of the Markets in Financial Instruments Regulation (“MiFIR”), an EU Central Counterparty (CCP) or trading venue may apply to its Competent Authority for a transitional arrangement in relation to exchange-traded derivatives, under which the open access requirements of Articles 35 or 36, respectively, of MiFIR would not apply until July 2020.
/goo.gl/jBwGEk
MAS chief Ravi Menon named best central bank governor in Asia-Pacific
TAN HWEE HWEE – Business Times
THE managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, has been named the best central bank governor in Asia-Pacific for 2018 by UK-based magazine, The Banker.
/goo.gl/rNEKdZ
Investing and Trading
Final 2017 Asset Class Scoreboard
RCM Alternatives Blog
2017 is in the books and all of the asset classes we track made money; granted there’s a large margin between the top and bottom performers in 2107 (26%!). Stocks and World Stocks crushed it, with +20% performances. Maybe it’s the contrarian in us, but we will say if World Stocks were labeled as a Hedge Fund, it’s almost decade long drawdown would definitely be played up in databases and the media despite its 2017 gains.
jlne.ws/2EQbuzY
The Smartest Beta
Tim Edwards – S&P Dow Jones Indices Indexology Blog
In the last year, plain old beta performed remarkably well in comparison to the so-called “smart” alternatives tracking large-cap U.S. equities. Of the 17 different strategies reported in our year-end factor dashboard, less than a third outperformed the S&P 500’s total return of 21.83% over the last 12 months.
jlne.ws/2EOI0SR
HFT is Dead. Long Live HFT.
Themis Trading Blog
The FT has just published an interesting piece titled “How High Frequency Trading Hit A Speed Bump”. While the main point of the piece was to highlight a new high speed transatlantic route known as “Go West”, the piece feels more like a HFT post-mortem. Comments from HFT folks about how profits have decreased due to higher data costs and lower volatility are frequent in the piece.
jlne.ws/2qmM4H0
Zinc joins commodity party
Neil Hume – FT
Zinc has hit its best level in a decade, joining a growing list of commodities reaching multi-year highs.
/goo.gl/APNypQ
Bitcoin price is a distraction, says big technology investor; Silver Lake’s Glenn Hutchins is more excited about opportunities in cryptocurrency system
Robin Wigglesworth and James Fontanella-Khan – FT
The rollercoaster ride of the bitcoin price captivated many in the finance industry in 2017, but for Glenn Hutchins, one of the biggest establishment names to venture into the world of cryptocurrencies, this is just noise that distracts from the bigger developments that are taking place.
/goo.gl/AADfWY
A Hedge-Fund Titan Puts Away the Punch Bowl
Greg Ip – WSJ
The U.S. economy and stock market have just turned in their best performance in years, so it seems like buzzkill to hand the microphone to someone who thinks the path ahead could be much bleaker.
Still, when it’s Ray Dalio, founder of hedge-fund manager Bridgewater Associates LP, it’s worth listening. That’s not so much because of Bridgewater’s size and success but because Mr. Dalio looks at the world through a unique prism.
jlne.ws/2qg7Yvu
Commodities Are on Their Longest Winning Streak in History
Mark Burton and Jake Lloyd-Smith – Bloomberg
Bloomberg Commodity Index set for 15th consecutive daily climb; Gauge moves higher as crude rallies and base metals advance
Commodities are forging a record-setting run of gains that straddles the end of 2017 and the start of the new year as crude oil notches multiyear highs and investors bet that booming global manufacturing output will help to sustain rising demand for raw materials.
/goo.gl/idgxiR
Philip Morris says its New Year’s resolution is to give up cigarettes
David Carrig, USA TODAY
Philip Morris International has made a dramatic New Year’s resolution: “We’re trying to give up cigarettes.”
/goo.gl/yPeY7s
Why bitcoin’s past ‘bubble moves’ suggest the next record may be a long time coming
Ryan Vlastelica – MarketWatch
Heavy volatility in the digital currency bitcoin is nothing new, but recent trading activity suggests that investors hoping to see 2017’s massive gains extended into the new year shouldn’t hold their breath.
/goo.gl/E7U8ip
Bitcoin Isn’t a Currency, It’s a Commodity—Price It That Way; If bitcoin has more in common with gold than dollars, it could have a long way to fall
Nathaniel Taplin – WSJ
Is a bitcoin worth the $15,000 it commands today, or is it really worth about $3,000? The huge runup in value since September suggests the lower figure.
/goo.gl/N2dTao
Institutions
Deutsche Bank minimum capital requirements increased by European Central Bank
Jasper Jolly – City AM
The European Central Bank (ECB) has forced Deutsche Bank to up its capital holdings for 2018 slightly above the average for European lenders.
/goo.gl/vdxbna
Morgan Stanley Wealth Exits Junk Bonds, Warns on Recession Risk
Dani Burger – Bloomberg
It’s too late in this market cycle to bet on high-yield bonds, according to Morgan Stanley Wealth Management.
/goo.gl/jat4fr
Ex-Millennium’s Johansen Opens Asia Quant Fund in Volatility Bet
Klaus Wille – Bloomberg
Disciplina Fund expected to start in January with $110 million;Adds to signs of hedge fund revival after slow start to year
Kennie Atle Johansen, a former manager with Izzy Englander’s Millennium Management, is launching a quant hedge fund trading Asia stocks in anticipation that market volatility will increase this year.
/goo.gl/EVpnWE
Merrill Lynch bans clients from investing in Silbert bitcoin fund
Reuters Staff
Bank of America Merrill Lynch banned clients from investing in one of bitcoin mogul Barry Silbert’s top funds last month, according to a memo seen by Reuters.
/goo.gl/K1EEPx
Fidelity Moves Brian Hogan Out of Equity Division; Hogan led unit that is home to star investors but faced scrutiny recently after allegations of sexual harassment
Sarah Krouse and Kirsten Grind – WSJ
The president of Fidelity Investments’ equity division is moving to a new role within the fund giant’s personal investing business later this quarter, leaving a post he has held since 2009.
/goo.gl/pEKXAy
Pension funds urge fresh crackdown on pay despite cuts for chiefs; Ratio of CEO remuneration to average full-time worker’s salary remains at 120:1
Attracta Mooney – FT
Big pension funds have warned corporate boards to crack down on excessive pay awards for chief executives over concerns that executive remuneration has become dislocated from company performance and employees’ salaries.
/goo.gl/djvf7Q
JPMorgan, Goldman Sachs come top of banker pay league in Britain
Lawrence White – Reuters
JPMorgan (JPM.N) and Goldman Sachs (GS.N) paid their top bankers in Britain an average of $1.5 million each in 2016, compared with $1 million for local rivals HSBC (HSBA.L) and Barclays (BARC.L), data released by the banks last year shows.
/goo.gl/fkECv4
Regions
Cargill to broaden India portfolio, invest Rs 15 bn in coming years
Business Standard
Cargill India is expanding its presence in the country and has prepared a plan to broaden its portfolio, which includes aqua feed and aqua premix, animal feed, plant for transfer fuels, strengthening edible oil brand, corn wet milling, and cocoa products for catering to the needs of chocolate making companies. Around Rs 15 billion in investments has been committed by its parent for the Indian market over the next few years.
jlne.ws/2ESVHA3
China’s Yuan Setting Is Highest Since May 2016; Fix reflects long slide in dollar—but a stronger yuan also supports policy makers’ stability story
Saumya Vaishampayan – WSJ
China’s central bank guided the yuan to its highest level against the U.S. dollar in more than a year and a half on Wednesday, following the dollar’s overnight slide against global currencies.
/goo.gl/T6XxhV
The Cashless Society Has Arrived— Only It’s in China; Mobile payments surge to $9 trillion a year, changing how people shop, borrow—even panhandle
Alyssa Abkowitz – WSJ
Soliciting handouts near a grocery store, Zhao Shenji, a slender man with shorn hair, made giving easy for Beijing residents accustomed to relying on their smartphones.
/goo.gl/hcJfEp
MiFID Reaches Australia as $140 Billion Money Manager Unbundles
Matthew Burgess – Bloomberg
There will be no escape from the effects of MiFID — not even on the other side of the world, according to one Sydney-based money manager.
/goo.gl/sg4Ej2
China’s Growth May Surprise Again This Year
Bloomberg News
CICC and Shanghai Securities see growth accelerating this year; ‘This year might hurt even more for the bears,’ economist says
From the strength of global trade to the resilience of domestic consumption, reasons to think China’s economy won’t slow as much as expected this year are gathering.
/goo.gl/DL4w8G
Malaysia Faces Higher Rates, Currency Risks and an Election Battle
Pooi Koon Chong – Bloomberg
Malaysia may be first in Southeast Asia to raise rates; General election must be held by August in test for Najib
Malaysia faces higher interest rates, currency risks and a contentious election battle in 2018 that will test Prime Minister Najib Razak’s grip on power.
/goo.gl/qKVFGP
Let North Korea in the Olympics; Humiliating the regime (again) would be a mistake.
Adam Minter – Bloomberg
This week, South Korea accepted North Korean leader Kim Jong Un’s offer of “urgent” talks over his country’s participation in the 2018 Olympic Games in Pyeongchang. Although the sudden engagement over what might amount to two figure skaters crossing the border may not seem like a big deal, history suggests that ignoring the entreaty could be a major missed opportunity.
/goo.gl/XQhACD
Australian Cannabis Stocks Double in Value After Export Approval
Bloomberg
Australian cannabis stocks more than doubled Thursday, almost matching gains made during the whole of last year after the government said it would allow medicinal cannabis to be exported. A Bloomberg index of local pot stocks based off a gauge from Red Leaf Securities rose about 125 percent in early trading, just shy of the 132 percent gain last year. “It’s further vindication that the sector is becoming valid. It’s not just a bunch of hippies anymore,” said John Athanasiou, chief executive officer at Red Leaf Securities. But “we’ve just got to be cautious about which ones to pick.”
/goo.gl/z6Dc8r
China cracks down on under-the-table bond deals in latest attempt to reduce risk in markets
South China Morning Post
Regulators order institutions to sign written contracts in bid to stop practice of sale and repurchase agreements agreed informally and verbally
/goo.gl/RW1Qoo
Bitcoin is neither legal nor illegal in India—and everyone’s confused
Nupur Anand – Quartz
Confusion reigns in India’s cryptocurrency ecosystem. The Narendra Modi government and India’s central bank have made it amply clear they aren’t comfortable with virtual currencies. The recent spike in bitcoin’s value, which attracted hordes of investors, has only made the government more vociferous in its criticism.
/goo.gl/qV3JaP
Chinese social network’s stock jumps 47% after it says it’s raising money through cryptocurrency; Renren is looking to raise funds through an initial coin offering (ICO), according to a white paper released Tuesday; Its stock climb 47.39 percent to $18.32 a share by the close of the U.S. trading session Wednesday.
Ryan Browne – CBNC
The share price of Chinese social network Renren has almost doubled after the company said it was raising money through a digital currency sale.
/goo.gl/MSszVf
This Is How to Sneak Oil Into North Korea
Serene Cheong and Dan Murtaugh – Bloomberg
Ship-to-ship transfers help obscure cargo origin, destination; Identity of cargo’s seller hidden under layers of ownership
Donald Trump’s desire to squeeze Kim Jong Un’s regime risks being undermined by the furtive maneuvers of oil tankers at sea.
/goo.gl/vSS3ww
Russia and Venezuela’s Plan to Sidestep Sanctions: Virtual Currencies
Nathaniel Popper, Oleg Matsnev and Ana Vanessa Herrero – NY Times
Russian and Venezuelan officials are hoping virtual currencies can help their countries make an end run around American sanctions.
/goo.gl/wM9zGn
India and Japan prepare joint mission to the moon; Effort to counter rise of China underlies move to collaborate on space exploration
Robin Harding in Tokyo and Amy Kazmin in New Delhi – FT
India and Japan are preparing to fly each other to the moon as two of Asia’s leading economic powers team up to counter China’s growing prowess in space exploration.
/goo.gl/LxiVCf
Brexit
Britain braced for Brexit raid on £8tn asset management industry; Sector threatened as rival European hubs look to expand their share of the market
George Parker and Peter Smith in London and David Keohane in Paris – FT
Theresa May is braced for a possible French raid on Britain’s £8tn asset management industry, amid fears the sector might be the most exposed part of the City after Brexit.
/goo.gl/9EB8bu
U.K. Thinks Barnier Bluffing on No Brexit Deal for Banks
Tim Ross – Bloomberg
Officials said to believe London banks will get market access; Barnier has ruled out financial services in free trade pact
Prime Minister Theresa May believes Michel Barnier is bluffing when he says there will be no special deal for financial services, officials said, as the U.K. prepares to negotiate its post-Brexit ties with the European Union.
/goo.gl/mf8pVH
Five-Year Brexit Transition Funding to Help U.K. Farmers Adjust
Tim Ross – Bloomberg
Subsidies at EU CAP rates to last until 2024 in Gove’s plan; Cash will go to farmers who plant trees, open land to public
The U.K. government will extend its Brexit transition regime to help farmers cope with the loss of European Union subsidies when the country leaves the bloc in 2019 in a move that will add billions of pounds to the cost of the split.
/goo.gl/g8dG91
Miscellaneous
Buyer Beware: Bart Does Crypto
Streetwise Professor
Back in the day, Bart Chilton was my #2 whipping boy at the CFTC (after Gary Gensler AKA GiGi). Bart took umbrage (via email) at some of my posts, notably this one. Snort.
Bart was the comedian in that dynamic duo. He coined (alert: pun foreshadowing!) such memorable phrases as “cheetah” to criticize high frequency traders (cheetah-fast cheater – get it? Har!) and “massive passives” to snark at index funds and ETFs. Apparently Goldilocks could never find a trading entity whose speed was just right: they were either too fast or too slow. He blamed cheetahs for causing the Flash Crash, among other sins, and knocked the massive passives for speculating excessively and distorting prices.
jlne.ws/2EMKUHM
As drone demand soars, New Jersey poised to bar drunken droning
Barbara Goldberg – Bloomberg
U.S. drone sales in 2017 topped $1 billion for the first time ever, but don’t raise a glass too quickly if you’re in New Jersey, where lawmakers on Thursday are poised to outlaw drunken droning.
/goo.gl/yCYh4K
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